Adam Smith:

Good morning, and thank you for joining American Tower's second 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.

Rod Smith:

Thanks, Steve. Good morning, and thank you for joining today's call. As highlighted in this morning's press release, we had a strong second quarter driven by the resilient demand for our assets and resulting in robust performance across several key areas. Given the critical nature of our global portfolio and the growth trends in mobile data consumption, we head into the back half of the year confident in our ability to drive strong growth, execute on our cost management initiatives enhance our quality of earnings and deliver compelling total shareholder returns. Before I discuss the specifics of our Q2 results and revised full year outlook, I'll summarize a few of the highlights. First, activity levels on our tower assets remain strong. Our consolidated organic tenant billings growth of 5.3% continues to demonstrate the strength of the fundamentals that fuel our business. In our U.S. Services segment performed in line with our expectations for accelerating tower activity in 2024 with revenues and gross profit each increasing over 50% versus Q1 and more than double that of Q4 of 2023. Next, CoreSite executed another exceptionally strong quarter with double-digit revenue growth their second highest quarter of signed new leasing in the company's history and record cash backlog. Additionally, our data center projects currently under development are roughly 60% pre-leased, four times the historical average, providing confidence and visibility to an accelerated pathway to realizing CoreSite's best-in-class returns on invested capital. Furthermore, in India, the positive collection trends we saw over the last several quarters continued in Q2, allowing us to reverse approximately $67 million of previously reserved revenue and clearing the majority of the outstanding AR we have with a key customer. Separately, we made further progress in accelerating certain payments included in the approximately $2.5 billion of potential total proceeds associated with our pending sale of ATC India. In the quarter, we repatriated more than $210 million back to the U.S., and we are in the process of repatriating an additional approximately $20 million, largely associated with the monetization of the VIL OCDs net of fees. To date, total accelerated proceeds stands at approximately $345 million, inclusive of funds received in Q1, and we expect the remaining proceeds potentially of approximately $2.1 billion to be received at closing as we make progress towards closing, which we continue to target the second half of 2024, we anticipate incurring incremental costs within the business between SG&A and maintenance CapEx, a modest offset to the upside realized through strong collections. I will touch on these items and how they impact our outlook later. Finally, we continue to effectively execute on our balance sheet initiatives highlighted in the quarter by the issuance of €1 billion denominated senior unsecured notes at a weighted average cost of 4%. The proceeds we used to pay down floating rate debt, lowering our ratio back to 89% fixed to 11% floating. Turning to second quarter property revenue and organic tenant billings growth on slide 8, consolidated property revenue growth was 4.6% or over 6.5%, excluding non-cash straight line revenue, while absorbing roughly 230 basis points of FX headwinds. US and Canada, property revenue growth was approximately 1%, or over 4% excluding straight line and includes an approximately 1% negative impact from Sprint churn. International revenue growth was approximately 7% or over 12%, excluding the impacts of currency fluctuations, which includes an over 8% benefit associated with improved collections in India. Finally, data center revenues increased over 12% as demand for hybrid and multi-cloud IT architecture continues unabated, AI-driven demand picks up in the backlog of record new business signed over the last two years continues to commence. Moving to the right side of the slide, consolidated organic tenant billings growth was 5.3%, supported by strong demand for our assets across our global portfolio. In our US and Canada segment, organic tenant billings growth was 5.1% and over 6% absent Sprint related churn, we expect a relatively similar growth rate in Q3 before a step down in Q4 as we commence the final tranche of contracted Sprint churn, all supportive of our 2024 outlook expectation of approximately 4.7%. Our International segment drove 5.5% in organic tenant billings growth, reflecting additional moderation in CPI-linked escalators as expected, and a sequential step down in colocation and amendment contributions, most notably in APAC. However, in Europe, we saw another quarter of accelerating new business moving organic tenant billings growth in the region to 5.7% and giving us confidence to modestly raise our full year outlook for the segment, which I'll touch on shortly. Turning to slide 9. Adjusted EBITDA grew 8.1% or nearly 12%, excluding the impacts of non-cash straight line, while absorbing approximately 210 basis points in FX headwinds, cash, adjusted EBITDA margins improved approximately 300 basis points year-over-year to 64.7%, which includes a roughly 80 basis point benefit in the quarter associated with India reserve reversals as compared to a drag of nearly 50 basis points in the year ago period. Absent these onetime items, we're continuing to demonstrate meaningful cash margin improvements supported by the inherent operating leverage in the tower model and continued cost management throughout the business. In fact, cash, SG&A, excluding bad debt, declined approximately 2.5% year-over-year in the quarter. Moving to the right side of the slide. Attributable AFFO and attributable AFFO per share grew by 13.5% and 13.4%, respectively, supported by a high conversion of cash adjusted EBITDA growth to attributable AFFO. Now shifting to our revised full year outlook, I'll start with a few key updates. First, as I mentioned earlier, we've had a strong start to the year. Core performance remains solid, and our continued focus on driving cost discipline and margin expansion across the business is paying off through exceptional conversion rates of top-line results through adjusted EBITDA and AFFO. As you'll see in the next several slides, our core results to-date and expectations for the remainder of year are contributing to outperformance across key metrics for 2024 as compared to our prior expectations. Next, having now come off so consecutive quarters of solid collections in India, we've reassessed expectations for the year. In our prior outlook, we have assumed nearly $50 million in revenue reserves from Q2 to Q4 or just over $16 million per quarter. As I mentioned earlier, through positive collections in Q2, we reversed $67 million of previously reserved revenue translating to an upside $84 million as compared to our prior outlook assumptions for the quarter. We now have confidence to fully remove our previous reserve assumption for the second half of the year, representing an incremental $32 million in upside, which, together with Q2 results is driving an outlook to outlook increase of around $116 million across property revenue, adjusted EBITDA and attributable AFFO. Finally, we have revised our FX assumptions, providing an incremental headwind of $51 million, $33 million and $28 million to property revenue, adjusted EBITDA and attributable AFFO, respectively. Turning to slide 10. We are increasing our expectations for property revenue by approximately $20 million compared to prior outlook. Outperformance includes $116 million associated with positive collection trends in India partially offset by a decrease of $45 million, which consists of a decrease of $58 million in pass-through primarily due to fuel costs, net of an increase of $13 million in straight-line revenue. Consolidated core property revenue remains unchanged with certain offsetting movements between segments. Growth was partially also offset by $51 million associated with negative FX impacts. Moving to slide 11. Expectations for consolidated US and Canada, total international and APAC organic tenant billings growth remain unchanged. However, we have raised expectations for Africa to greater than 12% and Europe to approximately 6%, up from 11% to 12% and 5% to 6%, respectively. In addition, we have lowered our expectations for Latin America to greater than 1.5%, down from approximately 2%. Turning to slide 12. We are increasing our adjusted EBITDA outlook by $130 million as compared to the prior outlook. Outperformance is driven by the flow-through of FX-neutral property revenue upside and direct expense savings partially offset by additional SG&A costs in India and $33 million of FX headwinds. Moving to slide 13. We are raising our expectations for AFFO attributable to common stockholders by $85 million at the midpoint and $0.18 on a per share basis, moving the midpoint to $10.60. Cash, adjusted EBITDA outperformance was partially offset by incremental maintenance CapEx split between the US and Canada, where we're prioritizing certain incremental projects and India. Growth is partially offset by $28 million in FX headwinds. Excluding India, outperformance on an FX-neutral basis was $27 million as compared to prior outlook. Turning to Slide 14. You'll see our capital allocation plans remain relatively consistent, including unchanged expectations for our 2024 dividend distribution, which is subject to Board approval. On the capital program side, we are increasing our plan for 2024 by $55 million, which includes $30 million associated with maintenance CapEx, as I previously mentioned, and additional success-based development investments in our US data center business to maximize sellable capacity on the back of ongoing record demand. Additionally, we have reallocated certain discretionary capital buckets, including an increase towards our strategically important US land acquisition program, partially offset by savings in redevelopment. Moving to the right side of the slide, we remain focused on strengthening our balance sheet and accelerating our pathway to additional financial flexibility. This commitment is demonstrated through our successful execution in the capital markets including the issuance of over $2 billion in fixed rate debt since the start of the year, a strategic and disciplined approach towards our capital deployment priorities, highlighted for reductions in discretionary capital spend in each of the last several years, together with a rebalancing of strategic priorities between geographies and risk profiles and a continued cost focus across the business. These strategic actions have translated into meaningful progress towards achieving our net leverage target and an improved fixed to floating rate debt profile over the past 24 months. Turning to Slide 15. And in summary, we are pleased with our execution through the first half of the year, demonstrating the strength of the fundamentals that underpin our business through solid organic growth and a diligent focus on cost management throughout our company, combined with our prudent approach to capital allocation, while reinforcing and enhancing our balance sheet strength financial flexibility we believe we are well positioned to drive strong sustainable growth and long-term shareholder value while being a best-in-class operation for our stakeholders across the globe. With that, operator, we can open the line for questions.

Simon Flannery:

Thanks a lot. Good morning. Steve, thanks for the comments on the international strategy approach. I was wondering if you could just give us a little bit of a update on how you're seeing the opportunities to do additional M&A in the US, Europe, other developed markets? What are you seeing in terms of interesting properties when SBA last night was talking about potential for material deals. Are you seeing the same sort of thing here, how are valuations looking? And then kind of related to that on data centers, you're continuing to invest heavily in that business. You see opportunities for inorganic expansion beyond some of the small tuck-ins you've done either in the US and/or Europe? Thank you.

Rod Smith:

Simon, good morning, this is Rod. Maybe I'll just add and complement what Steve is saying with a couple of numbers on CapEx for the data center business. So, notwithstanding the fact that our overall CapEx program year-over-year has come down because our capital priorities and the focus on balance sheet strength, delevering all the things Steve talked about. Notwithstanding that decline, we have increased our investments, our CapEx investments in CoreSite for '24 over '23 by roughly 100 million. We did the same '23 over '22. So we are seeing very compelling opportunities. We are following those and leaning in. The numbers in the grand scheme of things are meaningful, albeit modest, but we do have the ability to dynamically allocate that capital. And just because you see our CapEx program go down somewhat. It doesn't mean we're not leaning into the very best opportunities to deploy CapEx.

Operator:

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

Steve Vondran:

Sure. Thanks for the question. So in the US, we're seeing 2024 play out much as we expected. We've seen a modest increase in application volume in Q2 over Q1. It is fairly broad-based. The main driver continues to be our carrier customers continuing to build out their 5G network. So it is largely still amendment driven, although we do see an uptick somewhat in new colocations over prior years, I wouldn't point to that as quite a densification phase yet. There's still a lot of room for the carriers to continue to expand their 5G presence. And while we're not getting specific about individual carriers, we would say that over half of our sites are now upgraded with mid-band 5G, but one carrier is ahead of the other two. And we have one that's over 80%, one that's a little over 60% now and one that's a little bit further behind. So there's a lot of runway there for them to continue to roll out mid-band 5G across the portfolio, and we expect them to continue to do that. With respect to our services guide, we are holding our guide for the year. Now there's always a degree of risk in that services guide because it's near term, but what we're seeing in our application flow and our services by is supportive that full year guide. So we do still feel good about the US activity levels kind of hitting those levels that saw at the beginning of the year. I believe the carrier capital spend projections are right in line with that kind of $34 billion to $36 billion is what they've said publicly. And that's again supportive of a level of development that we think is typical in this phase of a build. So we feel good about the US, and we think we're going to continue to see that up-tick. And we're also seeing usage patterns by the consumer continue to drive demand on those networks, and we're seeing the continued drive of that 20% to 30% up-tick in consumer demand that's going to continue to put pressure on the networks. And we're seeing that 5G is working for the carriers. It's letting them produce more gigabytes at lower cost. So we think that, that's going to continue to be a compelling business proposition for them to build 5G and with the addition of fixed wireless and some of the positive trends we're seeing in ARPUs and things like that, we're very confident that the US market will continue to grow and build and that densification phase will come. Sorry, the dividend question.

Operator:

I retrieve him -- I'm getting him back-up. Please go ahead.

Michael Rollins:

That’s helpful. Thank you.

Operator:

Your next question comes from the line of Ric Prentiss from Raymond James. Please go ahead.

Rod Smith:

Hey Ric.

Steve Vondran:

At this point, Ric, there's no update on that. We're still waiting for the approval. And what we've said consistently is we believe it is second half of the year closing. So, I'm not sure when that's going to come out. It's hard to predict. But we do still anticipate getting that in that relevant timeframe. And in terms of closing afterwards, I think you could expect that to occur in kind of four to six weeks afterwards, somewhere in that timeframe.

Rod Smith:

Yes. If we have that choice, Ric, we probably would, we'll see exactly how it unfolds.

Steve Vondran:

Sure. I'll give a little bit of color on that. I think it depends on the geography that you're in. If you look at Europe, they've been able to deploy 5G of a large proportion of the population there. I think high 80s, low 90s and Spain and Germany for most part. That's a combination of low and mid-band spectrum to. So there's still a runway of continued opportunity there to get the mid-band deployed there. I don't have specific stats on the percentage of mid-band because it's a little bit more nuanced in that market. And in France, we have OneCare it's a little bit it's a little bit further ahead in terms of 5G than the other. So of a mixed bag there. When you look at Africa, you are seeing some 5G deployments in some of the major cities, but it's still pretty nascent there. They're still focused on their 4G networks, augmenting those and improving the network quality over time. But we do think that you'll see 5G being deployed there, especially where the population centers are over time. So there's still some runway there for those 5G upgrades to occur in Africa. In Latin America, you have a little bit of 5G that's been deployed in Brazil and a couple of the other markets, but most of those markets are a little bit further behind. And even in Brazil, I'd say it's probably nascent in terms of the 5G deployments today. In many of those markets, there's been a delay in getting 5G spectrum in the hands of the carriers. Some of that is auctions that have been delayed, and some of it is the carriers pushing for a lower entry price there. And so I think as we see that play out over time, we'll continue to see opportunity there. The other thing that's happening in Brazil is the incumbents there are still integrating the oil assets they bought and that's depressing the activities there a little bit as they deal with those integrations and combining those networks together. So I'd say it's very consistent with the way we kind of view the international markets that they're a little bit behind the developed markets, the deployment of 5G. We are starting to see some green shoots in some of those markets where they need those cheaper gigabytes that 5G delivers, and we're seeing some deployments there, but there's a lot of runway ahead to deploy it there.

Steve Vondran:

Yes. Thanks, Ric. We're looking at everything in terms of cost management. And our goal is to enhance our margin profile by direct cost savings in addition to SG&A. So what you're seeing there is exactly what you would expect. We're looking at that portfolio and where we have underperforming assets that we don't think are going to see near-term activity, we are decommissioning those to save the OpEx on those and doing what's right. So we are doing some accelerated work there. Rob, do you want to touch on some of the other elements.

Rick Prentiss:

Great. Appreciate the color. Thanks, guys.

Operator:

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

Steve Vondran:

Sure. Let me start with the services piece of that. So our Q1 services gross margin was about twice what our Q4 2023 was and our Q2 is about 50% up from Q1. So we are seeing acceleration in that services business. And again, we believe from the pipeline that we're looking at today that we're on track to hit our full year services guide on that. And again, there's a risk in that services pipeline, and we've seen it play out a couple of times in the past, but our teams are confident at this point that we're on track to be able to do that. With respect to our MLAs, what we were -- what we've disclosed is that we had one customer that rolled off the MLA earlier this year. And so we haven't really talked specifically about anything beyond that. But because we've telegraphed that pretty clearly, I think you can get an idea that that's where we kind of where we are. Those comprehensive portions are typically 3 to 5 years, so it's not just 5 years. There's a different range on those. And since we do have 1 customer that's off of that kind of use-right fee that underpins that smoothing out of growth over time, that customer is a little bit more dependent on the volumes that they're doing. And so there will be a little bit more peaks and valleys in terms of activity with them. The works on instant we're fine either way on that. We take a long-term view of these agreements. And if getting into another holistic type of agreement makes sense, we will. And if we don't think it does, we'll stay and pay up the drink, and we're very confident in our ability to monetize that way. With respect the activity and how that translates into our organic growth over time, it's too early to be giving kind of a 2025 guide at this point. We'll do that in February, like we always do. But we are encouraged by the growth that we see in terms of the activity by the carriers. We do have one major customer who is off the holistic portion of their agreement. They still have underling MLA, but the holistic portion is expired. And so if those volumes continue, that's a positive. We also have what we call our vertical market segment, which are smaller customers, and that's also very much dependent on volume and timing on that. And we're seeing good activity there as well. So we're encouraged by that. When we look out into the future, we do have a level of contractually locked in growth for 2025 via our comprehensive MLA and that's similar to what we see in 2024 as well as consistent growth from the escalator of about 3%. On the churn side, in 2025, we're going to continue to see a level of elevated spread churn. The final tranche of that spread churn commenced in Q4 of this year, that's about $70 million of annualized monthly run rate. That will impact our growth rates through Q3 of next year. In terms of kind of the swing factors that you would see in terms of 2025, there's a portion the growth that's not locked in via the conference of MLAs. Again, I mentioned one of the big three carriers and the vertical markets. So that's a swing factor. We also have our eye on the timing and scale of any potential churn from US cellular. Over the next couple of years in the event that deal is approved and closes. We'd expect the overlap to be modest, but the timing and the scale of that churn could put some pressure on rates temporarily. And who knows, we could end up signing another conference of MLA or agreement that would also potentially impact what that number looks like. So there's a number of swing factors for 2025, and that's why we can't really give guidance until we get to February. But at the end of day, we're still confident that we're going to have continued growth supportive of our longer-term guide.

Operator:

Your next question comes from the line of Matt Niknam from Deutsche Bank. Please go ahead.

Steve Vondran:

Thanks for the question. Let me just clarify, the 25% is pro forma for the India transaction. So a little bit higher today. Once we close the new transaction, we'll be at roughly 25%. And as we look at some of the macroeconomic conditions, particularly the FX headwinds that we've been seeing, that's kind of given us the choice to start pivoting a little bit more away from the exposure into those emerging market economies, given what we're seeing in the macroeconomic conditions today. So what we're doing is pivoting more of our discretionary CapEx to the developed markets. This isn't a new thing. We've been doing that for the last several years, and we haven't done an emerging market transaction in quite a few years now. And the bulk of our CapEx has been going toward developed markets. What that will do if that trend continues, and we expect it to, is it will reduce that emerging market exposure over time. We're not setting a kind of line in the sand a day for where we think it should be, but we do think it appropriate to work that percentage down over time by focusing on our developed markets. Having said that, we will continue to support our Tier 1 MNOs in those markets. We'll make some discretionary CapEx investments where it makes sense or where they meet the return criteria that we set out for markets. But in terms of expanding in those markets are looking to double down or anything. That's not something you're likely to see us do given our desire to reduce the exposure we have to that -- those emerging market economies.

Matt Niknam:

Awesome. Thank you.

Operator:

Your next question comes from the line of Jim Schneider from Goldman Sachs. Please go ahead.

Steve Vondran:

Sure. I'll hit the first part of that, Rod can hit the second. We always are looking to actively manage our portfolio. So the management team and the Board regularly review our portfolio and look at the assets under our management. And we're always looking to say, what's going to create the best long-term shareholder value. And so when you think about some of the benefits that American Tower brings to these portfolios, I touched on this a little bit in my prepared remarks, but I'll reiterate it. We have operational excellence across the globe, and that operational excellence lets us drive best-in-class margins. It lets us optimize the amount of new business we get, so organic growth is better under American Tower. And so we believe that we create a lot more value for those assets that are under our umbrella than anybody else can. Now where that doesn't hold true if we think that somebody else can create more value, we would look at divesting it, and that's what we do with India. So absolutely, price is one of the considerations that would factor in when we think about whether a disposition create more value than we continue to operate it. But at this point, we think the best thing that we can do is keep those assets under our umbrella, continue to operate them in the way that we do and continue to focus on the gross margin and the growth of the organic revenue there. And if we ever do decide that a disposition is more desirable at that point, it's going to be more valuable because we've created more cash flow on the assets. So right now, that's where our decision point is. But we'll always be nimble and we'll always look to maximize the long-term value. Now there are some subscale portfolios and some ancillary businesses that we would think about. If you look at what we've done over the past couple of years, we did divest Mexico fiber. We did divest Poland, one because it was subscale, the other because we thought somebody else could maximize that business better. And so when you look at some of those portfolios in our overall portfolio, that's the type of thing that we think about. But there's no process we've announced today and nothing I would point to of any scale that we think would make sense in the short-term.

Jim Schneider:

Yes, thank you.

Operator:

Your next question comes from the line of Eric Luebchow from Wells Fargo. Please go ahead.

Steve Vondran:

Yes. Thanks for the question. I'll address demand and then I'll address who we're leasing to a separate issues. We're seeing broad-based demand from a lot of different sectors. Part of that, there's a scarcity of supply in some of the markets that we're in. But our key customer base that's driving long-term demand in CoreSite continues to be enterprises that are deploying hybrid cloud deployment, hybrid cloud technology. And we see a very long tail of that business. And it's probably helpful for me to talk a little bit about how we curate our customer mix. CoreSite doesn't just lease to just anybody who wants to lease space in their facilities, particularly when we're looking at our scale and hyperscale space that's available, we want to lease to customers that help build the ecosystem. And that's why we are pretty selective in terms of who we lease to. And so that hybrid cloud deployment is the perfect type of customer to help build that ecosystem. We are seeing demand from AI, and the inferencing layer of AI is perfectly suited for our highly interconnected ecosystem like CoreSite because it helps distribute the content that the AI is generating. And so we do see some demand there. We're being selective in terms of who we're willing to lease to in that. We do recognize that not all customers are kind of built the same in that space. So we want to make sure that we're partnering with people who have good long-term business plans there. But what's driving the overall demand is just a general scarcity of supply there, but we're continuing to lease to that core customer base, expanding our enterprise reach for hyper cloud deployments, a little bit of AI and then continuing to serve a lot of the customers that we already have there as they expand their needs. And those are the primary drivers from who we're leasing to you.

Rod Smith:

Yeah, it's a good question, Eric. I would say, first off, we -- you saw in the numbers, we're at about 4.8 times levered. Our stated range is 3 times to 5 times. So we're below that. We're also at about 5 times at the end of Q1. Leverage for Q1 and Q2 were materially supported or helped by some onetime nonrecurring benefits. With that said, and Steve alluded to this earlier, we do expect leverage to tick back up to 5.0 or 5.1 during Q3 and Q4. We'll see where that goes. But we're very, very confident that we are on the right path, driving towards getting to that 5.0 and we will get there. Most likely the second half of this year, if not the beginning of next year. So with that, we do feel as though we'll be in a position to have financial flexibility and kind of manage the business without a hyperfocus on the delevering. And with that said, we'll be very disciplined. We'll be looking at all of our capital allocation options, including our CapEx programs, not in general, but specifically country by country, deal by deal, asset by asset. And there's some compelling things that we can invest our capital in as Steve outlined in his kind of strategic prepared remarks and in some of the Q&A. So the CapEx programs are still very much supportive of long-term total shareholder returns. So that's an opportunity. When it comes to buybacks, the buybacks, it has to create more shareholder value over the long term than deploying it towards CapEx or an M&A program or delevering. There are simple ways to look at it in terms of just you buyback a share stock as the yield above or below the cost of debt, we'll certainly be looking at that. But longer-term growth rates are really important, too, on our own business as well as where we invest, we'll be looking at the returns beyond day one as well. But rest assured, we will be doing a lot of work being very opportunistic and disciplined when it comes to capital allocation across the board and buying back shares will be one of options that that we have in our toolkit we'll be continuing to evaluate.

Rod Smith:

You're welcome.

Nick Del Deo:

Hey. Good morning. Thanks for taking my questions. First, going back to CoreSite. Yeah, I think you're planning your first aggregation edge data center in Raleigh. And I also saw a footnote that you're launching a JV with Stonepeak in Denver. So I guess, can you talk about what you're hoping to achieve with those projects, the rationale for the deal structure in Denver and whether we should expect more projects like these in the coming years?

Nick Del Deo:

Okay. That's great. Thanks for the detail, Steve. Second, kind of turning back to emerging markets towers. In your prepared remarks, you said that scale is the most critical driver of value creation overseas. I guess, how do you define and measure scale? Is it just a given number of towers? Is it share of towers? Is it exposure to top carriers when you look at scale by region versus country? Just interested in any each on that front so you can better understand kind of what you're looking for?

Nick Del Deo:

Okay. That's great. Thanks Steve.

Batya Levi :

Great. Thank you. Comprehensive MLAs have helped provide visibility for domestic growth. Can you talk about if you're also seeing opportunities to implement the same strategy internationally? And could that change the growth trajectory? I also wanted to follow up on AFFO growth with solid revenue growth and good cost control. If you just put FX and fluctuations in rates of side, do you think that we're back on a trend for high single-digit FFO growth for the next few years? Thank you.

Batya Levi:

Got it.

Batya Levi:

That’s very helpful. Thank you.

Adam Smith:

All right. Thanks, everyone, for joining the call today. Please feel free to reach out to the Investor Relations team with any questions. Thanks again.

Steven 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 U.S. application pipeline and another sequential step up in co-location and amendment growth in Europe.

Operator:

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

Rodney Smith:

Matt, this is Rod. If I could just add briefly here 1 or 2 comments. So of course, 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.

Operator:

Your next question comes from the line of Michael Rollins from Citi.

Michael Rollins:

And just 1 other quick one. Any shift in the mix between amendments and densification within the domestic activity?

Simon Flannery:

Great. 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 any other things that come out of that, any sort of portfolio assessment?

Steven Vondran:

Yes. 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.

Simon Flannery:

That's great. And any update on dividend policy beyond this year?

Ric Prentiss:

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 that? Is it in like 100% of attributable AFFO per share? Was it more like 90% and the growth rate is going to be more on that long term, again Board 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?

Rodney Smith:

I would just add to that quickly, Rick, to 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 to do. So that ratio of that 60% to 65% kind of fits in well with giving us a lot of financial flexibility to invest capital.

Steven 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 and 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.

Ric 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 an amendment even though CapEx might not be very different than the carrier. Is that another possibility?

Ric Prentiss:

Let me circle back, last one for me, Rod, you mentioned, obviously, you have excess cash that you can use for capital allocation, construction projects at new 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.

Ric Prentiss:

Well, I sure hope so more certainty and visibility.

David Barden:

I guess my first question would just be related to foreign currency movements. We've been seeing some pretty extraordinary moves in the last 6 months, the Argentinian peso, the Nigerian naira, the -- 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?

Rodney Smith:

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 $0.01 dilution or headwind when it comes to the outlook adjustment there.

Steven Vondran:

Yes. I would just add that we also use contractual mechanisms to also control it 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 U.S. in those markets. And in some markets, we also will have some of the revenues pegged to U.S. dollar. For example, in Nigeria, the -- about 40% of the revenue in Nigeria is passed through power.

Nicholas Del Deo:

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.

Steven 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 and retail scale, 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 they have 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.

Steven Vondran:

I mean, certainly, look, 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 or the supply-demand dynamics?

Steven 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 you're providing new 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.

Operator:

Your next question comes from the line of Batya Levi from UBS.

Rodney Smith:

Yes. In terms of the build-to-suits, I mean, we're keeping that consistent up in the range of 2,000 to 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.

Operator:

And your final question today comes from the line of Jon Atkin from RBC.

Jonathan Atkin:

And any change into '25 given that these are often 5 years in duration?

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.

Adam Smith:

Good morning. And thank you for joining American Tower's fourth quarter and full year 2023 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 that will be set forth in our upcoming Form 10-K for the year ended December 31, 2023, 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 Steve.

