美國電塔 (AMT) 2005 Q4 法說會逐字稿

Good morning. My name is Whitney and I will be your conference operator. At this time I would like to welcome everyone to the fourth quarter and full year 2005 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer session. [OPERATOR INSTRUCTIONS] Thank you.

Mr. Powell, you may begin your conference.

Thank you. Good morning and thank you for joining American Tower's conference call regarding our fourth quarter and full year 2005 results. We will begin with comments from Brad Singer, our Chief Financial Officer, and Jim Taiclet, our Chief Executive Officer.

Before we begin, I would like to remind you that this call will contain forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements include discussions about our first quarter and full year 2006 outlook, out stock repurchase program, statements regarding our goals, beliefs, strategies, objectives, plans or current expectations, and 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 press release and those set forth in the Form 10(Q) for the quarter ended September 30, 2005, and our other filings with the SEC. We urge to you consider these factors and remind that you we undertake no obligation to update the information contained in this call, including these forward-looking statements, to reflect subsequently occurring events or circumstances.

Our earnings release, which contains information required by Regulation G, was furnished this morning to the SEC on a form 8-K and is also posted on our website.

Now I would like to turn things over to Brad Singer.

Thanks a lot, Michael.

American Tower delivered on the commitments we made in acquiring SpectraSite during the fourth quarter. The combined companies produced strong top line revenue growth and disciplined cost and capital spending control while substantially integrating the operations of SpectraSite. As of the end of February, we have successfully integrated the customer and Asset Management elements of marketing and operations as well as the back office conversion of SpectraSite's financial and lease processing operations, with only a few remaining processes to be completed and excess office capacity to be sold. As a result, we anticipate [inaudible] the majority of the cost benefits by the beginning of the second quarter.

We have also significantly strengthened our financial position and flexibility and initiated a 750 million share repurchase program, completing nearly 170 million to date with the goal of completing the initial program during the second half of this year.

During our first full quarter operating as a combined entity, we increased total revenues 67% to over 307 million. Adjusted EBITDA increased 72% to 196 million, and cash provided by operations increased 103% to 137 million from the same period in 2004.

Our fourth quarter performance included approximately 104 million of revenue, 62 million of adjusted EBITDA, and 52 million of cash provided by operations from SpectraSite. When compared to pro forma results in the fourth quarter of 2004, American Tower increased total revenues 10%, adjusted EBITDA 22%, and cash provided by operations 47%. Substantially all of American Tower's performance on a pro forma basis was derived from organic revenue growth and cost control. Our industry-leading adjusted EBITDA margins were 64% for the fourth quarter, approaching premerger levels.

I would note that we have not only executed on an operating level, but we have focused on ensuring that we are efficiently managing our working capital. By example, we lowered the absolute level of our outstanding accounts receivable from the prior year, despite increasing sales in the current quarter by 67%.

In our core rental and management division, our revenues and operating profit increased 71% and 72% to 303 million and 207 million respectively from the fourth quarter in 2004. On a pro forma basis our tower revenues and operating profits increased nearly 12% and 18% respectively.

Our performance for the quarter exceeded the high-end of our expectations due to several items. Most notably, the continuation of higher than anticipated levels of new business, which ran at annualized levels of over 90 million during the quarter, lower levels of customer churns, which ran below 1.5% annualized, and 3 million of non-recurring revenue that was not included in our November 3 outlook related to the back-billing of certain leases and expenses and collecting of previously reserved receivables.

Please note that we have provided a breakout of American Tower's and SpectraSite's respective operating performance and supplemental information in our press release.

In the fourth quarter our capital expenditures totaled 29.4 million, with almost 11 million related to SpectraSite. During the quarter we successfully completed the construction of 64 towers, primarily in the Mexico and Brazil, and 11 inbuilding installations. The average unleveraged return on new towers and inbuilding projects was 15%, with strong prospects for additional tenants further increasing our future returns on invested capital.

For the full year, we have successfully built 259 sites, including 14 inbuilding sites, with average initial unleveraged return exceeding 13%. Looking back at the start of 2005, we have successfully increased our new build program from our initial expectation of 100 to 150 new builds, excluding the SpectraSite inbuilding sites, to complete approximately four times the number of sites that we completed in 2004 while maintaining our capital investment discipline.

