American Tower Corporation (NYSE:AMT) Q4 2022 Earnings Call Transcript

American Tower Corporation (NYSE:AMT) Q4 2022 Earnings Call Transcript February 23, 2023

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the American Tower Fourth Quarter and Full Year 2022 Earnings Conference Call. As a reminder, today’s conference call is being recorded. Following the prepared remarks, we will open the call for questions. I would now like to turn the call over to your host, Adam Smith, Senior Vice President of Investor Relations. Please go ahead, sir.

Adam Smith: Good morning, and thank you for joining American Tower’s Fourth Quarter and Full Year 2022 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. On this morning’s call, Tom Bartlett, our President and CEO, will provide an update on our strategy; and then Rod Smith, our Executive Vice President, CFO and Treasurer, will discuss our 2022 results and 2023 outlook. After these comments, 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 2023 outlook, capital allocation and future operating performance; our collections expectations associated with Vodafone Idea 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 that will be set forth in our upcoming Form 10-K for the year ended December 31, 2022, and in other filings we make 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 Tom.

Tom Bartlett: Thanks, Adam, and thanks to everyone for joining the call this morning. Five years ago, when we rolled out the Stand and Deliver strategy that would guide us over the following decade, we emphasized driving the business forward through four key pillars: enhancing operational efficiency, growing our assets and capabilities, investing in innovation and platform extensions and augmenting industry leadership. Since that time, we’ve seen carriers across our global footprint invest over $300 billion in network assets and methodically deploy next-generation networks to support rapidly increasing data demand in their served markets. Our commitment to execute on each pillar of Stand and Deliver, not only aligns with our customers’ needs in this context, but it also enhances American Tower’s position to serve as a strategic provider of critical infrastructure for the networks of the future.

So before highlighting the key strategic objectives, we’ll focus on in 2023 and over the next several years, I’d like to spend a moment reviewing achievements from the past five years that have driven our success to date. On the operational front, we’ve signed comprehensive master lease agreements with T-Mobile, AT&T, DISH and most recently, Verizon in the United States. These agreements represent a commitment to a mutually beneficial, predictable growth path and strategic alignment between American Tower and its customers, while also demonstrating the value and criticality of our nationwide 43,000-plus site portfolio to support 4G, 5G and future network generations. Such agreements also bring with them efficiency innovations designed to deliver simplicity in leasing processes and accelerated time to market for the carriers.

To extend on these benefits, we’ve invested in technologies to build a holistic standardized data set, mapping the vast majority of our US assets, which can be leveraged to eventually bring application cycle times down to a matter of hours. We believe this type of capability will be a particularly attractive customer value proposition in the context of a 5G densification cycle and one we believe can be scaled across our global footprint over time. Our focus on operational efficiency has extended throughout our international business as well. Notably, since the beginning of 2018, we’ve invested nearly $350 million, primarily in Africa, on improving site level performance through our Power as a Service program. This includes the installation of lithium-ion batteries and solar arrays for primary and backup power delivery, which has resulted in a sizable reduction in average fuel consumption per site across our African portfolio and has extended the replacement cycles of critical power sources all while providing over a 99.9% average uptime for our customers’ networks.

At the same time, we’ve established a centralized procurement organization that aims to drive down material costs. And we’ve leveraged shared best practices and our scale as a multi-national operator to strengthen our global vendor relationships. By streamlining these critical operational functions, we’ve been able to continue to drive solid investment returns on our capital deployments and efficiently meet the infrastructure needs of our customers, all against a challenging backdrop of price volatility and supply chain disruptions. In fact, since the start of 2018, we’ve added nearly 26,000 sites to our international portfolio through new builds, more than two times the volume of the previous five-year period. Today, these sites are contributing approximately $250 million in tower cash flow and an NOI yield of approximately 21%, demonstrating meaningful expansion from the already attractive low double-digit day one yields we typically see on these new build opportunities.