Rod Smith:

Thanks, Steve. Good morning, and thank you for joining today's call. Before I dive into our 2023 financial results and our expectations for 2024, I will highlight a few key achievements from the past year. First, we closed a successful 2023 with a strong fourth quarter, exceeding our prior outlook midpoints across property revenue, adjusted EBITDA and attributable AFFO per share with full year 2023 results comfortably beating our initial guidance from a year ago. For the year, performance was anchored by continued demand for our diverse global asset portfolio resulting in over 6% consolidated organic tenant billings growth, an acceleration of over 300 basis points as compared to 2022. With our U.S. & Canada and International segments each delivering record colocation and amendment growth of roughly $230 million in nearly $150 million, respectively. Additionally, we marked another record year of signed new business for CoreSite, supporting digital transformation across diverse workloads in emerging technologies, including more recently, AI use cases. Furthermore, our focus on cost management, combined with the inherent operating leverage in the tower model and certain one-time benefits resulted in attractive year-over-year cash adjusted EBITDA margin expansion, which I'll touch on in a moment. Second, we continue to strengthen our balance sheet through organic deleveraging and the successful issuance of approximately $7 billion in fixed rate debt. As a result of our 2023 actions, we've extended our average maturity and reduced our exposure to floating rate debt to less than 11% of the total debt stack, down from over 22% at the start of the year. Closing the fourth quarter with net leverage of 5.2 times, we are on track to meet the upper end of our 3 times to 5 times net leverage goal by the end of 2024. Finally, we concluded the strategic review of our India business earlier this year, reaching a definitive agreement to sell 100% of ATC India to Brookfield, which we will refer to as the India sale. We believe this transaction together with the Mexico fiber and Poland divestitures in 2023 enhances our global portfolio mix and risk profile and positions American Tower for sustained high quality earnings growth over the long term. Now let's discuss the details of our full year 2023 results. Turning to Slide 6. Full year consolidated property revenue growth was over 5% and nearly 7% on an FX neutral basis, tenant billings growth was 7.2% with organic tenant billings growth of 6.3%, complemented by the construction of nearly 3,200 new builds, primarily in our international markets. In the United States & Canada, property revenue growth was over 4%, with organic tenant billings growth of 5.3% or 6.6% excluding Sprint churn. Our international property revenue grew by over 5%, including organic tenant billings growth of 7.7%, with each segment meeting or exceeding our prior outlook. Additionally, in the fourth quarter, we were able to reverse approximately $38 million of prior revenue reserves associated with customer collections in India, contributing to outperformance versus our prior outlook, closing the year with a net revenue reserve associated with customer collections in India of approximately $28 million. Finally, our data center segment contributed approximately $835 million to our total property revenue in 2023, representing year-over-year growth of nearly 9%, and as I mentioned earlier, delivering another record year of signed new business. Moving on. Adjusted EBITDA grew nearly 7% or around 7.5% on an FX neutral basis to over $7 billion. On a consolidated basis, cash adjusted EBITDA margins improved approximately 170 basis points year-over-year to 62.3%, primarily driven by strong organic growth and certain one-time benefits combined with a keen focus on cost management throughout the business, with cash, SG&A as a percent of total property revenue down over 30 basis points year-over-year to approximately 7%. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by over 2% and 1%, respectively. Growth on a per share basis absorbed negative impacts of approximately 7% in financing costs and another 1% from FX. Now before I discuss the details of our outlook for 2024, I will start by summarizing a few key highlights and assumptions. First, and as Steve mentioned, we are committed to owning and operating the highest quality portfolio supported by a strong balance sheet. With that commitment in mind, we are focused on continuing to drive compelling organic growth across our diverse portfolio of assets, while maximizing the conversion of top line growth to profitability by taking costs out of the business. Together with reducing our aggregate capital intensity for the second year in a row and maintaining a relatively flat dividend payout in 2024 as compared to 2023, subject to Board approval, we believe these collective actions will maximize recurring cash flow growth, further strengthen our balance sheet, and as a result, accelerate our pathway to financial flexibility and optionality. We'll get into more detail shortly. Next, we are assuming a full year contribution of the India business in our outlook, representing over $1.16 billion in property revenue, $360 million of adjusted EBITDA and $285 million for unlevered AFFO attributable to AMT common stockholders. Upon closing of the India sale, which we anticipate occurring during the second half of 2024, subject to customary conditions and regulatory approval. We will then revise our outlook assumptions to incorporate the transaction. For added transparency, we have included Slide 20 in this earnings presentation, which shows the India contributions to our outlook by quarter, assuming a potential closing on October 1, 2024, for your reference, we would anticipate a reduction of $295 million and $95 million to our presented outlook midpoints for property revenue and adjusted EBITDA, respectively. Furthermore, we would estimate an approximately $0.09 reduction to attributable AFFO per share, which assumes anticipated proceeds at closing are used to pay down existing indebtedness. Also within the India segment, we have included approximately $65 million in incremental revenue reserves for the full year, translating to a reduction of $0.14 to attributable AFFO per share. Although, we are encouraged by the positive collection results realized in the second half of 2023, we believe it's prudent to take a conservative view at this point in time. Additionally, we've assumed the forward rate curve to support our 2024 interest rate assumptions, including the cost of our floating rate debt and assumptions for refinancing our 2024 senior note maturities. Lastly, on the FX side, our outlook reflects estimated negative translational impacts of $191 million on property revenue, $132 million for adjusted EBITDA and $82 million for attributable AFFO as compared to 2023. With that, let's dive into the numbers. Moving to the details on Slide 7. At the midpoint of our outlook, we expect total property revenue of over $11.1 billion, representing an increase year-over-year of greater than 1% and 3% on an FX neutral basis. Our guide includes cash revenue growth of around $200 million in the U.S. and Canada segment and $225 million of FX neutral growth in our international regions, excluding pass-through. We also expect data centers to contribute roughly $80 million of growth in cash revenue in 2024, demonstrating nearly 10% growth year-over-year, excluding the impacts of straight line. Property revenue also includes an approximately $203 million stepdown in non-cash straight line revenue or approximately 2% headwind to growth partially offset by approximately $28 million increase in pass-through. Lastly, as I mentioned in my earlier remarks, we anticipate an FX headwind of nearly 2% or $191 million to consolidated property revenue growth. Turning to Slide 8. We expect another solid year of organic growth contributions from our U.S. & Canada and International segments. In the U.S. & Canada, we anticipate organic tenant billings growth of approximately 4.7% or 6%, excluding Sprint churn. This expectation includes another healthy year of colocation and amendment growth contributions of $180 million to $190 million, reflecting the expected step down from our record level achievement in 2023 though still approximately 20% higher than our 2016 to 2022 average. Internationally, starting with Africa, we expect a strong momentum from 2023 to continue with expected organic tenant billings growth of 11% to 12%. This includes colocation and amendment contributions of approximately 7%, along with escalator growth of 8% to 9%, partially offset by churn of around 4%, which would represent a notable year-over-year improvement after incurring the largest impacts from carrier consolidation in 2023. Turning to Europe. 2024 organic tenant billings growth is expected to be 5% to 6%. On the colocation and amendment front, we anticipate growth of 3% to 4%, an acceleration as compared to 2023, while growth from escalators stand at roughly 3%, consistent with 2023, churn is expected to remain low at around 1%. In Latin America, consistent with our previous messaging, we expect organic tenant billings growth to stepdown as compared to 2023 to approximately 2% for the year, as churn will remain elevated at around 5%, primarily due to Oi (ph) in Brazil. Churn is offset by relatively consistent colocation and amendment activity of approximately 3% and contributions from escalators of approximately 4%. Finally, in Asia Pacific, we are guiding to approximately 2% organic tenant billings growth in 2024, including colocation and amendment growth of approximately 3.5%, roughly 2.5% from escalators and churn of around 4%. Moving on to Slide 9. At the midpoint of our outlook, we expect adjusted EBITDA growth of less than 1% and approximately 2.5% on an FX neutral basis, while absorbing a negative impact of over 3% associated with net straight line. Complementing the strong revenue growth trends I mentioned earlier, we're planning to reduce cash SG&A by approximately $30 million as compared to 2023, contributing to cash adjusted EBITDA margin expansion of around 30 basis points. Additionally, our outlook includes an expectation for approximately $17 million in year-over-year gross margin growth from our U.S. services business with the quarterly cadence, suggesting a ramp-up in carrier activity in the second half of the year. Turning to Slide 10. We expect attributable AFFO per share to grow approximately 5% year-over-year to $10.33 and approximately 6.5% on an FX neutral basis. Growth in cash adjusted EBITDA and a reduction in maintenance CapEx is partially offset by an increase in financing costs and cash taxes, together with higher minority interest adjustments due to growth in our European and data center JVs. Moving on to Slide 11. I'll review our capital plans for 2024 and our balance sheet priorities for the upcoming year. In 2024, we will continue to focus on organic growth, quality of earnings and operational efficiency, while prioritizing balance sheet strength, reducing risk and channel and discretionary spending into capital projects that support sustainable earnings growth and yield the most attractive risk adjusted returns. Consistent with the messaging, on our third quarter 2023 earnings call, the 2024 plan assumes maintaining an annual common dividend distribution of approximately $3 billion, representing a modest increase on an annual per share basis to $6.48 per share. We also expect to evenly distribute the dividend across each quarter of the year, which would suggest a one-time sequential stepdown from our fourth quarter 2023 declared dividend of $1.70 to $1.62 in the first quarter of 2024, all subject to Board approval. In addition, we expect to deploy around $1.6 billion in CapEx, of which 90% will be discretionary. As Steve highlighted in his remarks, we view the flexibility of our CapEx deployments with options across a range of geographies and assets to be a distinct competitive advantage for American Tower and our ability to drive sustained attractive returns for our shareholders. In 2024, this means increasing our CapEx allocation and exposure towards our developed markets. This includes increasing development spend for existing CoreSite data center campuses to $450 million as we seek to replenish the record capacity sold in 2022 and 2023, and maintain appropriate levels of sellable capacity, while continuing to drive attractive targeted stabilized yields in the mid-teens. The balance of the development CapEx spend will support another year of solid new build volumes internationally, which assumes the construction of 3,000 sites at the midpoint. Moving to the right side of the slide, and as I mentioned earlier, we made significant progress towards strengthening our balance sheet in 2023 through recurring business growth, augmented with cost discipline and combined with the strategic management of our capital allocation plans, we anticipate meeting the upper end of our 3 times to 5 times net leverage range by year-end. Our steadfast commitment to maintaining investment grade credit rating and enhancing our balance sheet strength and financial flexibility remains unchanged. Turning to Slide 12 and in summary, our global business continued to demonstrate solid core growth and resiliency in 2023, augmented by strategic initiatives aimed at enhancing our quality of earnings, driving operational efficiency and strengthening our already strong balance sheet. We believe successful execution of these initiatives provides a strong foundation for 2024 and enhances our position as a leader in the global communications infrastructure industry. Looking ahead, we are well positioned to capitalize on opportunities, adapt to challenges and deliver compelling risk-adjusted returns to our shareholders for years to come. With that, operator, we can open up the line for questions.

Simon Flannery:

Great. Thank you very much. Good morning, and Steve, congrats on the new role and the very best for that. I appreciate the initial comments on your priorities. I wanted to come back to this highest quality portfolio point that you were making. Is there some sort of review process where you're sort of formally going through each of the markets and just looking at what fits and what doesn't and what you want to do about that or is it more kind of investing more in these developed markets? Any color around that? And I'm thinking about markets like Nigeria, where we've obviously had a challenging FX environment here. How do you think about some of those more challenged markets in the near and medium-term? And then you mentioned data center several times in your comments, I know that Rod noted the CapEx was going up here. How are you thinking beyond the existing campuses either domestically or internationally, certainly, a huge opportunity in that business and again, a business where scale really matters? Thanks.

Simon Flannery:

Right.

Simon Flannery:

Great. Thanks a lot.

Michael Rollins:

Thanks. Good morning and congrats again, Steve, on the official transition. Two topics for you this morning. First, can you share an update on the domestic leasing environment as to whether or not you're seeing any changes in the activity levels early this year? And can you share some of the data points and development that are contributing to the decision to include improving carrier activity during the second half within your services guidance? And then just a second topic, what is the road map for the LatAm portfolio to normalize its level of organic growth? How long does it take to get there and what is that level of organic growth that AMT can return to? Thanks.

Michael Rollins:

Yeah.

Michael Rollins:

Thanks very much.

David Barden:

Hey, guys. Thanks so much for taking the questions. I guess, two, if I could. First, maybe just Steve, I think the biggest question I'm getting is that what we're hearing from American Tower about maybe a better second half of visibility into higher activity levels into the second half of the year is different than maybe what we heard yesterday from one of your peers, which is that the year is going to be more front-end loaded that the back part of the year could be slower than the jumping off point for 2024 and the 2025 might be slower. So could you kind of maybe talk a little bit about your conviction level that the second half activity levels can be higher, maybe some of the differences between some of the MLAs you might have that others don't DISH relationships, etc., that would be very helpful, I think, for people to kind of reconcile what we're hearing in the last couple of days. And then the second question, Rod. Thank you for all the details around India. I think some people, I think, were surprised to see India in the full year guide, and people are trying to back out that one quarter in the back part of the year. Slide 20, you have an unlevered number that gets you to around $0.15, $0.16 per share. But in the text, you've got a number that you're pulling out for about $0.09 per share in the fourth quarter. Could you help us understand the difference between the unlevered and the levered numbers that in order to kind of get a level set for what we are really thinking will be the guide for 2024 AFFO per share. Thank you.

Rod Smith:

Hey, David. Rod here. Regarding India, just a couple of points there. So you see in Page 20, we give you the breakdown for India, not just for the full year, but also on a quarterly basis so that to really help you figure out kind of what the impact may be up against a variety of closing dates, right? We expect the transaction to close in the second half of 2024. And the process that we're going through is it's being reviewed by the Competition Commission in India. So that's kind of the gating action there. And of course, we reviewed kind of that process with local -- with our local team, with local advisers, lawyers in India based, lawyers in the U.S. and as well as doing the proper diligence around interested parties within India, and we feel pretty good about that approval process. With all that said, we do expect it to be approved and closed in the second half of the year, but we're not exactly sure what the date would be. So we wanted to give you the quarterly breakdown so that as we progress through the year, you'd have the ability to kind of look at it quarter-by-quarter. On a full year, we've got property revenue from India at about 1.2 -- just under $1.2 billion adjusted EBITDA at about $360 million. And unlevered AFFO at $285 million and again, you can see the way that breaks down per quarter. Essentially, the difference between that unlevered AFFO and what we look at is the potential dilution of $0.30 to $0.40 for the year, maybe $0.09 dilution on a quarterly basis is the assumption that we would take the proceeds from the sale, roughly the $2 billion to $2.5 billion in pay down revolving debt that is in the -- not that I want to give you the guide in terms of our interest rate, but you can kind of know where revolving debt is these days for us up in the 6% range or so, approximately. You put that -- those proceeds towards paying down that debt, and that's the differential that brings that dilution down into the $0.09 per quarter or between $0.30 and $0.40 for the year. The math is really that simple, David.

Operator:

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

Rod Smith:

Yeah, Rick. Thanks for the question. So we're working through the process. I don't want to get into detailed discussions. We certainly haven't talked directly to the Competition Commission, but we've certainly done a fair amount of diligence. We're not sure where that will end up. We're pretty confident, very confident it gets approved. There could be some level of divestitures that was contemplated within the agreement that we work through. So nothing there that would concern us overly. And the other part is where Brookfield does have some towers the way they plan to run these also is competition friendly, I would say is the way that we kind of we view it there. So I don't want to go into more detail than that, but we do expect that the transaction would be approved and would have the ability to close it in the second half of 2024.

Steven Vondran:

Sure. It's hard to give an exact time line, Rick, because it's different by different customers. So I would say from application to revenue showing up on an a la carte basis, there's a variability there from call it, 60 days to six months kind of what you referred to there. It really depends on the customer and how urgent they are to get on the site, to be honest with you. In terms of the cadence for the contribution from the new leases and colocation, it's relatively flat across the period. Again, I just would point out that we had the comprehensive portion of 1 of our major MLAs expired at the end of last year. And so that got rid of some of the front-end loading that you saw in previous years. So it will be more evenly distributed this year.

Steven Vondran:

Yeah. Rick, I'll take that one. Look, we didn't take the decision to hold the dividend flat lightly on that, and we were aware of the optics problem with a step down from Q4 to Q1. But we had committed to our shareholders to a certain dividend in 2023 and when we decided to hold it flat in 2024. If we didn't have the step up in Q4, then we would have -- then we wouldn't have hit the number that we had committed to. And so we like to do what we say we're going to do, and that's the reason we kept it there. And we think this has been very well telegraphed. We're trying to be very clear on our Q3 call about what was happening, and we've talked about it since then. And this is a one-time event. And so agree that it wasn't -- it's not the ideal situation, but we wanted to do what we say we're going to do and handle the dividend flat.

Operator:

Your next question comes from the line of Eric Luebchow from Wells Fargo. Please go ahead.

Steven Vondran:

So I'll start talking about the M&A environment. Look, we continue to monitor what's going on in the M&A activity across the portfolio. We're still seeing a dislocation between public and private multiples. And so there's no portfolio out there today that's trading that we think is strategically important that would meet our investment criteria. And that's one of the reasons that we're a little bit out of that market right now. One of the reasons that we're very focused on bringing our leverage down to the high end of our target range is to make sure that we're in a position to take advantage of inorganic opportunities when and if they come to market that we think are strategically important, but also to meet our investment criteria. So we're optimistic that there will be portfolios in the future that are something that we would be interested in. But right now, there's just nothing that I would point to you that we think is, is trading in a range that we would find compelling.

Operator:

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

Steven Vondran:

I'll start with some leasing trends, Rod you can pick it up. So what we're seeing in Europe is we continue to see build-outs by the carriers. And we do see substantial 5G population coverage from the leading MNOs in Germany and Spain. So the pipeline of growth that we see remains solid, but it's more weighted toward colocations. In Germany, we are continuing to work through some of the market complexities that everyone's dealing with there, including some permitting delays and time for power connections. But we do feel good about the progress we've made there. We've brought in resources from other parts of our company to help with that and kind of utilizing best practices. So we do expect some improvement in our time lines there. So that's what we would expect to continue to see in Europe. There's a little bit more colocation driven activity and they're through the bulk of their 5G upgrades in most of our markets.

Batya Levi:

Got it. Thank you.

Matthew Niknam:

Hey, guys. Thank you so much for taking the questions. Just one on data centers and one housekeeping. First, on data centers, how are the nature of conversations with your customers changing or evolving if at all, as AI use cases become a little bit more pervasive across enterprises. And I'm really getting at, do you sense that, that sort of edge data center builds that maybe was part of the CoreSite acquisition maybe rationale at least initially, the micro data centers at the basis of your towers, is that becoming something that's a little bit more near term or is that more still of a long-term opportunity? And then maybe for Rod, on D&A, what's driving the review and the decision to potentially extend the useful lives of the tower assets? I saw a pretty big step down implied in D&A and your guide for this year? Thanks.

Rod Smith:

Hey, Matt. Regarding the tower life adjustment that you saw running through our numbers here, we essentially increased the tower life from 20 years to 30 years for book purposes for our GAAP books. And that was simply put, it’s just a function of matching up the book life here more closely with what the actual realized life is for the assets. So nothing really more complicated than that other than a realization that these assets last a lot longer than 20 years. So our books will not reflect that going forward.

Operator:

And your final question today comes from the line of Brandon Nispel from KeyBanc. Please go ahead.

Steven Vondran:

Sure. Well, the record amount of sales that we've had is what's led to increasing the development pipeline there. And it really depends on what our sales are this year and how we continue to see the opportunities in that portfolio evolve as to what the future spending are. So it would be premature for me to kind of guide future years' capital there. What I would reinforce is that we have a degree of optionality in our capital spending and that we do have a structure with CoreSite where we also have partners in that business. And so there is some optionality in terms of how much capital we put in, and you could see us using our capital or somebody else's capital to expand if we thought that was a better option for us. But at this point, the development pipeline we have today, we're choosing to sell fine because we're achieving mid-teens stabilized returns, very low risk in our existing campuses, and we continue to see demand rise. So we'll make that assessment into what's appropriate for 2025 and later a little bit later, and we'll share that with you guys at the appropriate time.

Brandon Nispel:

Great. Thank you.

Operator:

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.

Adam Smith:

Good morning, and thank you for joining American Tower's third quarter 2023 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 Barlett, our President and CEO will discuss current technology trends, and how our distributed portfolio of assets is positioned to benefit from ongoing wireless technology evolution. And then Rod Smith, our Executive Vice President, CFO and Treasurer will discuss our Q3 2023 results and revised full year outlook. We are also joined on the call today by Steve Vondran, our current Executive Vice President and President of our U.S. Tower division, who as announced this morning will assume the role of Global Chief Operating Officer effective November 1, before assuming the role of our President and Chief Executive Officer on February 1, 2024. 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 set forth in our Form 10-K for the year ended December 31, 2022, as updated in our Form 10-Q for the six months ended June 30, 2023, 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.

Rod Smith:

Thanks, Tom. Good morning, and thank you for joining today's call. In Q3, we continued our trend of strong performance, driven by solid demand for our diverse global portfolio of assets. Against the challenging macroeconomic backdrop, we remain focused on delivering results and creating value by driving organic growth across our existing portfolio and demonstrating global operational efficiency and cost management in support of attractive margin expansion. At the same time, we are committed to strengthening our balance sheet by enhancing our liquidity extending our maturities, reducing floating rate debt volatility and making progress towards our leverage target. These efforts coupled with the evolving technological trends highlighted by Tom, remain key drivers of our current performance and give us confidence in our ability to drive sustained growth over the long term. Before delving into the specifics of our Q3 results and raised outlook, let me touch on a few highlights from the quarter. First, we saw a continuation of solid trends across our global operations, driving consolidated property revenue growth of 7%, consolidated organic tenant billings growth in our tower business exceeded 6% for the third consecutive quarter and was complemented by over 9% revenue growth in our data center business. As a result of this strong performance and visibility extending through the end of 2023, we raised our full year expectations across nearly all segments, which I'll discuss in more detail later. Next, our keen focus on cost management resulted in conversion rates exceeding 100% and adjusted EBITDA margin expansion of roughly 290 basis points year-over-year and still over 215 basis points when normalized for the prior year VIL revenue reserves, complementing our operational efforts. On the balance sheet side, we raised $1.5 billion in senior unsecured notes at a weighted average cost of approximately 5.9% by utilizing the proceeds to pay down revolver balances, we reduced our floating rate debt exposure to approximately $4 billion or less than 11% of our total outstanding debt as of the end of the third quarter down from over 22% at the start of the year. Finally, we're making significant progress on the strategic review of our India business. As we are in the final stages of this process, we remain committed to communicating the outcome to our shareholders before the end of the year, consistent with our past messaging. In Q3, we recorded $322 million in goodwill impairment charges associated with our India business. This was prompted by indications of value obtained through the process conducted over the past several months, supported by our own interim goodwill impairment test. We believe this impairment accurately reflects the current market conditions, evolving risk premiums associated with operating in the India market and more generally increases in the cost of capital. With that, please turn to Slide 8, and I'll review our property revenue and organic tenant billings growth for the quarter. As you can see, consolidated property revenue growth was 7% or 8% on an FX neutral basis. U.S. and Canada property revenue growth was over 5%, which includes a nearly 2% headwind associated with a reduction in straight-line revenue, offset by timing benefits associated with certain non-recurring one-time items in the quarter. International growth was nearly 9% or approximately 11% excluding the impacts of currency fluctuations, which included a 4% benefit associated with the full collection of VIL billings in India in the quarter, as compared to the approximately $48 million revenue reserve in the prior year. Finally, as I mentioned in my earlier remarks, our data center business revenue increased by over 9% and continues to demonstrate solid outperformance as compared to our initial underwriting plan. As Tom mentioned earlier, we anticipate 2023 to again break the signed new business record just set in 2022, setting up CoreSite to drive sustained attractive levels of growth as the backlog of new business commences over the next several years. Moving to the right side of the slide. Strong performance across each of our segments drove consolidated organic tenant billings growth of 6.3%. Within our U.S. and Canada segment, organic tenant billings growth was 5.3% and greater than 6.5% absent sprint related churn, including another quarter of colocation and amendment contributions of nearly $60 million. Our International segment saw outperformance across nearly all reported segments, primarily driven by higher new business in Africa and churn delays in Latin America and APAC resulting in organic tenant billings growth of 7.9%. Turning to Slide 9. Adjusted EBITDA grew over 10% to $1.8 billion for the quarter or approximately 11% on an FX neutral basis. As I highlighted in my opening remarks, adjusted EBITDA margin expanded to 64.4%, a 290 basis point improvement compared to the previous year, primarily driven by solid organic growth, effective cost management throughout the business and the one-time revenue items I mentioned. In fact, despite the current inflationary environment, we have managed to maintain a relatively flat year-over-year cash SG&A profile remaining consistent with the themes from the first half of the year, with cash SG&A as a percent of property revenue standing at approximately 6.5% for the quarter, a nearly 70 basis point improvement versus Q3 of 2022. Moving to the right side of the slide. Attributable AFFO and attributable AFFO per share each increased by over 9%, driven by solid cash adjusted EBITDA growth partially offset by an approximately 5% headwind from financing costs. Now shifting focus to our revised full year outlook. I'll start by highlighting a few key items. First, as a result of our strong performance in the third quarter and the momentum taking us through the end of the year, we've raised our guidance for property revenue, adjusted EBITDA, attributable AFFO and attributable AFFO per share. Next, our revised outlook includes a reduction in U.S. services, resulting in a $20 million decrease in gross margin compared to our previous expectations for the year. As we've highlighted in the past, although, quarter-to-quarter variations in tower leasing activity have impacted our services revenue in 2023, our leasing revenue remains unaffected, underpinned by the comprehensive master lease agreements currently in place. Finally, the updated midpoints include revised FX assumptions that have resulted in outlook to outlook headwinds of approximately $28 million for property revenue, $14 million for adjusted EBITDA and $5 million for attributable AFFO. With that, let's dive into the numbers. Turning to Slide 10. We are increasing our expectations for property revenue by approximately $60 million as compared to our prior outlook. Our revised expectations are driven by $31 million in core property revenue outperformance, along with approximately $45 million and $12 million in additional pass-through and straight-line revenues, respectively. Our revised guidance includes $10 million in outperformance associated with VIL collections with roughly half included in our core property revenue and the balance in the pass-through outperformance illustrated. Growth was partially offset by $28 million of negative FX impacts. Turning to Slide 11. We are increasing our expectations for organic tenant billings growth across nearly all segments. In the U.S. and Canada, we are increasing our guidance to greater than 5% or approximately 6.5% excluding Sprint churn, now with an expectation for approximately $230 million in colocation and amendment growth contributions. Growth is further benefiting from non-Sprint related churn delays, which we now anticipate occurring in 2024. In Latin America, we have increased our outlook from approximately 4% up now to approximately 5%, largely driven by continued delays in anticipated consolidation-related churn. Next, we're increasing our Africa outlook from greater than 11% to approximately 12%, primarily due to a continued uptick in colocation and amendment demand. In APAC, we are increasing our guidance from approximately 4% to about 5% supported by a combination of strong new business in delayed churn. Moving on to Slide 12. We are raising our adjusted EBITDA outlook by $60 million. This reflects the strong conversion of the incremental property revenue highlighted earlier, coupled with prudent cost controls, resulting in an incremental $67 million in cash property gross margin outperformance along with an additional $14 million in cash, SG&A savings and $30 million of straight line. This growth was partially offset by a reduction of $20 million associated with our U.S. services business and a negative FX impact of $14 million. Turning to Slide 13. We are raising our expectations for AFFO attributable to common stockholders by $40 million at the midpoint or approximately $0.09 on a per share basis, moving the midpoint to $9.79 per share. Our performance was driven by the cash adjusted EBITDA increase of $61 million partially offset by $16 million of other items, including an acceleration of certain maintenance projects in cash taxes, along with incremental minority interest due to outperformance in our JV businesses, partially offset by improvements to net interest. As I noted earlier, FX caused a headwind of approximately $5 million. Moving on to Slide 14. Let's review our capital allocation plans for the full year. Consistent with the expectations set at the beginning of the year, we are planning to distribute approximately $3 billion in common stock dividends which represents a year-over-year growth rate of 10% on a per share basis, subject to board approval. Our full year CapEx spend also remains consistent at $1.7 billion with the acceleration of certain non-discretionary projects that I mentioned earlier, offset by lower discretionary spend, which includes a reduction in development CapEx associated with lower anticipated new build volumes. As always, our goal is to execute a capital deployment strategy that maximizes total shareholder returns. In line with my earlier remarks, we're focused on creating incremental value through solid organic growth and quality of earnings optimizing global operational efficiency and expanding cash margins, all while strengthening our financial position by further reducing balance sheet risk and enhancing financial flexibility. As it relates to capital allocation and against the current economic backdrop, we believe it's optimal to prioritize balance sheet strength and keep discretionary spend focused on select capital expenditure projects that yield the best risk-adjusted returns and quality of earnings. Additionally, decoupled from our current line of sight to its attributable AFFO growth for next year, we anticipate maintaining a dividend per share profile in 2024 that closely aligns with our 2023 expectation of $6.45 per share resuming growth in a manner supportive of our REIT taxable income thereafter, all subject to Board approval. By focusing on the above priorities, we believe American Tower is positioned for sustained and compelling total shareholder returns supported through balance sheet strength over the long term. Consistent with our historical practice, we'll discuss our 2024 plans in more detail on our next earnings call. Moving to the right side of the slide and as highlighted earlier, as a result of the successful execution of our financing initiatives in the third quarter, we reduced our floating rate debt balance to below 11%, increased our liquidity to $9.7 billion, and our average maturity remains over six years. We closed the quarter with net leverage of approximately 5 times, which benefits from certain non-recurring items in the quarter, as I mentioned earlier, and we expect to close the year slightly above 5 times. Moving forward, we'll remain opportunistic and potentially further accessing the debt capital markets, ensuring continued strength in our balance sheet, reducing risk and enhancing our financial flexibility. Turning to Slide 15, and in summary, our diverse portfolio of global communications assets continue to demonstrate resiliency in the face of a challenging macroeconomic backdrop, producing attractive growth through organic leasing, further amplified by exceptional cost management at the margin. Complementing our operational performance, we continue to make progress in strengthening and de-risking our balance sheet. Furthermore, we remain committed to managing our capital structure, sources and uses and capital allocation priorities in a manner that positions American Tower to drive sustained attractive returns for our shareholders over the long term. With that, operator, we can open the line for questions.

