American Tower Corporation (NYSE:AMT) Q1 2024 Earnings Call Transcript

American Tower Corporation (NYSE:AMT) Q1 2024 Earnings Call Transcript April 30, 2024

American Tower Corporation misses on earnings expectations. Reported EPS is $0.00196 EPS, expectations were $2.55. American Tower Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the American Tower First Quarter 2024 Earnings Conference Call. As a reminder, today’s conference is being recorded. Following the prepared remarks, we will open the call for questions. [Operator Instructions] I would now like to turn the call over to your host, Adam Smith, Senior Vice President of Investor Relations and FP&A. Please go ahead, sir.

Adam Smith: Good morning, and thank you for joining American Tower’s first quarter earnings conference call. We have posted a presentation, which we will refer to throughout our prepared remarks under the Investor Relations tab of our website, www.americantower.com. I’m joined on the call today by Steve Vondran, our President and CEO, and Rod Smith, our Executive Vice President, CFO and Treasurer. Following our prepared remarks, we will open up the call for your questions. Before we begin, I’ll remind you that our comments will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth, including our 2024 outlook, capital allocation, and future operating performance, our expectations for the closing of the sale of our India business and the expected impacts of such sale on our business, our collections expectations in India, and any other statements regarding matters that are not historical facts.

You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risk factors set forth in this morning’s earnings press release, those set forth in our most recent annual report on Form 10-K, and other risks described in documents we subsequently file from time to time with the SEC. We urge you to consider these factors, and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances. With that, I’ll turn the call over to Steve.

Steve Vondran: Thanks, Adam, and thanks to everyone for joining today. As you can see in the results we reported this morning, mobile network upgrades and digital transformation trends are driving compelling demand across our tower and data center platforms. 5G rollouts are contributing to an acceleration in our US application pipeline, and another sequential step up in co-location and amendment growth in Europe. Solid demand in Africa continued to drive elevated new business growth, and retail demand resulted in another quarter of strong sales performance at CoreSite, which you’ll hear more about later on. Before handing the call over to Rod, I’m going to spend a few minutes discussing the key factors that have driven performance in our US and Canada tower business and underpinning the evaluation and execution of our global expansion strategy.

In particular, we believe that our focus on asset quality, operational excellence, and contract structures, all through the prism of long-term value creation, have been the most critical factors in determining our ability to monetize growth in mobile data consumption, and our ability to drive leading performance on our assets over multiple network investment cycles. Over the last 25 years, we’ve developed a scaled nationwide portfolio of approximately 43,000 sites across the US and Canada. This portfolio has been methodically constructed, primarily through the acquisition of high-quality carrier-designed and constructed tower portfolios on which nationwide networks have been built and expanded upon through each successive G, and have further benefited from the transition to neutral host operation.

We’ve complimented the acquisition of these target assets with select high-quality independent tower provider portfolios, smaller tech and portfolios, and build-to-suit sites, which taken together, represent meaningful scale. Our ability to be highly selective in the assets that we’ve aggressively pursued for acquisition and development, the assets we’ve chosen not to pursue, and the standards we’ve used to underwrite our growth, are the result of robust internal analysis and due diligence capabilities that rely on data insights that we’ve accumulated through our history as a tower operator. These insights have reinforced our understanding about asset location, competition considerations, and structural dynamics come together to create the potential for differentiated value creation.

For example, our focus on high quality assets in premier locations has resulted in a portfolio that’s geographically skewed towards suburban and rural environments and transport corridors where the vast majority of Americans live and travel, as well as towers that are structurally designed for co-tenancy, which we believe has enabled us to generate leading new business growth on our assets. Similarly, by focusing on assets with significant structural capacity, we believe we can reduce overall operating and redevelopment costs, allowing for profit and return maximization at the asset level at industry best speed-to-market for carrier deployments in our towers. And we’ve seen these factors come together to result in significant value creation on our assets.

Notably, cash operating profit margins for our US and Canada property segment have expanded by over 440 basis points since 2016, the year following our Verizon transaction in the US. As we continue to focus on driving more new business and efficiency at the asset level, we see a path to further increasing the profitability of our US and Canada business going forward. Turning to our operating model, through our focus on efficiency and delivering exceptional value for customers, we’ve invested in technology and the buildup of capabilities that we believe enhance the service we provide our customers and the value of our product offering. For example, through our application and services automation programs, we’ve continuously reduced cycle times, further supporting critical speed-to-market advantages for our customers, which translates into accelerated revenue realization for our business.

Elsewhere in our services segment, we’ve combined investments in data quality and governance with the development of internal data platforms to improve our overall service offerings and asset integrity. Over time, customer feedback shows that these investments have resulted in a consistent upward trajectory in customer satisfaction, achieved by providing a differentiated customer experience, with high asset integrity. In our land management operations, we’ve also taken an approach that’s focused on our customers’ needs and expanding the profitability of our sites. Through our tower asset protection program, we perform thousands of transactions a year that improve the ground rights and ease site access conditions, a critical factor for our customers.

And over the last decade, we’ve deployed significant capital at attractive rates of return, and emitted thousands of contracts to protect our assets and mitigate growth in land rent, supporting margin performance. Finally, as we’ve said publicly many times, contract terms and structure are critical to realizing the full value of the assets we own and manage, and our approach has been centered around creating long term value for American Tower and our carrier customers, even when it can potentially come at the expense of short-term wins. Perhaps the most important capability we’ve built internally over the last two decades is knowing our assets and understanding their value. As a result, we’ve been able to achieve outstanding growth and create significant shareholder value under traditional MLA agreements, while also developing innovative structures such as the comprehensive MLA.

Under these agreements, we’re able to secure guaranteed growth over a multi-year period in a way that maximizes the value of our assets while providing a degree of insulation from quarter-to-quarter ebbs and flows in wireless network spending. Critically, we’ve seen these contracts representing a compelling value proposition for our carrier customers by lowering their total cost of ownership when compared to self-performance, by providing a framework to leverage our skill for their networks that translates to budgetary operational visibility, and by creating administrative efficiencies that yield lower transaction costs on sell site deployments. Taking all this together, we’ve seen this focus on the right assets, high quality contracts, and operational excellence, facilitate increasing monetization and growth in mobile data consumption and corresponding carrier CapEx increases over time.

Over the course of the 4G investment cycle between 2010 and 2018, average mobile data consumption per smartphone increased from less than 100 megabytes per month to seven gigabytes per month. And over that period, carriers were deploying approximately $29 billion annually on average, up from approximately $23 billion during 3G. As we’ve moved into the 5G investment cycle from early 2019 to today, we’ve once again seen mobile data consumption per smartphone grow to almost 30 gigabytes per month in 2024. We’ve seen early 5G subscribers consuming roughly two times the mobile data compared to the average 4G subscriber, and we see average annual carrier CapEx step up to approximately $36 billion a year. This CapEx investment translated to the approximately $230 million in year-over-year co-location amendment growth we delivered last year, much of which was attributed to 5G activity, as well as an expectation for growth on a per site basis in 2024 that significantly exceeds the average seen during the 4G deployment cycle.

