美國電塔 (AMT) 2009 Q3 法說會逐字稿

Good morning. My name is Tracy, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Tower third quarter 2009 earnings 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.

I would you now like to turn the call over to our host, Mr. Michael Powell, the Vice President of Investor Relations. Please go ahead.

Thanks, Tracy. Good morning everyone, and thank you for joining American Tower's conference call regarding our third quarter 2009 financial results. Please note that we posted a brief presentation to accompany this morning's call on our website, which is www.AmericanTower.com. If you haven't done so already, you may want to download this presentation, as we will refer to it at various times throughout our prepared remarks.

The agenda for this morning's call will be as follows. I will provide an introduction and highlight certain key metrics from our third quarter 2009 financial results. Following this, Tom Bartlett, our Chief Financial Officer, will go over our third quarter results in detail. And finally, Jim Taiclet, our Chairman, President and Chief Executive Officer, will then give closing remarks, including his thoughts on current key business trends. Of course, after these comments, we will open the call to your questions.

However, before I begin, I'd 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 statements regarding our 2009 outlook, our stock repurchase program, credit markets 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 results to be materially different than 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 our Form 10-Q for the quarter ended June 30th, 2009 and our other filings 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, I will begin the call with some of the highlights of our results. Please turn to slide four of the presentation for a summary of our third quarter 2009 results, compared against the third quarter of 2008. You'll note that we reported total revenues of approximately $444 million, reflecting growth of 8.5% from the year-ago period. Our results for the third quarter 2009 include a $6.7 million net one-time revenue item within our rental and management segment, related to a termination agreement with one of our US broadcast customers. Tom will provide additional color on our core growth for the business, excluding this one-time item and the impact of foreign exchange, rate fluctuations and straight-line accounting.

Our adjusted EBITDA for the quarter was $304 million, which is a 9.6 increase from the prior year period. Our operating income for the quarter increased 16% to approximately $179 million, and finally, income from continuing operations was up 11.5% to approximately $68 million, or approximately $0.17 on a per share basis.

And now Tom, I'd like to turn things over to you at this time.

Thanks, Michael and good morning everyone. I'm again pleased to report that American Tower continued its track record of consistently delivering strong revenue and adjusted EBITDA growth during the third quarter of 2009.

Please turn to slide five to review some of the highlights. Our core growth rate for tower revenue, which excludes the impact of foreign currency exchange rate fluctuations, straight-line lease accounting, and a $6.7 million one-time termination agreement with one of our US broadcast customers, was 10.3%, relative to the third quarter of 2008. We continue to generate an industry-leading adjusted EBITDA margin of 68.5%. I'd like to highlight that we have maintained this margin level, while doubling the size of our portfolio in Brazil and launching our India operations. We remained focused and disciplined while evaluating opportunities to selectively deploy our capital.

We believe these investments will not only drive our core growth in our portfolio, but also enhance our return on invested capital. Highlights during the quarter and to date include the construction of 267 sites across our portfolio, the acquisition of 230 communication sites in Brazil and 74 in the United States, and the purchase of 326 sites in India, which closed just subsequent to the end of the the quarter. All told, just under 900 sites added over the last 90 days for about $120 million. In addition, we also redeployed approximately $118 million of our excess cash flow back to shareholders through our share repurchase program. In fact, we purchased back almost $900 million since the beginning of 2008.

In addition, our balance sheet remains in a solid position and the strongest in the industry. Net leverage for the quarter was 3.3 times. The reduction from the second quarter is primarily a result of nearly all of our 3% convertible note holders exercising their option to convert their notes into common stock upon our redemption of the notes. We have nearly $850 million of available liquidity, which included over $225 million of cash and cash equivalents, and nearly $625 million of availability under our revolving credit facility. Finally, our recent upgrade to investment grade enabled us to raise $600 million of 4.625 senior unsecured notes due 2015, which is by far, the lowest cost unsecured notes ever issued by the Company.

As a result of the strong business performance in the quarter, we are reaffirming our previously established 2009 outlook. Turning to slide six, you can see from the chart in the upper left-hand side of the page that our top line growth trends remain strong. In fact our core growth versus the year-ago period would have been 10.3% on a currency neutral basis, and excluding the impacts of straight-line lease accounting and the benefit of the one time customer termination agreement I mentioned earlier. The majority of our core growth has been supported by our legacy communication sites which continue to produce solid levels of growth. Our organic growth has been strengthened by investments in new communication sites in the US and abroad.