Simon Flannery:

Tom, all the best for the future. It's been great working with you over the years, even back to the Verizon use of cell days. And Steve, congratulations and best of luck in the new role. If we could come back to the capital allocation please. The comments around the dividend and perhaps, Rod, you could just talk about target leverage? Are you thinking about bringing leverage down more aggressively given the rate environment and the uncertain macro environment? Just any color around that would be great or any other drivers of the dividend decision? And perhaps how are you thinking about M&A more broadly outside of the India process that you referenced earlier. There's a big gap here between public and private markets. Any opportunities there that you see? And what about buybacks? Is that something that could come into your toolbox in the coming quarters here? Thank you.

Tom Bartlett:

First of all, Simon, thanks for your kind words. But maybe with regards to the dividend, it's important just to just take a step back and understand how we really manage this dividend growth. Since we became a REIT over a decade ago back in 2012, we've always looked to complement AFFO growth with a compelling yield, which we've grown, as you all know, around 20% annually as compared to our AFFO per share growth, which has been closer to 10% over that same time period. We've aligned our distribution with REIT taxable income, as you would expect. And within REIT AI you do have a recurring run rate and more of one-time buckets, consistent of things like earnings and profits, settlements, throwbacks NOLs, which we used last decade, much of which is discretionary in the planning that are absolutely separate from AFFO. And these tools allow us for to manage a more predictable glide path on our dividend. So here we are in 2023, we're committed to a 10% dividend growth rate which, like other years, consisted of certain one-time items to manage the dividend path and ensure alignment between our distribution and REIT AI. And so although our recurring REIT AI bucket was negatively impacted by interest rates, we utilize certain one-time items to manage towards the distribution. And absent those items, like most years, we'd be overdistributed. So as we look ahead to '24, we see an opportunity to accelerate our glide path and reset REIT AI closer to the run rate, which means temporarily relatively flat dividends per share in '24 decoupled from our expectations for AFFO growth based on our line of sight today. So our priorities that Rod just laid out really remain on maximizing our total shareholder returns. And we see the optimal path to do so, really centered around strengthening and de-risking our balance sheet, which means, in part, reducing our debt balance and advancing our pathway to sub 5 times net leverage and with that, more financial flexibility. And we view the levers to accelerate this path through maximizing organic growth, reducing our cost base as we've done in '23 and will continue to do in '24 with disciplined capital allocation that Rod just referred to, together with managing the dividend in a relatively flat basis before resuming growth in line with our recurring REIT AI thereafter. So this isn't a decision we take lightly, as you would expect. But given the current macro volatility, we believe that the balance sheet strength and accelerating financial flexibility for future opportunities, which could include buybacks is the optimal approach from where we sit today. So hopefully, that gives you a little bit of a sense, at least in terms of how we're thinking about it and how it fits into our overall plans for creating value long term.

Tom Bartlett:

Yes.

Operator:

And next, we go to Michael Rollins with Citi. Please go ahead.

Tom Bartlett:

We got a long answer. My hairline has received more than years

Rod Smith:

Sure. I'll take that one. So we're not going to give specific guidance for 2024 at this time, obviously. And I don't want to get into specific care activity levels because I want to leave it to them to talk about the rollout plans. But in general, we have seen activity levels moderate over the last several months from the recent highs. However, the visibility that we have into a baseline level of contractually guaranteed growth through these comprehensive MLAs allow us to reiterate our expectation that we're going to achieve an average annual OTBG growth rate of at least 5% in the U.S. and Canada segment between 2023 and 2027. And despite some of the concerns that people have in the market over the recent moderation we have visibility into a level of organic growth in 2024 that's supportive of that average. Now having said that, I want to break down the components a little bit, we do not have visibility into another year of $230 million growth from colocation and amendment activity. That's far away a record from American Tower. But we balance that with an expectation for some moderation in churn following 2023, excluding Sprint. Our MLAs do provide us visibility into a level of colocation and movement contributions that exceeds the average we've seen over the past several years. And again, it's supportive of that at least 5% average OTBG that we've guided to between 2023 and 2027. And to reiterate on our Sprint churn, the annual impacts of our Sprint churn have been $195 million in 2021, $60 million in 2022, and $50 million in 2023 and $70 million in 2024 for a total of $375 million. So we're past the peak of that churn, and there's no change to that cadence versus our prior guidance in that respect.

Michael Rollins:

Thanks. And just one quick one, what's the percent that you're seeing in terms of the mid-band upgrades, the percent of sites that have been upgraded for mid-band already versus the amount that might be remaining?

Michael Rollins:

Thank you.

Operator:

And next, we can go to David Barden with Bank of America. Please go ahead.

Tom Bartlett:

Thanks, Dave.

Rod Smith:

Yeah, David. So let me hit the first part of your question. I think I missed a little bit of the second, so I may ask you to repeat that. But when you think about the upside in terms of the growth rates, let me hit it by addressing the organic tenant billings piece first-off. So we are seeing increases in organic tenant billings really across the board. So you can see in the charts, they were increasing our overall organic tenant billings for the company to about 6%, that's up about 50 basis points from prior. And that kind of -- that theme is consistent across many of the regions. So as Steve just highlighted in the U.S., we're bringing that guide to beyond 5% from what was previously around 5%. International is coming up to greater than 7%. Prior, we were at greater than 6.5%. And then you look at the different parts of the company region by region, LatAm is going up to about 5% versus what was previously a 4%. APAC is coming up to about 5%. Previously, it was 4%. Europe was staying around where it was at 8%. And then Africa is also coming up to around 12% from what was prior higher than 11%. A couple of things that I would say, in terms of the stay ability or the durability of some of that growth, certainly, in the U.S., it's nice strong performance. There is a little bit of delayed churn, so we can expect to see that hit next year. Other than that, the U.S. is very steady in terms of the demand. Part of that is because of the way the contracts we have work out. When you think of Latin America, we do have higher levels of churn this year than we have had in prior years. Some of the outperformance is churn driven. So when you think about the LatAm over performance, it's really a delay in churn and probably not all that durable from that perspective. When you get into APAC, it's a similar situation. The increase there is delayed churn, maybe some delayed discounts. Europe is staying in line. In Africa, we're seeing higher levels of new business activity. So much of that is, in fact, durable and lasting, that's the way I would kind of articulate that. And then maybe on the second question, if you could maybe just repeat the question about the dilution, just so I get it right.

Rod Smith:

Yeah. That's good, David. Thank you. So we're making good progress with the strategic review that we've set out. In terms of the write-down, we are writing the India business down about $322 million and sets the book value in around $2.2 billion or so. And as I stated in my prepared remarks, it really is based on our internal impairment review analysis, discounted cash flow driven and certainly, cost of capital plays a significant role in that. But also, as I highlighted in my comments, it does also consider indications of value that we've determined throughout the process. So I think you can understand what that means, and it will help you kind of think about where things might fit. We've also provided a little bit more breakout on the India financials and some of -- in the back of the presentation, which you'll see. But in terms of revenue, we're a little over $1 billion EBITDA. It's about $355 million. Unlevered AFFO is about $290 million. So that gives you a little bit more information to kind of piece through and kind of assume where we may -- the way we may have. I don't want to get into too much direct guidance. We'll certainly lay that out when we complete our strategic review, which -- the good news is we're happy with the way the process is evolving. We’re confident we’ll be concluding it this year just as we’ve previously mentioned, once we do, we’ll let the investors know exactly what we’ve concluded and what we plan to do there. We’ve said that our goal, and we’re on track to achieve our goals, which is to sell a majority equity stake to a financial investor. We’ve said between 51% and 100%, the reality is it’s probably going to be a majority stake. We probably will retain a stake, so it will be somewhere between that 61% and 100%. That’s where we’re kind of directing the process at this point. But again, we are confident that the process will conclude in the next couple of months. And when it does, we’ll let the investors know exactly what we’ve done.

Rod Smith:

Thanks.

Richard Prentiss:

Guys, I'll echo the bell head, thanks for the memory, Tom. it's been great working with you. I think we went to your first NAREIT like, 14 years ago.

Richard Prentiss:

Yeah. And Steve, been great working with you in the past, and we look forward to the new role.

Richard Prentiss:

Yeah. I want to go back to the dividend question from a couple of different angles as well. Rod, I think you mentioned $6.45 a share approximately current dividend announcing getting paid shortly would imply a little bit higher than that $6.48. Are we thinking it's in that range or is the $6.45 million more we should be thinking about?

Richard Prentiss:

Okay. I appreciate the comments that you're trying to kind of decouple from AFFO, more related to the REIT taxable income, it sounds like as well, but sort of implicit in that isn’t also that thought that the India sale is anticipated and that also can kind of affect what the dividend might have been prior thoughts.

Richard Prentiss:

Okay. And then, you said there was a small acquisition from AT&T/SBCs talking about history lesson. Can you talk a little bit about what you're seeing in the marketplace as far as multiples in the U.S., Europe and other places.

Richard Prentiss:

Okay. Was that some of the final purchase option stuff as well?

Richard Prentiss:

Makes sense. And last one for me then. I think you've mentioned that all assets are coming on the tail we reviewed with India getting closer to this process. Any update as far as what you're looking at on the balance sheet that might be possible to say it's not where they are, where we thought it would be or maybe someone else wants to pay more, given private versus pilot multiples?

Richard Prentiss:

Okay. Thanks, guys. And again, best wishes everybody.

Operator:

And next -- pardon me, next we go to Matt Niknam with Deutsche Bank. Please go ahead.

Tom Bartlett:

Sure. I'll start out and then, if you want to jump in, Rod. In terms of our service business, it's inherently a non-run rate business, and that makes it difficult to predict. And you saw that in 2021 when we raised our guide materially over a couple of quarters, we're seeing that this year as we've seen a moderation of activity. What I would say is because of our cooperative MLAs, that's not a direct read across to our property revenue, because we are somewhat insulated from the peaks and valleys of activity with the customers on that. And it's too early to be giving guidance for 2024 and where we see the activity levels going there. What I would just reiterate is this is consistent with what we've seen in other Gs of activity. And the carriers have an initial build phase that starts out with kind of a [indiscernible] of activity, and you'll see that moderate a little bit. We are seeing the capital spend moderate a bit, but it's still settling at levels higher than it was in 4G. And even with our reduced expectations this year for our services business, it's still higher than it was at the same point in 4G. So we're very optimistic that customers will continue to build throughout the cadence of this 5G build. There will be a restart of that activity. We don't know exactly when that's going to happen and we'll give better guidance on that in February as we get more visibility into 2024, what those activity levels are going to be.

Matthew Niknam:

Appreciate it. Thank you both.

Operator:

Thank you. And next, we'll go to Eric Luebchow with Wells Fargo. Please go ahead.

Rod Smith:

Yeah. Good morning, Eric. Thanks for joining in. And absolutely, all those issues are on the table. We look at our capital allocation every year, certainly, and I would say, even more frequently than that in the idea and the approach is to make the best decisions we can to support long-term total shareholder return. With the increase in cost of capital, the increase in interest rates as well as other factors affecting our markets around the globe, those all play into how much capital we will be deploying, how many build-to-suits will be executing on and where those will be. So that certainly comes into play. I won't get into a lot of detail in terms of decision-making there. I would just maybe highlight again that capital this year is lower than it was last year. And the environment in interest rates, in particular, there's still a fair amount of uncertainty. So we will be continuing to kind of look at that capital plan to decide if putting the capital into build-to-suits around the globe is better than some of the other options we have and a continuation of capital reductions is probably what you'll end up seeing in this environment. That's kind of where we're looking at it. The other part of your question is absolutely, we look at putting capital into places that primarily or specifically drive and align with our priorities. So when you think about us focused on organic growth over the long term, we're focused on quality of earnings. We're focused on operational efficiencies and driving balance sheet strength, all of the different ways that we can execute on achieving those goals are in play. If that means allocating more capital to higher quality markets versus emerging markets or vice versa. If it means putting less into CapEx and more into debt reduction, if it means reducing the growth of the dividend and putting more towards balance sheet and debt reduction. We think about those things all the time and it plays into our capital allocation and it will next year as well, and we'll lay out what that will mean in February.

Rod Smith:

Yeah. A couple of things that I’d – that I highlight relative to the LatAm market. I mean in 2022, we had roughly 5% churn that was part of embedded in our organic tenant billings growth. In Q3 here, it was 5.2%, so pretty consistent. For the full year of '23, we're projecting that to be around 6%. So that's what's driving. When we say elevated churn, that's exactly kind of what we're seeing there. We are seeing delays in churn. Much of that is tied to the oi churn (ph) that we're experiencing and will continue to experience down in Brazil. We also see churn from Telefonica up in Mexico. Those are kind of the two primary places where we see churn. We've laid out a lot of the different pieces of the oi churn. I won't do that again here. But I would say, we do expect elevated churn to continue into next year. I think you're absolutely right in terms of when inflation moderates in some of these markets, that will potentially lower the organic tenant billings growth from that perspective as well. So we'll be watching all of those issues. I think when it comes to LatAm, we'll be watching the churn as we go into next year. I can't tell you yet that we're beyond the peak here because of this churn that was delayed and potentially pushed into next year. But over the next couple of years, LatAm because of the reduction in inflation that could happen and the elevated churn, we could be in the low single digits in terms of organic tenant billings growth as we head into next year.

Rod Smith:

You’re welcome.

Nick Del Deo:

Hey. Thanks for taking my questions. And first of all, I want to echo others' comments and congratulate both Tom and Steve on the upcoming changes.

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?

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?

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?

Nick Del Deo:

Okay. Great. Thank you so much.

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.

Batya Levi:

Got it. Thank you.

Operator:

And ladies and gentlemen, that does conclude our Q&A session for today. I'll hand the call back over to our team.

Operator:

And that does conclude the call for today. Thanks for your participation and for using AT&T Teleconference. You may now disconnect.

Adam Smith:

Good morning. And thank you for joining American Tower’s second quarter 2023 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 international business, and then Rod Smith, our Executive Vice President, CFO and Treasurer, will discuss our Q2 2023 results and revised full year 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 set forth in our Form 10-K for the year ended December 31, 2022, as updated in our upcoming Form 10-Q for the six months ended June 30, 2023, 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.

Rod Smith:

Thanks, Tom. Good morning. And thank you for joining today's call. As you saw in our press release, we had a strong second quarter reflecting a continuation of resilient demand for our diversified global portfolio, and solid operational execution across our organization. Before I walk through the details of our Q2 results, and revised full year outlook, I'll start with highlighting a few items from the quarter. First, we continued to strengthen our balance sheet, raising approximately $2.7 billion in fixed rate debt through a combination of Euro and U.S. dollar denominated senior notes at a weighted average cost of 4.9%. As a result, we decreased our exposure to floating rate debt to approximately $6 billion or less than 15% of our total outstanding debt as of the end of the second quarter. Next, the momentum experienced across our global business in Q1 continued into the second quarter with outperformance across new business, escalations and churn, resulting in another quarter of over 6% organic tenant billings growth, allowing us to raise our full year expectations across our Latin America, Europe, and Africa segments. We also had another strong quarter at CoreSite where elevated leasing volumes since our acquisition continued into Q2, and were further supported by solid pricing trends, high renewal rates, and interconnection growth of approximately 10%, which together with our tower business drove property revenue growth of over 4% in the quarter. Complementing top line growth, and as I highlighted last quarter, we are maintaining a strong focus on cost management. Once again in Q2, despite an elevated inflationary environment, we kept cash SG&A roughly flat year-over-year, helping to support an adjusted EBITDA margin expansion of approximately 60 basis points to 63.1% or over 100 basis points when normalizing for VIL reserves. Finally, we continue to engage in active discussions with a focused group of investors around the potential sale of a majority equity interest in our India business as we assess strategic options in the market, and exercise we anticipate completing in the second half of the year. As always, we will remain disciplined and patient with the goal of achieving the best outcome for American Tower and its shareholders. With that, please turn to Slide 6 and I'll review our property revenue and organic tenant billings growth for the quarter. As you can see, Q2 consolidated year-over-year property revenue growth was over 4% or over 6% on an FX neutral basis. This included U.S. and Canada property revenue growth of over 5%, international growth of nearly 3%, or over 7%, excluding the impacts of currency fluctuations, and over 7% growth in our U.S. data center business. In the quarter we recognized approximately $35 million in revenue reserves associated with VIL short payments, as collection patterns in Q2 were relatively consistent with that of Q1. Moving to the right side of the slide, we achieved another strong quarter of organic tenant billings growth, which stood at 6.2% on a consolidated basis. In our U.S. and Canada segment, organic tenant billings growth was 5.1% and approximately 6.5% absent sprint related churn, including another quarter of elevated colocation and amendment growth contributions of nearly $60 million. Our international segment saw outperformance across nearly all reported segments, primarily due to a combination of higher than anticipated colocation and amendment growth and continued churn delays, resulting in organic tenant billings growth of 7.9% up from 7.5% in Q1. At a segment level, Africa, Europe, and APAC produce growth of 12.9%, 8.3%, and 5.6% respectively, each in acceleration off of Q1, with Africa representing a record for the region, APAC delivering its highest quarter since Q3 of 2017, and Europe demonstrating growth of over 575 basis points above its pre-Telsius [ph] average. In Latin America, we did see a modest deceleration of 5.4% as expected. Consistent with the last quarter, we continued to realize benefits associated with CPI linked escalators across the vast majority of our international markets while a continued delay in anticipated consolidation driven churn in Latin America has kept reported churn favorable to our initial expectations through the first half of the year. Finally, strong leasing trends across our international business has driven an acceleration in colocation and amendment growth contributions across nearly all of our segments, resulting in an approximately 40 basis point improvement sequentially at a consolidated international level. Organic tenant billings growth was further complemented by the construction of more than 565 sites with virtually all of the step down relative to Q1 associated with India volumes, as we continue to prioritize capital deployments across our footprint to projects that demonstrate the most attractive risk-adjusted rates of return. Turning to Slide 7, adjusted EBITDA grew nearly 5% to over $1.7 billion or approximately 6% on an FX-neutral basis for the quarter. As I mentioned, adjusted EBITDA margin expanded to 63.1% driven by elevated organic growth, combined with prudent cost controls throughout the business, which allowed for a conversion of over 85% of revenue to adjusted EBITDA growth, again, on a normalized VIL basis. Cash, SG&A as a percent of total property revenue was around 6.8%, and over 20 basis point improvement compared to prior year. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share decreased by less than 1% and approximately 2%, respectively. This decline includes financing cost headwinds of approximately 7% and 9% against attributable AFFO and attributable AFFO per share growth, respectively, driven by the rise in interest rates over the past year. Let's now turn to our revised full year outlook, where I'll start by reviewing a few of the key high-level drivers. First, as mentioned earlier, we had a solid second quarter, and the core performance of the business continues to remain strong supporting an increase to our expectations for property revenue, adjusted EBITDA, attributable AFFO, and attributable AFFO per share. Next, consistent with our prior outlook, we have maintained our VIL revenue reserve assumption of $75 million for the year. As I noted, we saw similar collection trends in the second quarter as compared to Q1 bringing our year-to-date reserves associated with VIL to approximately $70 million. Subsequent to the quarter end, VIL made a full payment for July's billings and has committed to paying at least 100% of billings moving forward. In this case, we could potentially see some upside to our outlook assumption. However, we believe it is prudent to leave the full year assumption unchanged at this time. Additionally, we have assumed lower U.S. services volumes through the balance of the year, resulting in an approximately $40 million reduction in gross margin as compared to our prior outlook. While the recent pullback was more abrupt than our initial expectations, moderation in carrier spend following the recent historic levels of activity we've seen in the industry isn't unexpected and is consistent with past network generation investment cycles. Despite this reduction, we're still seeing healthy levels of activity on our sites, which we expect to continue, and our guide still assumes over $40 million in services gross margin contribution in the back half of the year which on an annualized basis, is still in excess of any year throughout the 4G cycle. It is also important to note that although our services business is non-run rate, more susceptible to in-period carrier activity and cyclical in nature, our comprehensive MLAs continue to provide us with a high degree of visibility and contractual protection against activity variability in our 2023 property revenue and organic tenant billings guide, as well as the growth we've assumed in our long-term U.S. and Canada organic tenant billings growth target. Finally, on the macro side, we have revised our FX and interest assumptions. Starting with FX our revised outlook includes the negative impact associated with the recent devaluation in the Nigerian Naira with impacts partially mitigated through the USD denomination of roughly half of our tenant revenues in the market. This is further offset by the strengthening of other currencies in our portfolio, resulting in minimal FX impacts versus our prior outlook. On the interest side, our guidance reflects a modest increase to interest expense based on the updated forward curve estimates of SOFR, partially offset by interest income. With that, let's dive into the numbers. Turning to Slide 8, we are increasing our expectations for property revenue by approximately $125 million as compared to our prior outlook. Outperformance was driven by approximately $65 million in core property revenue supported by increases to the U.S. and Canada segment, which includes the benefits of several non-recurring onetime items along with our U.S. data center and international segments. Complementing our core upside, we're also increasing our outlook by another $60 million, primarily associated with straight line and pass-through revenue. Moving to Slide 9, we are increasing our expectations for organic tenant billings growth at a consolidated and international level. In the U.S. and Canada, we are maintaining our guidance of approximately 5% or over 6% excluding sprint churn, with an expectation for at least $220 million in colocation and amendment growth contributions. In Latin America, we have increased our outlook from greater than 2% to approximately 4%, largely driven by continued delays in anticipated consolidation-related churn. In Europe, we are raising our guidance to approximately 8%, up from 7% to 8% previously, supported by modest improvements in our escalator contributions, together with an expectation for colocation and amendment growth to be closer to the upper end of our initial 2% to 3% assumption as we continue to make operational progress in Germany on leasing up our rooftop assets. Next, we're increasing our Africa outlook from approximately 9% to greater than 11%, primarily due to a continuation of solid new business demand. Although we are pleased with the acceleration in organic tenant billings growth in APAC in Q2, we are maintaining our prior outlook of approximately 4% at this time. Moving on to Slide 10, we are raising our adjusted EBITDA outlook by $75 million. This reflects the strong conversion of the incremental property revenue I just mentioned, facilitated through prudent cost controls resulting in an incremental $75 million in cash property gross margin, along with an additional $40 million, primarily due to straight line. This growth was partially offset by a reduction of $40 million associated with our U.S. services business. Turning to Slide 11. We are raising our expectations for AFFO attributable to common stockholders by $25 million at the midpoint, representing approximately $0.05 on a per share basis moving the midpoint to $9.70 per share. Updates to our expectations include the cash adjusted EBITDA increase of $35 million, partially offset by approximately $10 million in other items, including the impacts of interest expense and also a slightly higher minority interest, which is the product of outperformance in our U.S. data center business. Moving on to Slide 12, while our capital allocation plans remain consistent relative to our prior outlook, primarily consisting of $3 billion in common stock dividends, subject to Board approval and $1.7 billion in capital expenditures, I'd like to spend a moment to review our approach to ensure adequate capacity for our CoreSite business as we support an elevated backlog and expectations for continued future demand. On the left side of the slide, you see our plans continue to assume approximately $360 million in discretionary spend allocated to our U.S. data center business in 2023. This level of spend supports a high watermark of cash backlog, driven by the record levels of leasing since closing our acquisition at the end of 2021. Similarly, our retail and scale backlog, excluding hyperscale, is also at record levels, demonstrating the strength of the core business and diversification of new leasing which we expect to drive incremental ecosystem value and a continuation of the industry-leading returns CoreSite has produced historically. The differentiated nature of the CoreSite assets, representing a network, cloud and digital platform rich interconnection hub, which in conjunction with large-scale, purpose-built adjacent capacity uniquely positions CoreSite to support the high-performance workloads of today and in the future including expected incremental AI capacity needs. Combined with the favorable supply and demand dynamics we're seeing across the data center industry, we have a high degree of confidence in our ability to drive double-digit stabilized yields on our development investments, largely supported by the reinvestment of CoreSite's own cash flows with further support from American Tower and our partner, Stonepeak. In fact, our pre-leasing at the end of the quarter was approximately 36%, which further derisks our capital investments and illustrates the robust demand we're seeing across the space. While such demand drives the need for incremental investment, we are eager to support the business and realize the attractive rates of return CoreSite has historically proven, while remaining selective and disciplined in current and future development priorities and decisions. Moving to the right side of the slide, and as I mentioned earlier, we continue to execute on our financing initiatives in the quarter raising $2.7 billion in fixed rate debt, extending our average maturity to over six years while reducing our floating rate debt balance to below 15%. We also closed the quarter with net leverage of approximately 5.3 times ahead of our own deleveraging path towards our targeted range of 3 to 5 times. Moving forward, we'll remain opportunistic in potentially further accessing the debt capital markets to appropriately manage our investment-grade balance sheet. Turning to Slide 13 and in summary, our business continues to demonstrate resiliency and benefit from ongoing demand across our operations while effectively mitigating certain risks and variability through the strength of our customer agreements. Supported by a continuation and positive growth trends in Q2, we were able to increase the full year outlook midpoints across the majority of our key metrics, largely supported by core property outperformance across our tower and data center segments. We believe our global portfolio, strong balance sheet, best-in-class operating capabilities, disciplined approach to capital allocation, and keen focus to drive long-term efficiencies across our organization has American Tower well positioned to deliver strong, sustained growth in shareholder returns as we close 2023 and over the long term. With that, operator, we can open up the line for questions.