That brings us to today, where we continue to see all of our key customers actively working on network upgrades and rollouts, and the 5G cycle playing out in line with the broader expectations underwritten in our long-term guidance. On our last call, we indicated that we expected a year-over-year increase in contributions for services segment due in part to early indications of uptick in our application pipeline, as well as conversations that our teams are having with our customers on the ground. The activity we saw in Q1 reinforces that expectation. Specifically, contributions in our services segment for the quarter came out ahead of our internal expectations. And on the application side, Q1 volume was over 70% higher than what we saw in Q4 of last year.

In fact, March represented the highest volume level of the trailing 12 months. It was supported by broad-based step-ups across our major US customers. Now, while there’s always some level of risk associated with our expectations in the services segment, I’m pleased to say that what we’ve seen thus far supports the 2024 guidance we provided in February, including approximately $195 million, the expected services revenue contributions, approximately 4.7% organic tenant billings growth, and $180 million to $190 million in year-over-year co-location and amendment growth, one of our strongest years to date. So, as we move forward, we believe our US tower portfolio is uniquely positioned to continue driving compelling growth as 5G, expected increases in mobile data consumption, and associated carrier investments, are driving increasing demand for our assets over time.

Importantly, by leveraging that same expertise to develop our leading global portfolio, we’re well positioned to monetize similar trends across our global footprint, while delivering a differentiated experience and value proposition to our customers. Further, we believe the factors I’ve taken you through today, as well as the global focus on increasing efficiency in our cost structure, provide a path to continue converting top line growth at a rate that expands already attractive cash operating profit margins and creates incremental shareholder value. With that, I’ll turn it over to Rod to discuss Q1 performance and our updated outlook. Rod?

Rod Smith: Thanks Steve. Good morning and thank you for joining today’s call. We are off to a solid start to 2024, with Q1 performance, exceeding our initial expectations across many of our key metrics. These results, together with the positive trends highlighted by Steve, the various initiatives we have in place to drive profitability and margin expansion, and our optionality and discipline in selectively deploying capital towards projects yielding the most attractive risk-adjusted rates of return, give us confidence in our ability to drive strong sustained growth, quality of earnings and shareholder returns for 2024 and beyond. Before I dive into the results and our revised 2024 outlook, I’ll touch on a few highlights from the quarter.

First, the strong reoccurring fundamentals that underpin our business are again highlighted in our Q1 performance, with consolidated organic tenant billings growth of 5.4%, and another exceptional leasing quarter at CoreSite, including its highest quarter of retail new business signs since Q4 of 2020. Furthermore, we continue to demonstrate cost discipline, resulting in strong year-over-year cash adjusted EBITDA margin expansion, which I will touch on in a moment. Next, in India, the collections trends we saw in Q4 of 2023 continued into Q1, allowing us to reverse approximately $29 million of previously reserved revenue. Separately, while we continue to anticipate a second half 2024 closing on our sale of ATC India to Brookfield, we have already made progress in accelerating certain payments included in the potential $2.5 billion total proceeds associated with the transaction, including the repatriation of approximately $100 million, net of withholdings tax, back to the US earlier this month.

Additionally, we are making progress towards monetizing our optionally convertible debentures issued by VIL ahead of the anticipated closing of our India transaction. Executing the intended purpose of the debentures in serving as a liquid asset to backstop outstanding receivable balances, we expect to use the anticipated proceeds from the India sale to pay down existing indebtedness. We will continue to keep our shareholders informed as incremental progress is made towards the closing of our transaction. Finally, we successfully accessed the debt capital markets last month, issuing $1.3 billion in senior unsecured notes at a weighted average cost of 5.3%, with proceeds used to pay down floating rate debt. Turning to first quarter property revenue and organic tenant billings growth on Slide 6, consolidated property revenue growth was 3.3%, or over 4.5% excluding non-cash straight line revenue, while absorbing roughly 100 basis points of FX headwinds.

US and Canada property revenue growth was approximately 1.8%, or over 4% excluding straight line, which includes over 1% impact from Sprint churn. International revenue growth was approximately 3.7%, or roughly 6% excluding the impacts of currency fluctuations, which includes a benefit associated with the improved collections in India, partially offset by the timing of the sale of our Mexico fiber business at the end of Q1 in 2023, and a reduction in Latin America termination fees as compared to the prior year. Finally, revenue in our data center business increased by 10.6%, continuing the outperformance versus our initial underwriting plan, as strong demand for hybrid and multi-cloud IT architecture continues, and the backlog of record new business signed over the last two years begins to commence in a meaningful way.

Moving to the right side of the slide, consolidated organic tenant billings growth was 5.4%, supported by strong demand across our global footprint. And our US and Canada segment organic tenant billings growth was 4.6%, and over 5.5% absent Sprint-related churn. As expected, growth in the quarter was slightly below our full-year guidance of 4.7%. As we lap modestly elevated churn that commenced in Q2 of 2023, we would expect Q2 and Q3 growth rates to each accelerate to roughly 5%, before a step down in Q4 as we commenced the final tranche of contracted Sprint churn, all supportive of our 2024 outlook expectation. Our international segment drove 6.5% in organic tenant billings growth, reflecting an expected step down from the Q4 2023 rate of 7.7% as we see moderation in CPI-linked escalators.

Meanwhile, contributions from co-location and amendments remain strong, with another sequential acceleration in Europe and a continuation of elevated contribution rates of around 8% in Africa. Turning to Slide 7, adjusted EBITDA grew 5.2%, or nearly 8% excluding the impacts of non-cash straight line, while absorbing 90 basis points in FX headwinds. Cash adjusted EBITDA margins improved approximately 240 basis points a year-over-year to 64.9%, taking certain expense timing in India reserve benefits, and further supported by our ongoing cost management focus. In fact, cash SG&A, excluding bad debt, declined approximately 5% year-over-year in Q1, and was down roughly 7% off our Q1 2022 levels. Additionally, gross margin from our US services business came in just over $16 million, a decline of roughly 50% year-over-year, though representing an acceleration of nearly 70% off our Q4 2023 levels.

