American Tower Corporation
Q3 2015 Earnings Call Transcript

Published: 29 Oct 2015

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the American Tower Announces Third Quarter Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. [Operation Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Leah Stearns. Please go ahead.

[Leah C. Stearns:]

Well, I guess it sounds a little bit like Groundhog Day, but good morning, everyone, and thank you for joining American Tower's third quarter earnings conference call. We've posted a presentation, which we will refer to throughout our prepared remarks, under the Investor Relations tab on our website. Our agenda for this morning's call will be as follows. First, Tom Bartlett, our Executive Vice President and CFO, will review our financial and operational performance for the third quarter, as well as our full year outlook for 2015. And then Jim Taiclet, our Chairman, President and CEO, will discuss recent technology trends, how they will impact the mobile value chain and how our diversified portfolio of assets positions us to drive compelling returns for shareholders well into the future. After these comments, we will open up the call for your questions, at which time we would appreciate that any questions be limited to a single topic so that we may enable maximum Q&A participation on today's call. Before I begin, I would like to remind you that this call will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include those regarding our 2015 outlook, foreign currency exchange rates and future operating performance, our expectations regarding our future growth, technology industry trends, anticipated closings of acquisitions, anticipated contributions of pending acquisitions 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 yesterday's press release, those set forth in our Form 10-K for the year ended December 31, 2014, and in our 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. And with that, please turn to slide 4 of the presentation, which provides a summary of our third quarter 2015 results. During the quarter, our Rental and Management revenue grew 20% from the third quarter of 2014 to over $1.21 billion. During the third quarter, our adjusted EBITDA grew 17% to approximately $779 million, and adjusted funds from operations increased by more than 21% to approximately $558 million. During the quarter, net income attributable to American Tower Corporation common stockholders declined by approximately $124 million to about $76 million, or $0.18 per basic and diluted common share. The primary drivers of the year-over-year decline in net income were the one-time $93 million cash tax charge as part of our previously announced GTP REIT tax election and approximately $78 million related to unrealized foreign currency losses attributable to our intercompany balances. Subsequent to the end of the third quarter, we announced an agreement to acquire a 51% controlling stake in Viom Networks in India. Please note that given the regulatory process associated with the transaction, we will not be in a position to provide detail on our future expectations regarding the acquisition until that process has concluded. And with that, I would like to turn the call over to Tom, who will discuss our results in more detail.

[Thomas A. Bartlett:]