Most impressively, as a result of growing revenues, controlling operating and financing costs, and disciplined capital spending, the Company's produced 108 million of free cash flow in the fourth quarter, an increase of over 72% on a pro forma basis compared to the same period in 2004. Excluding our investment in new towers and inbuilding projects, our free cash flow was over 120 million for the fourth quarter. We define free cash flow as cash provided by operations less capital expenditures.

I would also note, the fourth quarter included two non-recurring non-cash items. The first item is a provision for income taxes of approximately 30 million related to an adjustment to the anticipated proceeds from our refund claim based on our current expectations. The second item is a cumulative effect of a change in accounting principal related to FIN 47, which clarified the accounting for asset retirement obligations. As a result we recognized a $36 million impact relating to this change.

We are refining our 2006 outlook. We are raising our expectations for tower revenue due to several factors: Our higher than anticipated level of new business during the fourth quarter; the continued favorable wireless capital spending environment; and an increase of 10 million of non-cash straight line revenue recognition as a result of the extension of thousands of leases with a number of our customers to ten years.

Our expense outlook remains in line with our previous guidance, we anticipated merger-related synergies of at least 35 million.

Our overall anticipated pro forma revenue and adjusted EBITDA growth for 2006, based on the midpoint of our outlook, is 8.5% and 17% respect respectively. Please note that we are also introducing into our outlook and excluded from adjusted EBITDA an estimate of our non-cash compensation charges related to stock options.

We anticipate continuing to invest in our core tower operations. We anticipate building approximately 275 new towers and installing 40 new inbuilding sites in 2006. Our new tower and inbuilding investments are expected to range between 55 to 75 million, also including 10 million earmarked for land purchasers. Augmentation, improvements, and corporate capital expenditures are expected to be approximately 55 million, including integration related Capex.

Based on our outlook, we anticipate producing free cash flow, taking into account all capital expenditures, of approximately 500 million during 2006 and approximately 565 million, Excluding new tower and inbuilding capital expenditures.

With the completion of the merger with SpectraSite, we continue to move towards our optimal long-term capital structure. Our financial objectives remain consistent, four to six times combined leverage, which provides us with significant financial and strategic flexibility at our appropriated weighted average cost of capital.

As we move forward, we will continue to rationalize our existing capital structure, replacing higher cost and more restrictive debt with more flexible longer term capital. Consistent with our prior statements, given the imbedded costs of rationalizing the capital structure, also known as tender costs, this is a process that will likely begin towards the end of 2006 depending on the interest rate environments and in the near term. We anticipate seeking longer term capital and/or lower cost capital as we refinance our existing debt.

Please note that we completed the repurchase of remaining outstanding 12.25 senior subordinating notes in early February. We refinanced the final 220 million of their purchases during the fourth quarter of 2005 and through the beginning of February, 2006, with borrowings under our delayed draw credit facility.

Pro forma for the refinancing of our 12.25 notes, we have approximately 760 million of liquidity available under our existing credit facility. As of today, all but 850 million, or less than 25% of our debt, is at a fixed rate, with our average cost of debt at approximately 5.7% and our current annual run rate interest expense, including amortization of deferred financing fees of approximately 220 million.

With the strength of our financial position, we have initiated the previously announced $750 million share repurchase program. To date we have repurchased approximately 5.9 million shares for approximately 170 million, resulting in average cost of $28.50 per share. We anticipate completing our initial 750 million plan during the second half of 2006. Our share repurchases to date have been funded fully through our free cash flow and cash on our balance sheet. We anticipate augmenting our [reperspectivity] over the course of the year by borrowings under our credit facility.

As you will note, even after the completion of our initial share repurchase plan, we anticipate having considerable capacity to further return capital to shareholders.

In summary, we believe our results demonstrate our Company's ability to deliver on our commitments to our employees, customers, and investors that we discussed on May 3 when we announced the SpectraSite transaction. We look forward to 2006 and continue to deliver on our promises to all our constituencies.

I will hand things over to Jim Taiclet, American Tower's CEO and Chairman, who is also eagerly awaiting Manny Ramirez's arrival in spring training on March 1.