This performance, together with the broad-based application pipeline buildup discussed by Steve in his prepared remarks, gives us confidence in our expectation for accelerating activity continuing through the duration of the year, and is supportive of our full-year US services outlook. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by 10% and 9.8%, respectively, supported by high conversion of cash adjusted EBITDA growth to attributable AFFO. Now, shifting to our revised full-year outlook, as I mentioned, we are pleased with the results to date in the sustainable demand trends underpinning our performance. However, given the close proximity to our previously released guidance, we have kept core full-year assumptions largely unchanged.

With that in mind, our revised outlook includes several notable updates. First, we have taken the strong collections activity in India through the first quarter, which as I mentioned earlier, resulted in approximately $29 million in revenue reserve reversals, compared to approximately $16 million in revenue reserves assumed for Q1 in our prior outlook, resulting in a net benefit to plan of $45 million for property revenue, adjusted EBITDA, and attributable AFFO. Reserve assumptions for April through December remain unchanged, resulting in a net reserve for the year of $20 million, compared to the prior outlook assumption of $65 million. Next, we have revised our FX assumptions for the year, resulting in a modest headwind compared to our prior outlook.

Finally, while our net interest assumptions remain relatively unchanged, we have increased our interest expense due to elevated rates, which was partially offset by modest interest expense reductions through a reduced debt balance attributed to the accelerated India proceeds I mentioned earlier, and further offset by higher interest income. With that, let’s dive into the numbers. Turning to Slide 8, we are increasing our expectations for property revenue by approximately $30 million compared to prior outlook, driven by $45 million of upside related to the positive collections in India during the first quarter, partially offset by $15 million associated with negative FX impacts. We are reiterating our prior outlook expectations for organic tenant billings growth across all regions, including approximately 4.7% in the US and Canada, 11% to 12% in Africa, 5% to 6% in Europe, and 2% in both LATAM&APAC, collectively driving approximately 5% for international and 5% on a consolidated basis.

We will continue to assess our first quarter momentum as we work through the year. Turning to Slide 9, we are increasing our adjusted EBITDA outlook by $40 million as compared to prior outlook, driven by the flow-through of the revised revenue reserve assumptions in India, partially offset by $5 million of FX headwinds. Moving to Slide 10, we are similarly raising our expectations for AFFO attributable to common stockholders by $40 million at the midpoint, and approximately $0.09 on a per share basis, moving the midpoint to $10.42, supported by the revised India reserve assumption benefits, partially offset by FX. As I mentioned, although we are raising expectations for interest expense, it is offset on a net basis by a similar increase in interest income.

Turning to Slide 11, we are reiterating our capital allocation plans for 2024, which is focused on selectively funding projects we expect to drive the most attractive risk-adjusted rates of return, sustained growth and quality of earnings, executing on an accelerated pathway to balance sheet strength and financial flexibility, and delivering an attractive total shareholder return profile. As discussed on our Q4 2023 earnings call, this includes maintaining a relatively flat annual common dividend declaration of $6.48 per share, or approximately $3 billion in 2024, with an expectation to resume growth again in 2025, all subject to board approval. Moving to the right side of the slide, our disciplined approach to capital allocation, together with reoccurring top line growth and its high conversion to profitability through cost management, all support the progress we’ve made to achieving our goal of 5x net leverage by the end of the year.

While our Q1 net leverage already stands at 5x, it is important to note that the metric for this quarter benefits from the India reserve reversals previously mentioned, and we’d expect to be above 5x in Q2. These efforts, combined with our successful capital markets execution year-to-date, have further reinforced our investment grade balance sheet as a strategic asset, which will remain a key focus moving forward. Turning to Slide 12, and in summary, we are off to a great start to 2024. Our visibility into a solid foundation of recurring contracted growth across our global business, combined with an accelerating pipeline supporting our expectations for future activity, a keen focus on cost discipline and margin expansion, and a continued demonstration of strategically deploying capital, while enhancing balance sheet strength, gives us a high degree of confidence in our ability to drive strong sustained growth over the long-term for our shareholders, while being a best-in-class operator for our stakeholders globally.

With that, Operator, we can open the line for questions.

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Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Matt Niknam from Deutsche Bank. Please go ahead.

MattNiknam: Hey guys, congrats on the quarter. Thanks for taking the question. Just two, if I could. First on the US, maybe if we can get a little bit more color on the acceleration in activity you saw in the quarter, and maybe what that implies for services and new leasing expectations going forward, and more curious whether this was broad-based across the big three and maybe even DISH or more limited in nature. And then secondly, on data centers, I think you talked about your highest quarter of signed retail leasing since 4Q ‘20. Any color you can share in terms of what’s driving the uptick in new business. And it seems to imply there isn’t much in the way of macro headwinds or caution that some of your peers have talked about, but again, just curious if there are any signs of macro caution there. Thanks.

Steve Vondran: Sure. Thanks for the question. In the US, again, we’re seeing an acceleration in Q1 relative to Q4, and our application pipeline coming in in Q1 was about 70% higher than Q4, and our services gross margin came in at about $16 million in the quarter, which was higher than we’d expected. So, what we’re seeing is an acceleration activity that really underpins the guidance we gave last quarter. And just to kind of reiterate what that is, on our services, we’re expecting our services, about $195 million in revenue, about $100 million in gross margin. And look, while that services is inherently hard to predict sometimes, the activity we’re seeing in Q1, along with the conversation we’re having with kind of the boots on the ground teams from our customers, that gives us confidence that we’re going to hit that services guide for the year.

And so, we’ll continue to watch it and see how that cadence goes throughout the rest of the year. But everything we’re seeing in Q1 gives us some optimism there. Now, when it comes to our property revenue growth from that, again, I’ll remind you that a lot of our revenue assumptions are underpinned by our comprehensive MLAs. So, at this point, the acceleration that we’re seeing in growth doesn’t change our guidance in terms of what we’re expecting to see in the US. Again, I’ll reiterate that. We’re expecting to see organic tenant billings growth of approximately 4.7% in the US, and that will be a little bit different quarter by quarter. In Q1, it was 4.6%, and I will expect that to go up a little bit in the middle of the year. And then the final tranche of Sprint churn that hits in October, will weigh that down a bit in Q4.

But overall, we’re encouraged by that. In terms of what we’re seeing, it is fairly broad-based. I don’t want to get into individual customer activity levels, but we are seeing some broad-based activity pick up in the US with all of our major customers. And again, we’re encouraged that that’s going to continue for the rest of the year. When it comes to CoreSite, we have two years of kind of record sales, and we have a healthy pipeline this year, and we’ve got a tough comp compared to last year. So, I don’t know that we’ll achieve another record year of sales, but we’re hoping. And we did have a very strong quarter on retail this year, and that was really exciting to see. In terms of the headwinds for that business, we’re very optimistic about what we’re seeing.