Eric Luebchow:

Hi, good morning. Thanks for taking the question. So I wanted to touch on the U.S. domestic leasing environment. We heard from one of your peers that carrier activity had slowed substantially during Q2. It looks like you're seeing a little bit of that in your service revenues, but I wanted to talk more about your organic tenant billings growth. Obviously, you reiterated the guide this year, but as we look beyond 2023, I know you have I think, 75% locked in into your long-term guide, but could it sustain slowdown in carrier activity, put that 5% number potentially at risk beyond 2023, maybe you could just walk through some of the puts and takes there?

Eric Luebchow:

Great, thanks Rod. And just one follow-up. I wanted to touch on the data center business. Maybe you could give a little more color on the strength you've seen there. Is it coming from more of your traditional retail colocation requirements or are you starting to see increased demand for larger footprint deals perhaps tied to some of the AI demand we've heard about in the market with the cloud service providers, and I guess, given the demand backdrop, do you think that maybe CAPEX needs in that business might need to go up in future years or do you feel kind of comfortable with where you're at in terms of capital intensity with CoreSite?

Rod Smith:

Yes, Eric, maybe I would add just a couple of other comments to Tom's answer there. The overall growth that we're seeing in CoreSite is really healthy. We saw 10% overall revenue growth in Q1. We're seeing high single-digit growth in Q2. So you put that together for the first half and the revenue was up high single digits, which is really robust. We continue to see healthy escalators in that business. The cash mark-to-market is still up in our range, at the high end of our range, even beyond the 3% high end of the range. The churn is well controlled and within our range of 6% to 8%. Interconnection growth, we've always targeted 6% to 8%. We're seeing a higher level of growth than that today. So that's that ecosystem that we have kind of at work producing what we hope to produce. And then hitting the CAPEX part of your question, we've got $360 million this year in CAPEX, we had about $300 million last year. And we do think that's a good run rate. It will fluctuate from time to time, but the purpose for our CAPEX program, of course, is really to make sure that we have the adequate capacity available to satisfy the new business and the demand in the backlog. So you can see from the chart, we have an average backlog of about $53 million, which will be deployed over the next 18 to 24 months or so. So we are ensuring that we have that capacity available. So that $360 million really is going into the 28 locations we have, the campuses either adding buildings into those campuses or adding conditioned space within existing buildings to make sure that we're keeping pace with the demand that we see. And the demand is robust. So certainly, there's opportunities to deploy even a little bit more capital. We'll continue to evaluate the returns and the growth rates and those sorts of things. But all in, we're exceptionally pleased with the way the data center business is performing. And we do think staying in that between 300 to 360 in and around that area is the right place in terms of ensuring we have the capacity available to meet the demand in our current facilities.

Operator:

Next, we move to Simon Flannery with Morgan Stanley. Please go ahead.

Rod Smith:

Yes. Good morning Simon, thanks for joining the call. Thanks for the question. So delevering is a priority for us. We've talked about that for quite a while. It comes in a couple of forms, outright in reducing overall debt, we're focused on that as well. Our target range is between 3 and 5 times. You saw that we ended Q2 at just over that at about 5.3 times. So a little outside that window. We want to get down below 5 times, and that's what we're really focused on going forward. With that said, when we look at our capital program, our overall priorities haven't changed. We still prioritize the dividend and dividend growth so that's key. We see very good day one NOI yields and returns in the new build program. So this year, we're deploying about 1.7 billion in capital. We think that's a very good use of capital and resources for our shareholders. And then beyond that, when you look at M&A, as Tom has talked about in the past, in our pipeline today, we just don't see anything compelling. That's a combination of terms and conditions and markets where they're available in different criteria. So we look globally, we look at the pipeline, we continue to have a pipeline that we review. But again, nothing is compelling. So with that said, and in the specific environment where the rate -- the go-forward interest rate is still uncertain, we think it's very prudent to prioritize delevering and debt reduction. We think it's very prudent to reduce the amount of floating rate debt so we lock in our interest rates on a larger portion of our debt. So going forward, our target range is about 20% for floating rate debt. We've got that down to around 15%. And I think in Q3, you'll see us continue to be opportunistic depending on where the rates are in the U.S. and where the 10-year is in the U.S. and the benchmark over in Europe. You could see us back in the capital markets to reduce our exposure to floating rate debt even below the 15%. And you'll see us going forward this year and well into next prioritizing delevering and trying to get down below 5 times.

Simon Flannery:

Great, thank you very much.

Matthew Niknam:

Hey, thanks for taking the question. Just two on international. I guess, first on the churn expectations. I think, Rod, you had alluded to maybe some reduced expectations for churn at least this year in LatAm, just wondering if you can give us any updates in terms of the outlook, both for LatAm and Africa and whether the ultimate sort of churn expectations have been reduced or is this more of a deferral than anything else? And then secondarily, just on India, if you could maybe give us any additional color in terms of updates on discussions. You mentioned, I think, second half in terms of when you'd like to have the process completed, so any additional color would be great there? Thanks.

Matthew Niknam:

Excellent, thank you.

Michael Rollins:

Thanks and good morning. I was hoping to revisit some of the comments that you're providing around the carrier activity in the U.S. and specifically, is there a way to frame what changed relative to the carrier activity expectations that American Tower may have had earlier in the year for the full year 2023 and then given that customers under these comprehensive MLAs can execute a certain amount of capacity and if activity is less, does that mean they're not taking full advantage of the capacity they're paying for and then create some form of greater backlog of deployments that need to come through the system in the future?

Michael Rollins:

Thanks.

Richard Prentiss:

Thanks, good morning everybody. A couple of questions to follow up on some of the ones we had. Thanks for the updates on India, but a few extra ones. Can you remind us again how much you spent in India, where is that on your books right now as we look to maybe a transaction getting wrapped up here, hopefully?

Richard Prentiss:

Okay. And earlier, I appreciate the color that India's Vodafone Idea looks like they're getting current and 100% going forward. At what point you thought you might take a stake on that receivable, is that kind of on pause as you go through wrapping up the strategic review, and did I hear you say you maybe have slowed down some of the builds in India, is that also related to kind of the process?

Richard Prentiss:

Okay. And then you also mentioned delevering is a priority, makes sense. But that stock buyback might make sense in the future, particularly compared to M&A out there. What would be the timing to think about putting a plan in place and how low does leverage have to get maybe?

Richard Prentiss:

Yup, it all makes sense, all the calculus that you look at. Great, thanks. Everyone stay well.

Jonathan Atkin:

Thanks very much. On the CoreSite strength, Tom, you talked about positive renewal spreads and pricing. I wondered, is that happening as a result of like higher price list for cabinets and for cross connects, is that kind of a deliberate action you're taking on both new business and applying it to the base or if you can kind of tell us a little bit about the source of that strength? And then I wanted to ask about -- I think just real quick on DISH with their -- Dave Mayo retiring and then some of the uncertainty around that, how should we think broadly about U.S. leasing trends beyond this year just in a qualitative sense? Thanks.

Jonathan Atkin:

Yes, of course, a little bit more color around the CoreSite, the strength you are seeing?

Jonathan Atkin:

I think anything around innovation initiatives around EDGE data centers, things of that nature?

Jonathan Atkin:

Thank you.

Gregory Williams:

Great, thanks for taking my questions. Just the first one would be on the cadence of your U.S. new leasing going forward. So you hit about 119 in new leasing in the first half of the year, and you're guiding 220 for the full year, that implies a notable step down to like $50 million mark per quarter in the next two quarters. But you did give yourself leg room by saying at least $220 million here in full guidance. So I'm just trying to understand how much of this is conservatism versus taking our estimates down to the low 50s? And just second question, in that new leasing are you seeing a lot of DoD spectrum or dual-band radio spectrum being deployed and if not, could we then see another leg of growth as these dual-band radios and DoD get scaled and ready to deploy?

Gregory Williams:

Got it, thank you.

Operator:

And our next question is from Batya Levi with UBS. Please go ahead.

Rod Smith:

Hey Batya, good morning. Thanks for joining the call. I think when you think about data centers, we're happy with the scale that we have. We've got great facilities, 28 facilities across really eight key markets. Their eco -- the ecosystem there is very rich with cloud on-ramps and network companies and enterprise customers. And it really gives us kind of the backdrop and the footprint that we need. And we're not seeing any headwinds because of a lack of scale. So all the great financial results that we're seeing, we're able to do it, because of the quality of the ecosystem and the way that these facilities are distributed throughout the U.S. So from that perspective, we feel really good with our data center investment to date. Now certainly, adding a location here or there, you've seen us do that a little bit even before we bought CoreSite. That certainly could be in the cards going forward. But we really do like the assets we have. We're not overly focused on trying to ramp up the scale as we've talked about in the past. When it comes to services, I would say we are seeing a slowdown -- it's -- I don't know if abrupt is the right word to use there, but we did see kind of a slowdown. I wouldn't say that it's across the board. I don't want to get into specific carrier by carrier, of course. But some carriers continue to plug right along and others have slowed down a little bit. Again, it's not unexpected from our view. When it comes to the final part of your question, in terms of the construction services, that's always been a pretty small part of our business. We've been maybe a little different than some of our competitors from that perspective. It is a small piece and it continues to be a small piece of our business. Most of what we do is in the permitting zoning engineering kind of those preconstruction activities. We do some construction services and deployment but not a lot.

Rod Smith:

You are welcome.

Unidentified Analyst:

Hi, this is Richard for Phil. Just wanted to follow-up on the grooming comment that you made earlier. Does that typically last for just a few quarters or is that something longer? And then I have one more.

Unidentified Analyst:

Got it. And then on the expense side, are you seeing any pressure in the domestic business on ground lease renegotiations on renewals, given where CPI or inflation is?

Unidentified Analyst:

Great, thank you.

Operator:

I'll now turn the conference back to the leadership team for closing comments.

Operator:

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.

Adam Smith:

Good morning. And thank you for joining American Tower’s first quarter 2023 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 U.S. tower and data center businesses. And then Rod Smith, our Executive Vice President, CFO and Treasurer, will discuss our Q1 2023 results and revised full year 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 set forth in our 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.

Rod Smith:

Thanks, Tom. Good morning. And thank you for joining today’s call. As you saw in our press release, we are off to a solid start to the year with performance exceeding our initial expectations across many of our key metrics. Before diving into the results and the revised outlook for 2023, I’ll start with a few highlights from the quarter. First, despite ongoing macroeconomic volatility, strong demand trends continue to drive favorable leasing and growth across our global footprint, which is a testament to the resiliency and stability of our business. In Q1, we posted consolidated organic tenant billings growth of over 6%, our highest rate since 2017 and an over 300 basis-point acceleration as compared to Q1 of 2022. This includes growth through colocations and amendments of over 5%, our highest in three years, as carriers continue to leverage our leading macro tower portfolio to aggressively roll out their networks to meet customer demand. Organic leasing growth was further complemented by another quarter of strong new build volumes as we continue to leverage our scale and capabilities to attract accretive development opportunities from our leading customers across our international business. Finally, we had another record quarter of leasing from CoreSite, continuing the momentum from what was a record-breaking 2022 and exceeding our initial underwriting plan. Complementing our solid top line trends, our focus on cost management combined with the inherent operating leverage in the tower model, drove margin expansion of approximately 270 basis points as compared to Q1 of last year to 63.7%, with the benefits being more noticeable given the absence of material M&A. Going forward, we’ll continue to manage our business with cost discipline, maximizing the profitability of our strong reoccurring organic growth profile. Next, we access the debt capital markets, successfully issuing $1.5 billion in unsecured notes and $1.3 billion in secured notes at attractive terms. Proceeds from these offerings more than cover our Q1 maturities and the remainder together with the proceeds from various strategic initiatives, including the sale of the Mexico Fiber business, were used to pay down floating rate debt. As a result, we’ve reduced our floating balance by nearly $800 million year-to-date, now representing slightly over 20% of our debt structure. We’ll continue to evaluate opportunities to further manage this balance over the course of the year. Finally, we continue to have constructive discussions with potential investors as we assess strategic options for our India business. We remain focused on executing an outcome that maximizes value and optimizes our global portfolio mix and the risk-adjusted return profile for American Tower and its stakeholders. As we move forward, we will keep our investors informed of any new developments. With that, please turn to slide 6, and I’ll review our property revenue and organic tenant billings growth for the quarter. As you could see, Q1 consolidated property revenue growth was over 4% and approximately 7% on an FX neutral basis over the prior year period. This included U.S. and Canada property revenue growth of over 4%, international growth of over 3% or nearly 9%, excluding the impacts of currency fluctuations, and approximately 10% growth in our U.S. data center business. In the quarter, we benefited from accelerated decommissioning-related settlements in Latin America, totaling approximately $39 million, partially offset by Vodafone Idea or VIL, revenue reserves of approximately $33 million, representing a modest improvement to payment trends as compared to the second half of 2022. Moving to the right side of the slide, organic tenant billings growth was a significant contributor to our overall revenue growth, standing at 6.4% on a consolidated basis, which as I mentioned, was our highest quarter since Q3 of 2017. In our U.S. and Canada segment, organic tenant billings growth was 5.6% and nearly 7% absent Sprint-related churn, including a record quarter of colocation and amendment growth contributions of nearly $60 million, a nearly 65% increase as compared to the growth reported in Q1 of 2022. Growth modestly exceeded our expectations, driven by some delays in churn, which we still anticipate to occur in the year and, to a lesser extent, new business upside. Similarly, our international operations experienced improvements across nearly all reported segments, generating organic tenant billings growth of 7.5% and over 180 basis-point acceleration from Q4 of 2022, which includes the benefits of CPI-linked escalator commencements across various contracts. Africa generated its highest quarter on record with organic tenant billings growth of 12.1%, including escalator contributions of over 10% and a continuation of solid new business of nearly 7%. Growth in the quarter benefited from some delays in previously communicated carrier consolidation-driven churn, which we still expect to occur in the year. Turning to Europe, we saw a growth of 8.2% and including over 6% from escalations, demonstrating our ability to monetize on CPI-linked escalators across the vast majority of our portfolio in the region. In Latin America, we saw a growth of 6.1%, which includes relatively consistent escalator and new business growth, partially offset by the continued elevated churn, as we’ve highlighted on past calls. Churn in the quarter was favorable relative to our initial expectations as the decommissioning events have been slightly delayed to later in the year. Lastly, in Asia Pacific, we saw a growth of 3.4%, demonstrating steady improvement over the past three quarters. This growth acceleration was mainly driven by colocation and amendment contributions as carriers ramp up 5G deployments. Organic tenant billings growth was further complemented by the construction of over 1,300 sites in the quarter, representing our 11th consecutive quarter of exceeding 1,000 sites, primarily in Africa and Asia Pacific, as carriers continue to invest in their network coverage and densification needs across the regions. Initial returns remained solidly in the double digits with Q1 constructed sites yielding nearly 14% on day one. Turning to slide 7. Adjusted EBITDA grew nearly 9% to approximately $1.8 billion or nearly 10% on an FX-neutral basis for the quarter. As I mentioned in my opening remarks, adjusted EBITDA margin demonstrated an approximately 270 basis-point improvement year-over-year to 63.7% and still an over 190 basis-point improvement when normalizing both periods of VIL-related revenue and bad debt reserves in India. This margin expansion was achieved through our continued focus on cost controls, allowing for approximately 100% conversion of revenue to adjusted EBITDA growth. Again, on a normalized VIL basis and driving cash, SG&A as a percent of total property revenue down by approximately 50 basis points year-over-year to approximately 7.1% for the quarter. Moving to the right side of the slide. Attributable AFFO growth was 1.5%, while roughly flat on a per share basis, which includes financing cost headwinds of around 7.5% and 9.5% against attributable AFFO and attributable AFFO per share growth, respectively, primarily driven by the rise in rates over the past year. Let’s now turn to our revised full year outlook. As mentioned earlier, we had a strong first quarter, outperforming our initial expectations across the majority of our key metrics. While we are excited about the results to date and the sustainable demand trends that underpinned our performance, we have largely kept core and full year assumptions consistent to our prior guide, given our early position in the year and some of the timing benefits I alluded to earlier. This approach for our Q1 guidance is relatively consistent to past years. This also includes our assumptions around VIL-related revenue reserves, which we’ve held at $75 million for the year. As noted earlier, we did record approximately $33 million in VIL reserves in Q1 with the guide applying an improvement for the duration of the year, notably in the back half. This assumption is supported by certain factors that we’ve considered in our risk assessment, including the customers’ contractual obligations for 2023, our latest conversations with VIL management, where they’ve committed to meet these contractual obligations, and a demonstrated improvement in payments by the customer in Q1 relative to the second half of 2022. Key updates to our revised outlook include the impacts from the recent sale of the fiber business in Mexico, together with the upsides from FX derived using our standard methodology and several small adjustments below EBITDA at the attributable AFFO level. With that, let’s dive into the numbers. Turning to slide 8. We are reducing our expectations for property revenue by approximately $20 million versus our prior outlook, driven by $45 million related to the sale of the fiber business in Mexico, partially offset by $25 million associated with the positive impacts of FX. Moving to slide 9. We are reiterating our prior outlook expectations for organic tenant billings growth across our regions, and we’ll continue to assess the positive momentum coming from our strong first quarter as we work further into the year. Moving on to slide 10. We are reiterating our adjusted EBITDA outlook with a decline of approximately $25 million related to the Mexico Fiber sale, offset by $25 million from positive impacts of FX. Turning to slide 11. We are raising our expectations for AFFO attributable to common stockholders by $20 million at the midpoint and approximately $0.05 on a per share basis, moving the midpoint to $9.65 per share. Updates to our expectations, aside from FX, include the cash adjusted EBITDA reduction driven by the Mexico Fiber sale, offset by favorable net interest in part due to the use of the sale proceeds to pay down debt and some cash tax savings. On an isolated basis, the Mexico Fiber sale resulted in a $15 million decline to attributable AFFO as compared to our prior outlook midpoint. Moving on to slide 12. I’ll review our balance sheet and capital allocation priorities for 2023. Beginning on the left side of the slide, our capital allocation priorities for 2023 remain consistent with our prior outlook, which includes approximately $3 billion towards our common dividend, subject to Board approval, representing 10% growth year-over-year on a per share basis. In addition, our CapEx outlook midpoints remain unchanged across all categories and support our initial plans to construct approximately 4,000 new sites across our international footprint. Moving to the right side of the slide. And as I highlighted earlier, we further strengthened our investment-grade balance sheet in the first three months of the year, extending our average maturity profile to nearly six years, while reducing our floating rate debt balance to slightly over 20%. Additionally, we closed the quarter with net leverage of approximately 5.2 times, well on track towards our deleveraging target of 3 to 5 times. Consistent with our past remarks, we remain focused on driving shareholder value through our growing dividend and accretive CapEx program while strengthening our balance sheet through deleveraging, maximizing liquidity, managing a diverse pool of capital sources and an ongoing assessment of market conditions to potentially further term out floating rate debt and extend our maturity profile. Turning to slide 13 and in summary. Q1 was another strong quarter across our business with incremental steps taken towards strengthening our balance sheet. Underpinned by sustained demand trends across our global footprint, our leading portfolio of communications infrastructure assets generated accelerating leasing growth, while our capabilities as an operator and partner continue to afford us opportunities to deploy accretive capital to its high-yielding development projects. We believe we are well positioned to drive compelling growth, supported by attractive secular trends across our global footprint and deliver solid returns to our shareholders over the long term. With that, operator, we can open the line for questions.

Brett Feldman:

I was hoping I can ask about some background on the sale of the Mexican fiber asset. What led to that? Was that something you were actively shopping, or was there an inbound that came there? And then if we maybe just take a higher-level approach to this. You gave us an update you’re considering and evaluating a potential equity sale in the India business. You just sold a piece of your Mexican business. Are you undertaking a broader portfolio rationalization strategy? And if that is the case or even if it was just India, where you would pull some additional proceeds in, how do we think about applying those proceeds especially now that you’re getting close to the high end of your target leverage range? Thank you.

Rod Smith:

Brad, if I could just add a couple of points there. Thanks for the question. You see in our quarterly numbers here, we got our leverage down to 5.2% (sic) [5.2x]. And of course, as constant, we did use the proceeds from the fiber business to pay down debt, not just to delever, but to actually reduce our exposure to floating rate debt, which we did, and we’re down around that 20% number. And that really shows our commitment to our investment-grade balance sheet in this environment, looking to delever. That’s definitely top of the list when it comes to capital allocation once you get beyond paying the dividend and the dividend growth that we have. And we’ll continue to focus on delevering the business until we get down within our target range of 3 to 5 times. And we’re also continuing to focus on reducing our exposure to floating rate debt. So, we’re within our policy now right at about 20%. But we’re going to be looking at that and working to try to reduce that exposure on the floating rate side even more than that in the coming quarter. So, you’ll see us pretty active in that space.

Tom Bartlett:

Yes, absolutely, Brett. You’re exactly right. And now whether we go back down to 3 times, it could be a bit of a stretch. But clearly, we want to get sub-5. And as Rod said, we really do want to lessen the exposure to the floating rate debt that we have on the balance sheet.

Operator:

We’ll go next to the line of Simon Flannery with Morgan Stanley.

Tom Bartlett:

Yes, sure. Let me start, and then Rod, you can continue -- or can add to it. To continue -- continuation of what we saw in 2022. I mean, the demand from -- for the kind of the digital infrastructure that we have just continues to be strong throughout the country. And it’s a really nice balance between enterprise accounts, between operators as well as the cloud. So, the pipeline remains really healthy, and we’ve been able and have taken advantage of the opportunity to capture some strong pricing actions throughout the year, particularly as we really continue to drive all the interconnection growth. So, we’re really pleased with what the team has done, with the types of business that they’ve generated, and it really resulted again in a really strong Q1, and we continue to have really strong expectations for the business going forward. With regards to kind of all of the edge work, we continue to work internally on identifying particular locations where we can actually drive 1 meg or 2 meg of power. We have a number of sites that are shovel-ready at this point, and we’re looking to move on them. We continue to have conversations with all the service operators as well as the hyperscalers and all the cloud players to continue to move forward and figure out that value proposition that we think can be a profitable one for all of us. And so, as we’ve said, it’s still early stages of it, but we continue to remain really excited about the ultimate opportunity.

Tom Bartlett:

From a design and engineering perspective, we really have the specs really well laid out such that, as I said before, we’re shovel-ready on a couple of locations to start to deploy it. And so, the teams know exactly what it’s going to look like, have identified who the vendors are that are going to be providing a lot of the resources and pieces of it. And so, we’re really far along on the overall design.

Tom Bartlett:

I don’t know that I want to get into -- at this point in time. When we’re ready to roll it and deploy it, we can give more -- we’ll give more specifics as to the overall economics.

Rick Prentiss:

Thanks. Good morning, everybody. I want to follow up on Brett’s question a little bit on the Mexico Fiber sale. Let’s go deeper into what lessons that you learned there. I think you were hoping to see some small cell. But is it just that the fiber business is dramatically different than the power business and small cells weren’t playing. But what specifically did you learn? And I got a U.S. question.

Rick Prentiss:

In this debt environment, good to reduce your floating rate and save some interest. On the U.S. side, can you update us as far as in aggregate what kind of percent of your towers do you think have been touched with mid-band spectrum by the carriers. And we’ve heard a lot of talk that private networks are going slowly, but starting to ramp, but that some of the carriers are wanting to see private networks before we get to the edge. So just trying to gauge in the U.S. where we’re at as far as mid-band touches and what you’re seeing on private networks.

Operator:

We’ll go next to the line of Michael Rollins with Citi.

Rod Smith:

Hey, Michael. Good morning. Thanks for joining, and thanks for the question. We’ve talked about in the past we are seeing an acceleration in the leasing environment in the U.S. in terms of our numbers and specifically the incremental revenue that we’re seeing from new business coming from colocations and amendment. So, we had a really strong quarter in Q1 in the U.S. We booked about $60 million of incremental colocation amendment revenue. That’s well on track to achieve our $220 million target for the year, which is a nice step-up over last year, which was about $150 million. So, that’s the acceleration that we’re seeing. That is primarily coming from the primary carriers, the big three certainly. And DISH is also a contributor in that. And I think you know and most everyone on the call knows that we have holistic deals with the carriers in the U. S. environment. So not that we’ll go through any specifics with how they work carrier by carrier, but what it does is it has our revenue contracted in there. So, we have about 90% of our revenue and revenue growth for this year fully contracted, and there’s no variability in that. So, we feel really good about that. And then when you look at the long-term going out through 2027, you’ve heard us talk about that 5% on average OTBG in the U.S. We have about 75% visibility out over that long period of time of the underlying revenue as colored for revenue growth. So we feel really good about that. But the vast majority of that activity is the big three plus DISH. Certainly, we have kind of this other category with some broadcasters, some local independent radio companies and other people that use our towers like government agencies. And they always contribute a piece there, and they’re kind of in the range that they’ve always been at. But the vast majority really is the big guys in the U.S. When you think about churn, we did have delays in churn, which helps support our growth rates for the quarter. So, we’re up to about 6.4%. Our churn came in at about 3.4% for the quarter. And the places where it’s noticeable, it’s a slight improvement in the U.S. because of churn, but that’s not the biggest piece. It’s probably more dropping down into Latin America. Within our overall guide for Latin America, we had 8 percentage points in for churn. And that is primarily coming from two big carriers

Matt Niknam:

Just two, if I could. First, on India, if there’s any more color you can give or update in terms of where that process is and when you may expect to have that resolved. And then, maybe to dovetail on the prior question, obviously, this year has been impacted by interest, FX, some VIL reserves. As we kind of move past that, is high-single-digit type AFFO per share growth maybe a more viable aspirational target to consider in 2024 onwards, or are there other maybe headwinds we should be contemplating as we start to roll the calendar? Thanks.

Operator:

We’ll go next to the line of David Barden with Bank of America.

Rod Smith:

Hey David, good morning. I’ll take the first one on Voda. So the collections rate that we’re seeing in Q1, it’s not better than our expectation. It’s right in line with our expectation. We expect the level of collection that we had in Q1 to continue into Q2 as kind of the way we’re thinking about it. I’m not sure if I heard all the detail in your question, but I’ll try to clarify for you. That collections rate that we experienced in Q1 is slightly better than what we experienced in Q4 of last year and what we experienced in Q3 of last year. So that’s where we talk about the improvement in terms of the collections from Vodafone. It’s really the first half of this year, let’s say, compared to the last half of last year. The other part of your question, I think it kind of leads into what’s happening later in the year. And we do expect an improvement in collections from Vodafone as we enter into the second half of this year. And so, that’s kind of where we’re looking. And we talk to Voda quite frequently. We have -- you have seen -- we’ve seen that the government converted their equity. That does kind of clear the way a little bit for Voda to work on their balance sheet and to potentially raise equity and debt. And we gather that they’re working aggressively on that. You may have seen a new Board appointment over in India. We think that’s a really good fact as well. And we do believe that Voda management is committed to and capable of increasing their payments to us in the second half of the year, and that’s reflected in our outlook. So that’s kind of how those bits and pieces worth most of the $75 million serve that we have in there will be booked and realized in the first half of this year.

