美國電塔 (AMT) 2009 Q4 法說會逐字稿

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

I would now like to turn the call over to Mr. Michael Powell. Sir, you may begin your conference.

Thanks, Darlene and good morning, everyone. Thank you for joining American Tower's conference call regarding our fourth quarter and full year 2009 financial results. Please note that we have posted a brief presentation to accompany this morning's call on our web site which is www.AmericanTower.com. And 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 -- first, I will provide an introduction and highlight certain key metrics from our fourth quarter and full year 2009 results. Following this,Tom Bartlett, our Chief Financial Officer, will go over our financial results in more detail and provide color on our 2010 outlook. And finally Jim Taiclet, our Chairman, President and Chief Executive Officer will then give closing remarks, including his current thoughts and key business trends. As always, after these remarks, we will open up the call for your questions.

Before I begin, I would like to remind you that this call will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include statements regarding our 2010 outlook, our stock repurchase program, our pending acquisition in India, credit market conditions, and any other statements regarding matters that are not historical facts. You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risk factors set forth in this morning's press release and those set forth in Form 10-Q for the quarter ended September 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 this information contained in the call to reflect subsequently occurring events or circumstances.

And with that, I will begin the call and highlight some of our results. Please turn to slide four of the presentation, for a summary of fourth quarter results, as well as our full year 2009 results compared against the year ago period. With regards to our fourth quarter results, we reported total revenues of approximately $448 million reflecting growth of 9.7% from the year ago period. Tom will provide additional color on the core growth of our rental and management business, excluding the impact of foreign currency exchange rates, and straight line accounting. Our adjusted EBITDA for the quarter was $308 million which is a 10.1% increase from the year ago period. Our operating income for the quarter increased 15.5% to over $176 million. And income from continuing operations was approximately $64 million or $0.16 per both basic and diluted common share.

And now I would like to turn the call over to Tom.

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 fourth quarter of 2009. Please turn to slide five to review some of the highlights.

Our reported rental and management segment revenue growth was 10.4%. Our core growth which excludes the impact of foreign currency exchange rate fluctuations and straight line lease accounting was 10.2%, relative to the fourth quarter of 2008. In the US, our growth was supported by an overall increase in leasing demand from customers such as Clearwire, as they ramped up spending to deploy the first 4G data network in the US and three of the four national carriers who continued to invest in their networks to prepare for and meet growing data demand. In addition, our international businesses delivered another solid quarter with revenue attributable to our operations in Mexico, Brazil and India, now accounting for over 17% of our tower revenues. During the quarter, foreign currency translation became a tail wind for our results as the Mexican peso and Brazilian real both strengthened against the US dollar relative to the fourth quarter of 2008.

I would also like to highlight that we had under $3 million of net recurring revenue items in the quarter. In addition we remained focused and disciplined while evaluating opportunities to selectively deploy our capital. We believe these investments will not only drive core growth in our portfolio, but also enhance our return on invested capital. Investment highlights during the quarter include the construction of over 350 towers across our portfolio, the construction of ten in building DAS networks and the acquisition of over 500 towers in India and United States. So overall, we are very pleased with our strong finish to 2009.

Turning to slide six, you can see from the chart on the upper left-hand side of the page, that while our reported adjusted EBITDA growth was 10.1%, our core growth, versus the fourth quarter of 2008, would have been 10.6% on a currency neutral basis, and excluding the impacts of straight line lease accounting. The majority of our core growth has been supported by our legacy sites, which continue to generate solid levels of new business. We are also pursuing investments in new sites in the US and abroad to augment our organic growth and to provide a strong foundation for growth. We are pleased to report that even including the costs relative to the 3,500 sites, we added to the portfolio since the beginning of the year, our adjusted EBITDA margin held steady and at industry-leading levels.

Turning to slide seven, we delivered approximately 24% and 25% recurring free cash flow and recurring free cash flow per share growth respectively in the quarter versus the year ago period. This growth was primarily driven by the following -- our strong adjusted EBITDA core growth, lower capital expenditures which were primarily the result of completion of an international site redevelopment project which was winding down in the fourth quarter of 2008, and slightly lower cash taxes and interest expense. We believe that the investments we have made and will continue to make in our legacy and expansion markets, as well as in our stock repurchase program will continue to drive future recurring free cash flow and recurring free cash flow per share growth.