Turning to slide seven, our recent focus has been to expand further within our existing markets while also pursuing new growth opportunities for our tower leasing expertise can provide carriers with a strong value proposition. Since the beginning of 2008, we have been extremely focused on this endeavor and are proud of our progress to date. Our team in Brazil recently completed the acquisition of 230 sites from a regional carrier. These tower sites, along with more than 600 sites that we have built or acquired, have contributed to the successful doubling of our site portfolio since the beginning of 2008.

Similarly, in India, our recent acquisition of Excel Telecom and Transcend Infrastructure has enhanced our scale within our targeted regional telecom circles and provided us with assets that will provide solid foundation to grow. We also expect that these markets will continue to produce strong growth and in some cases stronger organic growth than our US assets as wireless industries across the globe mature, more and more subscribers are seeking 3G or faster speeds. And as a result, our customers' needs for tower space continues to grow.

In addition, as spectrum auctions are completed and our customers continue with expansions into new geographies, we will seek to partner with them. These opportunities should provide our investors with a complementary source of growth in the years to come. If you turn to slide eight, you can see the same positive trends in our core adjusted EBITDA growth, which was 9.2% with an adjusted EBITDA margin of 68.5%. We are pleased to report that even including the first full quarter of our expanded presence in India and Brazil, which partially contributed to the increase in our rental management segment operating expenses and SG&A from the third quarter of 2008, our adjusted EBITDA margin held steady at our industry-leading levels.

On slide nine, I'd like to highlight the ways in which we are seeking to add further shareholder value, by not only focusing on growing revenues, but also focusing on the costs to support those revenues to drive margin and cash flow expansion. First, our legacy assets continue to produce strong operating leverage as they continue to generate organic revenue, and have only experienced minimal increases in costs compared to the year-ago period. Alternatively, since the beginning of 2008, we have materially increased our international portfolios which have introduced incremental operating and SG&A costs. These costs support our future growth in these regions. However, we will remain focused on ensuring they are at appropriate levels.

Second, our recent ratings upgrade enabled us to raise $600 million of new senior notes at an annual coupon of 4.625, or 250 basis points lower than the notes we refinanced with the proceeds of the offering. As a result, and as an example of how this upgrade will benefit us in the you future, we will save approximately $11 million on cash interest costs per year on this transaction alone, which will contribute to our future sources of cash to reinvest in our core business, new assets, or our stock repurchase program. In addition, as we reduce our borrowing costs, our overall cost of capital should decrease.

Finally, we continue our work to ensure we are prepared to effectuate the best solution for minimizing our tax burden. Our overall global tax strategy involves managing our cash tax liabilities in our profitable Latin American operations, as well as our tax exposure in the United States.

Moving on to slide 10, you can see the positive trends in our capital expenditure mix over the last year. Our redevelopment CapEx continues to be lower in 2009, compared to the levels we experienced in 2008, and we expect this to continue for the remainder of 2009. Conversely, our discretionary capital expenditures have trended higher, and we expect them to remain so for the balance of the year. This is a direct result of our development team's success in finding high return projects to invest in to grow the business. During the third quarter, we spent approximately $33 million on new site development, completing the construction of 267 new sites with average day one unlevered returns of approximately 8%, with strong prospects for growth as we add additional tenants to those sites.

In addition, we spent approximately $18 million on land purchases. I would highlight that the Company's total return on invested capital as of the third quarter was approximately 11%, which represents an increase of 140 basis points from the beginning of 2008. The continued improvement in this metric demonstrates our ability to further maximize the return of our existing assets, while selectively seeking new investments to complement our asset base.

Turning to slide 11, we've highlighted the trends of both cash provided by operating activities and our recurring free cash flow. Consistent with prior quarters, we continue to use our cash flow from operations to reinvest in our core business and stock repurchase program. During the third quarter of 2009, we spent $32 million related to investments in our existing sites, and $101 million on new communication sites, of which $33 million was for the construction of new communication sites and $68 million was for new acquisitions. Finally, we deployed $118 million through our stock repurchase program.

As shown on the chart in the lower right-hand corner of the page, we are introducing a new metric for the Company, recurring free cash flow and recurring free cash flow per share. Which we believe will illustrate our past and future ability to deploy our excess capital into accretive investments to enhance shareholder value. Since the third quarter of 2008, our recurring free cash flow and recurring free cash flow per fully diluted share have increased 16.3% and 18.6% respectively. Consistent with our capital allocation strategy, we will continue to focus on investing in our existing assets and new communication sites while remaining committed to our stock repurchase program.