Thanks, Leah. Good morning, everyone, and thank you again for joining us this morning. As you can see, we had a solid third quarter from both an organic and inorganic growth perspective. In addition, we continue to add assets in select key markets where we believe the opportunity for long-term sustainable growth is compelling. This includes the acquisition of the nearly 4,700 towers in Nigeria we closed in July, and a follow-on close of an additional 1,100 sites in Brazil from TIM at the end of September. And as Leah said, just last week, we announced an agreement to acquire a 51% controlling stake in Viom Networks in India. This transaction will expand our tower footprint there to over 57,000 sites, while materially enhancing our ability to help all of the country's major carriers as they deploy 3G and 4G nationwide. As we've said previously, we believe India is 5 years to 10 years behind the U.S. in terms of wireless technology deployments, and given just a 4% fixed line penetration and a population of over a billion people predominantly using 2G technology, India is a very attractive market for a tower operator like ourselves. In addition, this transaction is also expected to be immediately accretive to AFFO per share, and will help us continue to achieve our aspirational goal of annual double-digit AFFO per share growth over the long-term. If you'll please turn to slide 6, let's now talk about our quarterly results. Our consolidated Rental and Management revenue in the quarter increased by 20% to just over $1.2 billion. On a core basis, our total Rental and Management revenue growth was more than 27%, and of this core growth, over 7% was organic. The balance of our core growth, or approximately 20%, was attributable to properties we've added since the beginning of last year, including over 12,000 sites domestically and about 20,000 sites in our international markets, with over 5,000 of the total sites that we built ourselves. The Verizon, Airtel Nigeria and TIM Brazil portfolios comprised the bulk of the inorganic core growth for the quarter. Turning to slide 7, our Domestic Rental and Management segment generated core growth in revenue of about 21% during the third quarter with organic core growth in revenue of about 6%. On a year-to-date basis our domestic organic core revenue growth was about 7%. Our annual organic core growth rate continues to benefit from the elevated decommissioning revenues we've recognized in 2015. As we previously discussed decommissioning revenues are expected to be around $38 million for 2015, which is higher than the $21 million we received in 2014. And year-to-date, as of the end of the third quarter, we received about $29 million in decommissioning revenues, as compared to about $18 million through the same period in 2014. T-Mobile and Verizon drove the majority of our commenced new business in Q3 and continue to comprise the bulk of our new business pipeline. In addition to solid commencement activity we saw a slight sequential improvement in signed new business during the quarter. Overall, our U.S. business continues to deliver good performance with organic growth for the year expected to be right in the middle of our long-term target range. In addition our new Verizon sites are performing in line with our expectations and the integration process is progressing on schedule. Our Domestic Rental and Management gross margin increased by about 17% on both a reported and core basis to $621 million and reflected a 63% revenue conversion rate. Excluding the Verizon sites this conversion rate would have been over 90%. In other words $0.90 of every incremental $1 of organic revenue is falling to the gross margin line. We also continue to invest in our domestic business. And during the quarter we constructed 22 towers and added two new DAS systems. While our DAS business continues to comprise a small portion of our domestic revenues, it is growing quickly. On a year-to-date basis, for example, revenue from DAS systems grew over 30% over the prior year period, excluding the impacts of any amortization revenue derived from capital contributions. In addition to investing in new construction in the U.S. we had a record quarter of land management activity, purchasing about 250 parcels and extending ground leases on about 630 of our sites, with the extensions averaging 31 years. Around 62% of the land under our U.S. towers is now either owned or controlled for more than 20 years, and we would expect to get that number up to 80% within the next five years. Reported and core Domestic Rental and Management operating profit growth was about 18%. This reflects strong revenue growth, our continuing focus on property level cost controls, and SG&A as a percentage of revenue of under 4%. Moving on to slide 8, our International Rental and Management segment had a solid quarter with reported growth of about 17% and core growth of about 44%. Organic core growth in revenue was nearly 11%. All of our international regions continue to deliver strong organic core growth. We are particularly encouraged by the continuing strong trends in Africa, where organic core growth was once again over 20% in markets like Ghana and Uganda. Reported international revenue growth was negatively impacted by foreign currency translation effects of about $100 million as compared to the prior year period. We saw strong demand in the quarter with markets such as Mexico, Peru and South Africa all generating double-digit sequential growth in signed new business. Large investment-grade tenants like AT&T, Vodafone and Telefónica continue to comprise the majority of our international revenues and organic new business growth. Additionally although our operating history in Nigeria has only been a few months, performance relative to new business commencements in the market is already exceeding expectations. We also further solidified our international revenue growth visibility by signing a long-term master lease agreement with AT&T in Mexico. In addition we continue to invest in our existing markets through new tower construction and built over 730 new towers across our international footprint. We added nearly 400 towers for tenants like Bharti and Vodafone in India. And had an exceptionally strong quarter of new build activity in Brazil with over 230 new sites constructed, primarily for Vivo and TIM. We also added nine international DAS systems in the quarter, bringing our international DAS system count to 137 systems. International Rental and Management gross margin in the quarter grew nearly 13% to about $240 million. Our reported international operating profit grew nearly 15% to $205 million, and the operating profit margin percentage was about 51%. Excluding pass-through revenue our international operating margin expanded over 120 basis points to 72% as compared to the prior year period. Our core growth in international operating profit was 48%. Turning to slide 9, on a consolidated basis reported adjusted EBITDA growth in the quarter was 17% with core growth of about 26% and an adjusted EBITDA margin of nearly 63%. Excluding the impact of international pass-through revenue, our adjusted EBITDA margin for the quarter was about 70%. We've been able to maintain this rate while adding roughly 30,000 towers with an average tenancy of 1.3 tenants per tower over the last year. Our adjusted EBITDA conversion ratio was approximately 65% excluding pass-through or around 90%, if you exclude the impacts of adding the new lower tenancy Verizon, TIM Brazil and Airtel Nigeria assets to the base. Cash SG&A as a percentage of total revenue in the quarter was under 8%. And for the full year we expect our cash SG&A as a percentage of revenue to be just over 8%, versus the 9% and 10% rates of 2014 and 2013 respectively. Longer term we expect this annual percentage to continue to decline further, as we leverage our existing SG&A base while driving organic growth. Our strong adjusted EBITDA performance resulted in solid growth in AFFO, which increased over 21% to $558 million or $1.31 per share. Core AFFO growth was nearly 33%. And our adjusted EBITDA to AFFO conversion ratio during the quarter was just under 87%. Moving on to slide 10, we are revising our 2015 Rental and Management segment revenue outlook to $4.65 billion at the midpoint, which reflects additional foreign currency translation effects of about $56 million relative to our prior outlook due to the strengthening dollar, which will be largely offset by organic outperformance of our legacy international assets of around $5 million, additional straight-line revenue of about $16 million, principally due to our newly-executed master lease agreement in Mexico with AT&T, additional pass-through revenue of about $10 million versus our prior outlook, and about $5 million in additional revenue from the 1,125 TIM Brazil sites we closed on September 30. For the year we expect core growth in consolidated Rental and Management segment revenue of around 23%. This includes organic core growth expectations of about 7% and nearly 11% for our Domestic and International segments respectively, resulting in a consolidated annual organic core growth rate of 8%. Moving forward, we expect our international markets to benefit from rising escalators attributable to higher inflation measures in the local markets which should help support International organic core growth and provide some additional insulation from foreign exchange translation effects. Despite slightly lowered revenue expectations due to the strengthening dollar, we are raising our adjusted EBITDA outlook midpoint by $5 million to $3.05 billion. This reflects both the strong revenue growth of our core business and ongoing cost management, which are more than offsetting the increased unfavorable FX impact to adjusted EBITDA of about $30 million relative to our prior outlook. We now expect core growth in adjusted EBITDA for the full year to be over 22%, which is about 90 basis points higher than our prior outlook. Turning to slide 11, we are also raising our full year AFFO outlook by $10 million to $2.13 billion at the midpoint. This is being driven by around $23 million in incremental cash EBITDA from our sites, about $9 million in reduced maintenance and corporate CapEx, and $5 million in reduced cash interest. This is being partially offset by an incremental $27 million in negative foreign currency translation effects versus our prior AFFO outlook. Our AFFO growth is now expected to be over 17% for the year, or about 27% on a core basis. We expect our AFFO per share growth at the midpoint to be nearly 11%, or almost 20% on a core basis. Consequently, we now expect to generate over $5 per share of AFFO for the full year. Moving on to slide 12, we remain committed to our capital deployment strategy which we believe will support our business in generating consistently strong growth across a variety of business and economic cycles. We are focused on simultaneously funding growth, returning cash to our stockholders and maintaining a strong balance sheet. So far this year, we've committed nearly $9 billion to our M&A program, including our pending Viom transaction, declared about $620 million in common and mandatory convertible preferred stock dividends, and deployed over $500 million in CapEx. About 40% of our annual CapEx spend is for the construction of an expected 3,000 new build-to-suit sites based on the midpoint of our outlook. Year-to-date, we've completed the construction of over 2,300 sites and have generated a first year return on investment of over 9% on those sites on a consolidated basis. We believe that the combination of our growth in AFFO per share and our REIT distribution will create meaningful value for our stockholders. This includes expected annual growth in the REIT distribution of at least 20%, which has actually been 30% or so over the last 12 months. Our payout ratio as a percentage of AFFO is currently about 35%, and is expected to grow to between 40% and 50% within the next few years due to anticipated growth in our taxable income and the reduction of our net operating loss carry-forwards. We also seek to maintain a substantial base of liquidity, and had about $2 billion in cash and borrowing capacity under our revolvers as of the end of the quarter. From a capital markets perspective, our focus for the remainder of the year will be to opportunistically extend duration and ladder out our maturities, which today have an average remaining term of nearly six years with an average interest cost of about 3.4%. We took steps towards attaining these goals just this week as we extended the maturity dates of our credit facilities and term loan. We remain committed to maintaining our investment-grade credit rating, and expect to end 2015 with net leverage in the mid five times range. Additionally, we expect to be at five times or below by the end of 2016, including the impact of our recently announced Viom transaction. We expect to evaluate a variety of financing options for this transaction and our other funding needs in keeping with our commitment to investment grade while maximizing the value for our equity holders. Our long-term target leverage range continues to be between three times and five times net debt to adjusted EBITDA. And over the long-term, we intend to utilize our solid financial platform to continue to invest in global, multi-tenant commercial real estate assets where it makes financial sense to do so. And if those opportunities aren't available, return that generated cash back to our shareholders. Turning to slide 13, and in summary, our global business has generated core growth above our long-term target for all key metrics so far this year. And we believe we are well-positioned to finish the year strong. Our high quality asset base, strong balance sheet and manageable leverage, positions us well to continue to invest in future growth with our recently announced Viom transaction as a prime example. This transaction will significantly increase our presence in a key global market, increase our portfolios exposure to India's densely populated areas, and enhance our role in the government's Digital India initiative. This is an exciting time to further increase our presence in India as the market appears to be at a significant inflection point in terms of wireless network investment, and we are excited to help our customers further enhance their wireless networks in the market. Trends across the rest of the markets in our diversified global footprint continue to be favorable as well, with consumer demand for mobile data increasing at a tremendous pace. Including the impact of Viom, we now have a strong presence in the four largest most strategic markets across the continents we serve. And with that, I'll turn the call over to Jim for some closing remarks before we take some Q&A. Jim?

