Brendan Cavanagh: So on holistic MLAs, I think that is a — when we talk about a goal of trying to ensure that we have stabilized our cash flow streams and results, one of the ways you do that is through enhancing and improving customer relationships. And that can be done in part through master agreements. We obviously signed one with AT&T last year. We’ve signed others in the past with each of our customers along the way. So I would expect we will continue to make use of that, assuming that it’s the best structure for what our customers need to get done and SBA is able to achieve a certain amount of certainty and length of commitment as part of those agreements. But each of those will be determined on an individual basis based on the needs of the customer and what we need.
Again, the buybacks versus M&A, yeah, I mean, we are — we’re not necessarily sitting here saying we’ve got all this cash we’re ready to spend on buybacks. We are — in fact, we still have balances out on our revolver. So I don’t feel like we’ve necessarily been in that position. We have historically been very opportunistic around share buybacks. I would expect that to continue to be the case now. But individual acquisition opportunities, particularly of size, may influence our timing on when we would buy back our stock if we otherwise saw it as an attractive investment. So that’s where we are, and we’ll see as time goes by. But just because you don’t see us buy back our stock doesn’t necessarily mean that we don’t see it as a good value. It means there may be other factors we’re considering.
Michael Elias: Got it. Thank you.
Operator: Next, we’ll hear from Brendan Lynch with Barclays. Please go ahead.
Brendan Lynch: Great. Thanks for taking my question. Maybe just — it’s been asked a few ways but maybe to put it in a different term. Can you talk a little bit about what is assumed in the $42 million of domestic leasing guidance that relates to kind of the lap-over effective signings in 2023 versus what you need to sign in 2024 itself?
Brendan Cavanagh: Yeah. I can’t tell you exactly with precision sitting here, but I’m sure we can follow up with you. It is largely based on what’s already been signed up to date. I’m sure it’s somewhere in the three quarters range of the number, but maybe even more. So we’ll follow up with you, Brendan, separately on that.
Brendan Lynch: Okay. That’s helpful. Thank you. And then one other question on international churn. I know you were expecting some churn in some Latin American markets. Maybe you could talk a little bit about what you’re seeing there. It did seem to tick up a bit in the fourth quarter and give some color on what you anticipate throughout the next year.
Brendan Cavanagh: Yeah. So I mentioned it briefly in my prepared comments, but there are a number of markets that we’re in where we have consolidations taking place, in particular, in Brazil where you had the Oi wireless consolidation with the other big three carriers there as we kind of work through that. Last year, that was a big factor. It represented roughly 40%. It was just from 10% by itself, associated with that consolidation, there’s one item. That is probably going to be a continued driver of some level of international churn over the next few years. But we’re working through negotiations with each of our customers. And as we do that, we’re kind of pricing this long-term relationship, long-term commitment where we’ve got stability that we can reintroduce into the relationship, but allow them to get through the efficiencies that they need to achieve as a result of the combination of customers that’s taking place in the market.
So it’s a mix, but Brazil will probably be the biggest just because it’s the biggest market we have with the most revenue.
Brendan Lynch: Great. Thanks for the color.
Operator: And next, we’ll hear from Walter Piecyk with LightShed. Please go ahead.
Walter Piecyk: Thanks. I guess just a quick follow-on for that one. In your discussions with those customers, is there an opportunity with Mobile and maybe take ownership of those towers? Do you think there would be some regulatory issues with that?
Brendan Cavanagh: Yes, I probably can’t answer that in this forum, Walt. But we do have ongoing conversations with them about all different things that they do that we do that might fit together. So — go ahead.
Walter Piecyk: Just looking through history, you go back to Oi and then you look at PGE and you maxed the balance sheet at like $7.7 million. Is that coincidental? Or is that kind of your threshold of pain in terms of where you would take something for the opportunities that exist out there?
Brendan Cavanagh: Well, it’s probably coincidental to some degree. I don’t think you’d see us go above 8x at any point in our history. But now that we’ve got this — we’ve got a pretty big cushion given where our leverage has come down to. So I don’t really foresee that ever being a number that we approach.
Walter Piecyk: Okay. Well, that gives us a sense of the size of things that you can consider. And then just lastly, just kind of a touchy-feely question, which is these operators have a lot of spectrum, which makes it a little different than past capital cycles when there’s kind of an ebb and flow. What gives you confidence that when this ebb turns to flow, it’s not only going to be in markets where it can be satisfied with rooftops and small cells as opposed to traditional areas where densification is required? I’m talking domestically, forget about your global markets.