Turning to slide eight, I would like to briefly review, three key highlights from our full year 2009 results. First, our core growth in both tower revenue and adjusted EBITDA were approximately 10%, which is in line with our 2009 outlook. Second, in a year with challenging global macro economic trends, our business model showed resilience and delivered consistent growth. And finally, as we look to drive further shareholder value, we believe recurring free cash flow per share growth is a solid indicator of value creation which we expect to be generated by the following sources. Our focus on driving core growth and adjusted EBITDA from our legacy, as well as expansion markets, our capital allocation strategy, which focuses on reinvesting in our core business through CapEx, as well as through selective acquisitions and our balance sheet which we anticipate will provide us with access to attractive financing, enabling us to return our excess cash to our shareholders through our stock repurchase program and minimizing our exposure to cash taxes both in the US as well as abroad. Looking to the future, while we're pleased with our recurring free cash flow growth in 2009, we do expect it to moderate to the mid-teens in 2010, as our recurring capital expenditures are expected to remain at levels comparable to 2009.

Turning to slide nine, our investments in 2009 remain consistent with our stated capital allocation strategy. We generated approximately $840 million of cash from operations, and redeployed nearly all of it into either our existing sites, new sites, or our stock repurchase program. Our 2009 capital expenditures of $250 million included discretionary capital spending of $179 million of which $49 million was for land purchases and $127 million was for the construction of over 1,000 new sites. In addition, we spent $296 million to acquire over 2,500 new sites, with $215 million of our remaining cash flow used to fund our stock repurchase program. Our discretionary investments in 2009 specifically focused on pursuing portfolio growth opportunities, and I'm pleased to report that we were successful in Brazil and India, where we have increased the size of our portfolios to over 1,600 and 2,600 sites respectively. We expect that we will continue to focus on expanding our US and existing international markets while potentially pursuing new markets where our communications site leasing expertise provides our customers with a strong value proposition.

Turning to slide ten, and before we get to our outlook for 2010, I would like to highlight the areas we intend to focus on for the year. Our first priority is to drive strong top line, sustainable revenue growth. To achieve this, our primary focus will be organic revenue growth, which we believe produces the highest incremental returns on our invested capital for our shareholders. We will also seek to augment our organic growth with selective asset acquisitions. This includes the transaction we announced this morning, whereby our Indian subsidiary has agreed to acquire approximately 4,500 sites from SR to further strengthen our presence in India. In addition, operational excellence will continue to be a focus for our organization. Our teams are continually using Six Sigma methodologies to drive efficiencies in our processes to ultimately achieve cost savings. Meanwhile, we will also seek to invest in our infrastructure in 2010 to assure that we can scale to support our growth. Finally, we will continue to capitalize on our balance sheet to opportunistically raise additional funds to finance our future expansion plans or our stock repurchase program. All of our objectives are focused on driving long-term value creation for our shareholders.

Turning to slide 11, we're introducing our outlook for 2010. We expect our rental and management segment to produce about $140 million to $170 million of incremental revenue in 2010 which reflects a stronger site leasing environment than 2009. The full year contribution of the new sites added in 2009, as well as approximately 1,200 to 1,600 new sites, which we expect to construct during 2010, as well as our contractual lease escalations. Additionally we completed a lease extension as of the beginning of 2010 with one of our major US customers which will result in an overall increase in straight line revenue for the year of about $14 million compared to 2009. In addition, our outlook reflects stronger currencies in Mexico, Brazil and India, relative to their 2009 average levels. These positive impacts to growth are expected to be partially offset by a slightly higher than historical level of churn in 2010 from analog TV broadcasters in the US, and the impact of a wind down of a customer take or pay agreement in the United States. Please note that until we close our acquisition in India, we will not include the impact of these new sites in our outlook.

Excluding the impact of foreign currency exchange fluctuations, straight line lease accounting and the material one item from 2009, which was the result of a broadcast customer termination fee we discussed last quarter, we expect core growth for rental and management segment revenue to be approximately 8% to 9% in 2010. Furthermore, our 2010 core revenue growth rate would be approximately 2% higher excluding the impacts of the broadcast analog churn in our take or pay agreement. Turning to adjusted EBITDA we expect to generate about $80 million to $110 million of incremental adjusted EBITDA in 2010, which reflects a lower adjusted EBITDA conversion ratio than 2009. This is primarily attributable to costs and related pass through revenue related to the 3,500 new sites we added to our rental and management segment portfolio in 2009, as well as the construction of 1,200 to 1,600 new sites in 2010. Excluding the pass through revenue and corresponding costs, our 2010 outlook conversion ratio would be approximately 10% higher. Additionally, we are making selective investments in SG&A, which we believe will better support our growth and expansion initiatives. We expect core growth for adjusted EBITDA to be approximately 6% to 8% in 2010. Finally, cash provided by operating activities is expected to increase $110 million to $140 million in 2010 which reflects the expected increase in adjusted EBITDA, as well as the benefit from our lower borrowing costs related to our investment grade issuance.