Thanks, Brad. Our robust fourth quarter financial and operational results did reconfirm that demand for tower space remains strong and that the expected benefits of our merger with SpectraSite are being realized. Our combined portfolio delivered solid organic same-tower revenue growth of nearly 11% and same-tower cash flow growth of 13%, as we continued to enjoy higher than previously anticipated levels in [inaudible] business.

Complementing our organic growth was the construction of the 64 new towers and 11 new inbuilding installations in the fourth quarter.

We remain confident that a strong demand for tower space will continue and believe that American Tower will account for a significant share of both the new site lease and augmentation opportunities. The foundation of this belief is the vibrancy and competitiveness of the wireless markets in the U.S. as well as in Mexico and Brazil.

The U.S. wireless industry demonstrated impressive results in the fourth quarter. Net subscriber additions numbered approximately 6 million. The four U.S. national carriers grew their revenues by approximately 14%, and they grew EBITDA by over 20%. Simply put, wireless continues to grow.

Minutes of use also are still ramping up and with the proliferation of family plans and other vehicles that put devices into the hands of a broader demographic, the places where these minutes of use must be delivered is broadening. While comprehensive coverage of work and travel venues remains essential, it's becoming increasingly important for carriers to have viable coverage in suburban, shopping, and educational areas as well.

The wireless industries and all of our served markets are marked by a number of well capitalized, sizeable, aggressive carriers. Again focusing on the U.S. as our example, we have four national carriers: Cingular Wireless, Sprint/Nextel, T-Mobile USA, and Verizon Wireless. Each of these carriers has reached a substantial scale position, with between 20 and 55 million subscribers each. In addition, each is either very well capitalized or backed by parent entities with significant financial resources.

Moreover, for each of these companies and their parents, the wireless business is clearly strategic. None can afford to lose ground in the U.S. wireless market and all have built a track record of reinvesting to advance their respective positions. Each of these national U.S. carriers have focused on three factors of success that we believe will continue to be important and therefore will also continue to drive demand for cell sites. These three major factors of success for carriers are gross add market share, relative churn, and data services.

Though U.S. wireless penetration increased robustly in 2005, there are many more prospective subscribers out there and the carriers compete for every one.

The pervasive advertising themes today are network quality and service plan flexibility. To deliver on these commitments requires continued network investment. Essentially, all elements of service plan flexibility, such as more peak minutes, unlimited night and weekend minutes, free long distance, free mobile to mobile calling, rollover minutes, et cetera, add to capacity and/or coverage demands on the networks.

Churn, of course, is financially damaging to carriers and each tried aggressively to minimize it. A top cause of subscriber churn has been and continues to be network quality. No carrier can afford to fall noticeably behind in network quality, which could then lead to unacceptable levels of churn.

The third key factor for success for wireless carriers is the deployment of competitive advanced data services. It will be imperative for each wireless carrier to be able to effectively complete in the 3G arena to sustain momentum in gross adds through both new customers or additional devices with their existing customers, to retain their existing subscribers as data services become more pervasive and important, and to bolster their average revenues per customer. So 3G is becoming an essential part of a wireless business.

Finally, making the wireless competitive landscape even more complex and challenging is the continued strength of long-standing regional carriers such as Alltel and U.S. Cellular and the expansion of emerging carriers focused on wireline substitution and fixed wireless broadband. These emerging carriers are making significant network investments in selected markets and they are adding new markets at a steady pace. Oftentimes these carriers increase the competitive nature of the markets they enter with offerings of unlimited voice calling for a fixed rate. To offer this type of high usage service requires significant network builds in the target markets.

In sum, we believe that the currently high competitive nature of the wireless communications market, with respect to achieving these three factors of success -- gross add growth, limiting churn, and providing RPU enhancing data services -- is quite sustainable. To address all these factors we believe carriers and their parents will continue to invest in their networks to maintain or advance their respective competitive positions, thereby creating continued demand for tower space.

Furthermore we anticipate that the upcoming AWS spectrum options could further expand demand for tower space. The level of incremental demand depends on who the successful bidders will be and the business plans behind their spectrum investments. The most favorable outcomes for the tower industry would involve some combination of currently active emerging carriers securing additional markets to launch service, incumbents intending to use this spectrum for high-speed data applications, or, potentially, a new national network-based service provider, though it's unclear at this time whether such a bidder will participate.