[James D. Taiclet, Jr.:]

Thanks, Tom, and good morning, everyone. As we do every year on our third quarter calls, I'll focus today's remarks on the fundamental trends in wireless usage and technology which we believe will continue to drive network investment and long-term growth for American Tower. So let's begin with U.S. mobile data usage, trends and projections as illustrated on slide 15. The monthly mobile data usage per subscriber on smartphones, laptops and especially tablets, is projected to increase significantly as people seek to mobilize more and more aspects of their daily routine. We believe this growth in mobile data traffic is principally a result of a virtuous cycle. First, after years of significant investment, mobile networks today are more capable than ever at delivering the necessary speeds to support high bandwidth data and entertainment applications. Second, mobile device, processor, battery, software and screen improvements are facilitating increased mobile app, navigation, music and video consumption. For example, leading-edge new LTE devices like the iPhone 6s and Samsung Galaxy S6 continue to expand the scope of what we can do on a mobile handset. And whether it's a simple phone call, listening to your favorite music streaming service, or getting turn by turn directions while driving in your car, a strong, continuous mobile phone signal is becoming ever more essential. As a result, current projections are for the average U.S. smartphone to consume more than 7.5 gigabytes per month in mobile data by 2019, up from around just 2 gigabytes today. An even greater increase in average usage is projected for network connected tablets which are expected to consume nearly double the amount of an average smartphone by 2019. Whether it's streaming an NFL game on 4G at the airport or entertaining your kids with an iPad on a long road trip, mobile video connectivity is becoming more mainstream. This transformation is being fueled by the wire to mobile conversion of social media and branded video content, especially by over-the-top providers such as Netflix. The cumulative impact of these usage trends is shown on slide 16. After nearly quadrupling in the last three years, total U.S. mobile data usage is expected to more than quadruple again by 2019. Since the early part of the 2000s, carriers have invested nearly $350 billion in wireless CapEx, as illustrated by the gray shading on slide 17. They're using this cash to build out their nationwide mobile networks to support the fixed to mobile conversion of first telephony, then Internet services, and most recently, social media and entertainment. Each new generation of technology has, in turn, resulted in explosive growth of traffic on those enhanced networks, and then a subsequent step function increase in network investment levels completing the virtuous cycle. There are two facets of mobile network investment which are depicted on the next slide. The first is known as the core side of the network, the fixed line portion of this system, which consists of the switches, servers and related electronics, the fiber optic cable and copper that connects all these major components together, and the software that makes it all work. The other side of the network is known as the RAN, or radio access network, and is made up of the widely-distributed transmission or cell sites. Each cell then utilizes an air link over radio spectrum to reach your device over the air. At American Tower, we play only on the RAN side of the network, and demand for our real estate goes up directly whenever more transmission equipment, such as antennas, is required, for capacity, or when new cell locations are needed for coverage. Moreover, our demand goes up indirectly when improvements in the core network reduced its cost of operation, potentially freeing up more capital and/or OpEx resources for the RAN and its many cell sites. Therefore, it's crucial to view technology and industry developments as they relate to American Tower by asking three simple questions about each. First, does this particular technology significantly improve air-link capacity and thus reduce the need for equipment on towers? Second, does this technology significantly increase the distance a high-quality wireless signal can travel, allowing sites to be positioned further apart? And third, conversely, does this technology reduce core network costs which then would enable more resources to be deployed back into the RAN. So now I'll spend a few minutes on several emerging technologies which we believe are, or will be incorporated in the future network deployments and address those three critical questions for each. First, let's start with self optimizing networks, or SONs, and software-defined networks, or SDNs. SONs allow networks to be more intelligent by dynamically managing traffic. This helps carriers reduce expensive truck rolls to make physical network equipment adjustments in the field. Meanwhile, SDNs provide carriers with a tool to add new network functionality and services through simple software upgrades, dramatically reducing time and cost. Both the SON and SDN, therefore, primarily enhance the efficiency of the core side of carrier networks, and help operators reduce OpEx and CapEx there. So we view both of these technologies as neutral to positive for tower demand. Next, let's address Cloud RAN or C-RAN technology which enables carriers to centralize the base stations of several cell sites at a datacenter instead of having dedicated ground-based equipment at each tower site. As a result, the carriers are able to reduce their base station costs and enhance the processing efficiency of the mobile core portion of their networks, while their ground space requirements at the base of towers can decrease with C-RAN in use, the amount of equipment on the towers themselves is unaffected or in some cases actually increases, as remote radio heads are installed on the tower. So for a tower operator, we also expect C-RAN to be typically neutral to net positive. As you can see on slide 19, it is our understanding that none of the technologies I just mentioned materially enhance air-link capacity or extend effective signal ratings. Conversely, when it comes to whether or not these innovations have the capability to decrease carrier operating expense on the core side of the network, the answer is yes. Over the long-term, this should be a positive for the tower industry. Turning to the air link side of the network, there have been technological improvements which, over time, have improved network capacity. For example, carrier aggregation has enabled mobile operators to deploy unpaired spectrum, usually with high and low bands together all in one site. This adds network capacity in the short term as spectrum assets are more effectively utilized. But in the long-term, we believe this will actually lead to increased cell site densification as the design requirements of the highest-frequency band spectrum will dictate ultimate network density and overall design requirements. Our estimate is that over the last few years, capacity gains from new spectrum and higher spectral efficiency of LTE have absorbed roughly 20% to 30% of incremental network usage, leaving the 70% to 80% being solved through additional cell sites and equipment on our towers. As I've highlighted in past calls, the laws of physics govern the properties of RF signal propagation and thereby limit the impact that many changes in technology can have to the air-link portion of a mobile network. For example, in the largely suburban and rural areas served by our U.S. towers, antenna elevations of at least 75 feet above ground level are usually needed for effective signal transmission. Antennas that are upwards of 10 feet tall also continue to be required for the specific spectrum bands being used and the cell radius being served in these topologies. In addition, higher bandwidth data traffic requires more signal propagation locations to ensure sufficient signal strength, and more equipment at those locations to process that signal as well. And these trends drive solid core organic growth that you've seen in our business year after year. Given the topographic and demographic characteristics of the United States and our international markets, we continue to expect the macro tower to be the predominant siting solution for carrier network deployments now and in the future. Additionally, the improvement of technology in the mobile core should enable the carriers to deploy relatively more capital on their radio access network build-outs to keep up with the demand. This may be especially relevant with the much higher throughput expected on future 5G networks and beyond. Moreover our international operations continue to benefit from the increasing availability of cheaper, more advanced smartphones and the greater ability of many more people around the world to afford them. Mobile connectivity is revolutionizing communications, commerce and entertainment in the developing world. And we think that in many of our served markets, the modernization cycle has actually accelerated. As you can see on slide 20 we are positioned internationally with a diverse portfolio of assets in markets where the rate of growth in mobile data traffic is likely to outpace even that of the U.S. An excellent example of this phenomenon is in India, which will be our largest international market pro forma for the close of our recently announced Viom transaction. The wireless sector in India is roughly in the same stage as the U.S. was in around 2005, with smartphone penetration of less than 25% and the vast majority of the population still on 2G technology. Like what occurred in the U.S., a fundamental shift towards more advanced wireless technology is now underway in India with the major carriers announcing significant network build plans for 3G and even the initial rollout of 4G beginning in key urban metros, where Viom is especially well-positioned. Another compelling example of a market that's still in the – early in the wireless technology curve is Nigeria. Similar to India there's virtually no fixed line infrastructure in place there. The large, predominantly young population of more than 170 million people has embraced wireless. But more than 80% of the devices being used in Nigeria are still on 2G. Cheaper, more advanced handsets are expected to drive significant growth in mobile data traffic. And carriers there are making significant investments in their networks to capitalize on this shift. Taken together we expect our diverse and substantial international assets to deliver growth that will be stronger for longer than even in the U.S. And given the consumer and industry trends in the U.S. and across our global footprint, we do expect to continue to deliver strong, long-term growth in AFFO and very attractive total returns for our shareholders. So thanks again for joining us today, and Tom and I will now be happy to take your questions. So, operator, can you please go ahead and open up the call?