Turning to slide 12, I would like to highlight some of our capital plans for 2010. With our cash on hand, plus our outlook for cash generated from operating activities, we will have access to over $1 billion of internally generated funds available for investment. Our first priority is to redeploy this cash back into our business and to that extent, we anticipate that we will utilize approximately $300 million to $350 million in capital projects. Our outlook for CapEx reflects comparable levels of redevelopment, capital improvements, and corporate capital expenditures versus 2009. We are forecasting $50 million for land purchases, and $165 million to $205 million for other discretionary projects, including the construction of 1,200 to 1,600 new sites. Consequentially, over two-thirds of our 2010 capital program is success based. Consistent with our capital allocation strategy, we will also seek to add new tower assets to our portfolio via acquisitions. If we are unable to find transactions that meet our long-term risk adjusted hurdle rates, we will return the capital to shareholders through our stock repurchase program.

Turning to slide 13, and in conclusion, we are focused on driving growth in our core business by investing in our existing sites as well as new tower assets. We successfully reinvested approximately $550 million in 2009, and will have access to nearly $1 billion in internally generated capital to seek out additional opportunities in 2010. We will continue to pursue expansion opportunities where we can replicate our site leasing best practices to drive strong value creation for our customers. Finally our balance sheet further strengthens our foundation for growth. We believe we have the capacity within our stated leverage targets to pursue meaningful transactions that will drive long-term growth, and return on invested capital and recurring free cash flow per share, which should in turn drive long-term shareholder value.

With, that I would like to turn the call over to Jim.

Thanks, Tom, and good morning to everyone on the call. As you just heard, we had a strong finish to 2009, with double digit growth in both fourth quarter revenue and adjusted EBITDA. That performance is a real tribute to our dedicated employees in the US, Mexico, Brazil and India. It is also a tribute to our customers who keep advancing the reach and capabilities of increasingly robust wireless service.

Among our currently four served markets our US customers are driving most aggressively towards providing ubiquitous and affordable wireless broadband data services. We believe that this will be a multi year endeavor and so we'll underpin sustained demand for tower space in the United States for sometime to come. Market research that we have commissioned indicates that domestic SmartPhone penetration doubled between year-end 2007 and 2009. And that it will double again between year end 2009 and 2011. And at the same time, SmartPhone data usage per unit is also increasing substantially. The research shows that basic SmartPhones consume about five times the data capacity of the average handset. However, advanced SmartPhones, such as the iPhone and the Droid consume upwards 30 times the data capacity of the average handset in a month. As the deployment of these super phones become more widespread, data demands on wireless networks will increase steadily over time.

US wireless carriers are stepping up to the challenge of delivering much higher mobile bandwidth to many more of their customers. For the carriers as an industry, facing this challenge and investing in the network is an imperative. Our projections are that the US wireless industry will sustain relatively stable annual voice revenues in the $120 billion to $125 billion annual range over the next few years. Voice revenues, therefore, will continue to deliver sizable operating cash flows to carriers that they can reinvest in their businesses. But it also means that essentially all wireless carrier industry revenue growth during this time will come from wireless data services. Both Verizon Wireless and AT&T Mobility recently reported that their fourth quarter wireless data revenues were up more than 26%. Both also indicated that their wireless capital expenditures would increase in 2010 due to elevated demand for SmartPhones and higher data usage. In addition, T-Mobile USA continues to invest in its 3G network buildout and it's partnering closely with Google to bring attractive broadband handsets to its customer base.