Turning to slide 12, American Tower ended the third quarter having generated approximately $467 million of free cash flow, year-to-date, with approximately $850 million of available liquidity and net leverage ratio of approximately 3.3 times. As I mentioned earlier, our strong business model with a significant backlog of contracted revenue, prudent capital structure and approach to leverage were recognized by both Moody's and Fitch with a a recent upgrade of our unsecured credit rating to investment grade. There are many benefits that go hand in hand with being an investment grade credit, some of which are. Greater inclusion in bond index funds and the obvious reduction in our cost of debt. Our recent 4 5/.8 senior notes offering illustrated our ability to achieve this, and we will continue to monitor the capital markets as we seek to ladder and further extend our maturities with lower cost debt for or capital structure.

Finally, on slide 13, we've highlighted our 2009 outlook for revenue, adjusted EBITDA and cash provided by operating activities, which we are reaffirming. As of the third quarter of 2009, we generated approximately 75% of our annual outlook midpoint targets, including our rental and management segment revenue, adjusted EBITDA and cash from operating activities. In summary, we continue to believe that the fundamentals of our business are strong and we are actively seeking ways to further redeploy our cash towards high return investments to enhance shareholder value. Also, depending upon our investment pipeline and market conditions, we remain committed to redeploying our excess cash to investors. We believe that our capital structure complements us well and will be a source of strength for the Company and its shareholders going forward.

Before I hand the floor over to Jim, I'd like to point out that we will provide our 2010 outlook during the announcement of fourth quarter results, which is the standard practice for most S&P 500 companies. At that time, our customers' budgets will be set, and we will incorporate any further acquisitions that may close by year-end into our run rates. Jim?

Thanks, Tom. Good morning, everyone, and thank you for joining us on the call today. As Tom very thoroughly described, American Tower again delivered strong operational and financial results in the third quarter. The meaningful and consistent growth in our revenues, profitability, and cash generation speaks to the sustained demand for tower space in our served markets and to the Company's exceptional execution capabilities. I'd like to take a moment to commend our people from Seattle to Boston, to Sao Paolo to Calcutta for their superb work ethic and commitment to customer service that makes these kinds of results possible.

As an investor, you should know that everyone at American Tower through our performance management system has specific goals and objectives that contribute to driving Company performance as ultimately measured by recurring free cash flow per share. We believe this metric captures the most important elements of effectively managing a Company such as ours. These elements include revenue growth, cost control, interest expense management and redevelopment capital expenditures. This metric also captures the ability of the business to distribute cash beyond funds needed to grow back to investors through share repurchase by the Company. As Tom noted in his presentation, we delivered approximately 18% improvement in recurring free cash flow per share in the third quarter of 2009 over the prior-year period. We intend to provide this metric to you on a go-forward basis in our future earnings releases too.

Another critical benchmark achieved by American Tower during the third quarter of 2009 was the Company reaching 11% return on invested capital. Our improvement in ROIC over the course of the year has been driven by two major factors, the continued solid performance of our existing assets and the efficiency with which we have been adding new assets. With respect to new assets, we have been building towers and DAS systems in a cost effective manner, and we've also been securing acquisitions as favorable entry prices in each of the US, Brazil and India markets. Viewed together, we believe that our ongoing report of recurring free cash flow per share growth and return on invested capital will provide a well-rounded picture of the effective strategic manage management of our tower Company.

Strong growth in recurring cash flow per share and stable or increasing ROIC will indicate an appropriate balance between operating leverage, price discipline in the acquisition of assets, and the return of excess cash to shareholders. We anticipate that both our recurring free cash flow per share and our return on invested capital results will further benefit from lower cost debt financing. The Company's recent elevation by Moody's and Fitch to an investment grade rating is already contributing positively to this objective. Last month's highly successful $600 million bond offering is a first step in utilizing our new position in the credit markets to extend the maturities of our debt and finance future growth initiatives with lower cost instruments marketed to a much broader investment base.

Finally, we are striving to exceed our growth aspirations for the business in what continues to be a solid demand environment. In the US, we believe that we are positioned to benefit for years to come from consumers' appetite for wireless data services. Not only do subscribers want access to true mobile broadband, but our customers, the wireless carriers, are seeing data as essential to their future revenue growth, and they seem to be prepared to fund the ongoing upgrade of networks that will be required over time.