[Operator:]

Thank you. Your first question comes from the line of Amir Rozwadowski from Barclays. Please go ahead.

[Amir Rozwadowski:]

Thank you very much and good morning, Jim, Tom and Leah.

[James D. Taiclet, Jr.:]

Morning, Amir.

[Amir Rozwadowski:]

Jim, you provided some comprehensive color on the demand drivers for traffic, but as we know that when and how the carriers choose to address data traffic is also a factor in determining the impact of these trends on your business. I was wondering if you could provide some updated color on what you're seeing in terms of application activity, as we've seen fluctuating behavior from different carriers in the U.S. through the course of 2015. And so any incremental color that you could provide there would be helpful. And then dovetailing on that you mentioned that – I think, Tom, you mentioned that your DAS business is up 30% year-to-date. Can you provide some insight on the size and scope of that business? And how we should think about that opportunity for you folks going forward, as carriers increasingly use some of these systems to address some of these traffic trends that you've highlighted in your commentary? Thank you very much.

[James D. Taiclet, Jr.:]

Sure, Amir. It's Jim and I'll address your first question. U.S. applications, as Tom said, are up slightly from the second quarter to third quarter of this year. And I can give you a quick run through of where we see the demand coming from, largely based, frankly, on the public statements of the carriers. But we can give you a little more color on some of it. Our largest new business customers over the last couple of quarters have been Verizon and T-Mobile, sort of running neck and neck in a way the last six months I'd say. And T-Mobile in the field we see them deploying aggressively their 700 megahertz A block spectrum. That's going to give them a stronger signal in places they don't have it. They're also doing a roaming overbuild, which continues. Because of the success of their subscriber additions, they can actually make the decisions to put network equipment in place in more territories across the United States, and they're doing that. So T-Mobile is being pretty aggressive this year. Verizon is pretty stable and steady. Their wireless CapEx is up almost 20% year-to-date from 2014. They guided I think to $8.6 billion for mobile spending for CapEx in 2015. They're aggressively deploying AWS spectrum across their markets to handle the data demand that they're seeing from their customer base. And again on a pretty stable sort of spending and deployment schedule in our estimation. AT&T continues to be grooming I guess we'd call it. They were our biggest customer for new business from late 2013 to mid-2014. And they've taken the intervening year or so to groom that investment and make sure that it's effectively being utilized for its subscriber base. They're guiding, as everybody I think knows, a little bit less from year to year CapEx spending, they're at $6.6 billion. So just as a reference. If Verizon is at $8.6 billion in 2015 and AT&T is at $6.6 billion, how does that future comparison or trend play out? I think everybody could draw their own conclusions on that. But we do expect AT&T to continue to be competitive over the next few years on a network side of the business. They are also going to be looking at deploying, as Verizon, AWS-3 once that gets cleared and available. What's interesting to us about AWS-3 and especially the fact that Verizon and AT&T spent collectively almost $20 billion for that spectrum, is that it means that the fundamental 4G network, which is based on 700 megahertz spectrum today, is going to be complemented essentially nationally by 1.7 GHz and 2.1 GHz spectrum, which doesn't have the same favorable transmission characteristics, of course as 700 MHz. So what we view AWS-3 long-term deployment in terms for the companies like American Tower is that you're going to have a denser network for 4G at the end of the day to carry the traffic. And so you see that in pieces now with various carriers deploying AWS and other pieces of spectrum, including Sprint with its 2.5 GHz. But as the time goes on, the only way to carry this traffic that we've been describing is going to be with AWS and higher spectrum, the sites are going to ultimately have to be closer together, we think. And that will take time. It will play out over a series of years. But we do think it will underpin some pretty good U.S. growth for the long-term. And then finally, just to make mention on Sprint, I believe they're still in the midst of finalizing their network strategy and once they do that, we'll hear more from them on exactly how they want to go through with that deployment. And again, they're going to be putting in spectrum bands for essentially 4G that are going to be much, much higher frequency than some they're already using today and eventually that bodes for a denser network even for Sprint when they're ready to make those investments. So I think I'll stop there and turn it over to Tom.