With our customers' competitive forces driving demand and new spectrum being made available, we remain totally focused on operational execution in the business of power leasing. Every employee at American Tower fully understands that our number one priority is the generation of additional lease revenue to our sites by new co-locations, augmentations to existing sites, and new tower construction and inbuilding deployments.

Over time, we feel that our substantial scale position in the tower industry and our dedication to an investment in customer service will bolster our growth rate. The clearest evidence of this opportunity is our recent track record with emerging carrier new deployments, where we often garner a significant share of sites in the initial build phases.

Our focus on operational execution enabled the Company to deliver another strong set of financial results in Q4 while simultaneously moving forward with our merger integration plan. Our integration plan remains on schedule, with 90% of the program completed, including sales and marketing, field operations, lease processing, billing and accounting. We continue to anticipate realizing the full extent of the cost synergies from the combined company during the second quarter of '06 and to do it at the high end of the range outlined at the announcement of the merger in May of '05.

As a result of our ongoing cost discipline, our focus on the tower leasing business, CL efficiencies, and the capture of a significant portion of our expected cost synergies, American Tower once again delivered the highest operating margins in the industry, at 64% in Q4. We are highly confident that our combination of industry-leading scale and lean cost structure will continue to enable American Tower to consistently deliver superior levels of operating margins going forward.

At the same time, we will continue our strategy of making prudent investments in the business, actively seek new tower build opportunities in the U.S., Mexico, and Brazil, as well as new inbuilding installations, all of which meet our return on investment criteria.

Our anticipated '06 build plan of approximately 275 towers and 40 inbuilding systems requires only a portion of our expected available cash that will be generated by the business. The remaining funds augmented by our available credit lines will be utilized to execute our share repurchase program. And as always, we will be seeking out strategic opportunities to meaningfully expand our tower leasing business at reasonable asset prices.

Not only are Brad and I confident and excited about American Towers' performance and prospects, our colleagues and employees across the Company are enthusiastic as well. This last week, for example, we hosted an appreciate event for a number of our employees that contributed to last year's hurricane recovery efforts. The dedication and energy that these people demonstrated in securing our affected sites and getting our customers back on air was inspiring and it's representative of the attitude of our employees, both across the U.S. and internationally.

We continue to demonstrate our confidence in our customers, employees, and the Company's performance by our $750 million share repurchase program, which represents our first implementation of a long-term committment to return value to our shareholders. We want to thank all of you for your support and participation in our success over the past year and look forward to 2006.

Thanks for joining our call this morning and at this point we will open it up for questions.

[OPERATOR INSTRUCTIONS]. Your first question is from Anthony Klarman with Deutsche Bank.

Thanks very much, a couple of questions. First for Brad, just on the adjustment made for the tax refund, I guess, is that a dollar for dollar change with respect to what the original expectation was? I think you had originally been thinking about something in like the $90 million range? And then if it is, does that get added back into the deferred tax asset on the balance sheet so you would be able to utilize that again later on down the road?

Anthony, it is a dollar for dollar reduction and it actually decreases the deferred tax benefit and that's why you see a provision on the income statement.

Got it. Okay. Okay. I was reading it exactly the opposite way. So you are actually monetizing part of the deferred tax asset as part of the adjustment.

That's exactly right. Or you are reducing it, rather than monetizing it.

Right. In terms of the portfolio, I was wondering if you guys, now that the SpectraSite acquisition is fully closed and it sounds like the integration is at least on plan if not ahead of plan, is there any kind of anecdotal evidence you could give us in terms of benefits you might be realizing in terms of having a larger tower portfolio? Have you had conversations with carriers where you've been able to use that to your advantage and have you been utilizing things like master lease agreements on larger numbers of towers to help secure greater numbers of leases?

Anthony, it's Jim. I would characterize the benefit of the scale as enabling us to take a higher level of partnership with our customers and we do that in a number of ways. We can have larger relationships with respect to volume based on more available sites that we have. We've executed on that a few times with key customers. With the emerging carriers, as I said, we can show up with numerous towers in a market that they're going to be entering, be -- not necessarily a one stop shop for them but most of the stop shop for them, as far as how many sites they will need, and again, with that volume comes a worthwhile relationships as far as connecting work processes, having people in each other's offices, and really, again, elevating the customer relationships with the customer, and that can include and has included extending our leases out, as Brad said, in many cases to ten years on the initial terms.