From a tower industry perspective, it's important to note that for the next two to three years, a substantial amount of the additional super phone and data service demand from Verizon, AT&T, and T-Mobile subscribers must be met with 3G technology and spectrum. Since 4G LTE handsets and widely deployed network base stations won't be in place until then. As a result, we expect these major carriers to conduct substantial cell site equipment augmentation and self-splitting of their 3G networks while also laying the ground work for 4G coverage over the next few years. Another positive development for the tower industry has been Sprint Nextel's strategic decision to introduce 4G earlier to its customer base through its investment in Clearwire. Sprint Nextel recently announced an additional $1 billion investment in that venture, making a significant contribution to Clearwire's fully funded business plan to reach 120 million covered POPs. Additionally Sprint Nextel also stated recently that it was increasing 2010 capital investment in its old iDEN and CDMA 3G networks by as much as 25% over 2009. In sum, we believe that the major US wireless carriers collective drive towards expanding broadband data services will result in 2010 commenced new business on our existing towers to be at or above the levels we experienced in 2009.

Also in 2009, our US customers contributed 85% of our Company's total revenue, and also delivered the bulk of our $840 million plus of cash from operations. We expect as Tom said, to generate nearly $1 billion in cash from operations in 2010, and our primary objective for this cash is to reinvest it into our business at attractive rates of return for the benefit of our shareholders. So our investments in new tower construction, acquired portfolios of towers and new market entries will add to our new organic growth on our existing towers and to the escalation on existing contracts during the year that particular investment is made. But even more important is the long-term future effect of organic growth and escalation on the new assets. This is why in addition to our efforts in our flagship US market, we are actively seeking attractive investments in high growth markets such as Brazil and India. Given that these types of markets are at earlier stages in wireless penetration and especially in the adoption of broadband data, we believe that they will provide both strong growth in the short term, and additional meaningful growth for an extended period into the future. Simply put, when we evaluate international investments, we consider both the magnitude and the likely duration of enhanced revenue growth opportunities for our Company.

We are very pleased, therefore, to announce our pending acquisition of the SR tower business in India. We view this transaction as strategic for our India market, bringing American Tower to approximately 7,000 sites. The SR portfolio further strengthens our position in the eastern portion of the country, and has enabled to us achieve the scale for long term success in the India tower market. The portfolio comes with 1.8 tenants on average per tower, and is well positioned for further lease up. The transaction requires government approvals in India, which we hope to obtain within the next two to three months.

And now before turning to your questions, I will leave you with the few core beliefs held by our management team as we plan and execute our strategy for 2010 and beyond. First, we believe US consumers strongly desire mobile broadband service, and are increasingly using wireless devices for entertainment, in addition to communications. Second, US wireless carriers depend on broadband mobile data for growth and they have the conviction and the means to make the necessary investments to get there. Third, American Tower's existing US focus business with its high operating margins, manageable and stable interest costs and relatively low maintenance and redevelopment CapEx will generate very strong cash from operations. Fourth, our solid balance sheet and access to investment grade credit markets provide for further funding to expand the asset base in the US and abroad. And finally, our management skills, operational excellence, and systems, we believe, are extendible to high growth international markets that meet our rigorous investment criteria.

So in closing, we are looking forward to a great year, and we're counting down to 39 days until gold medal mogul skier, Hannah Kearney throws out the first pitch at Fenway and the Red Sox chock up their first win of the season against the soon to be former World Champion Yankees. Operator, Tom and I are ready for questions at this time.

(Operator Instructions) Your first question comes from the line of Brett Feldman with Deutsche Bank.

About what you are seeing in the market. Jim, you were alluding to the strong growth in wireless broadband traffic in a way that's influencing the demand market right now. I was wondering is it changing any way your relationship with your customers and the things they are asking for from you? And some of the things I'm asking for are, the time frames they need to get onto the tower? Are you seeing an increasing interest in doing augmentations versus full new sites? Is there a stronger interest in towers that already have fiber backhaul, for example?

Sure, Brett, generally I think the drive to broadband is deepening our business relationship with most, if not all of our customers, on a couple of dimensions. One is -- you are correct, speed. Two, deployment is important. That's something we've been focusing on for years at American Tower. That's what we really dedicated our Six Sigma effort to is cycle times reductions -- both for new tower builds, new cell sites on existing towers and even to augmentations on existing cell sites on our towers. So that's some place where I think our investments have paid off and helped us with customers.

On a second dimension, customers will, in some cases want to us do more. So we are beginning to expand the footprint of what we do for some of our customers, including looking into, although not entering yet, helping bringing or encouraging others to bring fiber to our particular sites. That's the second dimension where customers would like a broader relationship with us. We are doing things, as we talked about like share generators other activities to help us with that. I do think it's helpful.