On the M&A front, we’ve executed a number of transactions that have been transformational in terms of delivering additional critical scale in existing and new markets ahead of major network investment cycle, the benefits of which we are seeing in our results and forward-looking expectations today. These include InSite in the United States, the in portfolio in Africa as well as Telxius in Europe and Latin America, which augmented our scale in Germany and provided entry to Spain in a leadership position just as 5G investments were beginning to ramp up on the continent. More recently, through our efforts to selectively expand our platform and position American Tower as a market leader in the next generation of network architecture development, we entered the data center space through the acquisition of CoreSite.

CoreSite delivers an interconnection and cloud on-ramp rich platform as well as exposure to a resilient high-demand communications infrastructure business, which we believe will deliver strong performance as demonstrated by a record signed new business in 2022 and provide accretive returns on a standalone basis over time. As importantly, we believe the combination of CoreSite and American Towers platform of distributed tower real estate positions us to enhance the value of our existing assets as the edge proliferates. Finally, I’m particularly proud of the steps we’ve made towards augmenting our leadership in several areas. Organizationally, we’ve made ESG core to our operations through initiatives such as our commitment to Science-Based Targets, localized DE&I initiatives designed to facilitate an inclusive organization for our employees and stakeholders and through the growth of our digital communities program, which has now reached more than 400 communities and serves more than 335,000 people across 15 countries.

As I mentioned on this call last year, we’re also a member of the EDISON Alliance: 1 Billion Lives Challenge, which provides us the opportunity to contribute to the development of affordable and accessible digital healthcare, finance and education solutions for communities in need. Over the past year, we’ve developed partnerships with healthcare providers that have resulted in the launch of several telehealth locations that provide primary, preventative and specialty teleconsultation services in underserved areas. While this is just one positive first step, we believe that we’ve achieved over the last year, clearly demonstrates the value we can create and the communities we serve through a commitment to multi-stakeholder collaboration and partnerships.

And we hope more organizations will join us in efforts like these over the coming years, which brings us to today and our focus for 2023 and beyond. We believe we’re poised to build on and accelerate the successes of Stand and Deliver that we’ve achieved thus far. As I mentioned in the opening, our teams are focused on key strategic objectives that will continue to guide our operations and management teams in American Tower over the next several years. The first of these is to leverage our premier platform of assets to drive strong recurring growth, both organically and through our disciplined capital allocation framework and our investment-grade balance sheet, as we seek to capture new business opportunities against the backdrop of secular demand trends that remain as strong as ever.

We refer to this internally as scale the core. To this end, we expect an acceleration in organic growth in 2023, representing an improvement of around 100 basis points relative to our prior five-year average. Beginning with our US and Canada segment, the benefits of our comprehensive MLAs and ongoing 5G deployments are driving an expectation for organic tenant billings growth of approximately 5% in 2023, including approximately $220 million in year-over-year co-location and amendment growth, which would be a record year for American Tower by a significant margin. We also see a path to solid organic growth in our international segment, led by regions like Europe and Africa, where we’re capturing activity from multiple network upgrade and densification cycles and are realizing the benefits of CPI-linked escalators on the vast majority of our leases.

This will be complemented by what we expect to be yet another year of solid new build activity, primarily in international markets, where the current 4G and 5G network rollouts continue to drive strong demand for new infrastructure. And in our data centers business, where we’re entering 2023 with record backlog, we’ll continue to focus on driving increasing growth, both on an organic basis and through high-yield development opportunities that are ongoing today. Operationally, our teams are working to continue to build on the many efficiency and growth initiatives we’ve developed in recent years, which hits on another key objective within the organization: being the most trusted strategic partner for our customers. The most concrete example of our efforts on this front, probably the long-term multi-market agreement we recently announced with Airtel in Africa, which includes a meaningful new build pipeline, a joint commitment to build in accordance with new low-carbon emissions guidelines, which we’re calling green sights and a partnership framework to enhance the impacts of both companies’ digital communities and kiosks programs on the continent.