So it's really elevating our ability to serve and collaborate with customers and making it actually more worthwhile for them to focus on us as kind of a leader or primary supplier.

And in terms of the tower construction or the tower build program, you've largely been focused on Mexico and Brazil due to the returns you've been able to generate in those markets. But with everything that's happening here in the U.S., whether it's Auction 66 or the continued growth in MOUs and wireless subscribers, might we see you start dedicating more Capex towards new builds in the U.S.? Or do you still feel focused, 75 or 80% of that program in Mexico and Brazil?

Going into the year it's probably looking like 75 to 80% internationally, but we also have a vigorous effort using some software tools we've developed and also our customer relationships to our sales force to get and uncover every single build opportunity in the U.S., where we can matchmake the two customers that we typically need to meet our return criteria in the U.S.

We also do projects where individually our customers will work with us to meet our criteria and their criteria jointly on one carrier tower that we build, but that's less likely. Usually it takes two.

And I'm sorry, I may have missed it. I was scribbling madly, but did you or could you give us what the same tower revenue and cash flow numbers were?

Yes. The same-tower was for the American Tower towers, and they were 11% for revenue and 13% for operating profit.

Thanks very much.

Your next question is from Michael Wallace with Citigroup.

Hi, good morning. Just a couple questions. First, just a question about new builds. I think there were some press reports in the fourth quarter, maybe earlier this year, about the subway system in New York and your possible participation in that? I'm curious if there's an update there and even more broadly, is this a start, do you see as a trend where municipalities and just different agencies are looking to build out more coverage, whether it's in tunnels, in subways, and if this could actually be the start of a growth spurt of coverage where coverage really hasn't been that great beforehand?

And then just a second question, Brad, on leverage. I'm curious if there is an update in terms of what you are thinking about using collateralized mortgage backed securities versus bank debt versus other kinds of forms of financing and where you stand on that strategy. Thanks.

Hey, Mike, it's Jim. Let me take the new build question and hand it over to Brad for the leverage piece.

This subway project in New York is a long cycle program. It may or may not ever get done. We are not sure. We are put in preliminary bidding interest. And we could change to work with our customers or on their behalf. This is very much up in the air. So I would say it's extremely preliminary. It's not in any of our guidance that we do this project or any other like it, but over time, yes, we all hope that there will be economically feasible ways to improve coverage in subways and other kind of enclosed areas. But I would not read too much into it right now.

Mike, with regard to capital structure and debt financing I think our thoughts are still pretty much the same, which are that we think that the securitized or collateralized types of obligations could make a lot of sense for our company and as we move through the year what we try to explore is the trade-off of price versus tenor in the debt market, and right now the collateralized obligations are cheaper but the tenor is shorter. And so if you go to do traditional bond market, that typically has a higher spread, but you also get longer maturities.

So, I think what you will see us do is take kind of a common sense approach to it and we may mix the two items or we may ultimately go the traditional bond market, but that's something we're working through right now and it's dependent also on our ratings and where we ultimately come out. Does that answer your question, Mike?

Yes, it did. Thank you very much.

Your next question is from Ric Prentiss with Raymond James.

Good morning, guys. Couple questions for you. One, follow-up on the new builds, you mentioned 75 to 80%, at least at the start of the year, looking at international. Nextel International had a pretty exciting call earlier this week as well, and mentioned they were going into Santiago, Chile. When you said international, was if meaning that you're looking beyond Mexico and Brazil?

Ric, right now our only international markets that we participate in are those: Mexico and Brazil. We don't have a commitment to any customers in Chile at the moment and on the other hand we are exploring other markets in Latin America and elsewhere, but we have not come close to making any commitments yet.

Okay. Second question is, you mentioned pretty low churn, under 1.5% annualized churn. Can you update us just a little bit about did you see any real meaningful Cingular decommissionings? Have you heard any discussions from them yet? It certainly seems like a pretty dampened impact from Cingular continues to be the tone.

And on the other side you mentioned very robust new business levels. Sprint, on their call, mentioned that they did a lot of business or added a lot of cell sites in fourth quarter, bought a lot of equipment in advance from vendors. Can you update us kind of in the quarter, who were your more active leasing people?

I would like to start off and Brad can add some color.