Augmentation versus new cell sites, Brett, don't necessarily depend on speed. It really depends on what the engineering decision is on the RF design. Again, we need to be good at both, and we think we are quite strong on cycle time, and delivery performance on those.

How is the mix this year? Do you think it will be a little bit more augmentation oriented just based on some of the big projects, like the 4G deployment at Verizon and some of the 3G augmentations we've seen at other carriers. I think the mix has historically been 20% or 30% of business with some augmentation. Is that still the right way to think about it?

I think so. Given how we ended the quarter -- this is Tom by the way. How we are beginning in 2010, I think we see continued trends, but we are also encouraged by the new demand for build-to-suits, and we saw a -- I think a strong pickup in even build-to-suits at the end of -- starting in the third quarter, going into 2010 and we see a strong build-to-suit market for us in 2010, which we think will position us well for future quarters.

Great. And just a question about the SR deal, the $430 million, is that the all-in, including the liabilities you are assuming.

Yes, the way the transaction is working, we have $430 million for the shares and the balance sheet will have some debt and some cash on it. So the answer is yes.

Okay. So it seems like the cash and the liabilities are netting out to fairly neutral.

That's right.

Okay. And then the price, it's nearly [$100,000], that's about 50% more than I think some of your recent deals. Can you give a little color on that?

Sure, I can speak to that one, Brett, and maybe we'll move to the next question, but as regards the price, the towers come with a 1.8 customers per site, as I indicated. SR did an excellent job of building and running this portfolio, frankly and we like the quality of the assets, where they are placed and also the book of business already on them. So, that operating cash flow from the existing customer base justifies that price.

Thanks for indulging the multiple questions.

Sure.

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

Hi, good morning. A couple of questions. First maybe on domestic M&A, I think a lot of your peers would point to you and say "AMT has historically has been known for the home run deals where you made your mark". SpectraSite most frequently pointed to, versus most recently a deal like the Cincinnati Bell deal -- high quality asset and towers but the size would make it -- in baseball terms -- more a double or a triple. I'm wondering, is this where the opportunity is? I would think just from talking to some others in the industry, it seems like you run into a lot more competition at this level, as opposed to maybe the middle segment where there are four or five operators where you would run into probably a less competitive process. Just wondering, thinking about the puts and takes there because it seems like the strategy has shifted in the US a little bit.

And then second a quick question on the ground lease activity. What prevents you from being a larger player in this market in 2010.

Sure, Jason, it's Jim. I will start off and then Tom can follow up on both of those questions. First of all, on domestic M&A we consistently participated in essentially every asset trade over the last few years since SpectraSite. Some have been big and some have been small. Some of the small ones we won were not sizable enough to report on individually but we have over the years acquired, small tranches of towers from third party or private equity-backed owners. None have risen to the size of Cincinnati Bell, though. So that was one that was worth pointing out and announcing. And frankly, we have used the same approach ever since SpectraSite on these smaller portfolios and recently we have been able to come out the winner in a couple of the key transactions that we have been involved with.

A couple of reasons for that -- one is we had a durable balance sheet. We had access to capital all through this time. And not only that, we've been able to reduce our cost to capital which reduces our weighted average cost to capital that we used to assess what we are willing to pay for assets. So I think it's just another -- an outcome of a steady strategy over time and up and down capital markets where we can act when others perhaps can't and we can be competitive in those time frames.

Jim, just to follow up on, that when you think about access to capital differences and what your cost of capital is, is there a certain metric that that translates into. Like that equates to one or two turn premium that you can pay, relative to the others?

Not necessarily, we look at every tower transaction in great detail. Almost site by site, as far as what is the existing customer, what is the credit worthiness of that customer, et cetera. And then we apply at the end of the day, what we think our cost to capital is to those cash flows that will be generated in the future under our management and therefore there's no real rule of thumb.

Jason, this is Tom. I may just add, if you take a look at 2009, we acquired about 2,500 sites. About 275 of them were in the United States. That's more than all we acquired in 2008, across all of our markets, and I do think that while -- the doubles and singles are not the home runs. I think we can be very attract -- very good in those, very aggressive in those -- I think our cost of capital does give us a bit of an advantage in terms of some of those markets.