Almost every US wireless carrier is in the midst of large scale 3G deployments and/or is planning on executing 4G as well. For example, Verizon Wireless reported 29% growth in data revenue in Q3 and it's in the process of a commercial launch of 4G, planning to cover 100 million POPs by year-end 2010 and virtually the entire US population by year-end 2013. AT&T Mobility reported 34% growth in data revenue in the third quarter, along with 3.2 million new iPhone activations. AT&T is upgrading its 3G network currently, and is planning to commercial launch 4G in 2011.

Sprint Nextel's post-paid CDMA customers in the third quarter had the highest average data revenue per user in the industry, at $19 each. Approximately 20% higher than in the prior year. Sprint Nextel is deploying its 4G network through the Clearwire venture and Sprint plans to offer 4G mobile broadband in 80 markets by year-end 2010. T-Mobile plans to have 300 mill POPs covered through its 3G roll-out by the end of this year, and is moving forward with a HSPA plus upgrade over the next 12 to 18 months to add speed to that network. In the prepaid segment of the market, both MetroPCS and Leap Wireless have future 4G plans under discussion in their respective organizations.

We're also optimistic about the prospects for our international business. In Latin America, we believe that there's still opportunity for carriers to grow their voice services, and that more importantly, the region is about to launch into a significant deployment of 3G data services over the next few years. We're hopeful that additional spectrum will be made available in early 2010 in both Mexico and Brazil to enable the beginning of the expansion of 3G in those countries. Meanwhile, in India, we still see significant upside for both voice penetration and coverage, with eventual deployment of data services on a national level a bit further down the road.

So in summary, we like the continuity of demand that we anticipate in the US. And we expect that the transition into 3G data in Latin America and the substantial opportunity in both voice and data in India will provide a very positive growth environment for our international markets. Our focus now is to finish strong in 2009, lay the groundwork for further organic growth in 2010, seek and close attractive acquisition opportunities in a number of targeted markets, and optimize our capital structure to fund our growth and benefit shareholders.

Thanks again for joining us on the call today, and now Tom and I will be happy to take your questions.

(Operator Instructions). We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of David Barden with Banc of America.

Hey, guys, good morning. Thanks for taking the question. I guess first, I have to say I'm a little disappointed that you guys chose to defer putting out 2010 guidance. I think the visibility in this business and your ability to differentiate yourselves with laying out a view for a year ahead was one of the things that makes these companies different and underscores that difference, so I'd love a little bit more color around why you chose to do that.

Second, with respect to the one-timer, Tom, we heard a lot about the margin being I guess 68.5%, but when you take that out, it's actually below 67%, and seems a little off trend. You seem to suggest that that might be related to margin softness in the international operations. So I'm wondering if you can kind of clarify how we should be thinking about margins on a go-forward basis. And then with respect to the guidance and the one-timer, by reiterating guidance and then noting that you have a $6.7 million one-timer in the quarter, are you effectively lowering guidance for the year?

If you could clarify that. Thanks.

Okay, David. I appreciate your first comment. But as I mentioned, we are going to be issuing guidance in just a few months' time and that's when most companies issue guidance. You cover a lot of big companies, so I'm sure you can appreciate our stance there. With regards to the one-timer, we are also now have a lot of scaling going on with obviously India and the new acquisition and the business there, so as we continue to scale and continue to improve the profitability there, which is by the way EBITDA positive, I would add, I think you'll see the kind of trends in gross margin as well as EBITDA that we've had in the past. But the increase in OpEx and SG&A quarter-to-quarter sequentially was really as a result of having the full first -- full quarter, if you will, of that deal. And what was your last question, Dave?

The guidance question for 2009.

Our guidance, I mean, it's pretty broad. It's kind of interesting in terms of the tower companies actually issue guidance. It's a pretty broad span, if you will, in terms of what the guidance looks like and what the mid-points look like. Because of its wideness, We're not changing guidance. we feel very strong about where we are and how we're going to end the year so we think we're going to end on a very strong note.

So just to be clear, Tom, should I subtract $7 million from the guidance or should I add $7 million to the guidance for the one-timer?

Just leave guidance alone.

Okay. Thanks, guys.

Your next question comes from the line of Jonathan Atkin with RBC Capital.

Yes, good morning. With respect to the Transcend deal in India, I wonder if you can comment on any particular aspects of those assets that you found appealing. And then just more broadly, it seems that India and Brazil is where you're most likely to make either carrier or third party tower acquisitions. Is that a correct assessment?