[Thomas A. Bartlett:]

Yeah, sure. On the second question relative to small cells, we have about 300 into our DAS systems, we have just over 30 ODAS systems, over 20,000 rooftop rights that are available for small cell and macro cell activity. Those comprise about 6% of our AMT Domestic Rental and Management revenue. And as I mentioned, we generated just over 30%, excluding the amortization. From a tenancy perspective on the venue-based assets, we have about 2.3 tenants per tower, or per node. Gross margin is in the 75% range versus the ODAS, which, as we've said before, is much lower at the 1.1, 50% kind of margin levels. But I think strategically, we continue to think that in most areas in the U.S., the macro towers are the optimal transmission points. We believe cost and technology prohibitive outside of dense urban areas to use small cells to any great degree just because of siting costs, you need to run fiber each node, hand off issues, things like that. However, as we've said, in dense urban areas with population densities of 10,000 per square mile, we think that small cells can make sense. And the key point, though, is you can make a multi-tenant model out of it and manage the technology risk and higher cost associated with the ownership of active electronics and fiber at those kinds of levels. Our conclusion thus far has been that the multi-tenant model where you can earn good, long-term economic returns exist, more so in indoor DAS types of installations. And as a result, we've got those 300 indoor DAS systems in the U.S. and another 100 internationally. So our ODAS presence is a lot smaller because we just haven't found the returns there to be as compelling relative to all the other investment opportunities that we have. So, we continue to participate meaningfully in small cells, but are really careful to make sure that we're investing capital where we can find a multi-tenant model. Hopefully that helps.

[Amir Rozwadowski:]

Thank you very much for the incremental color.

[Thomas A. Bartlett:]

Yeah.

[Operator:]

Your next question comes from the line of Tim Horan from Oppenheimer. Please go ahead.

[Timothy K. Horan:]

Thanks a lot, guys. I know you have a lot of different levers that you can pull on the AFFO growth, but it seems can you continue to set the growth for the next three years to five years while you're de-leveraging at the same time? Maybe you can just talk about some of the dynamics where you think the EBITDA margins can go and what acquiring land underneath and extending out the leases does for the AFFO growth? Thanks.

[James D. Taiclet, Jr.:]

Tim, it's Jim. I'll just some provide some headlines and let Tom take up some of the more detailed discussion. But we're striving for double-digit AFFO for share growth over the long-term. We've been able to deliver that consistently over the last decade or so. And we'll strive to do that going forward in the future.

[Thomas A. Bartlett:]

And I think, Tim, if you look historically at what we've done, we've been able to demonstrate that. That's clearly our aspirational goal. In quarter in, quarter out, there could be some fluctuations on that over the long-term, that's exactly what we're striving to do. And there are a number of elements to it. As I've said before, we kind of walk and chew gum at the same time because we're constantly re-investing our business in terms of acquiring new assets that are providing future opportunities for growth. We look at things on an AFFO per share basis because to the extent that those opportunities don't exist for future investments, that don't meet our own internal hurdle requirements, then we will return that cash back to shareholders and that obviously will take shares out of the market and provide an opportunity to increase AFFO per share that way. But that is our goal. I mean, we have the opportunity now of being able to invest in many different markets. And so we're not limited to just investing in one market. And so we have a broad array of looking at where we can create the most net present value. And I think we have the engine working. We have a really good machine here in terms of being able to manage through that process. Our R&D is really in the value that we have in our contracts. That's really where we're able to create the value. We have a long-term visibility on that, because the contracts are so long. So we continue to hone in on things like SG&A to make sure that we're leveraging that as best as we possibly can. It's the beauty of the model that when you do bring on that incremental dollar of revenue, you're – like we've been able to demonstrate, you're bringing $0.90 of that dollar down to the gross margin line. So that's a wonderful thing that we've been able to do on a global basis. And again, it comes to the quality assets, but more importantly, even to the quality of the contracts and the quality of the relationships that we have with our customers on a global basis. So that's what we do day in and day out to try to leverage the portfolios that we have and leverage the assets and the people that we've got in the business, to make the right kinds of investment decisions in terms of systems and all those boring operational things that we do behind the curtain to make sure that we really can continue that kind of growth. So long answer saying that's our plan, that's our goal, and that's what Jim and I do and as well as the entire executive team do every day.

[Timothy K. Horan:]

But higher leverage clearly helps that growth a bit and your cost of debt is probably half what your cost of equity is. So would you think about keeping debt up more this five times to six times level instead of going down to three times to four times?

[Thomas A. Bartlett:]

No, I think, Tim, the way we would put that into context is as our business demonstrates the stable growth and the outperformance over a long period of time and rating agencies and others in the debt market get a better and better understanding of that and we get more opportunity to expand our leverage. We will, but we do want to keep our investment grade rating along the way because we've done our own regression analysis to say when capital markets are tight, asset prices are lowest and when we can get access to capital and other people can't, that's when we make some of our best long-term transactions. So we're going to try to keep demonstrating the stability of the business and maybe get a little more headroom from the rating agencies and others in the market. But our goal (44

[Timothy K. Horan:]

Thanks for the color.

[Operator:]

Your next question comes from the line of Jonathan Schildkraut from Evercore. Please go ahead.

[Jonathan Schildkraut:]

Great. Thanks for taking the questions. If possible, I'd love to hear a little bit more about Mexico. Obviously, Tom, during your prepared remarks yesterday and today for that matter, you talked about 10% or double-digit growth. And just like to hear a little bit more about what's going on in Mexico. Obviously, it's a pretty big international holding for you. You mentioned the MLA with AT&T. Any additional color there and just who else is building and what your expectations are, I guess, over the next year or two years? Thanks.