This agreement exemplifies the benefits of our scale, best-in-class operations, and ability to deliver innovative solutions, while advancing both American Tower and our customers’ long-term sustainability and fossil fuel consumption reduction targets. Going forward, we’ll continue to work on building alignments with our global customers to leverage our scale to execute on opportunities to drive growth and maximize shareholder returns in a sustainable and responsible way. This includes an effort to accelerate our platform extensions. As I mentioned previously, demand trends in the data center space remain robust driven by digital platforms, leveraging distributed computing and by the early stages of a sustained enterprise migration from on-prem to hybrid IT and multi-cloud architectures.

As a result, we see a long runway of opportunity to drive strong returns by investing in the expansion of our existing CoreSite campuses and leveraging the open cloud exchange to extend their interconnection-rich ecosystem. At the same time, we’re working to position our combined platforms for outsized success as demand for the workloads and compute functions are drawn closer to the end users at the mobile edge. And as we evaluate opportunities to accelerate growth through platform extensions going forward, we’ll continue to focus on how we can leverage our core competencies in real estate, power provision, and connectivity to drive incremental value to the ecosystem while delivering increasing shareholder returns. Meanwhile, as a management team, we’re laser-focused on positioning our global teams for the future, while growing and maintaining a healthy cultural foundation.

These together represent perhaps our most critical key objectives as our world-class team members are the most valuable asset in American Tower. As we position the company to be a market leader in an evolving landscape, we recognize that developing, empowering and retaining diverse and talented team members is fundamental to our success as a company. Through this lens, we’ve renewed our focus on management development and institute region-specific programs designed to support a balanced life for our teams amongst many other initiatives. We also appreciate that facilitating a culture that is inclusive and equitable is not only shown to drive better decision-making in business outcomes, but more importantly, it’s the right thing to do for the people who dedicate so much of their time to growing this business and delivering value to our customers and shareholders.

In summary, the long-term secular demand trends underpinning growth in our industry remain resilient. We believe we’re optimally positioned to capitalize on the successes of our Stand and Deliver strategy to date. And we’re more energized than ever as we look to execute on our initiatives in 2023 and deliver strong, sustainable returns for many years to come. With that, I’ll turn the call over to Rod to discuss our 2022 results and expectations for 2023. Rod?

Rod Smith: Thanks Tom. Good morning and thank you for joining today’s call. Before I dive into our 2022 results and expectations for 2023, I would like to highlight a few key accomplishments from the past year and provide an update on several developments in India since our last earnings call. First, demand and operational performance across our global portfolio remain as solid as ever. We closed the year on a positive note with colocation and amendment tenant billings growth contributions of over 4% in Q4. In particular, our US and Canada property segment delivered its strongest quarter since Q1 of 2020, and we have a clear line of sight to continued acceleration into 2023, which I will discuss shortly. Organic growth was complemented by the construction of nearly 7,000 sites, an American Tower record, including over 2,300 sites built in Q4, our highest level over the past eight quarters with an average day one NOI yield of over 12%.

Photo by Touann Gatouillat Vergos on Unsplash

Moreover, during its first full year of ownership by American Tower, CoreSite delivered record new business, selling nearly double the number of megawatts compared to the previous trailing two-year average, demonstrating the value of the company’s interconnection and cloud on-ramp rich ecosystem. This robust growth was driven by increased demand from high quality new logos and expansions from existing customers, driven by secular tailwinds of digital transformation and the demand for hybrid IT solutions. Furthermore, since the announcement of CoreSite acquisition, we successfully executed on our permanent financing plan at attractive terms, including through the issuance of common equity and senior notes, as well as our strategic partnership with Stonepeak.