You take a market like the investment in Cincinnati Bell, even while we've had that and we've only had that for, six, eight weeks, the leaseup activity in that asset has far exceeded what we actually thought it was going to be. So we like those doubles and triples and clearly they are not the home runs but they are easy to absorb and they are easy to integrate into our business.

And on the ground lease question, Jason, we are, again, disciplined when it comes to investing in ground, just like we're disciplined when it comes to investing in towers like we have just been talking about. The same kind of analytical process and rigor goes to the ground lease negotiation. Which is a one at a time, individual negotiation. We have a pretty capable team dealing with individual landowners across the country. And if we can't hit our hurdle rate there, we just don't do the transaction. So we could buy more, but we would have to relax our standards and we're not willing to do that.

Great. Thanks, guys.

Yes.

Your next question comes from the line of Michael Rawlings with Citi Investments.

Hi, good morning.

Hi Michael.

I was wondering if you could give us an update on the NOLs and how you are thinking about the timing for a possible conversion to a real estate investment trust structure. Thanks.

Yes, sure, Mike. Pretty much along the same lines that I think we communicated on the last call. We have about $1.5 billion worth of NOLs. We expect them -- continue to expect them to expire in the 2012 time frame. I'm hopeful that we use the NOLs more quickly. But given current course and speed, that's what our forecast looks like over the next couple of years.

And we continue to evaluate the process of moving to a REIT. I think our assets fit right squarely in the middle of what would qualify as a REIT. We have certain parts of our business that would be excluded. Some of the services type of activity in the United States. And with the international businesses we are looking at net asset values and how we might allocate capital in some of those areas to be able to hit some of those triggers.

But this is a year that Jim and I are focused on getting through all of the homework, if you will, on both the tax side, as well as all the capital market elements to it. And we are really looking at this as merely being a tax election. We want this to be a minimal impact on our overall business. We want to make sure that we have ample cash to reinvest in our business and to be able to achieve the growth expectations that we have, ourselves for our business. And there's nothing that we see right now that wouldn't allow us to be able to have access to that cash, to be able to continue the growth expectations. So, we are right in the middle of it, and as I said, I think we would expect to be more completed with the homework by the end of the year.

And Jim, I was just wondering if you could give us an update on some of the strategic projects -- the longer term strategic projects that you are working on, like DAS and on battery backup for the cell site.

Sure, Mike. And, in fact, this relates to SR indirectly also. Those that have been covering us for a few years. You may recall that I came out two years ago now and suggested to the investor base that not only do we have a great US based business here at American Tower but that we were also wanting to f turbo charge that business over the next three to five years with three or four new areas of business, whether it be geographic or product line, that each might generate say on the order of $50 million of EBITDA a year. We wanted to compliment the growth core engine of the US, Mexico, and Brazil business that we had with some projects if you will. So that's what you are referring to.

Domestically, we have chosen a path to be distributing antenna systems on a wider scale to compliment our existing sites, with generators and some other equipment. Again, we are just now scratching the surface on do we participate in getting back to fiber loops and such. So on that front, we have built another 20 or so DAS indoor systems recently. It's still about 1% of our revenue. We did complete our first outdoor DAS system in the fourth quarter and we have customer up and running on that. There's 350 nodes, 400 nodes in the pipeline that we've got under control in addition to that project. So we're off and running. We'd like to get that to the $50 million of EBITDA a year level.

So, you combine indoor and outdoor DAS -- could it someday be 3% or 4%, maybe 5% of our revenue five years from now? We hope it could. But we are just -- we are still at that 1% to 2% level, Mike, at this point. When you look at India then, we have gone from 1% of our revenue in 2009 coming from that country to pre-SR, we would have predicted probably 3% this year. A full year of SR and our run rate business in India would be 7% -- 6% to 7% of revenue. So now we are starting to get there. Those are the kind of programs that we're running and that's the status of at least those two, Mike.

Thanks very much.

Yes.

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

Thanks, good morning, guys.

Good morning, Ric.

A couple of questions for you, first on the guidance side, what are your assumptions as far as how the year will be loaded, is it front end, rear end, or level loaded.

It's interesting, Ric, if I go back and take a look at the last several years, it generally runs, interestingly enough, with how capital is being spent at the carriers -- and its generally 45% in the front end and about 55% at the back end. And, taking a look at our plans for the year, it's consistent with that. Similar to 2009.