Again, what’s underpinning the growth in CoreSite right now, the bulk of that growth is being driven by enterprises that are going to hybrid cloud IT infrastructure, and there’s a long tail of that that we see out there. There’s still a lot of companies that have their own data centers, and there are a lot of companies that went cloud-native or that had moved everything to the cloud, and they’re looking for a different cost structure, and they’re going to this hybrid environment. And that’s still the biggest driver we have, and we see a very, very long tail of that activity out there. We are seeing an uptick in activity from AI. In particular, the inferencing portion of AI models is kind of perfectly suited for CoreSite. You’re going to have these large learning models that are done in the big hyperscale data centers, but when you start interfacing with the users to provide that data to them and also get the inputs from them, you need a distribution channel, and CoreSite is perfectly suited to provide that type of distribution.

So, we are seeing some activity there. In terms of kind of industry headwinds, we’re not seeing a fall off on our funnel today. We’re watching it, just like everyone else is. Some of the things that people have highlighted, some of the demand – I mean, supply issues, are things actually drive pricing up. So, where we have markets that are constrained supply, that’s actually driving pricing up. We’ve got more megawatts under construction today than we ever have before at CoreSite. So, we’re planning for that demand cycle to continue. But I’ll just reiterate that a large portion of that’s pre-leased more than we ever have before. In fact, our pre-leasing percentage right now of the stuff that we have under construction is about 35%, and that’s down a tick from last quarter, because we’ve placed some things in service.

But we’re still seeing a healthy demand for pre-leasing, and we’ll continue to explore that as well. We’re still seeing growth in interconnect, and I know that there’s been some discussion out there about grooming of cross connects, and that’s something that we constantly see with customers as they’re trying to optimize their cost structure. But even with a little bit of grooming going on, we’re still seeing healthy growth there. So, again, I think we’re very optimistic about the demand for CoreSite, the pipeline that we’re seeing. Hoping for another record year sales, but that’s a tough comp. So, I’m sure my sales team is cringing hearing me say that. But we feel good about it, and we’re not seeing headwinds weigh on it today. But again, we’re watching the market, just like everybody else is, and we’ll be appropriately cautious if we see that demand slowing down, but that’s not what we’re seeing from our sales teams today.

Rod Smith: Hey, Matt, this is Rod. If I could just add briefly here one or two comments. So, with CoreSite, as Steve said, we’ve had record levels of new business in the past, and what that is leading to is higher revenue growth now as we’re delivering that new business that we signed up over the last couple of years. So, you saw in the quarter we had a north of 10% revenue growth rate. As I said in my prepared remarks, that is the result of delivering on that new business, those record levels of new business we signed up over the last couple of years. The last couple years of new biz has also led to a high level of backlog. So, we’re up in the close to $60 million in terms of backlog, which is signed deals that we haven’t commenced into revenue yet.

That’s up from a run rate of closer to $40 million or $45 million in the last couple of years. So, the new business we sign up, it translates into backlog, and then it translates into revenue and revenue growth. So, with the activity level we’ve seen in the last couple of years, the high backlog we have today, that positions CoreSite very well to have high levels of growth over the next couple of years.

MattNiknam: Appreciate it. Thank you both for all that color.

Operator: Your next question comes from the line of Michael Rollins from Citi. Please go ahead.

Michael Rollins: Thanks, and good morning. Just following up on your comments regarding the pickup in domestic activity in the first quarter, do you see this as a rising tide for the tower category, or do you see American Tower taking share from your competitors? And then secondly, you referenced, I think in one of the slides and some of your comments, that the activity is supporting your long-term guide for the domestic business. If you can recap for us where you see the longer-term average annual organic tenant billings growth, and how these changes in activity levels may influence those outcomes. Thanks.

Steve Vondran: Sure. Thanks for the question. So, what we’re seeing in the US, it’s clearly – it’s one quarter results. And again, the conversations that we’re having, give us the optimism that our guide for the year is kind of spot on in terms of the customers starting to ramp up. I don’t have a lot of visibility into what my competitors are seeing, so I don’t think I can give an opinion on whether what we’re seeing is materially different than what they’re seeing. But when I reflect on what the customers need to do to complete their mid band 5G rollouts, and when I think about what their long-term goals are on their network, there’s a lot of work yet to be done. So, what I think that we’re seeing play out is the same cycle we saw in 4G, the same cycle we saw in 3G, where there’s an initial push, then there’s a little bit of a slowdown while they’re optimizing their network, and then there’s another push, and I think that we’re starting to see that.

Now, where I do think we’ve really differentiated ourselves is that our MLAs do provide a little bit of an easy button for our customers, and we’re able to give them great speed-to-market, great cost predictability, and I think that that does give us greater market share over time. Back to kind of our longer-term guide for the US, just to remind everyone, we said that we expect at least 5% organic tenant billings growth on average for the period between 2023 and 2027, and that would be 6%, excluding the Sprint churn that we have. And in 2023, that OTBG number was 5.3%, and we’re projecting 4.7% this year, and that’s all while we’re absorbing greater than 100 basis points of Sprint churn a year in each of those years. So, we see the activity levels very supportive of that long-term guide.

And again, we feel good about the cycle of 5G. We feel good about the carrier activity that we’re seeing and about the way 5G is performing in terms of giving them megabytes of data or gigabytes of data a lot cheaper than they could produce it any other way.

Michael Rollins: Thanks. And just one other quick one. Any shift in the mix between amendments and densification within the domestic activity?

Steve Vondran: A little bit. Again, I think when you think about these cycles that the carriers build in, the first push that you see is always a coverage network, and that implies overlays on existing sites. And then when they slow down and start optimizing, part of that optimization is infill to give better quality of service where they might have some coverage gaps, or might not be getting the optimal service, and that always implies more co-locations. So, we are seeing some demand for that as well. Again, we see some kind of broad-based activity, so we’re seeing both, and we’re seeing that across the carriers. And again, I would just remind folks that we do have comprehensive MLAs in place with some of our customers that smooth out some of those cycles of the ups and downs of the activity levels.

We did disclose in Q1 that one of our major customers rolled off of their comprehensive MLA. And so, for that customer, when you come off the comprehensive portion and go to more of the kind of pay by the drink, there is more seasonality in terms of the commencements of those leases as they sign them. And so, from that perspective, activity levels will drive that portion of our business more than they do for the ones that are on the comprehensive MLAs.

Michael Rollins: Thanks for all those details. Thanks.

Operator: Your next question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.

Simon Flannery: Great. Thank you. Good morning. Steve, thanks for the comments on the portfolio review. Maybe you could just review the M&A market more broadly. Are there things that you might be looking at doing, either buying or selling beyond the India situation, and how you think about that? And then other things that come out of that – any sort of portfolio assessment. And then any updates on the deal timing in India? I think we talked last quarter, perhaps about sort of October 1st, just being kind of a placeholder, but any updates on regulatory processes in India at this point? Thanks.