These financing activities reduced our leverage from 6.8 times at the end of 2021 to 5.4 times at the end of 2022 and moved us closer to our target range of three times to five times. Next, I’d like to take a moment to cover the latest developments in India. As anticipated, Vodafone Idea or VIL continued making partial payments in Q4 of 2022, consistent with our outlook, resulting in total revenue reserves of approximately $38 million for the quarter and around $87 million for the year. Recently, we were pleased to see the completion of the Indian government’s conversion of the adjusted gross revenue interest balances to equity in VIL. We view this as a reaffirmation of the government’s commitment to support a three-player private carrier telecommunications market and a critical first step towards the possibility of more stabilized collections from VIL.

However, although VIL had committed to pay their billings in full in 2023 and make payments for outstanding balances from prior years in early 2023, they have communicated that they would continue to make partial payments. For that reason, we believe it is prudent to include revenue reserves against their annual billings and other contracted obligations in our 2023 outlook, which we’ve assumed at $75 million. We will, however, remain focused on collecting what we are contractually owed in full over the course of the year. In the meantime, we have worked to incrementally better position American Tower and our receivables balance, while also demonstrating a level of support for VIL and India’s wireless market. This includes the expectation to convert approximately $200 million in existing VIL receivables into optionally convertible debentures pending Vodafone Idea shareholder approval.

Upon closing this agreement, we would have elevated the seniority of our pre-existing receivables balance and established an additional level of liquid collateral at American Tower’s option. And finally, as we remain focused on stabilizing our India business, collecting our outstanding and future receivables in full and assessing the positioning of our global portfolio, we are currently exploring various strategic options, including the potential sale of an equity stake in our India business. As always, any decision taken will include careful consideration of the growth opportunity and risk profile in the market going forward, valuation and the optimal portfolio and capital structure mix for American Tower and its stakeholders. We will certainly keep our investors informed of any developments as we move forward.

With that, let’s dive into the details of our full year 2022 results. Turning to Slide 6. Full year consolidated property revenue growth was nearly 15% and nearly 18% on an FX-neutral basis, which included a contribution of approximately 11% of growth from Telxius and CoreSite and negative impacts of approximately 2% and 1% from Sprint churn and revenue reserves taken associated with VIL in 2022, respectively. Organic tenant billings growth for the full year came in at 3.2%, in line with expectations, complemented by solid growth from new builds with actual volumes coming in at the upper end of our prior outlook range for the year. In the United States and Canada, property revenue growth was nearly 2% with organic tenant billings growth of just over 1%, in line with expectations, including approximately $150 million or 3.4% from colocations and amendments.

Escalators added another 3%, consistent with historical trends. This growth was partially offset by churn of around 5%, which consisted of roughly 1% in normal course churn with the balance being driven by Sprint. Our international property revenue grew by nearly 13%. International organic tenant billings growth was 6.6%, led by Europe at 8.4% and followed by Latin America at 7.9%, Africa at 7.7% and APAC at 2.6%. Overall, colocation and amendment growth for the full year was around 5%, while 6% came from escalators, partially offset by just over 4.5% of churn, the result of decommissioning agreements in Latin America, carrier consolidation in Africa and customer-specific churn in APAC. Finally, our data center segment contributed over $765 million to our total property revenue in 2022, including a record year of new business from CoreSite as I previously mentioned.

Moving on, adjusted EBITDA grew around 11% to over $6.6 billion or around 13% on an FX-neutral basis for the year. Growth was supported by solid contributions from Telxius and CoreSite and strong flow-through of top line growth achieved through effective cost management. On a consolidated basis, adjusted EBITDA margins were down around 190 basis points as compared to 2021, primarily due to the impacts of the VIL reserves and Sprint churn in the US, higher pass-through revenue due to rising fuel costs and the lower margin profile of newly acquired assets, which we believe are well positioned to drive meaningful margin expansion over time. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by approximately 5.6% and 3.5%, respectively, including over 11% growth on a per share basis in Q4.