On the low churn, Cingular was a very modest piece of that. There was ten or below leases that expired out of the 900 that we have with that combined company, so very minor.

As far as the upside on new business, it really came from all the major carriers and the emerging guys, Ric. Across the board everyone was fairly active. Sprint Nextel was in there. So one of the things that our field guys have said to me as I talk to them about how the new year looks, is that the first quarter lull that they usually see as carriers get their budgets and their planning together, it really wasn't happening this year, so we had strong demand from the majors, the emerging guys, and internationally. So it's all pretty solid.

I think, Ric, the year played out how we thought it would at the beginning of '05, which was that we thought that we would be a little bit slower domestically with a pickup in the second half of the year, and that's what you saw. In the third and fourth quarter, the rate of new business was roughly 100 million of annualized new revenue in the third quarter and in the kind of the low 90s million in the fourth quarter. So you have fairly high levels of new business.

In 2006 the way we've laid out our outlook is that we thought that this would be much more evenly distributed than what happened in 2005.

Okay. And then, Jim, you mentioned in your comments, always look at strategic opportunities at reasonable prices. What are you seeing kind of in the M&A environment out there? One of your other tower companies gave us some thoughts on what multiples are looking like in deals. What are your thoughts as far as what the pricing is looking like and what is reasonable?

Well, Ric, if there is an opportunity that is available at the pricing we're comfortable with, we are going to act on it. We made our most significant initiative, obviously, with the SpectraSite merger. Those are the kind of economics we are comfortable with. Going far beyond those multiples and those levels may not be something we are comfortable with, so we are just going to maintain our discipline and see what comes down the road and what's available. But you are not going to see us overpay for assets.

Okay. Any thoughts on what those multiples are?

I think that's something we would probably want to keep to ourselves, Ric.

Good point. Anything out there bother you besides your hold music on this conference call? [Laughter]. Good luck, guys. It looks like it's going to be an exciting year.

Thanks a lot, Rick.

Your next question is from Jim Ballan with Bear Stearns.

Thanks a lot. On the share repurchases in your leverage, I see that you are on pace to do the 750 for the year, but it's probably a little less than I was anticipating. And that, along with the EBITDA ahead of expectations, the quarter seemed to be deleveraging for you. Can you just give me some thoughts on -- your thoughts on picking up the pace of buying back stock versus continuing to deleverage? Because I look at where your leverage is now and it seems to me that you could probably make a $1 billion acquisition and still stay within your four to six times leverage target.

It depends how you finance that acquisition.

Well, even with cash.

-- what the price is. But, hey, Jim, with regard to the share repurchase and our leverage, as I said in my notes that I think four to six times where we target and you should anticipate us trying to be in the middle of that range over the course of 2006. We may drop below it or go above it slightly, depending on the quarter, but that's really -- we are centered in that range.

The way, the pacing of the share repurchase would take us, if it you extrapolate out, kind of mid fourth quarter we would go through the 750 million. We are going to try and be consistent. You may see us increase it slightly in any one quarter. And if we get through it earlier what you would see us do is reevaluate at that time and based on the philosophy we laid out, all thing being equal, we would probably extend and implement a new program if the conditions warranted it.

And that's how we would really think about it, is I think we are doing the plan we laid out on the pace we laid out.

Okay. Thanks a lot, Brad.

Your next question is from Vance Edelson with Morgan Stanley.

Hi, good morning. Just maybe a little more granularity on the last question. Brad, could you refresh our memories on the logistics of the share buy-back, when windows are opened or closed and how decisions are made or is the process largely automated?

And maybe second, could you give us a quick update on the broadcast business and what sources of growth you are seeing there and whether this is -- whether grows is expected through year end, especially with high-def requirements?

And lastly just a housekeeping question, could you give us an update on the NOL balance as of year end? Thanks.

Sure. With regard to, Vance, with the share repurchase, we use the 10b-5 plan, which enables us to -- you set an amount that you are going to buy, either in number of shares or how much money you want to spend. And it's on an automated program to take you through the windows. So our company keeps buying through even the blackout periods because we put these plans in place that are on -- that are automated and out of our control and just get executed each day. You should anticipate that we will probably continue that so we can be consistent buyers of the stock and we set it up usually each quarter, the amount and the timing of it, and that's how we would go about this program. So it is very consistent and on a daily market basis.