Steve Vondran: Yep. Sure. I’ll start with India. No updates at this point. It’s very hard to predict when that approval will come through. So, we’re still expecting second half of the year, but we’ll let you know as soon as we know what’s happening on that. In terms of broader M&A, our teams look at everything that’s kind of out there for sale, and that’s just part of our standard practice. There’s nothing that we’re seeing that’s compelling that would take us off of our capital allocation priorities that we laid out at the beginning of the year. And that is our first priority of any of our capital allocations, paying our dividend. But then we’re really focused on delevering after that, making sure we get down to our 5x net leverage.

And so, when we’re looking at the M&A that’s out there, there’s nothing that we’re seeing today that is strategically important or at the right price that would make us make us change our mind on that at this point. When it comes to our own portfolio, and I just want to be clear about this, we’re not doing a strategic review specifically of anything, meaning there’s nothing that we’re intending to sell out there today. And having said that, we do have some businesses that may not be as strategic for us, or they may not be at scale. And if the right buyer with the right price came along, we would consider something there. But as we look at our portfolio kind of across the globe, our goal is to figure out if there are businesses that are not meeting our original underwriting criteria.

The first thing is, what can we do to fix those? How do we drive greater sales? How do we get more efficiency in the market to drive margins up? And we will try that first. If we decide to exit another market, it would’ve to be because we’re getting the right price, and that we think it’s more accretive to our shareholders than holding it. So, at this point, there’s nothing to point to in our portfolio that we’re actively looking to dispose of. But again, there are some non-strategic businesses for us out there that we would consider if the right buyer or the right price came along.

Rod Smith: Hey, Simon, this is Rod. Simon, I’m going to add a couple of comments on India, just to give everyone listening a couple of the numbers and a reminder. So, as Steve said, the timing is still second half this year. Everything is going well, certainly within our expectation. I just want to remind everyone that we announced when we signed the deal with Brookfield to sell 100% of India, that it would have total proceeds that could be up to $2.5 billion. That comes in a couple of different forms. It’ll be $2 billion in terms of the, let’s call it the purchase price, which includes the intercompany debt that we have in there, as well as the term loan that we have in India. The intercompany debt is a little less than $0.5 billion.

And then the term loan is about $120 million. It also includes some working capital, some receivables, and the OCD that I’m sure you’re familiar with, that we put in place with VIL. So, the OCD was about $200 million. The other India receivables was a little less than about $200 million. And then there’s also a ticking fee component that we get that is based on the mechanics between signing and closing. You put all those things together, it comes up to about $2.5 billion. We are in the process of realizing and taking some of these proceeds out of India. So, you did see, and you’ll see in the details, we removed about $100 million from India and took it back to the US. That’s based on some of the positive collections trends that we’ve seen in India.

Those receivables belong to us and is part of the $2.5 billion. We also converted 90% of the $200 million OCD, and then we subsequently liquidated that right – kind of during and after the successful FPO that VIL had done, which we were happy to see. So, the 90% of the E200 million that we converted, we sold it into the market, and we realized a little over $200 million on that. So, that’s worked out really well. And again, I’ll just highlight that it’s achieving our original purpose, which is giving us multiple avenues to liquidate that receivable balance, increasing the probability of actually realizing cash, and it worked well. So, we have over $200 million. You will see us remove that from India and bring it back to the US as well. And on closing, you’ll see the $2 billion plus any kind of ticking fee probably be paired up around closing, just to give everyone the mechanics of those and what to expect in terms of the proceeds on closing.

Simon Flannery: That’s great. Thanks, Rod. And any update on dividend policy beyond this year?

Steve Vondran: Yes, what we’ve said is we plan to resume growth in 2025, subject to board approval. And we’ll give specifics on our Q4 call in February 2025, as we always do, in terms of what that’s going to look like. Over the long term, what you can think about is that our dividend per share and AFFO per share growth would be similar over the longer term. And so, there may be some short-term changes in that. So, for example, with our India divestiture, there will be some dilution in AFFO per share. So, there might be a dislocation there from the AFFO per share growth and what we will see in taxable income. So, over the long term, you can think about those being similar. But for 2025 in particular, we’ll get more specific about that in February of next year.

Simon Flannery: Great. Appreciate it. Thank you.

Operator: Your next question comes from the line of Rick Prentiss from Raymond James. Please go ahead.

Rick Prentiss: Thanks. Yes, I want to follow up on Simon’s question there on the dividend. I appreciate you can’t give a lot of color there yet, but what kind of payout ratio are you trying to achieve then? Is it then like 100% of attributable AFFO per share? Was it more like 90% and the growth rate’s going to be more on that long term? Again, more decision, but is it more a payout ratio or is it an absolute level, or is it growth that you’re kind of pairing up dividend per share with attributable AFFO per share?

Steve Vondran: Well, if we continue to grow it kind of in line with our AFFO per share growth, you can think of that payout ratio staying kind of in that 60%, 65% range.

Rick Prentiss: Okay. Makes sense. And then one question – go ahead.

Rod Smith: I would just add to that quickly, Rick, that that 65% range, it does leave us between $1.5 billion and $2 billion of additional, let’s say AFFO to put towards other uses, either CapEx or anything else we want do. So, that ratio, that 60% to 65%, kind of fits in well with giving us a lot of financial flexibility to invest capital.

Rick Prentiss: And it’s a good thing not to pay it all out. Leave yourself some money to grow the business. Appreciate that. One question we get a lot, and Steve, you’ve talked to a lot on the call already, prepared remarks and questions from Michael and others, about US green shoots, possibility of improvement. A lot of investors we talk to always look to like carrier CapEx, and you’ve pointed to it as well. I view carrier CapEx as an indicator, but not a perfect linear indicator of leasing. Can you help us understand how you look at carrier CapEx and why it may or may not be a perfect indicator to what can happen in any given quarter or year on the leasing activity you see?

Steve Vondran: Sure. I’m happy to. Thanks for the question, Rick. So, when you look at carrier CapEx, first, I would point out that we’re seeing the estimates for carrier CapEx in 5G are around that $35 billion, $36 billion per year mark on average. And that’s up about $5 billion or $6 billion from what we saw in 4G, and that was up $5 billion or $6 billion from 3G. So, we do see overall CapEx increasing. The reason it’s not a perfect algorithm for growth on the tower side is that CapEx goes to a lot of different uses. It’s not all going into the radio access network that goes on towers. Some of that CapEx goes into the core of the network, and some of it goes to the fiber to connect the network. And so, there’s a lot of CapEx that’s not related to just the RAN on the sites.