David Barden:

Tom, if I could just follow up. I think that there is a spectrum of relationships that tower companies have with DISH. Some are activity-related, some are kind of minimum take rates with contractual escalators and such. And I think that you’re in the latter camp. Is that fair to say?

Operator:

We’ll go next to the line of Batya Levi with UBS.

Rod Smith:

Hey Batya, good morning. Thanks for the question. So regarding M&A, our view today is consistent with where it’s been in the last couple of -- the last few months, certainly the last couple of quarters, which is in this environment, given what’s available and kind of the differences that we see in pricing between private tower sales and, let’s say, public tower equities, along with some terms and conditions that, of course, are important, when you look at portfolio by portfolio and region by region, we continue to look at the pipeline. And in our evaluation, there’s nothing in there that we see that’s compelling at the moment. Nothing in there that we see that would require us or prompt us to make any kind of a move. So then we settle back in. And we’re firmly kind of committed to our capital allocation approach here going forward. And one of the things that helps guide us is the uncertainty around rates and ensuring that we’re reducing our leverage getting back below our 5 times in a prudent amount of time, also reducing that floating rate exposure, making sure we’re aggressively managing interest rates along with providing a dividend and a growing dividend to our shareholders. So, when you look at the totality of opportunities available, we’re fully committed to the dividend and dividend growth. Next, we allocate capital to our capital programs, our internal programs where we build towers. We’ll build around 4,000 this year around the globe. Those come in at very high day one NOI yields, roughly mid-teens. 14% is the number for the -- for Q1. So, we feel that that’s really good. We’re also allocating some capital within our capital number for this year towards CoreSite in the mid-$300 million, let’s call it, $360 million or so. And as we’ve discussed, that’s kind of within their cash flow generation. They produce EBITDA or gross margin, let’s say, in the mid-400s. So we’re comfortably kind of reinvesting -- their cash flow back into their business to make sure that we have capacity to continue to satisfy the customers and keep up with the record demand that we experienced last year in the first quarter of this year. And I’ll highlight again for the folks on the call here that our capital program this year is slightly below last year, not materially below, but they’re slightly below. And that’s kind of a function of allocating capital towards balance sheet and reducing leverage and reducing our floating rate exposure. When you think about Europe and Asia, like we would want to be larger in there. We think that market is very constructive for us. We do think there are some interesting portfolios there, but nothing that we’ve seen yet in terms of terms and conditions and pricing and all the different pieces lining up where it would need to be. And we don’t expect that to happen any time soon. But over the next several years, let’s call it, 2 to 5 years, Europe is a place where we could be active in looking at different portfolios. We think there’s really good backdrop in Europe. With that said, if we don’t buy anything in Europe, we’ve got a really good portfolio and feel good about our position day one. And when you think of Asia where we spent a lot of time in the last couple of years looking at different transactions in Asia, and again, nothing kind of lined up and met our criteria. We’re very-disciplined when it comes to pricing terms and conditions, counterparty and also country evaluations and things like that. We’ll continue to be disciplined. And I do think you’ll see us be very committed to balance sheet, reducing leverage, reducing floating rate debt and not active in any major way in M&A in the near term. And then, maybe in Europe, the other thing just to hit your other question, we’re seeing good activity across Europe. It’s a -- when you think about Germany, kind of the center point that Drillisch 1&1 is just beginning to ramp up their network build in a full greenfield 5G build. So, we’re seeing a little bit of revenue activity from that. But we’re excited to support them in their endeavor to build out a network there. And we do think that we’ll see more activity with them in the second half of this year and certainly in years to come. But then when you think about France and Germany and Spain across the board, we think there’s a really good backdrop, a good set of counter-parties and carriers there for us to support. And we feel really good about the growth rates and our position within those markets. We guided when we did the Telxius transaction that we would be achieving mid-single-digit organic tenant billings growth. We’ve been above that since we acquired the portfolio in this year, we’re again looking at upper single digits in that 7% to 8% range, which is a really nice place. We’re benefited from the activity that we’re seeing from the carriers in terms of the leasing. We’re also benefited from the contract terms where we have untapped escalators in Germany and in Spain, which is very helpful. And then we’re seeing very low churn rates again, because of the demand that we see from the carriers to build out networks and also the way the contracts work that we’ve been able to negotiate. So, we feel really good about our position in Europe. We feel really good about our ability to support the carriers’ endeavors to build out networks in Europe, and we think there are some good things to come in Europe.

Brandon Nispel:

I guess when we look at the U. S. leasing colo line, $60 million I think was a record for the Company ever. Are we at the point where that colo number is peaking? And just because if we look at the midpoint of the guide $220 million, it would imply some deceleration. And then, can you just help us just refresh us in terms of how your master lease agreements work in terms of the use fee provided to your customers. I guess my understanding is in year one of those contracts, it’s typically the highest use fee contribution and that those generally fall off as the term of the contract extends. But I was hoping you can help explain it for us. Thanks.

Operator:

And we have time for one more question. That will come from the line of Eric Luebchow of Wells Fargo.

Rod Smith:

So, we’re very excited about the data center business that we have. I think you’ve heard us say in the past that it’s a differentiated set of assets to the extent that it’s a cloud-rich standard facilities, multiple cloud on-ramps and lots of the facilities that we have, their network and lots of enterprise customers in there. And that really means there’s a lot of interconnection. People come into these facilities for those multiple cloud on-ramps and to interconnect with everyone else, the cloud, the networking companies and the other enterprise companies. That is helping drive this record growth that we’ve seen. So, as we’ve talked about, we saw record new bids for CoreSite through the full year 2022. And we also saw a continuation of that where we had a record new business performance for Q1 kind of quarter-over-quarter from prior year, I should say, from Q1 of last year. So that strong performance certainly is continuing. That resulted in a 10% revenue growth year-on-year for that business. That’s higher than what we underwrote that business for. We’ve talked about kind of upper single-digit 6% to 8% economic growth in that set of assets. That’s the way we underwrote it. And we outperformed last year. We’ve got a really good start this year. Maybe that 10% thinks back a little bit. But we should be solidly in the upper single-digit growth rate and within our underwriting targets for that business. We’re also seeing really strong growth in interconnection revenue, up about 9.5%. And that’s really key because that really represents what these customers are doing within our facilities and why they’re there. And it makes the revenue that we have a lot more durable, dependable and sticky because they’ve got these relationships with other enterprise customers and into all these networking companies. So, that is a really good fact. We’re also increasing prices within that market being sensitive to customers as well, but also trying to drive growth in that business and making sure we’re getting the value that these assets are contributing to our customers. So, we continue to see cash mark-to-market increases in the 3% to 5% range, 3% to 4% range, which is -- which is going well. We have escalators in lots of our contracts, so we generally see a 3% escalator kind of in our underlying contracts. The churn rate continues to be in the mid-single digits in that business, in the 6.5% range, well within our 6% to 8% target. And our maintenance CapEx is right within our target range of about 2% of revenue, runs in between $20 million and $30 million a year. So, we’re really pleased with the way that the team is running that business and the way those assets are performing for us. And quite frankly, what those assets do for our customers, which they’re really important assets for the customers. And we’re continuing at a gross margin that’s almost 60%. So, we couldn’t be more thrilled with the performance of the data center business and the future outlook, quite frankly, and the optionality that those assets provide us when you think about the edge and potentially connecting those assets into our towers and into edge compute facilities closer to our customers’ base radios on the wireless side, but also closer to network companies as well as enterprise customers that are scattered throughout the U.S. So, that business and the future outlook there is really strong.

Operator:

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.

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.

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%. 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.

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.

Simon Flannery:

Well, I guess, just in terms of the scale M&A, you've obviously done a lot of deals over the years. If you get back down into that three times to five times leverage, is that when we think about you're potentially looking at larger deals again?

Simon Flannery:

Great. Thanks a lot.

Operator:

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

Tom Bartlett:

Hey Rick.

Tom Bartlett:

Actually, Rick, it's going to be very consistent, very linear throughout the year. And so largely, it's a function of the relationships and the agreements that we have in place. But we would expect it to be very consistent in the US throughout the year.

Tom Bartlett:

Yeah, exactly the same. I mean, it's – as we have said, as we have predicted, as we have thought, and again, it comes down to largely the relationships that we have with our customers. We see strong demand coming out. I still think we're in the early innings really with 5G. Our customers on average are probably on about half of our sites. So there is a significant amount of opportunity there. But it also comes down to the types of relationships and the arrangements that we have with regards to our MLAs. So we are underscoring really what we had said a year ago relative to growth coming out of 2023 through 2027.

Tom Bartlett:

Well, I mean, you've got a couple of questions in there. We're not going to – we're not focused on rolling out a long-term guide at this point, as you would expect. But there have been some significant macro environment changes that happened around the world that we use to underwrite kind of that double-digit expectation, which I think is what you're referring to. But I'm not letting the foot off the gas in the business, okay? We're not changing anything at this point in time. Our core growth, as Rod just walked through, really remains really, really strong. And we don't have any expectations for that kind of growth diminishing. We see kind of 4G, 5G being rolled out across all of our footprints, which really gives us a lot of comfort in terms of being able to suggest that, that growth is going to continue. Now, also having the types of relationships that we do with our customers in the United States helps underpin a lot of that growth. The interest rates, Rod walked through the impact of rates. It's kind of a reset in 2023. I believe it to be kind of more of a one-off, if you will, in 2023. So we remain really bullish on going forward. As I said, I'm not going to talk about long-term guide, but I'm not letting the gas – letting the foot off the gas at all within the business. With regards to – of our dividend program, as you all know, you're a REIT expert. Our policy is just followed our REIT TI. And it's been very consistent. We've been able to enjoy double-digit rates of growth on our dividend for the better part of the last 10 years actually, which has been very supportive. And we continue to be – we continue to feel that our dividend is an important part of our total shareholder return. So we're looking at 10% dividend, as Rod talked about this year. It's difficult really to predict what that might be. It depends upon what we bring into the REIT, what's not in the REIT, obviously, what kind of M&A exists out there. It could drop a little bit to high single digits. But again, we continue to expect it to grow significantly. And as I said, it's an important piece of our overall total shareholder return.

Tom Bartlett:

You bet.

Michael Rollins:

Thanks and good morning. Just a couple of follow-ups. So first, and maybe this is a slightly different question on the US leasing environment. But you outlined the percentage of revenue tied to comprehensive deals. I'm just curious if you can unpack where the flex could be in US performance, both in 2023 and maybe going forward as you think about the organic leasing growth potential of the US business. And then thinking a little bit more about the percent of revenue that you have tied to comprehensive deals. You shared a lot over the last couple of years on how the US has been shaping up on that front. Can you share with us how other regions fit in terms of the percent of revenue tied to comprehensive deals? And as you work with your customers, are there aspirations that you have in different markets to get that to certain levels over time? Thanks.

Michael Rollins:

Thanks very much.

Operator:

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

Tom Bartlett:

Okay. Dave, you got a bunch of stuff packed in there. Let me start to -- no. Relative to the M&A in India, there's not a direct connect between the two. They are somewhat mutually exclusive types of decisions. And it really becomes, again, part of a broader portfolio kind of conversation relative to what we think may make sense for the portfolio in terms of driving further value over time. India is really just kind of an opportunistic at this point in time. And really, it's -- we're in kind of the exploration mode at this point. A number of things going on there. And to the extent that there is, again, a value creation opportunity for us, we can continue to enjoy the growth of the market and utilize that capital in other parts of the world, including using it to further de-lever, perhaps more -- even more quickly than we would have otherwise thought is not a bad thing. So, there -- I understand the kind of the connection that you're drawing there, but I'm not really looking them in that way. And I really do believe the paths are separate.

David Barden:

Okay. Great. Thank you guys. Appreciate it.

Tom Bartlett:

Thanks.

Richard Choe:

Hi. This is Richard for Phil. Just wanted to follow-up on the builds. So what do you see as the most attractive markets right now internationally?

Tom Bartlett:

Just adding on to that, one of the really interesting, I think, parts of the build is what we're doing in Africa, because we're really focused on building green sites in Africa with Airtel and really leveraging a lot of the power and fuel competencies that we've created in that market. We brought in solar to over 15,000 sites. We brought over lithium-ion in over 19,000 sites. We've reduced 5 million liters of diesel over the last several years. And so there is an incredible competency that we're building with regards to Power as a Service in that marketplace. And we're able to bring that then on to those green sites that we're building in conjunction with our -- with the agreement with Airtel. So that's a particular interest that we're really excited about over the next couple of years.

Tom Bartlett:

I'm certain that there are certain pockets of the United States where we're already seeing some densification going on in the marketplace. And so I would expect that to continue as penetration continues with 5G sets. Keep in mind, it's in the carrier's best interest to deploy out 5G, because it's going to lower their overall cost of providing service. And so as activity continues to drive and as applications continue to develop and get deployed, you'll start to see that densification. But -- so I think it is already going on. And I would expect that over the next two to three years, we'll see an increase even in the densification within the market. Also keep in mind that carriers are using slightly higher spectrum bands. And so given the propagation characteristics, they're going to be requiring higher levels of densification as a result of that as well.

Operator:

Your next question comes from the line of Eric Luebchow from Wells Fargo. Please go ahead.

Rod Smith:

Yeah. Sounds good, Eric. So when it comes to Latin America, I guess what I would point to is our guide on organic tenant billings growth is a little bit higher than 2%. That comes in a few pieces. The gross new business is going to be in the mid-single digits, let's call it, around 3% or so. We're also seeing higher escalators at around 8%. And we do have a headwind of churn of about 8% as well. That's the bits and pieces in terms of getting into that growth rate. So you can see the churn number is fairly high. We do think it's temporary, and we do think it will work through it over the next couple of years and get back to a more compelling overall growth in the market. And when it comes to the churn pieces in our guide specifically, when you look out here in 2023, Telefonica is really the biggest piece. And I don't want to get too detailed in terms of customers. But I think everyone knows what's happening in Mexico with Telefonica and then joining AT&T as an MVNO there. So that's driving a fair amount of the churn. We're also seeing some churn remaining from American Movil really through the Nextel assets that were purchased down in Brazil. Those are the two things other than smaller churn, smaller customers throughout the region. But it's really the Nextel and the Telefonica in the bigger piece. And then the Oi piece really is going to be out over time. So there's a couple of things that I would say about Oi. Oi in total is about $100 million of revenue for us. It represents about 1% of our overall business. About one-third of that is tied in with their landline business, which we fully expect that the landline business of Oi will keep those sites over time. The other two-thirds, we have, on average, five to six years remaining on the length there. So that will be -- kind of over time, we'll see Oi is not a significant impact today that we're seeing, but that may start unfolding this year and into next as we negotiate with the three players who kind of carved up the Oi. It will probably extend into a multiyear period in terms of getting through Oi. So that's kind of what's happening in Latin America relative to the churn issues. Yes. On the balance sheet, a couple of things that I would say. I mean, we have longstanding percentage policies when it comes to fixed and floating. We run 80-20. We're pretty much there at the end of 2022. We expect to stay in and around that range. I mean, we can be opportunistic. I think you saw it at the very end of 2021 just before interest rates began to rise. We were fairly aggressive in terms of terming out floating rate balances. We got our floating rate percentage down to closer to 10%. With about 90% or just over 90% on fixed, we did that very purposefully to take advantage of the low rates, both in the US bond market and the euro market. And that was just ahead of purchasing the data center business on December 28, 2021. So we can be flexible there. In terms of managing the balance sheet going forward, we have about $3 billion in bonds that we'll refinance this year. We'll look at a variety of opportunities to do that. That could come in the form of getting into the US capital markets that we can do that or parts of that in the European markets. And of course, we'll be balancing short-term and long-term rates. We could stay on the shorter end of the curve and with the expectation that rates may come down in the next couple of years, and then we go out longer when the rates are more attractive. We can also secure some of the debt that's on the balance sheet to the extent we refinance it and maybe carve off some savings from that perspective as well. So there are a lot of opportunities in terms of looking at the market. There's a lot to consider in terms of where we expect rates to head. But as I said earlier in one of my last comments, we do expect that rates will probably peak here in the US this year, maybe even drift down later in the year. And we'll continue to watch the markets and interest rates and economy to see what we expect to be happening next year. But we'll be looking at the full curve and all the different capital opportunities that we have in front of us to make the very best decisions going forward.

Rod Smith:

You’re welcome.

Batya Levi:

Great. Thank you. Just following up on India and specifically for Vodafone. Can you size the partial payments that they're making right now, if there's been a change in the pacing? And if there are any adjustments to the pricing of their contract with you? And just going back to evaluating strategic options for India. It's been a challenging market, but potentially there is some improvement. How do you sort of underwrite what valuation you would take versus the -- your long-term growth assumptions in that region? Thank you.

Batya Levi:

Yes. With improvement in India, why is this the right time to look for strategic options in the region?

Batya Levi:

Okay. Thank you.

Operator:

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

Tom Bartlett:

No, it's really not. As a matter of fact, if you saw the numbers coming in from the field in terms of what they expected to build, it's significantly higher, candidly. And what I -- what we do is, we ratchet that back and look at the opportunity and look at where we can drive the most value there. So there's nothing going on there with regards to the pullback on sites. By the way, we will see different levels of site build in each one of the countries, just like we see different levels of colos, amendments depending upon what densification looks like and what the carriers are looking like. But now I wouldn't read in anything in terms of the pullback on India new builds for 2023.

Tom Bartlett :

Yes. No, nothing specific. I mean, I -- we have a fair amount of history in the kind of in that particular part of the infrastructure business. We knew what the model was that CoreSite was delivering on with their customers and how significant interconnection was in terms of driving value for their customers as well as for the cloud and service operators, and that demand continues. And it's a significant barrier to entry for others to be able to compete against them. I'm continually incredibly impressed with the team and how they think about returns and how they think about the relationships with the customers. So -- but that wasn't surprise, because I thought that candidly through the entire due diligence process. So I knew the quality of the group. We did enjoy significant growth in 2022, which I think just goes to the strength of the team and strength of the value proposition that they're offering their customers. And we believe that 2023 is going to be another strong year. We still have, as you would expect, a significant amount of energy around what the edge will ultimately look like. We have created an advisory board. We have a lab set up. We have plans to start to look at building out some of that capacity. We've identified about 1,000 sites within the United States that can handle up to over a meg of capacity. And through the relationships that we've been able to develop really through CoreSite with the cloud, we remain really optimistic about what that opportunity is going to look like and how we're going to be able to drive incremental business to our tower site, which is in and of itself has a strong competitive barrier given the ownership that we have of the land and of the site. And so we're very excited about it. There's nothing in our guide relative to performance coming from that activity. And as we've said, it's going to be a multi-year rollout. But we think that as a result of the CoreSite assets as well as our tower assets, we're really uniquely positioned to be a meaningful part of the puzzle as the edge continues to develop. So as I said, I think we would just continue to underscore what we originally had thought, and we're continually working very methodically in terms of trying to become that linchpin for rolling out that kind of capability.

Rod Smith :

And Nick, maybe I'll just add -- complement on to what Tom said here. As we wait for the edge or work for the edge to develop, the CoreSite business is performing exceptionally well and right in line with our expectations. You heard us talk earlier about the record new business that we achieved in 2022. We see strong demand from enterprise customers on those core data center assets that we have around the country. A few of the key metrics here. We are seeing escalations right around 3% on our rental space, which is right in our target range. We see cash mark-to-market adjustments for 2023 go up beyond where they were in 2022. So, they've gone from about 2% up to maybe 3% to 3.5%. So, that's certainly a good factor. Churn continues to be in and around 6.5%, which is on the low end of our range. Interconnection growth we expect in 2023 to be in the 6% to 8% range, kind of right in line with where we would expect it to be. And our development CapEx is coming in at around $360 million for 2023. And much of that is to replace capacity that we sold in 2022 through those record new business numbers that we will be deploying in 2023 and 2024. Replacing that capacity is really where the CapEx is being deployed. So, we're seeing very good results and really demand from that CoreSite business, again, as we look to work to develop the edge.

Operator:

And that's all the time we have for questions today. I would now like to turn the conference back to your speakers for any closing remarks.

Operator:

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.

Adam Smith:

Good morning and thank you for joining American Tower's third quarter 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 discuss current technology trends and how we are positioned to benefit from continued wireless technology evolution. And then Rod Smith, our Executive Vice President, CFO and Treasurer, will discuss our Q3 2022 results and revised full year 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

Rod Smith:

Thanks, Tom. Good morning and thank you to everyone for joining today's call. As you heard from Tom, we are very encouraged by the technological trends that we believe will drive continued secular growth in the industry and a long runway of growth for American Tower. Before I walk through the details of our Q3 results and revised outlook, I will first touch on several key trends and developments from the quarter, including the evident strength of leasing demand across our footprint and renewed collections volatility in India. First, we continue to see 4G and 5G investments driving strong demand across our footprint, which translated into solid gross leasing growth in the quarter and we expect this trend to continue and further accelerate, particularly in the US as we approach 2023. We complemented sequential growth in organic leasing with nearly 1,600 newly constructed sites internationally earning on average, low double-digit returns on day one, driven by those same trends. Additionally, demand for hybrid IT solutions optimally suited for our US data center portfolio remains healthy. This resulted in another strong quarter of leasing results, fueled by digital platforms and the continuation of enterprises moving their IT infrastructure from on-premises to interconnection-rich co-location facilities with direct cloud access, such as CoreSite. Next, we closed on Stonepeak's initial $2.5 billion investment in our US data center business in August, which was upsized by another $570 million after quarter end at the same valuation in terms. This further highlights the differentiated characteristics and value of the CoreSite portfolio, while establishing a partnership through which we will execute on our US data center strategy. Also, we signed a new comprehensive MLA with Verizon at the end of August, which is expected to allow Verizon to efficiently accelerate their 5G network deployment over a multiyear period. This agreement is yet another data point, illustrating the fundamental long-term criticality of our portfolio as our customers seek to leverage our scale and capabilities to rapidly deploy nationwide 5G and further provides tangible evidence that our US business should have a solid runway of growth over the next several years. Additionally, we executed a new multi-market MLA with Airtel Africa, our largest customer in the region. Under this new long-term agreement, we've secured attractive terms across our existing Nigeria, Kenya, Uganda and Niger portfolio, along with a contractually committed, attractive build-to-suit pipeline to support Airtel Africa's 5G deployment, among other opportunities. Importantly, with Airtel Africa, we share a focus on advancing wireless connectivity in a sustainable manner, which is represented in this agreement through a commitment to deploy low-carbon sites and expand our digital communities program. Our agreements with both Verizon and Airtel Africa, two of our largest customers is the latest demonstration of the value our global scale and operational capabilities as a company, both in markets and across borders, can unlock to provide mutually beneficial solutions for American Tower and our partners. With that, I'd like to take a moment to address some uncertainty related to collections arising out of our India operations and how this event has affected our results for Q3 and revised outlook for 2022. In Q3, collections from Vodafone Idea or VIL, fell short of our billings. And the customer has also communicated an expectation for that trend to continue through the balance of this year. As a result, we found it prudent to take certain reserves associated with VIL in Q3 and against the anticipated Q4 billing shortfall in our revised guidance. Consequently, our full year expectations now include approximately $95 million in additional revenue reserves, about half of which was booked in Q3. It also includes the removal of a $30 million bad debt reversal that was assumed in our prior guidance. Together, these result in a reduction in adjusted EBITDA and attributable AFFO of $125 million. At this time, our revised outlook for net income does not assume any additional impairment charges associated with the goodwill and intangibles that we currently have on the books associated with VIL, as the shortfall in cash flows is being viewed as temporary. It should also be noted that VIL did express a commitment to revert back to 100% payment at the start of 2023 and repay outstanding pass-through balances, which could potentially provide an opportunity to reverse certain reserves we've taken in the future. VIL has also laid out a set of strategic steps that we will closely monitor on its path to more stabilized and consistent payment, including the conversion of its AGR interest into equity held by the Indian government. However, until then, we expect continued uncertainty in collections for VIL and have reflected those risks in our revised outlook. In the meantime, we are actively working with VIL on the path forward, which could potentially include converting a portion of its existing AR into optionally convertible notes, which we believe can better secure our receivables. We will incorporate new developments that unfold over the next several months into our guidance for 2023 on this February's call. With that, please turn to Slide 6, and I'll review our Q3 property revenue and organic tenant billings growth. As you can see our Q3 consolidated property revenue of $2.6 billion increased by over 10% and over 14% on an FX-neutral basis as compared to the prior year period. Growth was primarily driven by solid organic leasing, execution on our international new build program in contributions from our US data center business, partially offset by headwinds of approximately 2% associated with revenue reserves taken in India during the quarter, as discussed, and another 2% from Sprint related churn. Moving to the right side of the slide, you can see we achieved consolidated organic tenant billings growth of 2.6% for the quarter. In the US and Canada, as expected, net organic growth was slightly positive at 0.3%, including a sequential step-up in gross organic new business of $38 million, a meaningful acceleration from $31 million in Q2 in our highest quarter since Q1 of 2020. As we have indicated throughout the year, we expect this acceleration to continue into Q4 and even further in 2023, where a large portion of our growth will be contractually committed through our comprehensive MLAs. Escalators were 2.8%, which, consistent with last quarter, were impacted by certain timing mechanics within our MLAs. Though for the full year, we expect escalators to come in right around 3%, consistent with historical trends. This growth was offset by the impact of Sprint churn, which continues to drive over 4% of negative headwinds year-over-year and will step down in Q4 as the largest tranche of contractual Sprint churn will have lapped in our year-over-year growth metric. On the international side, organic growth was 6.1%. Starting with Europe, we saw growth of 6%, which is now at a more normalized level with healthy largely in the prior year base. In Africa, we generated organic tenant billings growth of 6.8%, modestly higher than prior expectations due to some delays in anticipated churn now pushed to later in the year. Growth also included another strong quarter of gross organic new business standing at 7.5%, putting Africa on track for its best organic new business year on record and continuing past quarter trends, we saw the strong organic leasing activity complemented with an active new build program, constructing just over 250 sites in the quarter as we see 4G coverage and densification initiatives continue to drive strong top line growth and returns on our capital deployments across the region. Moving to Latin America. Organic growth was 8.2%, which includes approximately 9. 7% from escalations. Growth through organic new business and escalations was partially offset by another quarter of elevated churn, primarily associated with certain decommissioning agreement, which we expect to further accelerate in Q4, as highlighted on previous earnings calls. In APAC, we saw organic growth of 1.9%, in line with our expectations, which comes alongside a continuation of solid new build activity with 1,200 sites constructed during the quarter. Turning to slide seven. Our third quarter adjusted EBITDA grew nearly 6% or over 8.5% on an FX-neutral basis, to over $1.6 billion, with strong revenue growth and cost controls, partially offset by the negative impacts of Vodafone Idea revenue reserves and Sprint related churn, together representing approximately 6% headwinds to growth. Adjusted EBITDA margin was 61.5%, down 170 basis points year-over-year, driven by the lower margin profile of newly acquired assets, the conversion impacts of Vodafone Idea reserves and Sprint churn, along with higher pass-through revenue resulting from fuel costs. Moving to the right side of the slide, attributable AFFO, and attributable AFFO per share decreased by approximately 3% and 5%, respectively, with each including a 3% headwind associated with FX. Growth was meaningfully impacted by the Vodafone Idea reserves and Sprint related churn, combining for an over 8% offset to otherwise strong and resilient performance across our global operations. Let's now turn to our revised full year outlook, where I'll start by reviewing a few of the key high-level drivers. First, performance remains solid across our portfolio as demand for wireless connectivity and the rollout of next-generation networks are fueling strong new business volumes across our regions. Together with the straight-line benefit from our recently executed MLAs, along with pass-through increases, primarily related to power and fuel, we're raising our property revenue and adjusted EBITDA guidance for the year. Second, we have revised our FX assumptions using our standard methodology, which has resulted in outlook to outlook headwind of $45 million, $22 million and $13 million for property revenue, adjusted EBITDA and consolidated AFFO, respectively. Finally, and as noted earlier, we have incorporated approximately $125 million in incremental reserves relative to our prior outlook, associated with Vodafone Idea. This includes $95 million in revenue reserves, split between Q3 and Q4, and the removal of our previous assumption for incremental bad debt reversals of around $30 million. As I mentioned, Vodafone Idea has communicated its intention to resume full recurring payments in 2023. However, at this time, we believe these adjustments to be appropriate for the current year. With that, let's discuss the details of our revised full year expectations. As you can see on slide eight, we are raising our property revenue outlook by $70 million at the midpoint. This outperformance includes straight-line upside of approximately $65 million, primarily associated with our recently executed Verizon and Airtel Africa MLAs and $77 million in higher pass-through revenue driven by fuel costs, along with various non-recurring benefits, including accelerated decommissioning-related settlements in Latin America, which we now expect to total approximately $85 million for the full year. Our guidance raise was also supported by a recurring revenue upside across several of our segments, helping to contribute to some modest revisions to our organic tenant billings growth outlook, which I'll touch on shortly. This outperformance was partially offset by the $95 million in incremental revenue reserves related to Vodafone Idea and $45 million in FX. Moving to Slide 9, you will see our organic tenant billings growth expectations, while we are reiterating our prior outlook on a consolidated basis and for the US and Canada as well as APAC segment, we are slightly revising our expectations for International, Europe, Latin America and Africa. For international, we are raising our organic growth to approximately 6.5%, up from approximately 6% previously. In Europe, we have adjusted our organic growth expectations to greater than 8% from approximately 9% in our prior outlook, where we expect new business commencements to shift further into 2023. In Latin America, we are increasing our organic growth expectations to greater than 7%, up modestly from approximately 7% in our prior guidance, reflecting a continuation of the CPI-linked escalation benefits in the region. In Africa, we are increasing our organic growth expectations to greater than 7%, up from approximately 6.5% in our prior guidance, reflecting the delays we're seeing in anticipated churn, as I mentioned earlier. As a reminder, in Latin America and Africa, consistent with prior assumptions, we anticipate consolidation-driven churn events to drive a sequential decline in growth as we exit the year resulting in what we expect to be approximately 4% and 5.5% organic tenant billings growth in Q4, respectively, with some carryover impacts as we head into 2023. Lastly, in the US and Canada, where we are reiterating our prior organic growth outlook, we expect to see Q4 organic tenant billings growth of around 4%, with further improvement in 2023, backstopped by the contractual visibility afforded through our comprehensive MLAs with the big three carriers plus DISH. Moving to Slide 10. We are raising our adjusted EBITDA midpoint by $30 million as compared to our prior outlook, where we're seeing a high conversion of property revenue outperformance delivered through prudent cost controls and continued elevated services volumes, providing meaningful upside as compared to our previous expectations. These benefits are partially offset by the $125 million associated with incremental reserves assumed for Vodafone Idea, as previously discussed along with $22 million in FX. Turning to Slide 11. We are lowering our attributable AFFO guidance by $40 million or $0.09 on a per share basis. This adjustment is attributable to the Vodafone Idea reserves we have taken, which is translating into approximately $0.27 per share of downside, offsetting what was otherwise very strong performance across our business, which represented approximately $0.20 per share outperformance on an FX-neutral basis. Moving to Slide 12. Let's start by taking a look at our capital deployment expectations for the year, which are slightly updated compared to our prior outlook and continue to reflect our focus on driving sustained AFFO per share growth and shareholder returns. Within our capital deployment plan, we are reiterating our expectations to dedicate approximately $2.7 billion, subject to Board approval towards our 2022 dividend. With regard to CapEx, we are reducing our total midpoint by $45 million, with redevelopment decreasing by $35 million and start-up decreasing by $10 million, the result of some timing adjustments and savings as compared to our prior plan. We continue to assume the construction of approximately 6,500 new sites globally and roughly $300 million towards our US data center business, largely associated with development spend. As we've highlighted in the past, we continue to generate exceptional returns through our discretionary CapEx program, which remains largely financed through the redeployment of locally generated cash flows. We view our ability to allocate nearly $1.8 billion towards accretive high yield projects as a strategic benefit after years of building scale and credibility with our global customer base in a compelling way to further build scale and drive accretion for years to come. Finally, although we have not incorporated into our revised guide, I'd like to highlight that with the additional capacity we currently have as we outpace our delevering plan, we expect to opportunistically restart our share buyback program. Given recent market performance and the strong fundamentals we anticipate in our business over the long-term, we see this as a great opportunity to further drive shareholder value particularly against other forms of capital deployment in our current line of sight. Moving to the right side of the slide, I'd like to take a moment to review the progress we have made since the start of the year to shore up our balance sheet and liquidity position, particularly in light of the market volatility and unprecedented rise in rates occurring over the past several months. As you recall, we closed the CoreSite acquisition using our bank facilities and term loans, temporarily moving our leverage to 6.8 times and our floating rate exposure to 31% at the end of 2021. Since that time and against the challenging backdrop, we have strategically termed out short-term borrowings through common equity, private capital and senior unsecured note offerings, all at solid terms and pricing. Today, our leverage stands at 5.5 times ahead of plan with floating rate exposure of around 20%, in line with our long-term target. Looking ahead, we continue to believe this profile is appropriate given the predictable and contractual nature of our cash flows while providing us exposure to pre-payable debt, which offers us financial flexibility as we execute on our delevering path, and access to the typical low rate short-term curve. In addition, a meaningful portion of our floating rate debt is euro denominated, which provides us a natural hedge and diversified capital structure, while also offering pre-payable debt at terms more competitive than those currently available in the US. Although we anticipate 2023 as it appears today, we'll present certain growth challenges stemming from the current rate environment, we feel comfortable with our proven approach to balance sheet management. This includes our ability to manage our upcoming 2023 maturities where we expect our diversified sources of capital and solid liquidity position to provide near-term financing flexibility, allowing us to opportunistically access the markets against a healthy and constructive backdrop. In short, we believe our investment-grade balance sheet and the long-standing policies we've established position us well to navigate various economic cycles, including the challenges we're all facing today. And although we may see certain growth headwinds in the near-term, we believe our investment-grade credit rating and continued access to diversified sources of capital coupled with our focus on maintaining robust liquidity will serve as a more meaningful competitive advantage over the next several years. Finally, on slide 13. And in summary, we had a strong Q3 across our global business with solid operating performance, accelerated leasing and resilient demand even in the face of a challenging economic backdrop. During the quarter, the long-term critical nature of our portfolio of assets in positioning to drive sustained and compelling growth was further highlighted through key customer agreements with Verizon and Airtel Africa and the closing and subsequent upsizing of our Stonepeak partnership in our US data center business. Although, we will likely experience some growth pressure in the near-term associated with the continued rise in interest rates, we see our investment-grade balance sheet, liquidity and diversified sources of capital as a key competitive advantage as we execute on our growth strategy over the next decade and beyond. As we look ahead and over the long term, we are excited about the positioning of our global portfolio of communications assets as our customers augment and extend their networks to meet exploding data-driven demand and believe our global scale and proven capabilities have us positioned to drive incremental sustainable growth and value creation for our shareholders for years to come. With that, I'll turn the call back over to the operator for Q&A.

Simon Flannery:

Thank you. Good morning. Tom, it was good to hear your discussion about the opportunities from 5G and particularly from CapEx capacity additions as well as the favorable comments around near-term and medium-term US leasing trends. Can you square that with the CapEx trajectory at the likes of Verizon and T-Mobile where they're expecting a significant step down? I know it's not a one-for-one relationship. But how do you expect this to evolve? Because I think there's a sense here that there will be some deceleration as we've seen sort of in prior 4G cycle. So what's the offset to those lower CapEx numbers?

Simon Flannery:

Great. Thanks a lot.

Operator:

Next question comes from the line of David Barden, Bank of America. Please go ahead.

Rod Smith:

Hey, David. Good morning.

Rod Smith:

Yes, that sounds good. Good morning, David. Thanks for the question. I hope you're doing well. So regarding India and Vodafone and kind of their current situation, their desire to renegotiate some MLAs, I don't want to get into too many of the terms and conditions, certainly not want to talk about things that haven't happened yet in the future. But, I can tell you, they are in a predicament with their balance sheet, which everyone knows about, there's been a lot of press regarding that. So they're looking for a number of things from us in terms of supporting them. Discounts may be one of them, we'll certainly talk about that with them kind of over time. But I don't want to get into the details in terms of what we may or may not be willing to do. If we were to provide any kind of a disc that just run through our churn numbers and would be in our guidance. I don't expect any changes through our organic net billings guidance for this year negotiation or renegotiation with Voda. So -- and if anything changes next year, we'll update you for next year. I guess shifting, David, to the note, we did convert 200 -- or we have the option to convert $200 million of our existing accounts receivable, this is not a new investment, into Voda. I want to make sure that, that's clear. But existing accounts receivable that's on the balance sheet, we have signed an agreement where this $200 million could become a convertible note, but that is contingent on some conditions happening in India, both the government converting their near-term interest into -- I think, everyone is aware of that playing out. So that have to happen first. And if that does happen, then we could convert $200 million of our existing accounts receivable into a convertible note. The reason that's interesting to us, number one, is it helps shore up Voda a little bit. It basically moved the account receivable and, let's say, an MLA default into more of a financial interest and it helps them get some equity and maybe some additional debt on their book. So we want to support them and help them through this difficult time. So that certainly is one reason. The other thing, having this note, it does have predefined payment time frame in it, which is a little bit more certain than what you might see in typical accounts receivable that's hanging on the balance. And then we also have the option, at our option, to convert it to equity, which is another way for us to liquidate that favorable balance. So I think it increases our flexibility. It increases the probability in the near-term to convert it to cash, and that's really the reason we're interested in doing it. So -- and it helps Voda. So all those things, we did really looked at it and it makes a lot of sense for us, and I think it makes sense in terms of our willingness to support them.

David Barden:

Perfect. That’s helpful color. Thank you both, Tom and Rod. Thank you.

Rod Smith:

Thanks.

Greg Williams:

Great. Thanks for taking my questions. I have two. One is how much of the raise in guidance the $142 million in straight line was related to the Verizon MLA, if any? And second 1 is just dovetailing off of the M&A discussions, what is your appetite for M&A that's not tower-related? Now that you think about augmentor data centers, we've heard possible Asia data centers are of interest or even US fiber. And I'm just curious of your thoughts. Thanks.

Rod Smith:

Yes, thanks. Thanks, Greg, for the question. So the straight line increases that you see in our in our outlook here, we have an increase of straight line of about $65 million built into our property revenue guide. That's really split between the new Verizon deal as well as the deal over in in Africa with Airtel Africa. I don't want to break down that in too much detail and give you the piece parts, but it's really those two deals that make up.

Greg Williams:

Great. That’s helpful color. Thank you both.

Operator:

The next question is from Batya Levi from UBS. Please go ahead.

Rod Smith:

Yeah. Thanks, Batya. I'll give you a quick update on Europe here. So we are seeing really strong growth in Europe as you've heard us talk about consistently throughout the balance and the activity is really split across the markets and across the carry. So we're seeing good activity with all the carriers there. I don't want to talk about carrier to carry, but I will just call out that we are seeing 101 begin to build a new park there. We are beginning to see leasing activity. We certainly expect that to ramp up towards the later part of this year and be a much more meaningful contributor next year. The one thing we'll see, we are pulling back our guide a little bit in Europe, but organic in -- growth. That really is just a delay in terms of timing on some certain leases that we have in our pipeline. We're seeing that shift up a little bit into -- later into Q4 and even some of the things later into Q4 shifting into next year. So that's really what you're seeing from that perspective. And remind me the second part of your question was it AFFO guide?

Rod Smith:

Yeah. I think -- I mean, I think you should think about 2023 as a challenging year for us. I think everyone knows the interest rates are rising rapidly here, probably more rapidly than most people expected as we head into the end of this year. That is a noticeable material headwind for us in the AFFO line heading into -- so that will be a challenge. That certainly will take us off of our target AFFO growth. I don't want to get into too many specifics. But I think you guys have probably enough information to kind of work the numbers. And when you look at the rate of increase on interest line for us with the interest rates rising that will be a challenge. When we get -- the other challenge for next year is the timing of equity raise, we'll have the full new equity to 10 million shares kind of running in the numbers next year with the early in half of this year. So the comp is a difficult comp from that perspective. I do think when you get out to '24 and beyond, we are seeing really good support for leasing revenue in around the globe. Particularly in the US, you've heard us say we're acceleration of new business from co-location and amendment activity. That acceleration continues. We expect to end this year very strongly coming in very close to that $150 million of co-location new business in the US. And we're seeing that accelerate into next year on a run rate basis, which is also underpinned by our long-term MLAs. So, we have really high visibility into next year. So we expect to see a meaningful step-up in US co-location and amendment revenue into next year. And that puts us firmly on-track for our long term and particularly to the US organic growth averaging 5% from '23 out to '27. And that includes some impact from the -- which is about 100 basis points. So without that, you'd be at about 6%. We're firmly on track for that beginning next year and going forward because of that nice acceleration, that strong demand we're seeing in the US.

Rod Smith:

Thank you.

Michael Rollins:

Thanks and good morning. Just curious, as you're looking out over the next 12 to 24 months, can you frame just some of the friction points around whether it's market consolidation that you're seeing or some of just structural issues for maybe things that customers are working through? And just how to think about the magnitude and timing of those headwinds, maybe relative to some of the other things that you've noted around the build-to-suit opportunities and the organic improvement in demand?

Rod Smith:

Hey, Michael, this is Rod. I just add...

Rod Smith:

Yes. And Michael, I'll just add, in terms of the churn, the near-term, one thing that you will see is our churn rates are actually coming down from Q3 to Q4. So globally, we – in our 2.6% Q3 organic tenant billings growth, it was about $5.5% -- 5.4% that was cancellations or churn. That's going to step down to about 4% in Q4, which will end up driving our organic tenant billings growth for Q4, up from that mid-2s up to over – well over 4, certainly, which is really good. And that 4.4 in Q4 is what helps us drive that 3% for the full year. And in the US, you're seeing that churn drop in the US. So the good news here is, we're through the big bulk, the initial bulk of Sprint churn, you're going to see organic tenant billings growth for Q4 in the US at around 4%, which will be getting us back to where we really want to be longer term. And then in the international markets, we do have some, as Thomas saying some churn events, some elevated churn. Those churn events will be temporary as certain countries go through a little consolidation. But you will see from Q3 to -- from Q3 to Q4, churn will step up by about 100 basis points, going from about a little under 5% to up end of the 5 churn in the international markets. And the only thing I'd call out specifically is in Latin America, you will see -- that's where a bulk of that temporary churn will begin to hit. So you will see a step up in our churn rates in Latin America going from about 5% in Q3, up to a little over 8% in Q4. And that's all the normal churn that that we've all talked about that you guys know is coming. Some of that will persist into next year as well, particularly in Latin America.

Rod Smith:

You bet. Thanks, Michael.

Ric Prentiss:

Thanks. Good morning, everybody.

Ric Prentiss:

Hey. Hey, I want to follow-up on a couple of questions. One following up on Simon's question about CapEx. If we think about the US. Is part of the reason maybe you guys are so confident that the US leasing goes up in 4Q and then goes up and accelerating to 2023 possibly to do with the timing? Your Verizon MLA, your positioning of when you were getting contracts from DISH and that visibility that you talked about, Tom. Just trying to think, is some of this that it's very visible to you, it's really kind of more timing related?

Ric Prentiss:

Right. And if you're not seeing any air pocket out there that's been some of the concern in the marketplace because of high interest rates or because of inflation, maybe turns into recession at least on the US side and the carrier spend with you, it sounds?

Ric Prentiss:

Okay. And last question for me is a follow-up on some of David's questions. The stock buyback, what would trigger that? What else has to happen to trigger the stock buyback? That obviously will require some funding that could affect back on to the interest rate side. And second question with that is, was your $570 million upsizing from some peak kind of expected in the guidance also?

Rod Smith:

Yes. And Rick, maybe I would add to that, just from a leverage standpoint, we ended the quarter here at 5.5 times levered post this -- the CoreSite acquisition, we were as high as 6.8. So I'll just remind you and everyone else we have. We did start out higher than our target leverage range, which is 3 to 5 times. We work through plans with the rating agencies to delever -- our investment-grade credit rating. That is critical to us. That's very important. We take leverage very seriously. That's why we've been able to delever as quickly as we have, going down from that 6.8 to 5.5. I'd also tell you that the 5.5 is -- we're comfortably lower than the delevering plan that we've agreed with the rating agency. So that puts us in a pretty good position. The plans that we've agreed with the rating agencies did not contemplate or include the $570 million. So that additional capacity that we have to either further delever well, well ahead of the delevering plan, or we can put it to use in a different way. So that's what we'll be looking at. When you think about the $570 million from Stonepeak, that is in our guidance in terms of the mechanics and the way it runs through our numbers. But it's important to point out that it is a benefit when it comes to our ability to delever. And then, of course, when we think about what we do with that capacity or any other capital capacity that we have available to us, we'll always put a share buyback up against our own internally generated net asset value of the company and what we look at in terms of the share value. We're also balancing the analysis around the cost of debt and how we drive better AFFO per share accretion, either paying down our revolving credit lines or buying back shares. So there's a lot of math, as you know, that goes into that. So we expect to be flexible and opportunistic as we evaluate what we do with our capital. And I do think that you could see us do both, continue to delever at a furious pace as well as buy back some shares when we think that's appropriate.

Tom Bartlett:

Thanks.

Operator:

And we have a question from the line of Matt Niknam, Deutsche Bank. Please, go ahead.

Tom Bartlett:

Rob, do you want to cover the MI question and I can talk more broadly?

Tom Bartlett:

And Matt, on the second question, relative to the impact of what's going on around the world, on our customers outside of the United States. Interestingly enough, we haven't seen anything of significance that would give me the sense that they're going to be slowing down on their build programs around the world. Now who knows what that might look like going into 2023 and 2024. But they have the same level of energy that we've seen over the last 12 to 18 months. Now we are also protected just because of the diversification of markets and diversification of customers. And so as a result of that, we are actually able to avert a particular issue in one area or another. And also keep in mind, as I mentioned in my remarks that our customers have spent almost $160 billion on spectrum. And so they don't -- they want to monetize that $160 billion and be able to get out into the market as fast as they possibly can. So we are seeing, as I said, the continued robust deployment of capital in the markets. And we continue to support them. And we see also -- again, a lot of build to suit activity in the market as well, which is also an indication of their willingness and ability to spend.

Tom Bartlett:

You bet.

Operator:

And our final question comes from the line of Phil Cusick, JPMorgan. Please go ahead.

Tom Bartlett:

Rod, why don't you take those two?

Richard Choe:

Great. Thank you.

Operator:

And that concludes our questions.

Adam Smith:

Great. Thank you, everyone. If you have any questions, please feel free to reach out to the Investor Relations team. Have a great day.

Adam Smith:

Good morning. Thank you for joining American Tower's second quarter 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 international business. And then Rod Smith, our Executive Vice President, CFO and Treasurer, will discuss our Q2 2022 results and revised full year outlook. After these comments, we will open up the call for your questions. Before we begin, I'll remind you that our comments contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth, including our 2022 outlook, capital allocation and future operating performance; our expectations regarding the financing plan for the CoreSite acquisition; including the closing of our Stonepeak minority investment in our U.S. data center business, our expectations regarding the impact of COVID-19 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 Form 10-K for the year ended December 31, 2021; 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.

Rod Smith:

Thanks, Tom. Good morning and thank you to everyone for joining today's call. As you saw in today's press release, we delivered another quarter of strong performance across our global business. Before walking through the details of our Q2 results and revised outlook, I'll touch on a few highlights from the quarter along with the financing initiatives we've executed over the last several months. First, we've announced and partially closed our plans to raise approximately $4.8 billion in equity financing in support of our core site acquisition, beginning with our common equity issuance in early June, and later, through our announced agreement was Stonepeak in our U.S. data center business. With these two transactions, not only have we addressed our equity financing requirements for CoreSite, but we've accomplished it in a manner that maximizes shareholder value and supports our investment grade credit ratings further through our partnership with Stonepeak, who brings tremendous expertise and communications infrastructure, and if they like minded long term investment philosophy, we've created a platform to further evaluate and finance growth opportunities across our U.S. datacenter business as the 5G ecosystem further develops. Moreover, we believe Stonepeak’s investment represents a full valuation relative to what we have invested in our U.S. data center portfolio today, and allows American Tower to retain operational control, as well as the flexibility to execute on our mobile edge strategy. I'll discuss this transaction in more detail later. Second, we also continue to strengthen our balance sheet by leveraging the debt capital markets, raising $1.3 billion in senior unsecured notes at attractive terms. As a result of our Q2 financing activities in pro forma for our private capital proceeds, which we expect to use to pay down short term floating rate debt, we will increase our percentage of fixed debt to nearly 80%, up from 66% as of the end of Q1, and bring pro forma net leverage down to approximately 5.5 times. With our CoreSite financing now largely complete, we remain committed to organically delivering back below five times over the next couple of years. Third, we see strong secular trends driving increased network coverage and densification initiatives among our customers, continuing to translate into solid gross new business globally, including the need for more cell sites internationally as Tom just highlighted. Evidenced by the success of our new builds program, we constructed over 1500 sites in Q2, representing the 12 quarter of over 1000 new builds since the start of 2019, a demonstration of the success of our capabilities and expertise, scaled to market positions, and strong customer relationships. Additionally, demand remains robust for our differentiated interconnection rich U.S. data center campuses, as customers leverage the dynamically scalable solutions and interoperability provided by CoreSite’s national ecosystem, leading to another strong quarter of new and expansion leasing. And finally, our first half performance and confidence in our full year outlook and long term targets amid heightened market volatility, rising inflation and operational challenges is a testament to the resiliency of our business and the stability of the earnings we consistently generate. This is made possible through operational excellence and service dependability, our investment grade balance sheet, the strength of our underlying contracts, including international revenue supported by CPI linked escalators, the ability to pass through a substantial portion of our direct costs across our international regions, and the matching of escalator terms in the U.S. between customer and land leases, and more importantly, the mobile data trends driving unabated demand for our communications assets. With that, please turn to slide six and I'll review our Q2 property revenue and organic tenant billings growth. As you can see, our Q2 consolidated property revenue of $2.6 billion grew by over 17% and nearly 19% on an FX neutral basis over the prior year period. In the U.S. and Canada, property revenue was roughly flat due to the continued effects of Sprint churn, while international growth stood at roughly 19% or nearly 23%, excluding the impacts of currency fluctuations, and includes about 12% contributed by the Telxius assets. In addition, our U.S. data center business contributed nearly $190 million of growth in the quarter. These growth rates are indicative of the strong secular demand drivers that underpin growth on our communications infrastructure assets across the globe as 4G and 5G deployments continue. Moving to the right side of the slide, you can see we achieved consolidated organic tenant billings growth of 2.6% for the quarter. In the U.S. and Canada, as expected, organic growth was slightly negative at 0.4% including a sequential step down and gross organic new business on $1 basis associated with the timing of certain MLA use V commencements in 2021 which we guided to during our Q1 call, we continue to expect a reacceleration and gross new business in the back half of the year. Escalators were 2.8%, which as we also highlighted last quarter, were impacted by certain timing mechanics within our MLAs though for the full year, we expect escalators to come in right around 3%, consistent with historical trends. This growth was offset by the impacts of Sprint churn, which continues to drive over 4% of negative headwind year-over-year. On the international side, organic growth was 7.8%. Starting with Europe we saw growth of 11.2%, which remains elevated given contributions from the Telxius portfolio, which were only partially included in our Q2 2021 base. Absent Telxius our legacy European business grew roughly 6% and expansion of approximately 160 basis points as compared to our Q2 2021 growth rates. In Africa, we generated organic tenant billings growth of 9%, which includes 8% in gross organic new business contributions, our highest quarter on record the continued strength and new leasing activity in the region was complemented by the construction of just over 400 sites in the quarter. As we see 4G coverage and densification initiatives continue to drive strong top line growth in returns across the region. Moving to Latin America, organic growth was 8.3%, which includes approximately 8.7% from escalations. Consistent gross organic leasing growth was offset by expected elevated churn primarily associated with certain decommissioning agreements, as highlighted on previous earnings calls. For both Africa and Latin America as we look to the second half of the year, we expect a step down relative to the first half in net organic growth rates due to anticipated consolidation driven churn, which remains consistent with our prior outlook assumptions. In APAC, we saw organic growth of 3.9% in line with our expectations and representing our fourth consecutive quarter of positive growth, which comes alongside a continuation of solid new build activity with nearly 1000 sites constructed during the quarter. It's important to note that although we remain encouraged by the positive trends we're seeing in our APAC growth rates, we do anticipate a modest sequential step down in Q3 to the low single digit range before recovery in Q4 to near that upper end of our 2% to 3% full year guide, which remains unchanged. Turning to slide seven, our second quarter adjusted EBITDA grew just over 13% or over 14% on an FX neutral basis to approximately $1.7 billion. Adjusted EBITDA margin was 62.5%, down 170 basis points over the prior year, driven by the lower margin profile of newly acquired assets, the conversion impacts of commenced sprint churn along with higher pasture revenue, resulting from rising fuel costs. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by 7% and 5%, respectively. Growth was meaningfully impacted by sprint churn and the timing of cash taxes, which together provided a negative headwind of nearly 7%. Let's now turn to our revised full year outlook where I'll start by reviewing a few of the key high level drivers. First, our core operating performance remains strong across our business, allowing us to raise our AFFO per share guidance for the year and increase our expectations on an FX neutral basis for property revenue and adjusted EBITDA. Second, we have revised our FX assumptions using our standard methodology, which has resulted in Outlook to Outlook headwinds of approximately 100 million, nearly 50 million, 40 million and roughly $0.08 for property revenue, adjusted EBITDA, consolidated AFFO, and AFFO per share, respectively. Finally, we have updated our CoreSite financing assumptions to reflect our completed common equity issuance, and our anticipated close of private capital funding. This update has resulted in a reduction in our total equity requirement balanced with the incremental debt and associated interest costs. Additionally, we have contemplated the minority interest impacts related to the Stonepeak partnership and updated closing assumptions, all of which I will address in more detail in a moment. With that, let's discuss the details of our revised full year expectations. As you can see on slide eight, we are continuing to project consolidated year-over-year property revenue growth of nearly 14% at the midpoint. The $15 million decrease relative to prior guidance is driven by the FX headwinds I previously mentioned, which were partially offset by over $40 million in core property revenue outperformance taking the benefits of CPI in our international escalators and accelerated decommissioning related settlements, together with upside in our U.S. and Canada in data center segments and over $40 million and other outperformance primarily driven by higher international passer revenue due to elevated fuel costs. Moving to slide nine, you will see our organic tenant billings growth projections, which have been slightly revised since our last earnings call. While our expectations remain consistent in the U.S. and Canada, international, and on a consolidated basis, we have made some adjustments within our specific international segments. In Europe, we have adjusted our growth back to approximately 9% reflecting our expectations for temporary shift and new business commencement timing, from the back half of 2022 into 2023. Demand remains very solid in the region, setting us up well as we exit 2022. You will also see that we have modestly raised the guidance for Latin America to approximately 7% in Africa to approximately 6.5% both up from previous expectations of greater than 6% reflecting a continuation of escalation benefits from CPI. Moving to slide 10, we are lowering our adjusted EBITDA outlook by $20 million as compared to our prior outlook, driven again by negative FX impacts, with expected growth of approximately 10% year-over-year. While we are seeing a strong conversion of core property revenue upside to cash margin outperformance we have taken a revised view on SG&A, notably on bad debt reversal expectations for the year. Although collection trends were solid in Q2, we have pushed out some of our assumptions related to the incremental collections associated with previously reserve balances that we continue to expect to collect in time. Turning to slide 11, we are raising our attributable AFFO per share guidance to $9.74 from $9.72, despite absorbing the negative effects from FX and a continued rise in interest rates. To better understand the components in our revised outlook bridge, I'd like to spend a moment to walk through the moving pieces of the guidance associated with our updated Equity Plan and the mechanics of our Stonepeak partnership, which consists of 1.75 billion in common equity, and 750 million in mandatory convertible preferred equity for a total ownership interest of 29% on a fully convertible basis in our U.S. datacenter business. First, as I mentioned, we were able to reduce our total equity requirement from approximately $5.5 billion to $4.8 billion, including $2.3 billion of common equity proceeds, which meaningfully reduced our share issuance to approximately 9.2 million shares. The reduction in equity resulted in an increase to our debt balances, which together with the revised timing of the equity raise, along with the elevated interest rates has driven an increase to our interest expense outlook, which largely makes up the over $50 million other reduction to AFFO as compared to our prior outlook. Next, regarding our Stonepeak partnership, the financial impacts for their minority investment will appear in two places. First, a coupon of $750 million of mandatorily convertible preferred equity with a cost in the mid-single digit percent range will be recognized as a deduction to the AFFO generated by our data center segment and reflected in our consolidated AFFO, which represents approximately $14 million in our 2022 guide, as shown on the slide. Second, until conversion of their preferred equity, which is expected to occur four years from the date of closing, Stonepeaks initial common equity stake in our data center business will stand at 23% which contemplates approximately $2 billion of net debt on the U.S. data center business and will be considered as a minority interest deduction for attributable AFFO purposes, equating to approximately $20 million in our 2022 outlook. Please note, we have also reduced the European minority interest assumption from $160 million previously to $150 million largely due to FX. Together, we are now guiding to a minority interest adjustment of $170 million in 2022. Finally, as I mentioned earlier, our updated outlook also takes consideration updated equity closing assumptions. We previously assumed they made closing for our common equity issuance, which actually occurred in early June. We also assumed our private capital will close in mid Q3 with plan proceeds to be used to pay down short term floating rate debt. Taken all together, our revised CoreSite financing plan drove approximately $0.06 of incremental accretion relative to our prior attributable AFFO per share outlook, which includes a negative hit of roughly $0.03 driven by higher interest rates on our debt financing relative to our previous assumptions. Moving to slide 12, let's look at our capitol deployment expectations for 2022, which are updated compared to our prior outlook, while continuing to reflect our focus on driving strong, sustainable AFFO per share growth. First, we now expect to dedicate approximately $2.7 billion subject to board approval towards our 2022 dividends. This is down slightly from our previous guidance of $2.8 billion, which is simply a function of our reduced common equity issuance and continues to represent approximately 12.5% in year-over-year growth on a per share basis. In regards to CapEx, we are decreasing our outlook midpoint by $60 million in total, with development CapEx increasing $15 million and with redevelopment capital and land acquisition spend decreasing $25 million and $50 million respectively. Our development plan continues to assume the construction of approximately 6500 new sites globally at attractive returns. In fact, on the nearly 3000 sites constructed in the first half of 2022, we saw a day one NOI yield of roughly 14%. Lastly, we continue to expect to direct roughly $300 million towards our U.S. data center business largely associated with development spend. Now turning to slide 13. In with our CoreSite financing plan largely complete, I will briefly touch on the strength of our investment grade balance sheet, which is fundamental to the execution of our stand and deliver strategy. Our long standing financial policies, including establishing optimal levels of leverage and an appropriate mix of debt instruments guide the management of our capital structure, which together with our strong business fundamentals provide American Tower with continued access to capital markets at attractive terms. As you recall, the American Tower proactively access the debt capital markets in 2021, taking advantage of historically low pricing, raising roughly $3 billion in senior unsecured notes in the second half of the year, at a blended cost of approximately 1.6%. With our fixed debt percentage at the time rising to over 85%, this effectively allowed us to lock in low rate debt for future strategic initiatives including the CoreSite acquisition, which in turn reduce our dependency on the debt markets in 2022 as part of our final financing plan. We believe the strategic and efficient management of our balance sheet puts us in a strong position as we close out 2022 and look beyond. As of the end of the second quarter in pro forma for the close of the Stonepeak investment in our U.S. data center business our average cost of debt stands at about 2.6% with an average remaining tenor of over six years. Since 2010, we have reduced our average cost of debt by approximately 250 basis points and increased our average debt tenure [ph] by about one year by accessing the long part of the yield curve proactively refinancing our debt and capitalizing on low rate environments. In addition, and more recently, we also focused on diversifying and expanding our capital sources and structure by issuing Euro denominated debt, establishing our ATM program and efficiently executing on public equity raises and partnership agreements with leading global private investors. With a strong liquidity position of approximately $6.7 billion on a pro forma basis, inclusive of Stonepeak proceeds and other financing activities subsequent to the quarter end in a staggered maturity profile we feel well positioned moving forward as we focus on organically deleveraging back to within our normal net leverage range over the next couple of years. Taken all together, we see the strength of our financial position as a competitive advantage for American Tower, whether executing on our growth strategy navigating economic downturns or volatility in the financial markets. And we remain focused on and committed to our thoughtfully established financial policies that have guided our financial strategy for the past decade. Finally, on slide 14, and in summary, Q2 was another solid quarter supported by leasing demand across our global portfolio of communication assets, strong execution of capital markets initiatives, including financing for the CoreSite acquisition and meaningful high yielding new asset development activity. Our high quality set of assets and established market positions continue to benefit from secular demand trends driving 4G and 5G initiatives across our global footprint, while the strength of our balance sheet and cash flows, has us well positioned to manage and grow the business through potential market volatility and uncertainty. As we look to the back half of the year, we are excited about our growth trajectory and remain focused on executing on our strategic initiatives, which support our long term double digit AFFO growth aspirations. With that, I'll turn the call back over to the operator for Q&A.