For the year, both metrics included over 2% in headwinds associated with FX. Attributable AFFO per share of $9.76 exceeded the original 2022 outlook midpoint laid out a year ago by $0.06, despite absorbing the negative impacts of incremental VIL reserves, rate-driven interest costs and FX relative to our initial assumptions. Now before I discuss the details of our outlook for 2023, I will start by summarizing a few key highlights and assumptions. First, as we’ve previously communicated, we expect a meaningful step-up in US and Canada organic tenant billings growth, driven by an acceleration in new business backstopped by the comprehensive MLAs we have signed over the last few years together with the sequential improvement in contracted Sprint churn.

Internationally, we expect a strong year of organic tenant billings growth across most of our regions driven by continued strength in organic leasing trends, along with contributions from CPI-based escalators, particularly in Europe and Africa. As we’ve communicated over the past couple of quarters, growth in Latin America will be moderated by churn headwinds associated with a continuation of Telefonica churn in Mexico and Oi churn in Brazil, where we’ll see some staggered impacts over the next several years. Second, and as I mentioned earlier, we have factored into our guide an expectation for a continuation in VIL collections volatility, resulting in an assumption of $75 million in revenue reserves for the year. Third, given the unprecedented rise in interest rates over the course of 2022, which saw the one-month LIBOR increased by more than 400 basis points and 10-year treasuries increased by around 250 basis points from the beginning to the end of the year, we expect 2023 to have one-time outsized negative growth headwinds associated with financing costs.

Key components driving this assumption include elevated costs on our floating rate debt and to a lesser extent, the refinancing of our 2023 senior note maturities as well as the full year impacts of our 2022 equity-related initiatives, including our common equity issuance and the incremental minority interest and preferred distributions associated with our partnership with Stonepeak. Taken together, we have assumed a roughly 8% headwind to attributable AFFO per share growth associated with financing costs in 2023. Next, our initial outlook reflects estimated negative translational FX impacts of approximately $150 million for property revenue, $64 million for adjusted EBITDA and $47 million for attributable AFFO as compared to 2022. And finally, looking beyond the challenges I mentioned associated with interest rates, VIL reserves and FX, our core business continues to demonstrate strong performance and resiliency, representing nearly double-digit year-over-year growth at the attributable AFFO level.

While this performance is fueled by the solid organic leasing trends we’re seeing across our global portfolio, it’s further amplified by exceptional conversion rates through AFFO, achieved through a keen focus on cost management across our business. With that, let’s dive into the numbers. Moving on to the details of slide 7. At the midpoint of our outlook, we expect total property revenues of nearly $10.8 billion, representing growth of approximately 3% or approximately 4% absent the incremental reserves assumed for VIL in 2023. Our guide includes expected cash revenue growth of around $230 million in the US and Canada, and $245 million of FX neutral growth in our international regions, excluding the 2023 VIL reserves of $75 million. We also expect data centers to contribute roughly $55 million of growth in cash revenue to the property segment in 2023.

Lastly, as I mentioned in my earlier remarks, we anticipate a modest FX headwind of just under 1.5% to consolidated growth. Turning to slide 8. We expect organic growth to contribute meaningfully to our property revenue growth assumptions. Starting with the US and Canada, we anticipate organic tenant billings growth of approximately 5% or greater than 6% excluding Sprint churn. This expectation includes record levels of year-over-year co-location and amendment growth of around $220 million, a nearly 50% increase over the levels achieved in 2022 and a 60% increase as compared to the trailing three-year average. Of the $220 million, over 90% is locked in through MLA-driven use right fee commencements and carryover growth. On the churn side of the equation, after incurring the largest impact of Sprint churn last year, we expect churn of around 3% in 2023, including an approximate 1% impact associated with Sprint, which would represent a year-over-year improvement of over 200 basis points in the segment.