So, it’s not a perfect algorithm for that. And in fact, I think I’d point you to one of my customers comments earlier this year where they said that their C-band deployments will continue at pace and that the savings that they’re getting in their CapEx this year is coming from core and fiber. So, when we think about carrier CapEx, what we’re really trying to focus on is what we think the CapEx is going to be on the tower sites themselves. And while the carriers don’t break that out specifically, that’s where we take our market intelligence and what we’re hearing from the teams on the ground to get a better idea from our perspective of what the activity is going to be based on what they’re preparing to do on their sites. And so, the CapEx does matter.

If they’re spending more CapEx, that does imply, generally speaking, more activity. Less means less, but it’s not a perfect algorithm.

Rick Prentiss: Sure. And back to another thing Michael pointed out, it seems to us also that if you do see the shift from coverage and amendment activity to new lease activity and new co-locations, typically your average rent is going to be higher obviously for a new lease than a amendment, even though CapEx might not be very different at a carrier. Is that another possibility?

Steve Vondran: Yes, that’s a possibility, Rick. A new lease rate is typically higher than an amendment rate, but you get more amendments than you do new leases. So, there’s a little bit of a trade-off there. But look, it’s all positive and it’s all the things that underpin our long-term guidance, and that’s where our expectation for growth is. It’s a combination of new leases and amendment as we go through a 5G cycle. It’s a long cycle and it’s going to replicate very closely what we saw in 4G and 3G, and that’s what we’re seeing play out today.

Rick Prentiss: That helps. I want to circle back the last one for me. Rod, you mentioned, obviously you have excess cash that you can use for capital allocation, construction projects that meet returns, but you would also think stock buyback comes into the equation at some point. I know you’re trying to get to the 5.0. Help us understand the process getting through India, and then what would trigger and allow you to think that stock buybacks are an available option, given where the stock price is at?

Rod Smith: Yes, it is a great question, Rick, and as we’ve – as Steve and I have been saying really for the last couple of quarters, we are very focused on driving organic growth, very focused on driving operational efficiency, reducing our overall direction and SG&A cost to drive AFFO and FFO per share growth. When it comes to capital allocation, we’re very focused on delevering and strengthening our balance sheet and continuing momentum of adding CapEx and with the best projects that we see driving quality of earnings, the right risk profile, the right growth profile over the long term. So, all that is clear and remains our focus. You did see we are at 5x this quarter in terms of net leverage. So, we’ve achieved our goal for Q1.

I’ll point out, Rick, for you, that that was benefited by the payments that we saw in India in the absence of, let’s say the need for the reserve that we had in our outlook. So, there is some timing benefits there that could be as much as $40 million, $45 million in Q1. What that means is we expect that leverage during the year will be back up above five slightly between now and the end of the year. And we’re going to continue to work on getting that down to five in a sustainable way. And the goal is by the end of the year. Now, we may not get there, but we’ll be very close, I think, and we’ll be in good shape. So, with all that said, at some point when we have leverage at our target range or below in a sustained fashion, then I think all options are on the table.

At that point, we regain full financial flexibility. In order to really engage in buybacks, I think we’d want to see more certainty around the economics, more certainty around issues of inflation and interest rates and those sorts of things today. I think we all appreciate the fact that there is still a fair amount of uncertainty there, and we’re going to be prudent in making sure our balance sheet is strong and that we are managing the business effectively to drive AFFO growth. That means reducing our floating rate debt, reducing our vulnerability, let’s say to changes in short term rates. That’s kind of the focus for this year. So, I would say when you think about buybacks, Rick, it’s probably more towards the end of this year we’ll be reassessing things.

At that point, I think we’ll be in a little bit different position when it comes to sustained leverage. Hopefully by then, there’s more certainty in the economic outlook and where interest rates are going. And at that point, we can do a full consideration of different allocation options.

Rick Prentiss: Well, I sure hope some more certainty and visibility. Thanks so much guys. Have a good day.

Operator: Your next question comes from the line of David Barden from Bank of America. Please go ahead.

David Barden: Hey guys, thanks so much for taking the questions. I guess my first question would just be related to foreign currency movements. We’ve been seeing some pretty extraordinary moves in the last six months, the Argentinian peso, the Nigerian Nira, even more recently, the yen. Could you kind of share with us any evolution in your thinking around hedging and how that might be impacting your outlooks as you give them for the year? And then the second question would be, similarly, we seem to be at a inflection point, maybe in fixed wireless access, some carriers getting more aggressive, some carriers getting less aggressive. Could you kind of share how you are looking at fixed wireless access as an increasing contributor or a decreasing contributor to your growth outlook for the macro side? Thank you.

Rod Smith: Hey, David, thanks for the question. I’ll hit the FX one and then I think Steve will take the one on fixed wireless. So, when it comes to FX, you’re absolutely right to point out we do have some FX headwinds in the business. That’s clear. This year, the FX headwinds that we’re really seeing are coming through Africa and primarily in Nigeria, which I think you’re aware of. So, when you look at outlook to outlook, we’re down about $15 million in this guide on property revenue, just about $5 million on EBITDA and AFFO, which is about a penny dilution or headwind when it comes to the outlook adjustment there. And the puts and takes there, we’ve seen, although for the year, year-on-year, we have an FX tailwind across Latin America, outlook to outlook, there’s a bit of a headwind that brewed up here in the first quarter.

And then we have the opposite in Africa, where we have a pretty significant headwind in FX across the region year-on-year, but outlook to outlook is actually a positive kind of tailwind in Africa. So, not all currencies kind of move together. We certainly benefit at times more than others in terms of the portfolio effect, where if one currency is under pressure, another one may be up a little bit. If you look at the spot rates, we actually could improve revs by about $17 million. It’s too early to build that into our outlook, but that’s what the spots would tell us. So, from a hedging standpoint, I mean, one of the things that we’ve done is we’ve diversified our debt structure quite a bit in the last several years, and we’re up now to about $7.5 billion of Euro denominated debt to kind of match up with our euro based business that we have in Europe.

The other thing I would say is the international businesses that we have, let’s say across Latin America and Africa and APAC, the cash flow that we generate there, we continue to kind of reinvest back in the business if we don’t take it out through our intercompany lending. And of course, when you have devaluation, we’re still operating in local currency in those markets. Our P&L is denominated in local currency. So, all of the revenues and expenses are all in local currency. So, a lot of it is translational. There isn’t a lot of hedging that we can do, or we think is prudent to do in Africa and Latin America. But reinvesting those cash flows back into assets in those regions, I think is a pretty good long term play in terms of creating value for our shareholders.