Michael Rollins:

Thanks and good morning. Two topics, if I could, first on the U.S. curious if you can give a further update on the U.S. leasing environment, and specifically provide an update on how American Tower is tracking against the previously provided growth target of at least 5% organic growth beginning next year. And then also sorry, just one other part of this is just are you seeing any change in the environment with AT&T announcing the acceleration of C band deployment? And then I'll come back to be on in just a second topic on India if I could.

Rod Smith:

Yes. And Tom, maybe I'll just add in there. In terms of further discussing the on-track comment, we guided to approximately 2% of growth both on average for 2021 and 2022. And as you can see in numbers, Michael, right on track with that 2.2% last year in the U.S. So a little at 1% this year. That puts us right on the back of that 2%. I will remind you that there is a pretty significant headwind from the Sprint churn that is affecting the growth rate. And that does equal about 4% headwind going into this year. So that 1% would have been a lot closer to 5% if it hadn't been for [Technical Difficulty]. And then, the further guidance from 2023 out to 2027 is the -- is around 5% on a reported basis with about 2% adjusted for the Sprint churn kind of coming out of that. And we're well on track for that. We've got about two-thirds of that revenue growth already committed within the framework of our holistic agreement. And we're also seeing that in the co-location and amendment contributions from new biz in the U.S., so we are on track with that metric for this year. That is growth over last year. We do expect Q3 and Q4 to be at higher levels than what we had in Q1. So that's the acceleration we're seeing through this year, and we expect the levels as compared next year based on the way that our holistic deals are struck, the addition of DISH, as well as the acceleration of spend from the carrier.

Tom Bartlett:

Just quick on the – sorry Mike I had a little computer difficulty here that I just had to, to address. Yes. So when it comes to the, to the India information, it really is associated with the consolidation that we've seen in the Indian market with the turn that we've had over the last several years, as you're well aware of with that, when we have single tenant towers where we don't see additional lease possibilities in the near term, we did end up taking those down to kind of rationalize the operating expense aspect of kind of what we're what we're doing in India. So as you see churn in India continue to moderate which we've seen to a great extent, over the last couple of years, you'll see commission activity in the tower reduction slowdown as well. And there is usually a little lag between when you see the churn come through our revenue numbers. And then when you see the tower, some towers actually come out of the tower counts.

Operator:

And next we’ll go to Simon Flannery with Morgan Stanley. Please go ahead.

Tom Bartlett:

Hey Simon, maybe I'll take on the data center side. And we had another really strong quarter with all of our data center business. We've largely completed the integration of our legacy centered into intercourse, right. Strong sales, strong backlog, really positive cash MDM, churn is right on contract. So we're really pleased they're outpacing as Rod mentioned, we've actually upgraded our, our guidance relative to the activity that we've seen within CoreSite. So really strong top line growth, new and expanded sales activity, all very, very good mix with new logos with a network, new business, as well as with hyperscale. So really balanced, strong growth and interconnection, as well, which I think is just critical to this the competitive advantage that we are seeing in the business and fully expected. So couldn't be more pleased with, with what the business has been able to generate out of the gate.

Simon Flannery:

Great. And on the data center Tom, any updated thoughts on the edge opportunity now that you've owned it for six plus months?

Simon Flannery:

Thank you.

Eric Luebchow:

Great, thanks for taking the question. First, I wanted to touch on the -- you mentioned some of the churn in Latin America. And maybe you could just expand on that, whether that specific to the oil restructuring in Brazil, kind of how you expect that to flow versus some of the churn you've had in Mexico and how you see that trending into next year. And then, Rod curious on the bad debt reserve, you mentioned any color you can provide in terms of regions that you're closely monitoring in terms of collections or payments activity that would be helpful. Thank you.

Eric Luebchow:

Great, thanks.

Ric Prentiss:

Thanks, good morning everyone.

Ric Prentiss:

A couple of questions. First, obviously, I think it's important you guys are focusing on attributable AFFO. Help us understand what a full year impact of the new Stonepeak would be as far as demand out convert $14 million in the current year and the $20 million minority interest? And then I've got two others quick ones.

Ric Prentiss:

Second one is, you guys obviously know I've really focused on removing amortization of prepaid rent from valuation and non-cash items. Interestingly, a number of smaller than crown, crown did put a table out there, talking about what they see, as far as the amortization of prepaid rent going forward, is that something you guys would consider and I’ve got one of the quickie ones?

Ric Prentiss:

That makes sense, unless we lose, we're getting a lot of questions from investors on data center's. We talked about the growth capital opportunity, there that CoreSite. What do you think maintenance CapEx is in the data center business? And one I think unusual question we get that came up is what would cause data centers to become obsolete or individual data centers becoming obsolete?

Tom Bartlett:

And Ric relative to your second question. I mean, it all comes down to really barriers to entry. And if you think of the, the asset that we have with CoreSite, the barriers to entry are incredibly strong, with the interconnection capability with the cloud on ramps. And so, it's hard to think about a world in which, our customers are not going to be still looking at kind of this hybrid environment, to be able to connect with the cloud to be able to really use data centers as a sales channel for themselves as their interconnection within the business. So, we don't anticipate any of that kind of activity you said, but I must say that it's I think this particular asset that we have within CoreSite, and we're building out, really continues to build up those barriers to entry. And, and that's going to be critical. It's much like the tower business. We build up a strong barrier to entry with the foods and pieces of real estate we have, that's our strategy to find those assets, that have those strong barriers that we can continue to develop.

Tom Bartlett:

Thanks Ric.

David Barton:

Hey, guys, thanks so much for taking the questions. First, I guess maybe, Rod, you in your script, when you were talking about the partnership with Stonepeak mentioned something to the effect that you were creating a platform for data center investment given Stonepeak’s experience in the common infrastructure space? I think one of the concerns some people have about American Towers foray into data center’s is that it's going to be a big call on Capitol at the margin, and we just don't know how big it's going to be. So if you could kind of clear up a little bit about how you think this platform, might be looking at acquisitions and investments and calls on capital. And then second, maybe, Tom, I don't know if you have a view on this. But with respect to American Tower, not having a holistic MLA with Verizon at this stage. Do you feel that that AMT contributing factor to AMPs kind of domestic same store sales growth performance this year might be that that Verizon is allocating business to its other tower partners in the early stages of its C-build and we need to wait for them to come around to become an A&T customer. Thanks.

Rod Smith:

Yes, and David, with regard to your question on the on the data center spend, this year we do have CapEx in the plan of about $300 million, maybe a touch over was a couple of development projects, that really will not be recurring in May. So we're looking at about $200 million of historical annual investment projects, and total CapEx including the maintenance CapEx. And that's where we expect to stay going forward, that would allow us to keep ahead of kind of a net absorption, forward looking two years, we need to make sure that each of our facilities has a scalable megawatt capacity. And in order to do that, we expect to reinvest about that $200 million, give or take, which is what CoreSite had been doing historically. Maybe ours will be a touch higher, maybe they were closer to 150, between 150 and 200, we'll probably be closer to 200, or maybe a touch, a touch over. So we're not looking to compete on a national scale and the data center business. We really bought CoreSite because of the cloud centric network, dense nature, the inner nature of these assets and kind of the geographical spread throughout the U.S. in really good proximity to our tower sites with his facilities. And in LA, and Silicon Valley, Chicago, Denver, Boston, New York, Northern Virginia, we have, we've got a nice spread of these assets. And because of the high quality nature, that's what's giving us the, the nice growth rates, as I mentioned earlier, up and up in the 10% range, which is well above our underwriting expectations of between 6% and 8%. So we see really strong demand for these high quality. And we're looking to really take these assets, and potentially in the future, connect them to our sales, cloud on ramps and interconnection facility at the tower sites, that's the real significant upside. So with that said, we'll be reinvesting the CoreSite cash flow kind of back into keep ahead of that two years of absorption on the megawatt capacity. And then you may see us add a data center here or there throughout the West, but not a major change in capital allocation certainly.

Operator:

And we'll go to Matt Niknam with Deutsche Bank. Please go ahead.

Tom Bartlett:

Hey Matt. I'll take the first one, Rod can take the second one. We're very focused on the U.S. as we said. Yes, there are a lot of opportunities outside of the United States. And, and as a result of the positioning that we have with CoreSite, we get approached by many, many different players to develop, but we're very focused on the U.S. And as Rod said, to the extent that there's outside CapEx, we're going to be incredibly measured about how we spend that, but it will be at the tower sites. Remember the Edge is all about the opportunity at the site itself. And we've identified, largely over 1000 sites that with power and interconnection could support upwards of at least a megawatt of capacity. And so we're going to be looking at that where we can take it to a megawatt where we can take it to two, where we can take it to three. And to the extent that we're able to develop the demand from a customer perspective, we will look at building, that kind of capacity out, but it'd be very measured. It will be based upon demand. And it will largely be in the United States.

Matthew Niknam:

That's great. Thank you both.

Unidentified Analyst:

Hi, this is Richard [ph] for Phil. Just wanted to follow up on the international tower builds of the 40,000 to 50,000 over the next few years. Wanted to get a sense of how much of that is contracted versus you have a good line of sight into…

Unidentified Analyst:

Great. And the follow up on that the yields are high on day one, but what kind of colocation, I guess, expectations do you have on those builds over time? Can you give us any color around that?

Unidentified Analyst:

And the last follow up for me on the data center side, just to clarify, there's no additional capital coming in from Stonepeak with either, the new builds, but there might be if there's an acquisition a small one or whatnot.

Unidentified Analyst:

Okay, thank you.

Batya Levi:

Great, thank you. In the U.S., can you provide a little bit more color on the activity you are seeing from DISH? And a question on capital allocation? You typically bring back sharp share buybacks after an issuance or ahead of like mandatory conversion. Going forward, can we expect it to balance maybe debt reduction versus opportunistic buybacks? Thank you.

Rod Smith:

Yes. And then, relative to the capital allocation question, you've heard us say it many times, but the first priority, of course, is funding our dividend. And not only funding it, growing the dividend. So this year, we'll have a double-digit 12.5% growth rate on the dividend. And in the current environment that we're in, we certainly will be focused on delevering. It's no surprise to anyone on the call, I'm sure, that we are outside a little high of our target range of around 5x, below 5x. So we ended the quarter at about 5.8x. That's about 5.5x of the pro forma the investment from Stonepeak in. So we still have some delevering work to do, which we will be focused on. So we will be focused on organic growth, where we focused on driving 10% AFFO per share growth. We'll be focused on delevering. We'll be focused on our capex plans around the globe, funding the build to suits that can see very good returns on across all the markets that we're currently in. And then, to the extent that there are opportunities to buy back shares at attractive prices from time to time or fund additional M&A from time to time that's accretive and fits within our disciplined approach, we'll balance those to investment opportunities and make the choice that's best for our shareholders and drives the most AFFO per share growth.

Operator:

And speaker’s I hand the call back to you.

Operator:

Thank you. And that does conclude the call for today. The replay will be made available after 10:30 this morning and running through August 11 at midnight. You can access the AT&T replay system at any time by dialing 1-866-207-1041 and entering the access code 5855174. International parties may dial 402-970-0847. Those numbers again 1-866-207-1041 with the access code 85855174. That does conclude the call for today. Thanks for your participation and for using AT&T teleconference. You may now disconnect.

Adam Smith:

Good morning and thank you for joining American Tower's first quarter 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 U.S. business. And then Rod Smith, our Executive Vice President, CFO and Treasurer, will discuss our Q1 2022 results and revise full year outlook. After these comments, we will open up the call for your questions. Before we begin, I'll remind you that our comments contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth, including our 2022 outlook, capital allocation and future operating performance; our expectations regarding the financing plan for the CoreSite acquisition; our expectations regarding the impacts of COVID-19; 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 Form 10-K for the year ended December 31, 2021; 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.

Rod Smith :

Thanks, Tom. And thanks, everyone for joining today's call. As you saw in today's press release, we're off to a great start in 2022, delivering another quarter of strong performance across our global business. Before getting into the details of our Q1 results and revised outlook, I want to touch on a few highlights from the quarter. First, demand for our towers continues to be strong throughout our global footprint, evidenced by the sequential acceleration of organic tenant billings growth across each of our reported segments. Additionally, organic leasing activity was complemented with nearly 1,450 newly constructed sites in Q1, our eleventh quarter of over 1000 new builds in the last three years, a milestone that was only achieved once prior to 2019. Second, growth from our recently acquired premier assets Telxius and CoreSite is at the high end of our initial expectations. As a result, we are modestly raising guidance for Europe organic tenant billings growth and the midpoint of our datacenter segment revenues. Additionally, in Europe, we recently signed an agreement with 1&1 in Germany, establishing a leasing framework to support their network rollout, which we expect to be another solid catalyst for growth in an already strong leasing market. We believe this further speaks to the quality and strategic positioning of our acquired Telxius assets, the opportune timing of the transaction and our optimism for the future. And finally, we continue to leverage the capital markets to support our investment grade balance sheet. And we're able to issue $1.3 billion in senior unsecured notes on attractive terms, right after the end of the first quarter. With proceeds used to term out a portion of our floating rate debt. Looking ahead, and as it relates to our CoreSite financing plan, we continue to explore options that are aimed at maximizing shareholder value while supporting our investment grade credit ratings. Consistent with our prior outlook, we are targeting to finance the $10 billion plus purchase price roughly equally between debt and equity, the latter potentially being satisfied through issuances of common equity, mandatory preferred equity, or other convertible instruments or private capital or a well-balanced combination. With that, please turn to Slide six and I'll review our property revenue and organic tenant billings growth for the quarter. As you can see, our Q1 consolidated property revenue of $2.6 billion grew by 22% or over 23% on an FX neutral basis over the prior year period, which included a contribution of approximately 17% in growth from Telxius and CoreSite. In the U.S. and Canada, property revenue grew under 1% due to the impacts of Sprint churn, while international growth stood at roughly 32% or nearly 35%, excluding the impacts of currency fluctuations. Additionally, our newly expanded U.S. datacenter business contributed over $180 million of growth in the quarter. These growth rates across our property segments continued to reflect the essential nature of digital services and our communications real estate throughout our served markets. Moving to the right side of the slide, you'll see our organic tenant billings growth for the quarter, with consolidated growth standing at 3%. In the United States and Canada, while growth was 0.6%, we saw an acceleration of gross organic new business on dollar basis, posting our highest quarter since Q1 of 2020, resulting in a 3.3% contribution to growth. Given the mechanics of our MLAs and the timing of certain use fees in 2021, we will see a decline in gross organic new business in the second quarter before ramping up in the back half of the year, which was all contemplated in our original 2022 guidance. Escalators were 3.5%, which is also impacted by certain timing mechanics within our MLAs. Though for the full year, we expect escalators to come in right around 3%, consistent with historical trends. This growth was largely offset by the impacts of Sprint churn. On the international side, growth was 7.4%, and we saw improvements across each of our reported segments. Starting with Latin America, growth came in at roughly 8.7%. This includes approximately 8.5% from escalations, which represents an acceleration of 300 basis points as compared to Q4 2021. Additionally, relatively consistent growth organic leasing trends were largely offset by churn primarily associated with certain decommissioning agreements as highlighted on our Q4 2021 earnings call. In Africa, we generated organic tenant billings growth of 8%, which includes 7% in gross organic new business contributions, our second highest quarter on record. This strong new leasing activity was complemented by the construction of over 600 sites in the quarter, as we see 4G coverage and densification initiatives continue to drive strong top line growth and returns across the region. We have now constructed over 3,800 sites in Africa since the start of 2020, around the time we closed the Eaton Tower transaction, which meaningfully augmented our scale and enhanced the existing MNO relationships in the region. As a point of reference, prior to the Eaton transaction, we had constructed less than 2,200 sites in the preceding nine years of operations in Africa combined. Turning to Europe. We saw growth of 18.8%, reflecting pronounced contributions from the Telxius portfolio, which was not in our Q1 2021 base. Absent Telxius, our legacy European business grew over 6%, an expansion of 300 basis points as compared to our Q1 2021 growth rate. As we look to the back half of 2022, where we'll have more comparable year-over-year results with Telxius included, we expect to see strong organic tenant billings growth in the mid-7% range, driven by accelerating 5G deployments and continuing investments in 4G. In APAC, we saw growth of 2.1%, a continuation of the improvements we have seen over the past several quarters as churn further moderates in the India market. In fact, churn is now down to the mid-6% range, the lowest we've seen in nearly five years, which we project to further improve over the course of 2022. Turning to Slide seven. Our first quarter adjusted EBITDA grew approximately 13% or nearly 14% on an FX-neutral basis to $1.6 billion. Adjusted EBITDA margin was 61%, down over 5 percentage points over the prior year, driven by the lower margin profile of newly acquired assets, the conversion impacts of commenced Sprint churn, along with the higher pass-through revenue resulting from rising fuel costs. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by roughly 6% and nearly 4% respectively. Growth was meaningfully impacted by the timing of cash taxes and maintenance CapEx in 2021, which was heavily back-end weighted. The contributions of these two line items provided a negative year-over-year growth headwind of approximately 5% on AFFO in the quarter. Let's now turn to our revised full year outlook, where I'll start by reviewing a few of the key high-level drivers. First, due to higher pass-through revenue associated with rising fuel costs, strong underlying trends in the business and modest FX improvements, we're increasing our property revenue outlook by $75 million at the midpoint. It's important to note that we continue to apply our standard methodology for projecting FX across our regions, taking the more conservative of the trailing 30-day spot rate averages and an aggregation of bank estimates. When applying current spot rates, we would actually see improvement beyond these revised assumptions, although we believe it's prudent to continue with our standard approach. Second, through solid conversion of our top line upside, the carryforward of some cost benefits and strong services performance in Q1, we are raising our outlook for adjusted EBITDA by $55 million. At an attributable AFFO per share level, we are raising our guide at the midpoint to $9.72, an increase of $0.02. Finally, as I mentioned earlier, we are maintaining our prior guidance assumptions around the equity financing for CoreSite. With that, let's move into the details of our revised full year expectations. As you can see on Slide eight, we are now projecting consolidated year-over-year property revenue growth of 14% at the midpoint. The increase, as compared to prior guidance, is due to approximately $66 million in additional international pass-through and straight-line revenue, $7 million in core property revenue outperformance, along with another $2 million in FX benefits. Moving to Slide nine, you'll see our revised organic tenant billings growth expectations for 2022. With the leasing environment remaining largely consistent across our footprint, we are reiterating our prior growth rates for Latin America, APAC, international, U.S. and Canada and on a total consolidated basis. We are modestly raising our expectations for Africa, driven by stronger new business in Europe mainly due to higher CPI-driven escalation contributions. As such, we now expect organic growth of greater than 6% and greater than 9% in Africa and Europe, respectively. Moving to Slide 10. And as noted earlier, we are raising our adjusted EBITDA outlook by $55 million and now expect year-over-year growth of roughly 10.5%. These revised expectations include $26 million from cash gross margin outperformance, driven by the increase in our revenue guidance and some services margin expansion, partially offset by higher pass-through expenses. We also now expect an additional $19 million in net straight line and another $10 million associated with revised FX assumptions. Turning to Slide 11. We are raising our expectations for AFFO attributable to common stockholders by $10 million at the midpoint. As the benefits from the operational and FX upside I just mentioned are being partially offset by higher interest expenses, the result of an elevated rate curve since our last call. This translates to an increase of $0.02 on a per share basis, moving the midpoint to $9.72. As I mentioned earlier, and consistent with our initial outlook, our AFFO guidance includes an assumption for the CoreSite equity financing, which, for modeling purposes, assumes a common equity issuance by midyear. However, we continue to evaluate several potential sources, including common equity, mandatory convertible preferred equity and other convertible instruments and also private capital partnerships, where discussions continue to progress as a result of strong interest from leading private investors for a minority stake in our U.S. data center business. That said, we remain flexible in our approach, with the final mix ultimately depending upon what course offers the most attractive cost of capital terms and operational flexibility. Finally, with respect to the balance sheet management, following our recent senior unsecured note issuance, which I highlighted earlier, and pro forma for executing our equity financing, we will have termed out a significant balance of our floating rate debt and would expect to bring our net leverage to the high 5 times range, with a clear path to returning to our target range of 3 to 5 times over the next couple of years. Moving on to Slide 12, let's review our capital deployment expectations for 2022, which are consistent with our prior outlook and reflect our continued focus on driving strong, sustainable AFFO per share growth. As always, distributing capital to our common shareholders remains our top priority, and we continue to expect to allocate, subject to Board approval, approximately $2.8 billion towards our dividend in 2022. On a per share basis, this equates to approximately 12.5% in year-over-year growth, consistent with our double-digit target. On the CapEx front, we are reiterating our prior outlook midpoints across all categories. This plan supports our initial expectations to construct approximately 6,500 new sites across our international footprint and includes roughly $300 million towards our data center business, $270 million of which is tied to development projects. We will continue to prioritize our development opportunities across our global footprint given its strong return profile and our ability to largely fund these initiatives through locally generated cash flows. In fact, of the nearly 1,450 sites we constructed in Q1, we saw an average day 01 NOI yield of 14%, at the high end of the double-digit initial return rates we've seen through our build program historically. Looking ahead, our development pipeline remains strong, with opportunities afforded by our scale, market positions, customer relationships, operational capabilities and solid underlying secular trends, which continue to drive strong demand across the portfolio. Finally, on Slide 13 and in summary, Q1 was a fantastic start to the year, with organic tenant billings growth accelerating sequentially across each of our reported segments as 5G deployments, 4G densification initiatives and the benefits of our comprehensive MLA agreements drive strong organic new leasing and increasing demand for newly constructed sites. We see the same secular trends driving solid performance on the datacenter front, and we could not be happier with the assets and team we've added through the CoreSite and data site acquisitions. We continue to be encouraged by the demand trends across our global portfolio of distributed communications real estate and look forward to executing on a number of strategic initiatives, including finalizing our CoreSite financing through the rest of the year, as we aim to deliver compelling total returns to our stockholders. With that, I'll turn the call back over to the operator for Q&A.