Moving to Latin America. We expect organic tenant billings growth of greater than 2% for the year driven by relatively consistent co-location and amendment activity and continued solid contributions from CPI-based escalators of approximately 8%. This escalator rate does represent a step down from 2022 levels, as we saw inflation in markets like Brazil moderate in 2022 as compared to 2021. As we’ve previously highlighted, higher churn of around 8% is partially offsetting gross growth due to the expected continuation of Telefonica churn in Mexico and the early part of what we expect to be staggered Oi churn in Brazil. Similar to last year, we do expect to receive some settlement payments from Telefonica over the course of the year, which will be captured outside of the organic tenant billings growth metric.

We’ve assumed approximately $50 million in 2023 payments as compared to the over $80 million we received from Telefonica Mexico and Nextel Brazil in 2022. Turning to Asia Pacific. We are guiding to approximately 4% organic tenant billings growth in 2023, including churn of around 4%, which is around 70 basis points lower than the 2022 churn rate. We expect co-location and amendment growth contributions to ramp up compared to 2022, coming in around 6%, fueled by the rollout of 5G networks. However, it is important to note that the reserves we’ve assumed for VIL in our guide reside outside of this metric, consistent with past practices. Turning to Europe. 2023 organic tenant billings growth is expected to be 7% to 8%, which is slightly lower than 2022 due to the mathematical benefits realized last year, given Telxius was only in the prior year base for a partial year.

However, this does suggest a solid acceleration off our Q4 2022 organic growth rate of around 6%, which represents a more normalized comparison. On the co-location and amendment front, we anticipate 2% to 3% growth, while growth from escalators stand at roughly 6%, reflecting the benefits of CPI-linked escalators across the majority of our European footprint. Churn is expected to decline to around 1%, reaping the benefits of the lower churn profile of our recently acquired Telxius portfolio. Finally, in Africa, we expect a solid acceleration off of 2022, with expected organic tenant billings growth of approximately 9%. This includes co-location and amendment contributions of around 6%, along with escalators of around 10% and expected 450 basis point increase from 2022 levels.

This will be partially offset by an expectation of elevated churn of greater than 6%, as carrier consolidation continues to work its way through the financial metrics. Moving on to slide nine. At the midpoint of our outlook, we expect adjusted EBITDA growth of approximately 4% and around 5%, absent the incremental reserves assumed for VIL in 2023, while absorbing approximately 1% in FX headwinds. We expect this growth to be achieved through solid cash conversion rates of 85% to 90%, the result of prudent cost controls across the business and the expectations for another strong year from our US services business. Turning to slide 10. We expect attributable AFFO per share to decrease by $0.16 on a reported basis, while remaining flat year-over-year absent the impacts of the 2023 VIL revenue reserves.

As mentioned, we expect growth to be meaningfully impacted by financing costs, which include a rate-driven increase to cash interest expense along with the incremental full year impact of minority interest and preferred distributions associated with our US data center business. Together with the common equity share issuance in 2022, financing costs are expected to provide a significant one-time growth headwinds of approximately 8% in 2023. As I mentioned earlier, absent the impact of financing costs, FX and the 2023 VIL reserves, our business is demonstrating solid growth contributions of around 9%. Moving on to slide 11, I’ll review our capital plans for 2023 and our balance sheet progress and priorities for the upcoming year. In 2023, we will continue to deliver returns to our shareholders through the growth of our dividend.

And subject to Board approval, we expect to distribute approximately $3 billion, representing an approximately 10% year-on-year growth rate on a per share basis. In addition, we expect to deploy around $1.7 billion in CapEx, of which 90% will be discretionary. This will largely be spent continuing the success of our new build program internationally, which assumes the construction of around 4,000 sites at the midpoint. We also expect data center capital to increase modestly as we seek to replenish the record capacity sold in 2022 and maintain appropriate levels of sellable capacity. Moving to the right side of the slide. As you can see, we made tremendous progress towards strengthening our balance sheet over the course of 2022, putting us ahead of the deleveraging path we committed to with the rating agencies, which actually afforded us the flexibility to repurchase a modest number of our shares in Q4.