Okay. Thanks.

With regard to the broadcast business, the broadcast business grossed slightly less than our traditional wireless business, as we've said before. About 5% of our -- the absolute growth in revenue terms was about 5% this quarter, year on year. The business, the growth comes from usually a variety of sources, whether it's digital upgrade, an occasional radio or TV broadcast that switches towers, low powered guys, newer entrants such as a Qualcomm, and it's really a bunch of things as well as the escalators themselves that go into it.

Okay. NOL balance?

And with regard to the NOL, it's about the same as where we were, the full NOL is right around 1.7 billion, I do believe.

Okay. That's very helpful. Thanks.

Your next question is from Lale Topcuoglu with Goldman Sachs.

Hi, guys. Just two questions. On the M&A side, I know you are not going to comment on the multiples, but are you seeing potentially a greater discrepancy between the bid and asked prices now as the public valuations continue to rise?

And secondly, Brad, when you look at the capital structure, what are your thoughts between share buybacks versus dividends? And that's probably a longer term question than it is in the near term? Thanks.

Okay. On the M&A, Lale, what I would like to start with saying is I think we are a pretty sophisticated assessor of individual sets of assets. So what may be going on in other parts of the market may or may not be our perception of what value is for assets. So to broadly discuss whether we think there's bigger variances, I don't know if it makes sense for us. But I just want to reemphasize that we have an excellent team of people that's assessed every set of assets that's come available over the last couple of years. We know how to do it and we go into these opportunities for options, if you will, with that skill set and that's how we come up with our evaluation. How others do it, I can't speak to, but that's how we will continue to go at it.

Lale, with regard to share buy-back versus dividends, for now or the foreseeable future we are using share buybacks and the reasons I think we've discussed before, which are it's more tax efficient to our investors and the tax code may change, which may even make that more lopsided, and it also enables our shareholders' returns to compound at a faster rate because you are reducing that share count and letting the returns accrete a little bit faster. So that's what we've instituted.

Would we never do a dividend? I think that's something we would always consider and whether that makes sense to do a mixture or a combination of the two, but it's not something, at least in the near term, that we are looking at.

Your next question is from Blake Bath with Lehman Brothers.

Thanks. Good morning.

I guess the first question is with regard to the lease terms in Mexico and Brazil, could you just talk a little bit more about, and the length of the leases there, the monthly rents you are getting relative to the U.S. and what you are seeing in terms of additional lease up activity.

And since everyone seems to be focusing on the stock buyback issue, I guess I'll pile on a little bit. If you are buying back stock into the fourth quarter -- I was just trying to do some quick math, but it appears that if you are buying back stock in the range of $35, that you are paying what amounts to 18 times 2007 tower cash flow, which would be well above any asset prices that seem to be out there. I'm just curious, is that an area you feel comfortable at, paying 18 times forward year cash flow for your own assets?

Let me talk -- there's a bunch of questions in there, Blake. It's Brad.

With regard to lease terms in Mexico and Brazil, they are fairly comparable, the two markets. Most of the leases, if not all, are ten years in length for the initial term rather than the States, there's a mix of five or ten years. The rents themselves are somewhat comparable to the U.S. The one difference is in addition to the monthly rents the ground rent is usually shared among the tenants on the towers themselves.

The lease-up activity, I think we mentioned this at the beginning of '05 and we've updated you since, in the early part of 2005 the international markets were a little bit stronger and the second half, they were a little bit weaker and that's how we budgeted it for the year and that's how the year played out. In 2006 somewhere, in the States we think it will probably be somewhat more evenly distributed during the course of the year.

With regard to the buyback, obviously we have not projected 2007 so I do appreciate that. And when you do look at our tower cash flow, unlike our peers we load into our tower numbers about 50 million of G&A that is related to running those towers. So you would strip that out if you are looking at purely asset level cash flows, Blake. And so the multiples you were using would be somewhat improved by the fact that we don't have the G&A in there, if you are doing asset by asset.

Okay.

And so when you think about -- and your question is how do you evaluate how you would you want to invest it, if we are buying back stock I think that's implied that we think there's a good return on that, on those assets, at the levels that we would be buying back shares.

Does that answer all your questions?

I think so. So -- but 18 times, the way you would you evaluate tower cash flow, given your current capital structure, cost of capital, et cetera, you would still feel comfortable at those kinds of levels?