With regards to Transcend, some of the things that we have released in terms of the acquisition price and we paid $20 million for the towers, we actually bought them for about $65,000 per tower. Tenancy is pretty consistent with the existing towers there, in the 1, 1.3 range, so we feel very good. I mean, having now the management team in place on ground and having the scale that we're building there, we'll be able to add on these kinds of portfolios we think on a pretty regular basis, so we feel very good about this particular transaction. It's not going to really move the dial if you will in terms of kind of fourth quarter margin or fourth quarter revenue. It is just 325 towers, but again I think it demonstrates the success that our team over there is having.

And with regards to where we'll be looking at portfolios, we believe that we're going to be adding portfolios in all of of our markets. Clearly, Brazil and India are kind of low hanging fruit for us, if you will, right now. We think we're in a good position to add towers there and we've had great success between those three markets, international markets, I think we had just over 6,000 towers, so we had great success there over the last couple of years but we're very focused on adding towers in the United States as well.

In Brazil and India, do you find these are competitive bidding situations or not the case?

What we've done, Jonathan, is establish a position I think in both those countries, from a business model perspective, at least, the leading tower Company in each of those countries and so we do get an opportunity to do some negotiated transactions along the way.

Okay. And then on the outdoor DAS assets, I notice this is kind of nitpicking but you eliminated the word DAS from your CapEx breakdown. Doesn't look like you've expanded that in the recent past. Less likely to see new investment in that, in that particular area?

No, we're still on track, Jonathan. It's a long cycle product. I think for those that understand it, you know that there are permits, rights of way, licenses, et cetera, that you need to get and the design and sale process to the carrier is pretty long too. So we're investing in it. We've always said that it's a niche product that like our indoor DAS, it's a nice round-out to our total solution. We're still investing in it and it's going to be modest as we've always said, we think.

And then finally on the question of 2010, I understand your position about not giving quantitative guidance but anything you can share qualitatively about the outlook for leasing growth. Roughly comparable to 2009, or would you expect any meaningful difference?

We expect the leasing environment in 2010 to be at least as strong as it was in 2009, Jonathan. And what we would like to do is just have a more accurate picture of merger and acquisition activities that we're working on that may or may not happen first part of the year. Also, currency, we would want to have the most up-to-date currency to be able to incorporate to the guidance as far as FX rates. And those are the reasons, along with our customers' budgets being more available and stable, that we're going to do this in the first quarter like most other companies do.

Great. Thank you.

You bet.

Your next question comes from the line of Jason Armstrong with Goldman Sachs.

Thanks. Good morning. Couple questions. First, on just the key customer risk you had in Mexico around some liquidity fears. Can you update us there and maybe talk about the flow of cash payments, if that started again. And then second, just on core growth, you guys mentioned 9.5% last quarter, that's up to 10.3% this quarter. I'm just wondering, can you step us through how much including the Excel acquisition for a full quarter sort of contributed to that uptick and maybe take us back to a same tower growth type metric, if you can, and how that's been trending. Thanks.

With regards to the use of cell, I think they're making great progress down in Mexico. They're staying current on all of their recent business that we've done with them. We did not add any additional bad debt to them in the third quarter, so we feel good about where they are and they are paying in full. And we anticipate that going forward.

With regards to core growth, I think if you look at our core growth over the last several quarters, I mean, it has been -- it ranges in the 9.5 to kind of 10.5% range so I don't think there are any surprises. There was a little bit of an uptick in this particular quarter, perhaps in the second quarter, for more of the impact -- perhaps full impact of the India operation. India represents about 2% of our total revenue. I think in terms of kind of same tower growth, it's consistent with where we've seen it over the last few quarters so I think as Jim pointed out, we feel very good about getting into the fourth quarter and ending the year.

Great. Thanks.

Your next question comes from the line of Mike McCormack with JPMorgan.

Hey, guys. Thanks. Just a couple things on the demand side. Are you guys seeing obviously Sprint doing a lot more on the boost unlimited subs, any significant change going on on the IDEN network now that they've got positive net subscriber adds on that network. Secondly, Jim, your comment about HSPA plus, some of the things that T-Mobile is doing there, AT&T is doing is as well, is there anything for the tower companies or is that more of software upgrade.