[James D. Taiclet, Jr.:]

Yeah. Hey, Jonathan, it's Jim. First of all, it's important to point out that AT&T is our biggest customer not only in the U.S., globally, and now also in Mexico. So we have an excellent, I think, business relationship with AT&T across the board. There's always things to talk about on contracts and such, but what we've done in the U.S. has determined a way to have mutually beneficial contractual arrangements with AT&T especially in periods where it's growing its network rapidly. And so we've replicated the same sort of arrangement with AT&T in Mexico which is, again, over half of our revenue base in the country. And let me just speak to that for one more minute and then I'll turn it over to Tom to add some more of the data behind it. So we have a unified master lease agreement now with AT&T, covers all of our site leases under the previous Iusacell and Nextel agreements and extends all of those leases for 14 years which is a really nice long time horizon to have, a guaranteed revenue stream from all those leases. This agreement also guarantees our company certain levels of new business from AT&T Mexico over the next several years with some potential upside on top of that depending on how active they think they need to get in the network, and again, we believe it's going to be mutually beneficial to American Tower and AT&T. And it also specifically, for our customer, provides access and flexibility for them regarding all of our Mexico assets to help efficiently accelerate their network upgrade strategy. We want to be their partner in that. So I also wanted to note that with their acquisition of DIRECTV, AT&T is now not only our top five new business customer in the U.S. and Mexico, but it's also in the third quarter in the top five in Brazil, Colombia and Peru as well. So that's demonstrating the expanding geographic scope of our partnership with that particular company, and it's another example of us having global, multitenant, high level carrier relationships that can really extend around the world in some cases and drive stable revenue growth for the long-term and in this case, again, 14-year kind of expansion. Tom?

[Thomas A. Bartlett:]

Yeah. No, just a couple additional facts, I think, Jonathan, on it. I mean Jim walked through the presence – our customer presence on our towers and the percentage of revenue. AT&T represents a significant piece of it, Telefónica represents about 20%, 21%, and AT&T up in the 60% level. As we've mentioned in the past, the organic core growth has picked up nicely, now we're at double-digit core organic growth. As that market has come out of a period of a couple of years, where, because of some of the – I think, the regulatory environment there has been, as I said before, a little bit sleepy. And so now, we're starting to see a pickup of growth in that market as the carriers, as Jim mentioned, are deploying 4G and I think gets us cautiously optimistic in terms of the growth that we would expect to come from that market going forward. 90% wireless penetration, only 35% smartphone penetration, 45% 3G and 4G penetration, a $10 to $11 ARPU. I think the LTE investments, as we mentioned, are still very much in the early stages. CapEx, down there, is still in the 15% to 20% range, and we believe will be higher given what we've heard, AT&T and América Móvil announced publicly. We believe, like Brazil, that the market needs twice the number of towers to support 4G over the long-term. And so, as I mentioned, the team has done really nice – I think really well in terms of managing the portfolio that we've had down there. It's grown significantly. We're building towers for our customers in the marketplace. It's our second largest Latin American market probably res (49

[Jonathan Schildkraut:]

Thanks, guys, for taking the question.

[Thomas A. Bartlett:]

You bet.

[Operator:]

Your next question comes from the line of Colby Synesael from Cowen. Please go ahead.

[Colby A. Synesael:]

Great. Thank you. I have two questions. One is on your MLA with AT&T in the United States. My understanding is that that's going to be expiring soon. And that at least more recently, you've benefited from that MLA in terms of growth you recognized from AT&T, despite lower activity from them. And I guess my question is, if you don't renew that MLA with them as we go into 2016, what's the potential impact on the revenue to which you recognize from them without that MLA? The second question is on international escalators. Can you just remind us what percentage of your international escalators are tied to CPI-type benchmarks? What that average rate has been in 2015 and based on where rates are now, what that rate could be in 2016? Thanks.

[James D. Taiclet, Jr.:]

Hey, Colby, it's Jim. We don't speak to the specific timing in terms of master lease agreements, but in general, just to say, you know the concept, that these holistic agreements have a period of years during which there's a lot of flexibility, as I mentioned earlier, and what the carrier can do. There are limitations to equipment rights and other limitations within those. But at a certain point those widely available rights will then revert back to retail model, if you will, which is an individual application for every single thing that the carrier wants to do. And we just go back to business as usual or pre-holistic practice, which is we'll price that application and we'll individually negotiate it, and we'll end up getting our revenue that way. So the concept is that as long as there's demand we'll get nice revenue growth from the same customer whether it's holistic or not. What the holistic does is reduces any kind of downward risk over a period of time. And there's quite a few years to run on the individual site leases with AT&T well beyond the point where that switchover might happen. And again – so we're not speaking to the progress and negotiation, the exact timing of when these things happen. But that is the general concept. And I think that AT&T is going to again be competitive in the U.S. market. It's one of their – it's not their core business, one of their top core businesses in the corporation. And we expect them to be trying to capture as much of that rising demand for data as they can within their financial plan.

[Thomas A. Bartlett:]

And just let me add, Colby, let me be really clear. The master lease agreement is not expiring, okay? There are certain elements that Jim talked about that change over that period of time, but the MLA is not expiring. So I just want to make sure that you understand – that you clearly understood that. Because I also saw that in some write-ups, and I just wanted to be very, very clear on that. With regards to the escalators, about 90% of our revenue international markets is tied to inflation. And in each of those markets, there are CPI indices that are used for determining what that inflation would be, and how that then would impact the ongoing leases and the revenue stream in those markets. And that happens throughout the year, whenever that lease was originally put on the base. So it won't all happen as of January 1, there are some caps, floors, maxes on that. But we think it's a very good way for us to be able to minimize the impacts of that. I'll also mention that we also have similar types of escalators on our land, okay? So it's not just the revenue that we have it on. It's also on the land costs. But just to give you a sense, even in the third quarter our escalators in our international markets was probably about 4.5%. So it clearly provides some benefits, and we would expect, given the levels of inflation over the – that we've seen over the last 18 months – 12 months to 18 months that we would start to see some of that benefit as we have in 2015. But I think we'll see even probably a higher level of impact in 2016.

[Colby A. Synesael:]

Just one real quick follow-up to that. Are you hitting some of those caps? You mentioned that there's caps and floors. Are you hitting some of those caps now, or have you been this year?