Matthew Niknam :

Hey guys, thank you for taking the question. Just two, if I could. First, on Europe. So we've heard a lot of press around larger carrier portfolios coming to market there. I'm wondering how you think about the prospects of scaling up in Europe further through the lens of either full ownership versus partnering with a financial sponsor as you've done in the past? And then already in light of leverage, sitting at 6.4 turns right now. And then secondly, on CoreSite, obviously, this was the first full quarter with CoreSite under your belt. I'm wondering if there are any positive or negative surprises you can share. And then, Rod, I think you alluded to maybe a little bit of an increased outlook for the data center business, if there's any color or additional detail you can give? Thanks.

Rod Smith:

Yes, good morning Matt. Thanks for joining us, and thanks for the question. I'll add a couple of points on CoreSite. So we are seeing positive trends in CoreSite. You've heard us say it before, we continue to view the asset as a very unique high-quality asset, and we're seeing the quality of the asset come through early on here in the financials. So we did have a terrific end of the year last year in terms of new and expansion revenue being added. We do see that accelerating into 2022. So that's really positive. That allowed us to increase the midpoint of the revenues by about $5 million. And we have seen the backlog for that measure kind of come up. We're sitting at about $19 million backlog versus a year ago same period where it was around $9 million. So that's up about $10 million. And we -- across the major metrics here, we think the business is really strong. In terms of revenue growth, the range we look at is between 6% and 8%. We're looking at the high end of that range, maybe even a touch above that range here. The escalators are in the range of 2% to 4%. Interconnection growth, our target range is between 6% and 8%, and again, we'll be at the high end of that range. We believe cash mark-to-market in the range of 2.3. We'll have to see exactly where that ends up. It always can be affected by kind of unique renewals from certain customers, with the range there is about 2% to 3% on an ongoing basis. The monthly recurring revenue per cabinet, we look at growth rates of 4% to 6% range. Again, we're in the mid-single digits for this year. So that is compelling. The churn rate is the right where we expected them to be in the middle of the range, the range is 6% to 8%. So we're taking on all cylinders with the business. I think it really demonstrates the quality of the asset. The fact customers of this business really do enjoy the interconnection nature and the cloud-centric nature of these assets. And from a CapEx perspective, we put in about 2% of revenue back in maintenance CapEx. And for growth CapEx, we've got about $300 million going into the business this year, really to build out additional capacity. Hopefully, that gives you some color, Matt.

Eric Luebchow:

Hi, good morning. Thanks for taking the question. Just wondering if you could comment a little bit on the 1&1 relationship, the new MLA you signed. Is that kind of driving a faster organic growth outlook in Europe than you previously had anticipated? And then secondly, I just wanted to take your temperature on the potential to do future data center M&A. Obviously, CoreSite only in eight markets. Are you seeing some opportunities out there, whether internationally or perhaps in secondary markets in the U.S. that might be interesting to further scale that platform? Thank you.

Rod Smith:

Yes. Thanks, Tom, and thanks, Eric. So with 1&1, we are pleased that we have the agreement with 1&1. We're really looking forward to help them build out their greenfield 5G network across Germany. So that really is very exciting. The deal that we struck really is a framework around how the two parties will work together contractually. It also kind of lays out and gives 1&1 kind of that framework to access our sites. So that's exciting. There are long-term contracts kind of embedded in there. So we'll work through that. It's not really driving additional growth in our 2022 organic tenant billings yet, although we do think it's a very exciting development that will provide growth over the long-term and maybe even pick up in the back half of this year a little bit. But maybe, Eric, I'll hit a couple of points on the growth rates here in Europe. So you saw the announcement earlier in the presentation. We did have organic tenant billings growth in Europe in the high teens. A lot of that is driven by the Telxius assets, which is, again, a really high-quality asset across Europe, particularly in Germany. We do expect that momentum to continue, at least in terms of the leasing activity, but the -- when you get out into the back half of the year, when you bring the Telxius base revenue into the equation, we expect organic tenant billings growth for Europe to moderate and drop down into the 7% range, maybe between 7% and 8%. So still very strong growth. If you exclude Telxius and you just look at Germany -- I mean, just look at Europe legacy business, that business for Q1 grew greater than 6% on an organic tenant billings growth basis. That compares to a year ago same period at only 3%, 3.5%. So we're seeing really good growth momentum in Europe on the OTP metric on the legacy business as well as being assisted with the high-quality assets from Telxius. And we do think 1&1 will be a kind of a multiyear additional benefit as we go forward.

Michael Rollins:

Thanks and good morning. Just curious if you could talk a little bit more about the domestic leasing environment in terms of that multiyear visibility that you previously been speaking to? And how that visibility is evolving for the business?

Operator:

Our next question will come from David Barden with Bank of America. Go ahead please.

Rod Smith:

Yes. Thanks, Alex. Thanks for the question. Thanks for joining us. So we're working through the financing plan. We're very excited at the prospects and the different opportunities we have. As I said in our prepared remarks, we're looking at equity and equity component. That's really the final piece of the entire CoreSite financing. We ended the quarter here at about 4.6 times leverage. Our target range is between 3 and 5 times. And we do have a plan to delever over the next couple of years. So we expect by the end of the year to get into the mid- to upper 5 times. So that's where the equity component comes in. We're looking at raising about $5 billion from an equity transaction. That's what's in our base model. And the outlook just to reiterate here, the base plan, assumes that we're going to do a common equity issuance for the $5 billion, at roughly $235 a share. That's what's in our 2022 guidance for AFFO and AFFO per share growth. But with that said, we're also looking at other forms of equity. So complementing the common equity with some preferred convertible equity instruments, other kinds of convertible instruments and private capital. So we are looking at private capital options. Much of that has come from inbound inquiries that we've had. When people heard that we were buying CoreSite, I think there was a lot of excitement in the marketplace in terms of the high-quality nature of those assets. So there was a lot of inbound interest there. We also went out with some outbound inquiries, and we've been working through a process. So -- the other thing I would just clarify here, Alex, I think I mixed up the numbers on the leverage. We're ending at 6.4 and I think I may have said 4.6. So again, we're getting back down into the mid- to upper 5s by the end of the year. I think you made a comment in your question that we might be pushing the equity financing into Q3. I'm not sure that's correct, but we're working through the process. There's a good chance that we could have it wrapped up in Q2, like we initially said at the outset of the year.

Operator:

We'll go next to the line of Ric Prentiss with Raymond James. Go ahead.

Tom Bartlett:

Sure. Rob, do you want to -- I can...

Tom Bartlett:

And Ric, I'd just reiterate that I think they're candidly, a very positive event, putting these assets in the hands of Tim Claro and Vivo. And they're very focused on building out further 4G and 5G. So I think this is a real positive for the market.

Brandon Nispel:

I want to follow up on Mike's question. Do you guys continue to expect to be at $150 million in colocation and amendments in the U.S. in '22? And then how should we think about the exit rate in terms of colocation and amendments for modeling purposes for 2023? Is that going to be a good run rate? Thanks.

Operator:

We'll move on to the line of Jon Atkin with RBC.

Rod Smith:

Sure, Jonathan. I can give you that. It's really just a variety of small acquisitions on the tower side. Many of them were in Europe. We do have an arrangement with a carrier in Europe, where we consistently buy a number of sites throughout the -- throughout each quarter in Europe. We're also buying a few down in in Latin America, 1s and 2s here and there. We also always have a pipeline in the U.S. where we're rolling up a few acquisitions here and there. And then there's some payments that are related to the prior year deals that we acquired. So there's really not a ton going on. We think about it in terms of Europe and in Latin America, primarily.

Rod Smith:

No, Jon, we're not expecting anything material from that perspective. We don't see it -- we don't see any real negatives. Nothing meaningful to note. So we're committed and kind of confident in the growth rates that I outlined a little earlier in the call.

Batya Levi :

Thank you. In the U.S., can you talk a little bit about the activity you're seeing from DISH? And fixed wireless is ramping faster than we had expected. I know it's still very small, and the carriers have a lot of hollowed capacity. But anecdotally, do you see any change in carrier activity on the side where usage is increasing significantly? I want to get your thoughts on that. And then another question on -- in terms of the pulse build, you have a significant build program this year on development CapEx. Can you talk about your sort of what you're seeing in terms of the cost versus your expectations and any delays?

Rod Smith:

And Batya, I'll give you a couple of specific numbers here. On the costs -- you mentioned the cost of the builds. They're coming in at a little less than 100,000 on average, maybe closer to 75,000 on average per site. And we are continuing to see the targeted NOI yields being in the low to mid-teens. So we're in the range of about 14% now, which is great. Regarding to your question on DISH, we are seeing activity from DISH in the U.S., we did last year, as you know, and that continues this year. We see it mostly showing up in our financials through our services business. So we're continuing to have strong volume and activity in our services business. We're projecting in and around $225 million to $230 million in services revenue for this year. Last year, it was up to about $250 million. So there's a slight pullback there. But if you think about our services activity for the first quarter of 2022, it's almost 100% growth over that same time period in last year. And certainly, the DISH greenfield build is a big part of that. And if you rewind back to 2020, our services business was driving less than $100 million in revenue. So we've seen that step up in our services, which really highlights the level of activity that we're seeing in the U.S. And again, DISH is part of that. We'll begin to see leasing revenue here this year from DISH, and that will ramp in the back half of the year. And we'll exit at, of course, a much high level of leasing revenue from DISH than we entered the year. And then that will ramp and continue for years to come.

Philip Cusick:

Hey guys, thanks. A couple, if I can. First, if you can -- if I can follow up on the capital raise report site. If you were working on a large European deal, would that be material enough that it would be hard to raise public equity in the meantime? Or is that not something that's an issue? And then second, can you dig into your comments about the expected decline in gross organic new business in the second quarter before you said ramping up in the back half of the year? And is that alluding to the Verizon MLA expiration? It doesn't seem like that impacted the first quarter at all?

Tom Bartlett:

Phil, let me just reiterate, As I said all along, the CoreSite capital raise is not impacting how we think at all about future tower opportunities. We'll stop.

Sami Badri:

Thank you very much for the question. First, I wanted to just get a better sense on how you think about the CoreSite business from a pricing and renewal perspective. And I know you mentioned that business for retail colo and other parts also were very strong last quarter, but what is kind of the strategy at A&T? Are you guys looking to kind of just take a bigger share out of the market by lowering pricing a little bit and winning a bigger chunk? Or are you maintaining pricing discipline as legacy CoreSite and seeing kind of the revisions and renewals as kind of as strong as what CoreSite was reported for they were taken out by you guys? Just trying to get a better idea on the strategy and the vision of CoreSite under AMT.

Operator:

And with that, we'll turn the conference call back over to your host.

Operator:

Ladies and gentlemen, this conference is available for replay, beginning today, April 27, at 11:30 a.m. Eastern Daylight Time, running through May 11, 2022 at midnight. During that time, to access the AT&T executive playback service dial toll-free 866-207-1041. Internationally, area code 402-9700847. Then the access code is 7543388. I'll repeat those numbers. The total fee number is 866-207-1041. The international number is area code 402-970-0847, with the access code 7543388. That will conclude your conference call for today. Thank you for your participation and for using AT&T Executive Teleconferencing. You may now disconnect.

Adam Smith:

Good morning and thank you for joining American Tower's fourth quarter and full year 2021 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 Stand and Deliver strategy. And then Rod Smith, our Executive Vice President, CFO and Treasurer, will discuss our 2021 results and 2022 outlook. After these comments, we will open up the call for your questions. Before we begin, I'll remind you that our comments contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth, including our 2022 outlook, capital allocation and future operating performance; our expectations regarding the financing plan for the CoreSite acquisition; our expectations regarding the impacts of COVID-19; 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 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, 2021; 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.

Rod Smith:

Thanks, Tom and thanks, everyone, for joining our call today. I hope you and your families are well. As you just heard from Tom, American Tower had another year of solid performance which included strong Q4 results throughout our global business. Before we dive into the details of our expectations for 2022, I'll briefly review our Q4 and full year 2021 results. To start, I'd like to highlight a few key accomplishments from the past year. First, 2021 marked another year of strong overachievement against our initial AFFO per share targets. For the full year, we posted consolidated and attributable AFFO per share growth of 13.7% and 11.7%, respectively. This is a demonstration of our ability to deliver solid total revenue growth, tightly manage operating costs and execute on strategically important M&A transactions, all while maintaining a thoughtful and disciplined approach to our capital structure. I'll also note, this is a great start towards achieving our previously stated objective of delivering, on average, double-digit AFFO per share growth between 2021 and 2027. Second, we delivered our third consecutive year of record new builds. As we've discussed previously, these newly constructed sites continue to be amongst our best uses of capital. And in 2021, we saw average day 1 NOI yield of nearly 12% over the nearly 6,400 sites we constructed. Finally, during 2021, we completed two strategic M&A transactions and, as a result, strengthened our position in the United States and Europe, two critically important markets for us. With that, let's dive into the details of our Q4 and full year 2021 results. Turning to Slide 8. In the fourth quarter, our consolidated property revenues grew by more than 13% year-over-year or over 14% on an FX-neutral basis. In our U.S. and Canada segment, property revenue grew 1.2%. This included an organic tenant billings growth decline of 0.5% or an increase of over 4% when excluding the impacts of Sprint churn. As a reminder, over half of the total Sprint churn commenced in 2021, primarily on October 1, as expected. International property revenues grew over 28%, with nearly 20% driven by contributions from our Telxius assets. International organic tenant billings growth was 5.7%, led by Latin America at 7.4%, followed by Africa at 7.3% and Europe at 6.6%. APAC grew for the second consecutive quarter, coming in at 1.3%. This was complemented by the addition of nearly 1,900 high-yielding, newly constructed sites across our international markets. Moving to adjusted EBITDA; growth was over 10% in the quarter, while the impacts of Sprint churn, combined with the addition of newer, lower-tenancy assets, drove a decline in adjusted EBITDA margin to 62%. Finally, consolidated AFFO per share grew 3.8% in the quarter or 4.3%, excluding the negative impacts of foreign currency fluctuations. This included nearly $140 million of year-on-year cash-adjusted EBITDA growth which was partially offset by the higher net cash interest expense, along with higher cash taxes and maintenance costs. As anticipated, the timing of these expenses was heavily back-end weighted in 2021, resulting in a material impact to the year-over-year growth rates in Q4. Meanwhile, AFFO per share attributable to American Tower common stockholders grew by 1.4% in the quarter. Turning to Slide 9. Full year consolidated property revenue growth was 14.5%, including organic tenant billings growth of 3.8% and total tenant billings growth of 11.3%. U.S. and Canada property revenue growth was nearly 9%, with organic tenant billings growth of 2.9%. This included contributions from co-locations and amendments of 3.2%; another 3% in growth from escalators; around 0.2% in negative impacts from other run rate items; and churn of 3% which consisted of around 1.8% in normal cost churn and the balance driven by Sprint. This was complemented by new asset contributions to tenant billings of 4.1% and approximately $144 million in higher straight-line revenues as compared to 2020. Our international property revenue grew by over 21% with organic tenant billings growth of 5.5% for the year. Overall colocation and amendment growth was 5.9%, while 3.8% came from escalators and 0.3% from other run rate items, all of which was partially offset by 4.5% of churn. This elevated churn was primarily concentrated in India, where more recently, we have started to see the churn rate moderate. Finally, with our recent expanded data center portfolio, we have introduced a new data center segment within total property, consisting of the newly acquired CoreSite and DataSite assets along with our existing Colo ATL facility. This segment contributed approximately $23 million to our total property revenue in 2021. Turning to Slide 10; adjusted EBITDA grew 16% for the year to nearly $6 billion. This included strong flow-through of organic tenant billings growth; $100 million in incremental services gross margin versus 2020; over $140 million in net straight-line growth, as well as around $300 million in contributions to growth from newly acquired assets, primarily in the U.S. and Europe. On a consolidated basis, adjusted EBITDA margins were down around 20 basis points as compared to 2020, primarily due to the impacts of Sprint churn in the U.S. and the addition of newer lower tenancy international assets which we believe are well positioned to drive meaningful margin expansion over time. We also grew consolidated AFFO by 15.4% and consolidated AFFO per share by 13.7% in 2021, with over $680 million in cash adjusted EBITDA growth from the drivers I just mentioned. This growth was partially offset by higher financing costs associated with our recent strategic M&A as well as a modest increase in maintenance CapEx and higher cash tax expense as compared to 2020. Finally, AFFO attributable to AMT common stockholders per share grew 11.7% year-over-year. With that, let's turn to our outlook for 2022. I'll start by highlighting a few key assumptions underlying our projections. First, we expect a strong year of new leasing activity across our operations, with anticipated gross new business contributions to total tenant billings growth nearly 7% higher than what we saw in 2021. This expectation is being driven by a few key items. In the U.S., the comprehensive MLAs we've signed over the last few years are continuing to result in solid levels of new business activity. In Europe, we expect an exceptionally strong year, boosted by our larger presence following the Telxius transaction. And across our developing market footprint, the demand for site continues to rise as next-generation network deployments advance. Second, we expect churn to be higher than historical levels in 2022. In the United States, this will be driven by Sprint churn we've discussed previously, with about $160 million in year-over-year impacts in 2022 versus 2021. Additionally, in select international markets, a handful of carrier consolidation events are temporarily driving churn higher. Third, we've layered in some preliminary assumptions related to our CoreSite financing. And finally, our initial outlook reflects estimated negative translational FX impacts of approximately $125 million for property revenue, $70 million for adjusted EBITDA and $55 million for consolidated AFFO versus 2021. Moving into the details on Slide 11, you can see we expect total property revenues of over $10.3 billion at the midpoint, representing growth of 13% or nearly 15% on a currency-neutral basis. This includes expected property revenue growth of less than 1% in the U.S. and Canada and over 14% of FX-neutral growth in our international regions. We also expect data centers to contribute roughly $705 million of growth in cash revenue to the Property segment in 2022. Turning to Slide 12 and unpacking the property revenue growth assumptions a bit, you'll see our expected organic tenant billings growth rates for 2022. I'd like to note here that our tenant billings metrics do not include contributions from the data centers segment. Looking at the United States and Canada, we anticipate growth of approximately 1%, in line with the 2022 expectations implied in the long-term projections we presented last year. This includes contributions to growth from colocations and amendments of roughly $150 million, representing solid double-digit growth versus 2021. We expect this to be partially offset by churn of over 5% which includes a 3.7% impact associated with Sprint. Turning to Latin America; we expect organic tenant billings growth of greater than 6% for the year, supported by solid gross colocation and amendment activity as well as additional growth from our CPI-based escalators which we anticipate to be around 300 basis points higher than in 2021. These items are being partially offset by higher churn in 2022, primarily related to Telefonica in Mexico as well as the continuation of Nextel churn in Brazil. With both events, we expect to receive settlement payments over the course of 2022, compensating us for the early termination of leases ahead of their expiration, where applicable. As is typical, these payments will fall outside of the organic tenant billings growth metrics. Moving to Africa; organic tenant billings growth is expected to be in the 6% range. We continue to see strong demand for our macro tower assets driving colocation and amendment growth of around 6.5% for the year. In addition, we expect escalators to be up as compared to 2021 by roughly 90 basis points. This will be partially offset by an expectation for elevated churn as carrier consolidation and some smaller market exit events from Q4 of 2021 work their way through our 2022 financial metrics. Meanwhile, in Europe, we're seeing the benefits of added scale from the Telxius acquisition, the early stages of 5G rollouts and low churn, all driving expected organic tenant billings growth of approximately 9% in 2022. This includes roughly 6% in contributions from colocations and amendments and escalators of around 4.5%. These higher escalators are being driven by the combination of higher CPI and the mechanics of having the Telxius assets in our numbers for the full year of 2022. Churn is expected to decline to around 1.5% as we benefit from the lower-churn Telxius assets and reduced cancellations across our legacy business as carrier consolidation events wind down. Finally, in Asia Pacific, we're guiding to 2% to 3% organic tenant billings growth in 2022, including churn of around 5%, representing less than half of the 2021 churn rate. At the same time, our outlook does imply a reduction to gross colocation and amendment growth contributions relative to 2021 levels as carriers in the marketplace continue to digest recent developments. With that said, we are encouraged by the market reforms aimed at improving the overall health of the telecom sector as well as more recent steps taken by the carriers to rationalize pricing and improve overall profitability in the marketplace. We think these steps could bode well for the long-term growth picture in India. Turning to Slide 13; at the midpoint of our outlook, we're projecting adjusted EBITDA of over $6.5 billion, representing year-over-year growth of 10% or nearly 11% on a constant currency basis. We continue to drive solid organic growth conversion rates and are complementing this through growth on assets acquired in 2021, including approximately $360 million in expected adjusted EBITDA from CoreSite in 2022. We are seeing some margin compression in 2022. This is primarily the result of Sprint churn in the U.S., along with the full year impact of the slightly lower-margin CoreSite and Telxius assets. That said, the benefits of our continued focus on operational efficiency are taking hold in our regional legacy businesses, particularly in Africa, where our commitment to sustainable energy solutions and strong cost controls are driving meaningful expansions in margins. Turning to Slide 14; we expect consolidated AFFO to grow by more than $380 million to over $4.7 billion, despite absorbing approximately $160 million in negative impacts to AFFO from Sprint churn. This includes $675 million in FX-neutral cash-adjusted EBITDA growth and the expectation for maintenance CapEx to be more or less flat as compared to 2021 as capital intensity remains in the 2% range. We expect this to be partially offset by approximately $55 million in higher cash taxes and $185 million in incremental cash interest expense, primarily associated with our preliminary CoreSite financing assumption as well as roughly $55 million in expected negative translational FX impacts. Additionally, we've layered in a common stock issuance assumption for the purposes of outlook in the first half of 2022, again, tied to the CoreSite transaction. Taking these assumptions into account, we expect our consolidated AFFO per share for the year to be $10.05, reflecting growth of 4%, or roughly 8%, excluding the impacts of Sprint churn. Finally, AFFO attributable to AMT common stockholders is expected to grow approximately 3% year-over-year to $9.70 per share in 2022. This includes an assumption of approximately $165 million in minority interest impacts related to our partnerships in Europe. Moving on to Slide 15, let's review our capital deployment in 2021 and expectations for 2022. In 2021, we declared nearly $2.4 billion of common dividend distributions, representing a year-over-year growth rate of 15%. We spent another $1.4 billion through our CapEx programs, over $500 million of which was dedicated to our development projects, including the construction of nearly 6,400 new sites across the globe. Finally, we deployed over $20 billion, including the assumption of debt to acquire the Telxius and CoreSite assets as well as a handful of smaller transactions around the world. We expect these new assets to drive meaningful accretion and shareholder value over time. Looking to 2022, our dividend remains a top priority. And subject to board approval, we expect to distribute approximately $2.8 billion to our shareholders, as we continue to increase the dividend in line with our stated long-term, double-digit growth targets. We also expect to deploy roughly $2.1 billion in capital expenditures, over 90% of which will be discretionary. Of our total discretionary capital spending, we expect approximately $270 million to be directed towards attractive organic development opportunities in our data center segment. On the tower side, we expect to deploy roughly $565 million in development CapEx, primarily for the construction of 6,500 sites in our International segment. Similar to 2021, we anticipate driving average day 1 NOI yields on these new builds of nearly 12%. As you can see on the chart to the right, these international new site investments have driven exceptional returns over time. In our earliest vintage, we're seeing average NOI yields of 46%. Sites built between 2010 and 2014 are yielding around 26%. And on the more than 26,000 sites we've constructed since the start of 2015, we're seeing yields in the 20% range, with room to expand as we continue to drive lease-up on these lower-tenured sites. Looking forward, we believe our international new-build program presents a significant opportunity to continue adding meaningful portfolio scale while achieving highly attractive returns. And we'll continue to prioritize site development opportunities as a key part of our capital allocation strategy over the long term. Turning now to Slide 16, we've laid out our current thoughts around the permanent financing strategy for our CoreSite acquisition. As always, the primary objective is for us to finance this transaction in a way that optimizes our capital structure within our investment-grade framework, minimizes dilution to our common stockholders and positions us to continue to opportunistically deploy capital in ways that maximize value creation for our shareholders over the long term. At a high level, we expect to get there through a combination of debt and equity issuances. The debt markets remain attractive. And as we have done in the past, we expect to be opportunistic as we seek to term out revolver and term loan borrowings into longer-term fixed rate instruments. On the equity side, we anticipate evaluating a number of alternatives, including common equity, mandatory convertible preferreds and private capital partnerships, much like we did for the Telxius acquisition in 2021. With that said, for the purposes of our initial 2022 outlook, we have assumed that roughly half of the $10 billion purchase price will be financed through a common equity issuance assumed to occur in the first half of 2022. As you can see on the slide, we anticipate that this will bring our leverage back down to the high 5x range while putting us on track to get back to 5x or below over the slightly longer term. Importantly, we remain committed to our investment-grade rating and have been working closely with the rating agencies throughout this process. As we continue to evaluate a number of potential options, particularly on the equity side, we will plan to keep you all updated as to our progress. In the meantime, we believe that the baseline case we have incorporated in our current outlook positions us well as we create long-term shareholder value with the CoreSite assets. Turning now to Slide 17 and in summary, we drove strong results in 2021, including compelling double-digit AFFO per share growth, record new build activity prudent, balance sheet management and the completion of several transactions that we believe will enhance American Tower's leading global position. As we look across our global footprint, we're encouraged by what we see as a long tailwind of secular technology trends that are expected to drive continued strong recurring demand for our critical communication infrastructure assets. In the U.S. and Europe, we're well positioned to support a continued acceleration in 5G activity as carriers deploy new spectrum assets and build out greenfield networks. Meanwhile, in our early-stage markets, we expect to benefit as operators look to upgrade and densify their mobile networks to meet ever-increasing mobile data demand, all of which we believe will translate into meaningful growth and attractive total shareholder returns at American Tower for many years to come. And with that, operator, we can open up the lines for questions.

Simon Flannery:

Great. Thank you very much and good morning. Tom, I think you talked about some of the deals you've been doing over 2021. And I wanted to get a sense of your -- how do you think about M&A from here. There's a lot of portfolios available in Europe. Obviously, the public equity valuations have pulled back. So I'm not sure if there's been an adjustment on the private side as well. But how are you thinking about the opportunities out there to continue to build your business? And about what the optimal mix between regions and assets are over the medium term? And then just a housekeeping question for you, Rod. You talked about some of the churn in Latin America. You didn't call out Oi. Any update on what the recent Oi transaction and the regulatory approvals means for this year and beyond?