For the Boost product that's been successful for Sprint Nextel, I think it's burdening the legacy IDEN network a bit, especially in larger population centers in the country and Sprint Nextel themselves announced that they were going to deploy some additional sites in the IDEN network to take care of those questions and issues. We expect that to happen in 2010. But it will be, again, modest in the context of what a typical national carrier would do in a typical year. So won't be the full 2,000, 2,500 site kind of number probably at Sprint, but it will be a lot more meaningful than it was in 2009, which was de minimus. On the HSPA plus, that's a UMTS upgrade that enables sort of an interim speed improvement between 3G and 4G.

And the way we look at all those speed and broadband expansions, Mike, is that, yes, there are some amendments up front on some sites. Some of those amendments have revenue associated, some don't. But as those networks begin to be used by subscribers and filled up, then you end up having plenty of value amendments, and you're going to end up with cell splitting along the way as well. So as more subscribers use more bandwidth due in part to these sorts of upgrades, we think that there will be additional length and strength to our demand for tower space out in the future.

Great. Thanks, guys.

Your next question comes from the line of Ric Prentiss with Raymond James.

Thanks. Good morning, guys.

Good morning.

Couple questions for you, maybe follow up on David's question earlier. On the 2009 reaffirmation. I think you said you're at 75% of your midpoint through three-quarters of the year. Obviously faced a lot of FX headwind early in the year as well. As we look to the last two months of the year, how would you kind of frame it as far as what would it take to hit the low end of your guidance? What would have to happen to hit the mid or high end? Just frame it for us as far as what the wild cards out there for For what is a very wide range.

You want me to get into modeling questions, do you?

Sure. And 2011 depreciation and tax rate. What it would take. Because it is a wide range and FX has improved significantly over the last couple of months.

Back to David's question before, when I'm looking at our guidance and our midpoint, I'm not including the revenue associated with the -- this one-time events. As we said all along, we've had strong activity in the second laugh of the year, was actually stronger than the first half, the activity, from the first half of the year in terms of signed activity and we think that's going to provide us a strong basis going into the fourth quarter of 2009 and into 2010. So I don't want to get into the modeling issues here with you, Rick, but as I said before, we're reaffirming our outlook. We feel very good about how we're going to end the year on a very strong note, and this one-time event even when we looked at the 10.3%, we backed out the effect of that one-time event just to give you kind of the transparency in terms of what the real core growth of the business is. So when I'm looking at midpoints and looking at 75%, I'm not including the effect, if you will, of that one particular event.

Okay. That's good to know because it kind of -- I think people were worried that you were including that one-time in there to achieve the guidance.

I specifically backed it out to given you a sense of what our real core growth is.

Okay, that's good. And then on the balance sheet side, obviously some very significant movement, finally investment grade does mean investment rates. I think Jim and Tom, you both talked about further laddering, first steps. How much cash do you need to keep on hand in this business? As you look at your stock buyback program it dropped back to I think about $1 million in October so far versus a much faster pace. How do you look at managing the cash balance? How do you look at approaching the debt markets in terms of changing out some further financings?

Rick, it's Jim. When you've got the kind of cash flow generation the business provides and you've also got a very active kind of M&A initiative going on, more or less around the world, there's no one number for what the minimum or required cash need is in a given month or quarter. We're actually managing that dynamically, based on the pipeline of M&A activities that we have, and what we think the capital markets are like sort of in that given quarter. So that cash number's going to fluctuate, and you can see it and you have seen it as you pointed out in the share repurchase activity. So when we think we need to build cash for an M&A set of opportunities, the share repurchase may dip downward as far as the rate. If we've got more cash than we need to do what's in the pipeline, you'll see us turn the rate back up. So it's a pretty simple mechanism if you will, and it's all enabled by the fact that the business throws off significant cash flows and that we've got lots of opportunities out there that we're looking at.

And on the refinancing aspect?

We obviously are -- don't have to do any refinancing. We're at a nice position from that perspective. We'll continue to take a look at some of those obligations that we have out in the 2012, 2014 time to see what makes sense but the most significant items that we really wanted to refinance were the ones that we already have, the ones that matured in 2012, which is this last one that we just called which is that $500 million. So we think we've done a lot of work on the balance sheet to continue to kick out the tenors and we'll continue to monitor, see how we want to handle the 2012 and 2014 but there's nothing that we have to do right now relative to those maturities.

Great. I'll just echo that it was pretty impressive rate. Definitely opened a lot of eyes so job well done on that.

Thanks, Ric.

Your next question comes from the line of Simon Flannery with Morgan Stanley.