Yes. And then Jim, you mentioned a little bit on the SR there being a full year, maybe 6%, 7%. What are the thoughts as far as why not putting SR in the guidance right now. Any concern on the closing, as far as timing or approval?

Well, we don't like to get ahead of government approvals in any market that we do transactions, Ric. So that's the first thing. Second thing, of course, the impact on 2010 will depend on the date of that closing. If it's April, May, June, it's going to have a big difference on the numbers. So we'd like to just get the transaction completed and closed. Go ahead and use that appropriate date to forecast the rest of the year, and we'll include it in that earnings call guidance that we update you all with, whether it's in May, hopefully, or it has to be a little later, it will be.

Okay. And then there was no tower cash flow or gross margin guidance this time. Is that also getting at the wanting to keep things together until you get the SR deal closed or I'm just wondering, is that something that you are not going to guide to anymore.

I think, Ric, you take a look at those types, even services, there were a couple of items there that we didn't feel were necessary to include. I think -- if asked, they are comparable to 2009 so that there are no surprises with those. They just didn't seem that meaningful, candidly going forward, given the comparability that they are in 2010 going to be with 2009.

Last one in the quick staccato of questions here. You mentioned $1 billion of potential before capital raise, as far as investing and growing your business between CapEx and other items. As you think about your leverage, where are you at as far as your target leverage and your thoughts about how high you would go up to -- as you look at potential deals out there.

Well, our stated leverage is 3 to 5, and we -- for 2009, we were in the 3.3 to 3.4. I think at the end of 2009, we ended up a little bit even below that. I think with the cash that we have been talking about here and the script on the slides, it upticks a little bit to 3.5, 3.6 range. So even with the activity that's included with $1 billion of cash available to reinvest in the business, we are still well south of 4. So, we will continue to look at, as I mentioned before, with future acquisitions out in the market place. But, we have been at this level for the last couple of years. I think it would take a pretty meaningful transaction to get north of 4, more transformational, if you will. So we feel very good in terms of where we are. And our cost to capital and our cost of borrowing in 2010 is expected to be below where it was in 2009. So, I think it's all being beneficial to our shareholders.

Great. Thanks, guys.

Your next question comes from the line of James Ratcliffe with Barclays Capital.

Good morning. I wonder if you could give us a little more color on the SR deal, particularly how many of the sites are currently under construction, and for the sites, do you already have anchor tenants for them, or are they spec?

I think of the 44 to 50 sites, 90% are fully up and running. Maybe 10%-ish are under construction there, James. What was the second half of your question about SR?

And for the ones that are under construction, do you already have tenants booked for those?

Yes, absolutely. Everything that we are buying has a tenant contract or one or more tenants already on the site.

Got it. And you said 1.8. Is that the average for the existing sites or does that include the new ones?

That's everything that we're buying, including those under construction.

Great. Thank you.

Your final question comes from the line of Jonathan Schildkraut with Jefferies & Company.

Thank you for taking the question. Yes, I was wondering if you could give us a little bit more color on the share buyback program. Obviously you guys did a couple hundred million in '09 what's the outlook for 2010? And then secondly, you noted -- I think Tom noted -- that non-US revenues grew to about 17% of the business. Over the longer term, how should we think about the contribution of international markets as a percent of total revs? Thanks.

Sure, Jonathan. Let me start off and Tom can follow up. The share repurchase we don't guide to because it's a consequence, frankly in any given year of our deal pipeline. What we've got that we can announce and have to fund, like SR today, and what we have in front of that in the pipeline, as far as prospects, their size magnitude and probability of closure. We don't guide to share repurchase, because it's essentially a derivative of the deal pipeline that we close on an the one that we anticipate.

And then secondly, as far as international scope over time, we're really comfortable with obtaining 25% to 30% of our revenues being outside the US, again, over a two to four to five year time frame.

Thank you for taking the questions.

Very good.

Well, great. Thank you very much for all of your attention.

Before we end the call, I just want to make one announcement that Michael Powell who has done a tremendous job managing our investor relations and financial planning analysis team will be transitioning all of his attention to corporate planning, where he will be focused on expanding our overall financial planning and analysis capabilities and support our growth initiatives. [Leah Sterns], who most of you already know and have worked with in the past as part of Michael's team, will assume Michael's role and manage investor relations at American Tower.

With, that Jim and I would, again, like to thank you for being here today and have a nice day. Operator, this concludes our call.

This concludes today's conference call. You may now disconnect.