But with that said, to the extent that we see any markets that have outsized FX headwinds, that certainly comes into our capital allocation thinking. And one of the benefits of our portfolio is it is very broad, and we don’t have to invest capital in every country every year. We can allocate it where it makes most sense for our shareholders and where it will create the most value, and we do that actively and dynamically. The other thing, you’ve heard us say this before, David, we certainly build FX headwinds or FX impacts into our underwriting model. It’s in all of our deals. So, we do weighted average cost of capitals country by country. We also have the fisher effect and an expectation of inflation differentials between the foreign country as well as the US currency that we invest in, and we build that in out over the long term within the model.

So, it’s hard to get FX right in the short term, but I think when you pull that out over a 20, 30-year period, you have a much better chance of getting that right in the long term model. So, in terms of our underwriting over the long term, we still feel good about the portfolio that we have and our ability to handle the FX, but it is important to know that in the short term, we have the ability to lean in and out of different places, depending on what’s happening. And FX is one of those things that we would certainly be looking at.

Steve Vondran: Yes, I would just add that we also use contractual mechanisms to also control that to some extent. It’s very important for us to have CPI-linked escalators in all those international markets to make sure that you do recover some of the differential that you have from inflation from the US and those markets. And in some markets, we also will have some of the revenues pegged to US dollar. For example, in Nigeria, about 40% of the revenue in Nigeria is pass-through of power. And so, that’s kind of passing through at the same rate that we’re paying it. So, that’s a little bit of a natural hedge. Of the remaining 60%, about half of that is pegged to the US dollar. We get paid in Nira, but it’s pegged to whatever the exchange rate is when we go it there. So, we do use contractual mechanism to hedge as well, as well as what Rod said, that most of our expenses are local currency expenses. So, there’s some natural hedge there as well.

Rod Smith: On fixed wireless.

Steve Vondran: Oh, fixed wireless. So, on the fixed wireless side, look, we’re seeing our carrier customers aggressively leaning into fixed wireless. And it’s – we’ve always said that that might be one of the first use cases of 5G and we’re seeing that play out. And I think the number is about 10 million subs that we’re at total for fixed wireless in the US. At this point, we’re not seeing them deploy standalone fixed wireless networks by the major carriers. We do have standalone fixed wireless for some of the small guys, the WISPs and people like that. But at this point, the carriers continue to utilize the excess capacity they have in their current builds. What that means for the long term, I think it’s too early to say.

I’m encouraged by the ARPUS they’re getting, the growth that they’re seeing, the competitiveness that they’re showing with the fixed line broadband. And if those trends continue and if they’re able to kind of underwrite some additional incremental network builds to support that, that would be upside to our base case. When we’ve set our long-term guide in the US, we were not anticipating any type of a standalone fixed wireless build or incremental network activity driven by fixed wireless. So, that would be upside for us if it happens, but I think it’s too early to tell right now if that’s going to drive a lot of additional business or not.

David Barden: Got it. Thanks, Steve, I appreciate it.

Operator: Your next question comes from the line of Nick Del Deo from MoffettNathanson. Please go ahead.

Nick Del Deo: Hey, good morning. Thanks for taking my questions. First on CoreSite, your MMR per cabinet growth has been really strong. Steve, you talked about that a little bit earlier. I guess, can you help to decompose the drivers a bit more, how like for like pricing gains versus mix changes versus higher consumption per cabinet might be driving that. And you also noted that you had a record quarter for retail signings in the quarter. I guess more generally, can you comment on the mix of retail versus scale deals that you’ve had in recent periods and what’s in your funnel today?

Steve Vondran: Sure. Let me attack the first part of that. So, when you look at pricing across our markets, what’s really driving it is supply-demand dynamics. And so, we’re seeing similar increases in retail scale and hyperscale pricing in those markets. There’s probably a little bit more increase in hyperscale at this point because contiguous capacity is becoming more rare, and because it had the lowest pricing to begin with kind of in the markets. And so, what we’ve seen across all of our markets is the supply is less than the demand, and part of that’s just I think AI and other use cases have taken off faster than people expected, and the entire ecosystem has not provided as much capacity as what people are seeking. And that’s really the underlying driver for what that pricing is happening in our facilities.

Our funnel has a healthy mix of retail and scale. I don’t have the exact breakdown in my fingertips, but a lot of that’s driven by what capacity we have to sell and what contiguous capacity is out there for some of the scale installations. And so, depending on which facility and which market, we could be flexible in terms of what we offer people, and we can be selective on the customers. Because CoreSite is really an interconnection hub, it’s not just a retail or co-location facility, we don’t underwrite all -we don’t write all the business that comes to us. We’re not a low cost provider per se in those markets. People come to us because of the interconnection we provide. And so, we curate a mix and we try to balance networks, cloud players, and enterprises, with a healthy mix of retail in a way that gives us that kind of industry-leading returns on our capital that CoreSite was delivering before we bought them and that we can continue to use to underwrite our model there.

Nick Del Deo: Hey, Steve, have higher powered entities influenced the MMR cab at all, or is it more just the like for like pricing dynamic you described?

Steve Vondran: I mean, certainly, we price the higher density cabinets more because they’re taking up more power. So, that does influence it. We did have a press release a couple of weeks ago about being NVIDIA-certified in some of our facilities. And so, certainly when you’re putting GPUs in versus CPUs, there’s a pricing differential on that cabinet. But really what’s driving the pricing increases across the board are the supply-demand dynamics.

Nick Del Deo: Okay. And can I ask one on expenses? You’ve always run a pretty tight ship from that perspective. Seems like you’re running even tighter than normal this year. I guess, can you drill down into any of the specific actions you’re taking to really help keep costs down?

Steve Vondran: Sure. Let me give you kind of the backdrop to it, then I can give you a few examples. So, over the last decade, we’ve been in a rapid growth mode in a lot of our markets. And when you’re growing very quickly and you’re buying and integrating assets, you’re really focused on that piece of it and making sure that no balls drop and that you’re providing good customer service, et cetera. Now that we’re not buying a lot of assets and integrating them, it’s a good time for us to really focus on operational excellence. So, across the board, what we’re doing is, we’re looking at our operations and saying, how can we be better without negatively impacting customer service or the future of our business? So, we’re being very careful that we’re not damaging the long-term trajectory of the business with it, but we are finding opportunities to do things more efficiently.

And I would say what we’re doing today is kind of phase one, and that each market is looking at what they can do on their own. And then there is an opportunity that we’re focused on to more globalize the business, and that’s taking best practices from each market in terms of what their expertise is, and taking that to other markets to see if we can drive additional efficiencies there. For example, in the US, we’ve automated a lot of our processes, and the question that we’re asking ourselves is, can we take those automations and use them internationally to drive even more efficiency there? In Africa, we are extremely efficient with how we use fuel in our power-as-a-service business. So, we’re looking at that saying, can we export those practices to other markets like the US?