I think there's no absolutes, right, in the different interest rate environment you look at what your cost of capital would be implied to be. If you are asking me whether or not, you know, if we borrow at 6% and the implied return on our equity should be greater than 6%, I would say if we are buying in shares that would be the implication. And we'd take into account the tax effect, also.

Okay. Thank you.

Your next question is from David Barden with Banc of America Securities.

Hey, guys. Good morning. Just a couple of questions. I'm kind of following up with things so far.

So, Brad, I just wanted to make sure I understood what the reason behind the tax adjustment was in the quarter. I understand kind of what it is in terms of the valuation reserve change, but just what changed in terms of the outlook that made you have to take that provision down?

The second thing was just in terms of the AWS auctions that are coming up this summer, I was wondering if you guys are actually seeing any specific kind of inquiries as people start to do the blocking and tackling to get ready to make bids and kind of do their business planning. If you could kind of give us a comment on, given the different types of bids and bidders that might emerge during the auction, there's obviously a range of outcomes so it would kind of helpful to get a sense of kind of where you think people are doing the most [investing] in the legwork.

And then the last thing would be kind of outside AWS and outside the cell carriers, is we've been doing a lot of talk about these new technologies, new opportunities. Could you rank order, maybe just for the sake of argument, the top one, two, or three things that are really emerging on your radar screen and the biggest incremental movers in the tower lease-up business? That would be great. Thanks.

Okay, David, it's Brad. I will take the first one and I'll turn it over to Jim for the other two.

With regard to the tax revision, as we are going through the refund process what you are doing is re-examining all the elements of your operating losses over the last, I guess, seven or eight years. And one of -- the issue that we took a reserve on was really the valuation related to the spin-off value back in 1998. And I think -- we believe that the valuation will not enable us to get the full 90 million. 60 million, it looks like, is what will ultimately be what we will get. And that's what the provision came from. It was basically done -- it is based on the work we've been doing as part of the refund process.

Okay.

And David, on the option that's coming up, as far as specific inquiries, we've spoken to -- first of all, for the national carriers we have an ongoing dialogue with, some of which may be looking at some of the spectrum for the 3-G roll-outs to see what they have already going or what they might plan to do in the future. So that's one avenue.

The second is some of the satellite companies, but those are very preliminary. And I think you have to put into context, both this question and your next one, is what do you need as a customer before you're actually going to sign a tower lease, right? And commit money to an operating cost. There's really four things: there's having the spectrum or expecting to get it. The second thing is having the financial wherewithal to actually build out the network.

The third thing is to have a business plan that your investors or your parents believes in that can be funded and include in that business plan the product that you think will sell.

And then the fourth thing is the technology selection and vendors. So until you have all four of those things, whether you're a satellite company , a cable consortium, Intel, Apple, or anyone else, they're probably not going to be talking to us about specific leases on specific sites.

And that leads into your last question, is, what are the emerging opportunities. It can be all of those things, I mean Sprint Nextel has a 2.5 gigahertz spectrum, they've talked about deploying. They actually have a small commitment to the government to deploy some of that spectrum, to do a fixed wireless product. We've got other fixed wireless players like Clearwire already out there. But even above that, I think the metro PCSs and the [inaudible] world as they deploy this wireline displacement strategy, can be very good customers for us.

So it's really to all the subspecs that people are talking about right now, but until you have those four things lined up as a customer, we're probably not going to be signing a lot of leases. Now, Qualcomm has those things and we are signing leases with them. Clearwire does, we'll sign leases with them. Metro [inaudible], obviously the same.

So, it's tough to lump them into baskets like fixed wireless data or kind of -- fix a mobile replacement or --

Yes, I mean, you can bask in them, David, but then you've got to do the four-way kind of assessment on each company and say, is it real. And as you can imagine, preliminary discussions with the people looking at this, but literally, when it comes to signing leases and site commitments and those kinds of things, you really have the business plan, the money, the spectrum, and the technology lined up.

All right, guys. Thanks a lot.

We're working it, buddy. Thanks.

Good luck.

Mr. Singer, are there any closing remarks?

No. We just want to thank everyone for participating in the call. Have a good day.

Yes. Bye, everyone.

Thank you for joining today's conference call. You may now disconnect.