Brendan Cavanagh: Well, what — I mean, really what gives me confidence, but we’ll see how it plays out, its history. I mean, every time we’ve seen the cycle of activity, it’s ultimately gotten to the suburban markets, the rural markets. Those dense urban centers really were never tower markets to begin with. So it’s not really been a factor for us. Anything that’s getting resolved with root tops, that’s a very limited tower market. So I’m not sure it matters that much to us.
Walter Piecyk: So are there factors that in suburbia that you could hit or not you, but like, let’s say, TMS, Verizon, maybe AT&T jumps on board. They hit enough penetration that the depth of spectrum that they have from C-band and the Sprint spectrum is not enough to serve whatever, let’s call it, 30% penetration that they would require additional identification.
Brendan Cavanagh: Sure.
Walter Piecyk: Okay. Thank you.
Operator: And next we will hear from David Guarino with Green Street. Please go ahead.
David Guarino: Hey, thanks. Sticking with the US on the $40-ish million in new leasing activity expected in ’24, is this level of the new run rate we should expect as we model out over the next few years? Or do you think there’s a chance that new leasing levels might reach what we saw in ’22 and ’23, again? And then the second question was, could you just comment on the discretionary CapEx spend for ’24? It looked like it stepped up pretty meaningfully from ’23, what drove that increase?
Brendan Cavanagh: So the leasing level into the future, yeah, we think it could go up, sure. Obviously, it’s all driven by carrier activity. I mean if you go back over the last three years, David, you will see, if you go back a few years ago, that we were at a level very similar to where we are now. In fact, I think we reported a number lower than the $42 million that we just put in our outlook for this year, three, four years ago. So since that time, obviously, it spiked up much higher than that because of carrier activity. And I think to some degree, the network strain that they may feel the — and the cost of capital is very impactful to the decisions they’re making there. And so yes, we believe there’s definitely opportunity to see the number go higher in future years, but we need to see how that moves. In the case of — I’m sorry, your other question was on CapEx?
David Guarino: Correct.
Brendan Cavanagh: Yeah. I think — I don’t believe — I believe what we guided to was similar to what last year’s number was. Yeah it’s where we guided to, $330 million at the midpoint and last year, it was $310 million. So sorry, Dave, what do you — what’s the core of the question?
David Guarino: No, my apologies, I must have misread that wrong. If it’s flat, you can disregard the question.
Brendan Cavanagh: Okay. All right. Thanks.
Operator: And next, we’ll hear from Batya Levi with UBS. Please go ahead.
Batya Levi: Thank you. Just a couple of follow-ups. First, on — AT&T recently signed a new contract with FirstNet. Can you provide color if that will be included within the current M&A you have with them or provide some upside? And just another one on M&A. As you think about increasing your portfolio, do you have a preference for carrier-owned towers versus portfolios that are coming out of independent tower operators? Thank you.
Brendan Cavanagh: Sure. With regards to AT&T FirstNet, for the most part, I would expect, based on my understanding of everything that is expected to happen there, that it would have limited upside for us from an amendment or upgrade standpoint, the opportunity set would be more based on a need to densify where they needed to actually have new lease agreements at existing sites or possibly even new tower builds. So it’s really a new site leasing opportunity to the extent that there is an impact, but I do not think there’s much of an amendment impact potential for us. With regards to the M&A question, we would — generally speaking, I would say we would prefer independent tower company towers as opposed to carrier owned towers, usually, we find that they’ve been developed with the mindset of co-location already in there, and they are operated and maintained in a way typically that is better than what you find with the traditional carrier sale leaseback.
But having said that, we’ve done both kinds of deals, and I think our what we bring to the table is our expertise that allows us to kind of improve those operations. Sometimes there’s greater opportunity for improvement when you buy things that haven’t been run quite as well. So I guess it just depends on the individual opportunity.
Batya Levi: Got it. Thank you.
Operator: And we have no further questions at this time.
Brendan Cavanagh: Well, great. Thank you, everybody, for taking the time, and we look forward to reporting to you next quarter.
Operator: And that does conclude our conference for today. Thank you for your participation. You may now disconnect.