And so, right now, we’re being very deliberate in kind of chasing the low hanging fruit that’s just inherent in the business after coming off a decade of growth. And then we’re going to be very thoughtful about continuing to look at those costs as we try to become as efficient as we can everywhere we can over time.

Nick Del Deo: That’s great. Thanks, Steve.

Operator: Your next question comes from the line of Batya Levi from UBS. Please go ahead.

Batya Levi: Great. Thank you. Can you talk a little bit about the trends you’re seeing in LATAM? I think the quarter came in a bit ahead of your outlook. An update on activity and maybe expected churn from Oi, any exposure to its wireline business would be helpful. And just a second question on your build-to-suit program across regions, any changes given the macro pressures or some regional risks that you’re seeing? Thank you.

Steve Vondran: Go ahead, Rod.

Rod Smith: Hey, Batya, this is Rod. I’ll start with LATAM and give you a little a little insight on the trends there. So, we’re seeing, for the outlook for 2024, LATAM is going to be coming in around 2% organic tenant billings growth. That’s coming with about 3% being contributed via the co-location and amendment revenue. And if you put that up against prior year, it’s pretty flat. So, we’re seeing a steady level of demand and activity across Latin America in that 3-ish percent for new business. The escalators are also in that 4%. So, a touch above that. That’s actually down kind of moderating because inflation across the region has come down. So, last year, that was north of 7%. This year it’s about 4%. So, that’s a big driver of any headline change that you’ll see is just the moderation of that inflation.

The good news is, we also are seeing a lower level of churn. So, churn is about 5% in this year’s guide. Last year, it was up closer to 6%. Within that 5% churn, almost half of it is coming from Oi, which I know you’re familiar with. That’ll take a couple more years to kind of work through, and we will sort of get to the other side there. And then we would expect that more normalized overall growth will come back in the region, but it will take a couple of years before we get there. When you think about, maybe just hitting the wireline side of OI, you heard – you probably saw a couple of comments come out publicly around the wireline of Oi and what they’re doing, but I’ll give you a couple of numbers here. They represent about $35 million to $40 million of revenue for us in our LATAM business.

We did agree to about a 20% discount that is assumed in our outlook. So, there’s no negative impact to the outlook that we have out on the Street based on that. That means that – that comes into about $7 million on a per year basis over the next couple of years in terms of the discount. And as part of the transaction, we will also be taking ownership of certain sites down there from Oi. I’m not going to give you a count or any more detail there. We’ve got a little bit of work to do to look at that, but we have kind of worked through that. So, we’ll be working through the remaining churn down in LATAM. We do think it’s temporary, but we also do think that you’ll see kind of relatively low growth for the region for the next couple of years, let’s say lower single digits in that 2% to 4% range, let’s say.

Batya Levi: That’s helpful. Thank you. And maybe just the build-to-suit update.

Rod Smith: Yes. In terms of the build-to-suits, I mean, we’re keeping that consistent, up in the range of a couple thousand, 2,500 to 3,500, Q1, the volumes were a little bit lower, but we do expect that to increase. We continue to see strong demand for us building towers for our customers across Africa and also in Europe. So, we certainly have been happy with that. We are being fairly disciplined with the higher cost of capital, looking to make sure that pricing around build-to-suits reflects the new reality. But we still see several thousand sites that we can build every year. And I would say the volumes have come down a little bit, but one of the results of that is the quality, let’s say has increased because we’re really being very selective on where we build, who we build for, and what assets we build. As we look at the macro environment with the uncertainty around rates and cost of capital, we’re being extremely disciplined.

Batya Levi: Great. Thank you.

Operator: And your final question today comes from the line of Jon Atkin from RBC. Please go ahead.

Jon Atkin: Thanks. Question about MLAs, maybe a two-parter. To what extent do you use them internationally? I know a lot of it is paid by the drink. But maybe just update us on holistic MLAs and to what extent they’re used internationally. And then as we look into maybe year-end 2025, anything changing around the holistic portions of your domestic MLAs that roll off, or even take effect. Thanks.

Steve Vondran: Sure. So, when it comes to our international markets, we have a variety of contract structures, and sometimes they depend on whether it’s with an acquisition that we did or build-to-suits or a bigger part of the business there. So, I would say, there’s a lot more variation in terms of how we construct our contracts internationally. We do have a couple of holistic-type deals internationally. Again, a little bit different flavor than we would have in the US, but we do try to utilize those contract structures. I think that’s something that may be an opportunity for us over time, but it takes time to get the customers to understand those. They’re not typically used in a lot of those markets. And so, kind of educating them on the benefits of those type structures and seeing the experience that our US customers have had in terms of being able to continue to utilize those agreements and see value from them, is something that may take some time.

In terms of the US agreements at the end of the year this year, there’s nothing that we would point to specifically on that, that we’re talking about publicly at this point. So, I would expect a ton of change there

Jon Atkin: And any change into 2025, given that these are often five years in duration.

Steve Vondran: Well, look, it’s a little early for us to be giving any type of guidance for 2025. But look, we think that our fundamental growth algorithm kind of holds true. And so, when we look at 2025, we continue to see strong fundamentals in our business, and that includes a continuation of solid US and Canada organic tenant billings growth, even while we’re still absorbing some headwinds associated with that final tranche of Sprint churn that happens in Q4 of this year. We see leasing volumes in Africa and Europe remaining positive, with churn remaining low in Europe, and an expectation for further moderation in China and Africa, continued strong growth from CoreSite, especially as we’re commencing those kind of record levels of new business that we’ve signed since the transaction was consummated.

And we’ll complement that top line growth with, again, continuing to focus on margin expansion and cost discipline, and continue to be very disciplined in our capital allocation. Now, that growth is going to be a little bit offset by the headwinds we have in Latin America because we do see an elevated consolidation churn environment there for the next few years, and that’s going to keep Latin America kind of in that low single-digit growth. And then again, when you think about 2025 and beyond, there’s a lot of variables that we’re keeping our eyes on, like FX rates, interest rates. Services is inherently harder to predict. So, we won’t be trying to guide anything on that until early next year. And then the timing of the India closing will also have an impact on what that AFFO per share growth rate is, although we think we’ve been very clear about what that means to us.

I think most of our investors understand the variability on that with the timing. But all those kind of variables, we think point to our long-term growth algorithm remaining strong in 2025 and beyond.

Jon Atkin: Thank you very much.

Adam Smith: Thanks, everyone, for joining the call today. Please feel free to reach out to myself or the IR team with any questions. And operator, we can close the call.

Operator: Thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.