Nick Del Deo: Tom, just following up on the technology outlook you shared, is there any reason to believe that — call it, the combination of the volume of spectrum that the carriers have been able to deploy and the capacity improvements enabled by 5G and massive MIMO, are going to allow them to stretch out their 5G upgrades over a longer period of time than may have been the case in the past, I think what you call the harvest phase of the 5G deployment or do you think those — the impact of those improvements are just confident to what we’ve seen in the past with other technology upgrades?
Tom Bartlett: My sense is that they’re more comparable with what we’ve seen in prior upgrades. Yeah. There are bigger swaps of spectrum in the market today that all of our customers are deploying, particularly in the mid-band. But the demand is disproportionate to what we’ve seen in the past. So my sense is that given the demand and the additional kind of usage that we would expect over the next several years, it will be very — rarely, very, very consistent. The data intensity that I even talked about with regards to adding certain levels of video usage is really going to eat into a lot of that spectrum capacity that is out there. So as I said, there is definitely more spectrum out there, definitely more in the mid-band, but I would expect that the usage that we will see and experience over the next several years, we’ll put it on the same path as what we’ve seen in 3G and 4G.
Nick Del Deo: Okay. And then maybe for Rod kind of a follow-up question on the dividend outlook. You noted that coming 2025, we should start to see the dividend grow at kind of in line with taxable income. I think historically, you had outlined sort of a 10% expectation. Should we think of your likely taxable income growth as being in that zone or is it going to be sort of a different level or is it just too early to say?
Rod Smith: I think, Nick, it — we’ll have to watch kind of the trajectory of the REIT taxable income. But in general, I think it’s probably safe for you to assume that, that will be in line with all material respects with our AFFO growth and AFFO per share growth, that’s probably a safe way to kind of think about it. It may not be exact all the time. But given the fact that we can’t predict the future certain — and certainly, we’re not going to be guiding long term on that. If you think about where our AFFO and AFFO per share growth is going to be and you think about that being probably consistent with where re-taxable income might be and where the dividend growth could be. That’s probably the safest bet. I’d just highlight again, we do have a requirement to dividend out 90% of our REIT taxable income.
We typically dividend out closer to 100% because we think that’s most beneficial to our shareholders from a tax perspective. So that’s important to notice. But then, Tom, mentioned, there are other ways that we manage the dividend payout relative to REIT taxable income, and that’s where there is a little bit more discretion on our end to try to match it up to AFFO growth. So that’s probably the way to think about it. Think about what our AFFO growth is going to be over the long term, what our AFFO per share growth is going to be and a dividend growth very well may align with that. But with that said, we will be considering capital allocation and the best uses of capital for our shareholders each and every year and each and every quarter. And the dividend specifically, is approved by our Board each year in each quarter.
Nick Del Deo: Okay. That’s great. Thank you, Rod. And can I just — one quick clarification on the one-time revenue benefits you called out. It looks like other was elevated in the U.S. in the quarter. I think that’s really the Sprint payments. And any other one-timers that you would call out or be able to describe to us?
Rod Smith: The only thing it’s really in the settlement area. I mean we had about — I think it was about $50 million in settlements this quarter. Last year, same quarter was much lower, more in the $15 million range. There’s a customer equipment removal settlement in the U.S. that was pulled forward from the fourth quarter into the third quarter, that was probably in the range of $25 million or so. But those are really the items. It’s the one-time items, it’s settlement fees. We get some small settlement fees throughout our other international markets and the timing of those can be somewhat bumpy. One thing you’ll see from our guide is those settlement fees, those one-time items do drop off pretty substantially in Q4. So that’s one of the things you can think about when you look at the bridge from Q3 to Q4 in terms of our AFFO, there will be a non-recurrence of close to $40 million, $45 million of those one-time items.
Nick Del Deo: Okay. Great. Thank you so much.
Operator: And next, we’ll go to Batya Levi with UBS. Please go ahead.
Batya Levi: Great. Thank you. Tom ad Steve, I wish you all the best as well. Just a couple of quick follow-ups. Rod, you mentioned that we’ll end leverage at about 5.2, 5.3 at year-end. Where do you want that to be over the next year or two? And we will get specific guidance next year, but just directionally, do you expect AFFO to grow in ’24, assuming India is sold at year-end? Thank you.
Rod Smith: Yeah. Hey, Batya. Nice to hear from you. Hope you are well. Yes, so we ended the quarter with 5.0 leverage. It’s going to be a little higher than that at the end of the year, primarily driven because of those one-time items on the EBITDA side. But our clear focus is to delever to reduce debt as well as reduce our exposure to floating rate debt by driving the percentage of our debt that is exposed to floating rates, and we got that down to about 11% or so. Our goal is to get to 5 times really as soon as we can. And that’s what we’re focused on, and that’s what’s driving a lot of our capital allocation decisions is driving balance sheet strength and reducing leverage getting to that 5.0 as soon as we can. So that is clearly the goal.
The goal will also — the goal — and it’s specifically for 2024, that’s where we hope to get to. And we’re looking for all the opportunities we can find to drive that. And that could include reducing the capital program a little bit next year, that certainly is in line with the dividend decision that you heard us articulate today, you’ll see that our SG&A is being held flat year-over-year. You’ll see that our margins are expanding that’s the result of a lot of global initiatives around operational efficiency to drive additional EBITDA and AFFO. Not only is that good for everyone. It also helps us get our leverage numbers down a little bit. It provides a little bit more cash flow to reduce the debt. So those are all the pieces that we’re focused on.