Throughout 2023, we will continue to be guided by our long-standing financial policies as we execute on our financing plans. This includes the refinancing of maturing debt, while leveraging our strong liquidity position as needed to remain opportunistic as we access the capital markets. Finally, we remain committed to our investment-grade credit rating. And our priorities over the course of 2023 and into 2024 remain on deleveraging our balance sheet back down to the three to five times range. Consistent with our recent comments, at this time, we do not see any material M&A in our pipeline that would alter these areas of focus. Turning to slide 12. And in summary, we delivered strong results in 2022, demonstrating the resiliency of our business model in the face of various macro-related and customer-specific challenges.

Our global portfolio of assets and operational capabilities continue to prove critical in meeting the growing demands of our customers and the customers they serve. We saw record new build volumes internationally and record leasing within our CoreSite business and experienced a steady acceleration in colocation and amendment growth as we exited 2022, which we expect to continue into 2023. As we look ahead, we expect to further build on the successes of the recent years and leverage our portfolio to drive strong recurring growth on the back of consistent secular technology trends for many years to come. With that, operator, we can open up the line for questions.

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Q&A Session

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

Simon Flannery : Great. Thank you very much. Good morning. Tom, you talked about scaling the core, and Rod just talked about no material M&A in the pipeline, thanks for that. Just give us a little bit more color, if you could, on how you see the portfolio today. And is this the mix of assets that you want? You’ve obviously talked about potentially monetizing some of India. But any kind of areas where you feel like you’re overexposed or underexposed? And how long is this sort of approach of not doing large deals likely to last? And then you talked about the strong results in CoreSite. You did buy some land there. I’ve noticed your future development pipeline potential goes up quite significantly, probably as a result of that. Just give us some color as how you think about beyond just incremental capacity, something larger, given the opportunities you see there? Thanks.

Tom Bartlett : Yes. Sure, Simon. You got a lot going on in that question. But let me try to peel it back and then remind me if I left anything out. With regards to scale of the core, it really comes down to really three pieces. One is to just do what we do every day, that’s servicing our customers and driving that organic growth. And we’ve really been very focused on that in the US as you saw our expectations for 2023 and beyond, because those large-scale relationships that we put in place with our — the critical carriers in the United States are long-term in nature. And so we now have a very predictable growth path in the US. And the US is the foundation really of our entire business. And what I’ve always said is that we enjoy the benefits of diversification, because there are going to be some markets that are going to grow significantly, others that are going to grow less so simply because the methodology that all of our customers use for build are different.

And they all form those different sign waves as we’ve talked about in the past. And we can — if you can layer on all those sign paths, you’re able to get some predictable rates of growth. And so we’re excited about coming out of 2022 strongly. We expect higher rates of growth in 2023 and in particular, within the United States. From a total portfolio perspective, we’re constantly looking at where we can maximize value. And we are in 26 countries today, and there could be certain markets there where it may just make sense for us from a number of different perspectives for us to peel back some of those assets. Don’t have anything in mind as we speak. We’re constantly evaluating it. That’s kind of what we do. And with regards to India, India is a market where they’re going to have a higher population than China, if not now, very soon.

They have huge penetration, huge data usage. And it’s a market that we would like to be able to continue to keep our toe in because we continue to believe that there is significant growth there. To the extent that we can bring in a third-party player to monetize the particular part of the asset and reallocate some of that capital in some other parts of the market, we’ll look at that. It’s purely opportunistic, and we look at every kind of available opportunity as we speak. With regards to our data center business, of course, I had a terrific 2022 record sales in 2022. And they’re replenishing capacity where they needed. We’ve added land in Denver and New Jersey, where we needed some additional runway. But we’ve got a good amount of capacity in the hopper.