Thank you very much. Good morning. Just to clarify on the broadcast customer, Tom, what sort of size impact is that on Q4, the amount of revenues that they took and any other commentary on other expected churn. And then I think you referenced briefly looking at your options once your NOLs expire. Can you just give us an update on timing and thoughts about status and what you need to do to prep for that.

Relative to the one broadcast customer, it's minimal in the fourth quarter, so I wouldn't expect it to have any impact at all really significant impact at fall the fourth quarter.

Just to add, Tom, that was a very long-term buyout of a broadcast contract, Simon and you know that those go for many, many years into the future. When you take it on a monthly, quarterly basis, it's not going to affect materially the churn rate of the revenues of the Company.

Thank you.

Relative to the NOL, Simon, as I've said before, we're looking to, given current course and speed, probably utilize the NOLs in a 2012, 2013 kind of time frame. So we do have some runway, if you will, in terms of being able to look at our various options. What we are spending a tremendous amount of time internally now working with a number of different advisors, on what our options are, what our strategies are and what our best path forward is and when we land on what that best path forward is, we will obviously let you know.

Okay. Does the growing international presence complicate that or can you work through that, make it --

We believe we can work through that on a number of different structures.

Okay. Thank you.

Your next question comes from the line of Jonathan Chilcott with Jefferies.

Great. Thank you for taking the questions. You know, in your prepared remarks and the presentation, you highlighted the size of the backlog. I was wondering if you could compare that to maybe some prior periods to give us a sense of where it stands versus kind of historical activity. And I was also wondering if you can give us a sense as to some of the application activity in the quarter. And then I'd like to ask one question on India, following that. Thanks.

Okay. I can take the first question. Just in terms of the backlog, I believe I go back and take a look about 12 months ago, it's up about $0.5 billion. So sizable increase in terms of year-over-year activity. On the application front, Jonathan, we're seeing a nice, healthy increase in the second half of the year, many of you know how our business process works which is customers put in applications for sites, either new sites or upgrades. Those can take from 60 to 90 days to get fully completed and converted into a commenced contract which then begins to build revenue. And so we have a very positive trend of signings in the second half of this year which gives us some good confidence into what we're going to see as far as commencements and billings in 2010. So it's a pretty good picture right now.

Great. In terms of India, just had a couple of questions here. You just finished this recent acquisition and I was wondering just in the sense of how disciplined you've been in that market, if there have been M&A opportunities that you guys have passed on or bid on that have gone to other people that just were kind of outside of your required return rates. And then further along in that market, we've read a lot about some tower sharing agreements among some of the larger providers in the Indian market and I'm wondering how you view those from a competitive perspective and whether those are maybe not in circles that you are or whether they are in fact competitive. Thank you.

Sure, Jonathan. As in all the markets we participated in over the last seven, eight years I've been here, we win some deals and we've lost some deals or some of the deals didn't trade at all like the T-Mobile divestiture in the US that didn't happen about two years ago. So sure, the answer is we've been in situations where others may have outbid us even in India, so that has in fact happened. But we stick to our price discipline and we also have the long view that sometimes these things come back around. So we're not going to overpay on the first iteration. We may never see it again. But we may see it in a second iteration at a price we like. So that's how we approach it. We're going to keep the discipline in India as we have in other places. There is some tower sharing agreements in India. There are also some in other markets that we operate in. They're a portion of the site leasing traffic, if you will, in a number of markets, but there's still plenty of room including in India for the kind of business that we conduct and we think we're going to be very successful there as well.

Thank you for taking the questions.

You bet.

Your next question comes from the line of Philip Cusick with Macquarie.

While recognizing you're not giving 2010 guidance, I wonder if you can help us think about how you look at both the 4G builds, both from Clearwire and from Verizon as it does amendments through next year. Can you help us get an idea of sort of what you're expecting over the next 12 months on that.

Sure, Phil, it's Jim. On the Clearwire front, the application stream that I mentioned earlier is significantly benefited by Clearwire in the back half of 2009 in our Company. And so we do expect that they'll have meaningful commencements in 2010. There will be a material new business customer for us for billings next year and when we pull the guidance together in detail and provide it to you all in the first quarter, they'll be included in that. Verizon is active on a number of fronts including just building out its normal couple thousand sites a year network plan. And the 4G that goes with it.