[Thomas A. Bartlett:]

Yeah, I don't have the details in front of me, Colby. But sure, there's probably a situation where we have actually hit some of those caps.

[Colby A. Synesael:]

Great. Thank you.

[Thomas A. Bartlett:]

Sure.

[Operator:]

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

[Ric H. Prentiss:]

Thanks. Good morning.

[James D. Taiclet, Jr.:]

Hi, Ric.

[Thomas A. Bartlett:]

Hey, Ric.

[Ric H. Prentiss:]

Hey. Speaking of América Móvil, so we were down in Mexico this week for their Investor Day. One of the things they talked about is diversifying their business, both geographically and also the funding on their balance sheet as far as where they borrow the money. You guys also obviously a large global infrastructure leasing provider, diversification. So kind of two prongs to the question. One, do you have a target mix of how you'd like to diversify U.S. versus international and where those international baskets might go? And then on the funding side, most of your existing balance sheet is I think in U.S. dollars still. Can you update us a little bit about your thoughts as far as how funding this diversification as you – I think, Tom mentioned – continue to invest where it makes financial sense? So just kind of the diversification and funding question.

[James D. Taiclet, Jr.:]

So I'll talk to the diversification, Ric. We have said a number of times in the past we don't have a specific revenue split target for U.S. versus our international markets. But just as a reference, because of the size, the pricing structures, the strength of the contracts that Tom already mentioned, the U.S. still delivers 75% of the operating income of the company, right? So that's going to be a very big flywheel that itself grows over a long period of time. And there's a smaller flywheel of international operating income that's going to grow faster for a longer period of time. And so those two things actually complement each other. And we don't have a specific target of how the math ought to work in say year 5 or year 10. But what we will continue to do is look both in the U.S. and outside for investment opportunities that meet our investment criteria, right, which is meaningful AFFO per share growth opportunity at asset prices that give us a good opportunity to also keep ROIC stable and rising over time as well, okay? That's how we make those investment decisions. The benefit of having the global aperture as we look at those investment decisions are it gives us a lot more things to look at. Many of those things will meet our investment criteria, and we'll go through with them. A couple of those have happened already this year in the case of TIM, Airtel and now Viom. We also had that aperture open in the domestic side, and we made a very significant agreement with Verizon as everybody knows earlier this year. And then there's a lot of things we don't have to do, because we have the wide aperture. There was a couple of other carrier deals that didn't meet our asset pricing objective, and you didn't see us win those. There's many international deals because we have again both sides of the street to play on that we don't take, because we don't think we have to take them to grow inorganically. So I think those are the benefits of having the global team in place, the track record, these multinational customer relationships. The diversification will naturally happen, because as you know 60% of the sites – and it'll be greater next year contingent on our Viom closing – are outside the U.S. And they're going to grow faster and longer. So this is naturally going to evolve over time, but there aren't any targets. Tom?

[Thomas A. Bartlett:]

Yeah. And I would just add, Ric, I think from a capital allocation perspective, because we do look at cost of capital on a risk adjusted basis, it's where we can create the highest levels of net present value. And that's what the investment committee within our business focuses on. And so we can create more net present value in one market versus another, that's where we'll allocate our dollars. And as I said it's largely due to the fact that we look at everything on a risk adjusted basis. And relative to the second question from a funding perspective, we have less than $500 million invested today. Clearly our goal where it makes financial sense to raise more capital locally. We will be pro forma for the Viom transaction, upwards of $1 billion to $1.5 billion of local country financing, given the fact that that $800 million to $900 million of debt on that business is all local currency with local banks, local bank debt at this point in time. So there will be $1 billion, $1.5 billion of debt invested internationally. And Leah and the entire Treasury group continues to look at opportunities to invest in local markets where it makes sense. So we'll continue to do that, continue to and raise cash locally, as well as look at all other kinds of opportunities where we can actually raise capital.

[Ric H. Prentiss:]

I think in the past you've also given us some kind of growth or return hurdles as you look at the different regions of the world. Can you update us on what those hurdle rates were? And given the recent FX pressure out there, have they modified at all?

[Thomas A. Bartlett:]

Yeah, they changed slightly. But they still are in the 7% to 20% range, depending upon the market, depending upon the region. And the rates will impact it as well as local country betas, risk adjusted yields. There are a lot of things, as you know, that go into those formulas. Local country borrowing rates also becomes a critical piece of it. They're still in that kind of that 7% to 20% range.

[Ric H. Prentiss:]

Can you carve out Africa versus Brazil versus others for us at all?

[Thomas A. Bartlett:]

Yeah, if you take a look at EMEA, and from a region, it'll go from – depending if you talk about a South Africa probably in the 12% to 13% range, up to a market like Nigeria where you're talking high teens. Ghana, Uganda, high teens there. If you take a look at the risk adjusted element of it, it's probably 1,200 basis points versus what it is in the United States. Down in Latin America it – depending upon if you're talking a market like Chile to Colombia, it can be in the 12% to 15% range, 14% range. And India is probably – Asia, some of the markets that we're looking there, but particularly India is probably in that 11% to 13% range.

[Ric H. Prentiss:]

Great. Thanks so much, guys.

[Thomas A. Bartlett:]

You bet.

[Operator:]

Your next question comes from the line of Phil Cusick from JPMorgan. Please go ahead.

[Philip A. Cusick:]

Hey, guys. Thanks. Two questions. First, can you give us some thoughts on churn and decommissioning payments in 2016? And then second, Tom, you just mentioned India. What's the potential at this point to buy more towers in India? I assume this gives you the scale you're looking for but anything going forward? And as you said, you won't need to raise equity to stay below 5 times at the end of 2016. Is that a fair way to look at it or is there something else – another dynamic we should be thinking about? Thanks.

[James D. Taiclet, Jr.:]

It's Jim, Phil. I'll just speak to India strategy first and turn it over to Tom here. We're going to be very, very focused on the Viom transaction for the next 6 months to 18 months, probably, between regulatory review, integration systems, et cetera. And so I think that will be our focus strategically. Now, we'll certainly keep our doors open and for discussions between now and then. But I find it difficult for us to contemplate another major asset acquisition in the midst of integrating Viom and combining our current business with it in the near-term.