Again, some of those 4G amendments on an existing network like Verizon has have revenue associated with those and some can be included within the rights that are already on that tower. So we will see some applications and we have for Verizon LTE. Many have some revenue that go along with them and that's happening now but it's not necessarily at the game-changer level yet. And again, Phil, as I said earlier, what's encouraging for us as we view the long-term aspect of our business is every carrier that steps up to 4G and we basically talked through almost all of them today over the next two, three, four years is going to need to invest in this network in a material way and that's going to lengthen our opportunity. So it's applications in the short-term, we think important in the long-term with 4G in terms of Verizon and others that have existing networks.

Thanks, guys.

You bet.

Your next question comes from the line of Gray Powell with Wells Fargo Securities.

Good morning, everyone. Thanks for taking the questions. Just have a few. I know you touched on this already but can you just kind of talk about what you're seeing in terms of booking trends in Q3 versus Q2, possibly quantify some of this increase that you're seeing in the second half. And then what do you expect to see in terms of bookings in Q4?

Sure, Gray. As I take a look at -- as we said, the third quarter signed and actually commenced business has been picking up as we said. I think it's consistent with how the carriers have actually been talking about their build-out plans throughout the year. Q3 was I think a very solid quarter for us in terms of signed and commenced new business and we expect to actually pick that up further into Q4 as Jim was saying, which really reflects some of the new Clearwire activity so I think we're ending on a very positive track and as I said before I think we're positioned well as we go into 2010.

Switching subjects, can you just tell us what local currency revenue growth in Mexico and Brazil are tracking towards in 2009? And then with the spectrum option in Mexico coming up, how would you expect that to impact 2010 trends?

Yes, hey, Gray, it's Jim. Together, Mexico and Brazil have been growing in 2009, about on pace with the total Company on pace with the US growth rate. And Mexico being a little lighter than normal and Brazil being a little heavier than normal, just based on the timing of options and new spectrum and new entrants in each of those countries. For 2010, again, not having quantitative guidance here quite yet but kind of a qualitative sense would be together Latin America will be around the same or potentially a shade better if we get a Mexican spectrum auction the first part of the year.

Okay. And then just last question, redevelopment CapEx moved lower this year after I guess heightened levels of spending in 2008. How should we expect that to trend going forward?

I think we should -- we're not giving guidance here, but I think you should be thinking of that consistently with how we've been spending in the 2009.

Okay. Thank you very much.

We had a project last year in 2008 with one of our Latin American customers where we committed to do some redevelopment specifically to their needs and the lease rates were higher that went along with that. That program's wrapped up and so as Tom said, redevelopment in the future is going to look a lot more like it did in the back half of this year.

Okay. That makes sense. Thanks a lot.

You bet.

I think we have time for one more question.

Our last question comes from the line of Michael Rollins with Citi.

Hi, good morning. Two follow-up questions. Firstly, just to go back to guidance, realize there's already been a number of questions on it, but for 2009, if you go back to the disclosures in the 2Q press release you were estimating an impact from foreign exchange rates of a negative 2 percentage points at the midpoint of guidance. Can you give us some sense to where that is today based on the way FX rates have moved to date? And then the second question that I have is just on revenue churn. Can you give a sense of how revenue churn has been moving through your model? Is there anything that you see, any kind of activities that you see that could pick up that revenue trend over the next 12 months or things that have happened in the past that you don't think will happen next year that could actually reduce that rate of revenue churn? Thanks.

I think with regards to the FX, I mean, there was -- on a sequential basis, there was actually a bit of a pickup with relative to FX, still on a -- kind of a year-over-year basis, Michael, I think we're pretty consistent with where we were back in the second quarter release so I don't think there's any impact and there's obviously no impact to kind of the core growth. And relative to churn, we still are obviously underneath kind of the 2% level. What you may see, and again, this is not guidance, but what you may see going forward into 2010 is the delay in the -- some of the broadcast churn that occurred perhaps later in the year, benefiting us, then we had thought just because of the delay in the spectrum itself coming off. So you may see a bit of a pickup on a year-over-year basis relative to the broadcast churn in 2010. But again, not significant but just in response to your questions.

Yes, Mike, if you just get a chance later, refer back to page six on the presentation that's on the website, the Q3 2009 impact of FX was a negative 2.1, so there's a quarter left and you could make an estimate on what you think it might be in the fourth quarter but as Tom said, it's pretty consistent in the third quarter from what we said we thought would happen.

Okay. Thank you.

You got it.

Great. Well, thank you very much for taking the time to listen to us and we look forward to reporting results for the fourth quarter in a couple months.

Have a great day, everybody. Good-bye.

This concludes today's American Tower third quarter 2009 earnings call. You may now disconnect.