[Thomas A. Bartlett:]

On the decommissioning side at this point, we expect a more normalized year in terms of decommissioning revenue in 2016. As we previously said, we would still expect to record $20 million, $22 million in revenue under a multiyear agreement that we have in place with one of our carriers. But the incremental level of decommissioning revenue, which is around $15 million, $17 million that we expect to record in 2015 may not recur in 2016, Phil. And on the capital raising side or on the equity side, we'll be looking to – once we get through all of the regulatory review in India, this will close in the – we anticipate, in the middle of 2016. And we'll look at that time just in terms of where are the margins, where the EBITDA is, what kind of EBITDA performance we've had in our existing business, a lot of different elements, Phil, to determine what our capital raising plans would do. As you know, the good news is that – and by the way, as well as the debt balance that we would be assuming with the Viom transaction. So I think at that point in time, we'll have a much clearer notion in terms of where and what the capital structure would look like. We're committed to getting down to that 5 times by the year end 2016. We think we have a lot of products available to us to be able to ensure that. And we're really excited about the opportunities with that Viom transaction, and where the EBITDA levels may be, as well as where the EBITDA levels are going to be in our existing business. So a long way of saying, we'll have a much better sense, I think, as we go into 2016 in terms of what that structure might look like.

[Philip A. Cusick:]

That's helpful. Thanks, guys.

[Thomas A. Bartlett:]

Sure.

[Operator:]

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

[David William Barden:]

Hey, guys. Thanks. Just two, if I could. Maybe, Tom, last quarter you guys gave us some data about the lease upgrade on the Verizon tower portfolio being about 900 lease applications. It would be great to just get an update as to what kind of velocity we've been seeing on that portfolio domestically. And then second, just quickly on the organic side internationally, could you give us some color as to what you think Brazil as an organic, apples and apples, year-over-year situation might look like in 2016 or at least what you're base lining? Thanks.

[James D. Taiclet, Jr.:]

So, David, good morning. It's Jim here. So on Verizon towers, we've actually got almost 5,000 third party applications on 11,500 sites. Now, it's going to take months and, in some cases, a number of quarters to get those applications through. It's a mix of co-locations and amendments, all kinds of activity there. It will play out over, literally, the next 6 months to 12 months as far as real revenue opportunities that flow from those many applications. But we already have commenced new business in process where we think we'll end the year with about $800,000 a month of incremental monthly revenue based on the new applications we will have processed by then. So that's a really great start. It's in line with our business plan and we've got a huge pipeline of applications as we've opened up these towers for business, so to speak. Tom?

[Thomas A. Bartlett:]

Yeah. And then on the Brazil question, we'll come out and give more color, David, in the beginning of next year, but historically last year in 2014, we were growing in probably the 17% to 19% range, if you will, from a core organic perspective in Brazil. It's down a little bit this year in more in the 13% to 14% range, which would – I would hope, would be more probably more of a typical run rate going forward. But as I said, we'll be – our customers are investing heavily, as Jim talked to, in the marketplace. There definitely is a need to double the amount of sites that are actually in the marketplace. I think the regulators down there are driving that kind of requirement on the carriers themselves and so we're very bullish in terms of what we would expect some of the recent transactions that we've done is giving us more of a metro type of a coverage range. So we would hope that that would help even stimulate some additional capital and organic growth on our portfolio.

[David William Barden:]

Awesome. Thanks, guys.

[Operator:]

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

[Simon Flannery:]

Great. Thanks very much. Can you just talk a little bit about FirstNet? It seems like we're moving forward towards an RFP process and actual network deployment finally. So what sort of discussions have you been able to have and get some visibility into what the opportunity might be here and the timing around that? And then in Brazil and also elsewhere, there's been a lot of talk about carrier consolidation. Can you just talk about the tradeoff between fewer companies building but also stronger financial condition and how that plays out and what – in markets like Brazil, what your lease term remaining are? Thank you.

[James D. Taiclet, Jr.:]

Sure, Simon, it's Jim here again. As far as FirstNet, there's definitely progress on schedule and RFPs being put together. There's going to be upwards of a six-month review process and the goal of the first-step management is to choose not only its partners but its actual structure of operation, and it's going to be something that we're going to participate in as closely as we can. We don't know how this is really going to play out in the end yet, who is going to participate as far as operators, OEMs, other kinds of prime contractors that could get involved. So we're going to keep our options open and deal across the board with potential teammates as this evolves and with FirstNet to the extent we can deal with them directly. So there's definitely an opportunity here. There is a need of a good – a better public safety network of 4G base one in this country. FirstNet is going drive that and what we've planned, of course, to participate in it, although we can't assess the value of the actual lease stream down the road yet. And then as far as consolidation risk in Brazil, the tradeoff for us has always been, as you pointed out, we need at least three, we think, well-funded, successful mobile operators in the market to get the optimal long-term outcome for our company. And so whether it's five, counting Nextel in Brazil today, or four or three, over the 10-year to 20-year time horizon, as long as they're funded in a way that they can drive 4G penetration to 100% and then get to that 2 gigabyte, 4 gigabyte, 6 gigabyte a month usage level, it's going to be terrifically constructive for the tower business. Our overlaps in Brazil happened to be really modest. TIM and Oi are the biggest cycle on the rumor scale, I guess, as far as potential consolidation. And if they were to merge, just as an example, we don't expect this, but just to give you again context, the overlap on our towers in Brazil is only 1% of consolidated revenues. And we have eight years to nine years on average left on these contracts. So we don't view industry consolidation in Brazil as a material threat to the business, certainly in the mid- to long-term it wouldn't affect it, I don't think.

[Simon Flannery:]

And do you get the sense that the current financial condition and maybe the market, that there is a lot more they'd like to do but they just don't have the financial capability right now?

[James D. Taiclet, Jr.:]

Not necessarily because if you look at the big investors in mobile networks in Brazil today, it's these major multi-national companies, right? So it's Telefónica, Telecom Italia, América Móvil. Actually, Nextel is investing more now that it's really focused on Brazil. And Oi has scaled back a bit. But again, they're being competitive. So these are major multi-national mobile operators that I believe, as we do, view Brazil as an outstanding long-term market. And they're going to continue – and they are investing and continue to invest, I think, to make sure that they maintain and maybe even grow their market share there.

[Simon Flannery:]

Great. Thank you.

[Operator:]

Ladies and gentlemen, this conference will be available for replay after 10

[Leah C. Stearns:]

Great. Thank you, everyone, for joining the call today.