美國電塔 (AMT) 2012 Q4 法說會逐字稿

Good morning. My name is Angel, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Tower's and fourth-quarter, full-year earning 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 our host, Ms. Leah Stearns, Vice President of Investor Relations and Capital Markets. Ma'am, you may begin your conference.

Thank you, Angel. Good morning, and thank you for joining American Tower's fourth-quarter and full-year 2012 earnings conference call. We have posted a presentation which will we will refer to throughout our prepared remarks under the Investors tab on our website, www.AmericanTower.com.

Our agenda for this morning's call will be as follows. First, Jim Taiclet, our Chairman, President and CEO, will provide opening remarks. Then Tom Bartlett, our Executive Vice President, CFO and Treasurer, will review our financial and operational performance for the fourth quarter and full year 2012, as well as our outlook for 2013. And finally, after these comments, 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 those regarding our 2013 outlook and future operating performance, including AFFO growth and dividend per share growth; our capital allocation strategy, including our stock repurchase program and redistributions; 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, those set forth in our Form 10-Q for the quarter ended September 30, 2012 and in 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.

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

Thanks, Leah, and good morning, everybody. American Tower's growth strategy is based on a simple observable premise, that consumers' appetites for mobile communications and entertainment are growing dramatically in the US and around the world. The most recent industry results and forecasts confirm that we are squarely in the midst of the decade of wireless in the US, based on tremendous demand for mobile data and entertainment services.

In just the first two years of the decade, smartphone penetration increased from about 20% to nearly 60%, and mobile data traffic grew by five times in just those two years. Moreover, as shown on slide five, the most recent Cisco forecast that was just released projects that mobile network traffic will grow another 10 times over the next five years. The Cisco study also estimates that approximately 75% of this growth will be delivered over traditional macro sites, primarily towers. The remaining 25% of the expected growth would be on supplemental solutions, such as DAS, picocells and WiFi, with even some of these small cell installations being used on or in connection with macro sites on towers, and we are actually starting to see some of that now.

Therefore, our view is that macro site network infrastructure, which is predominantly tower-based, will shoulder the bulk of network expansion and is expected to grow at a 50% cumulative average growth rate over the next five-year period, as you see in the dark green on the chart.

To meet this demand, we expect our wireless carrier customers to continue to employ an integrated approach to their networks, which will further increase demand for communications real estate, especially towers. An obvious aspect of this integrated approach is the installation of fourth-generation wireless technology, primarily long-term evolution, or LTE. This network upgrade requires the installation of additional equipment, especially antennas, to our customers' existing cell sites. As a result, site leasing rates increase due to the amendments our customers make to their existing contracts with us. This investment cycle has been a key driver of recent revenue growth for tower operators as they install 4G.

Another important aspect of the integrated approach is the attainment and deployment of incremental wireless spectrum. This often results in additional lease amendments for equipment that is needed to transmit the new spectrum or for other rights at our sites, again contributing to our revenue growth.

However, additional equipment and spectrum won't be enough to meet the exploding demand for mobile data and entertainment. Over time, new cell sites will be needed to increase the capacity and density of each carrier's 4G network. Today, less than 10% of US wireless subscribers are experiencing the speed and quality of service offered by LTE technology. As the level of penetration of LTE devices increases, and voice over LTE, commonly known as VoLTE, is added to carriers' service offerings, it is our technical view that additional cell sites will be needed as a result of the higher signal strength required to effectively deliver acceptable video and VoLTE applications to large numbers of users.

So as site proximity and consequently network density increases, American Tower expects to secure additional leases on our existing towers, as well as more opportunities for new tower construction.

Of course, both these activities are major drivers of our future growth. Today, the US is among the leaders in moving to 4G technology, with the four largest domestic carriers in the process of national LTE deployments right now. However, we believe that access to the broadband data and entertainment services enabled by 4G will be in high demand not only in the US, but worldwide. In some of our 11 served markets, we are already experiencing the following developments.

In Germany, LTE has been rolled out first in some rural areas as per local regulatory requirements, but the overall deployment, although it started at least a year behind the US.

Further, in countries such as South Africa, Mexico, Brazil and Colombia, 3G is still even in the process of deployment, while 4G is either in the planning or very early initiation phase. In these types of countries, the lag time behind the US schedule is, we believe, about two to five years.

And then in markets such as Ghana and India, voice coverage is still being expanded, while 3G service is in the introductory stage. 4G will come down the road, and these types of markets, we believe, are six to 10 years behind the US schedules.

So as a result, we believe our international presence will lengthen and strengthen American Tower's domestic growth trajectory.

Our management team anticipated this global phenomenon years ago and in preparing for the future, our first step was to achieve a doubling of our US assets with the acquisition of SpectraSite in 2005. This move positioned ATC as the first mover in the consolidation of the domestic tower industry and laid the financial and operational knowledge foundation for our ultimate global expansion initiative.

Then beginning in 2007, we established regional teams around the world to explore and cultivate growth opportunities, leveraging our US knowledge base and our early experience operating in Mexico and Brazil. Once again, these teams used their first-mover advantage, which started six years ago, to build leading franchise positions in the most critical and attractive markets in each region. For example, expanding dramatically in Mexico and Brazil, while adding new cornerstone markets, such as India, Columbia, South Africa, and most recently, Germany.

Moreover, our teams have secured deeply-rooted strategic relationships with some of the world's leading multinational mobile operators, such as Telefonica, MTN and Millicom, further strengthening our international position.

So given our geographic strength and mobile operator partnerships, I'd argue that our strategic positioning on the international front is truly exceptional.

As a result of our growth prospects in the US and around the world, we've set a new aspirational goal to once again double our asset base and our financial performance over the next five to six year planning horizon. Our confidence in striving towards this new goal is bolstered by our Company's progress over the past five years. When I first set our sights on doubling the business at the end of 2007, our tower count stood at 23,000 sites. After five years, we more than surpassed this goal by ending 2012 with over 54,000 sites.

So turning to slide six, I'll quickly review our Company's consistently strong financial performance over those past five years, beginning with Rental and Management revenue growth of 14.5% cumulative average growth rate that you do see on page six.

The next slide shows the 14.2% CAGR in gross margin. And then slide eight shows the 14.1% CAGR in adjusted EBITDA. Moreover, we were successful in maintaining adjusted EBITDA margins at industry-leading levels all along the way.

Then on slide nine, you can see that AFFO per share has grown nearly 15% per year over this period.

Moving on to slide 10, we've also enhanced our return on invested capital at the same time.

And on slide 11, you can see that we've also maintained our disciplined capital structure, keeping our financial leverage near the midpoint of our stated 3 to 5 times range.

Given this consistent track record, American Tower's management team is committed to pursuing our aspirational goal of doubling the business yet again. We expect that much of this growth will be generated organically through our worldwide portfolio of over 54,000 sites. We also anticipate that our strategic relationships with our key customers around the globe should support a construction program of 2000 to 3000 sites per year, and that our significant cash flow generation capabilities should in turn enable us to choose to invest in additional acquisitions that meet our investment criteria or to repurchase shares during periods during which available asset prices and quality may not meet our standards.

Our management objective is to deliver mid-teens growth in AFFO per share for our investors as we strive to double the business again over these next five years.

At this point, I'll turn it over to Tom to describe in detail the Company's fourth-quarter and full-year 2012 performance and our outlook for 2013. Following that, we will take your questions. Tom.

Thanks, Jim, and good morning, everyone. We finished 2012 on a high note and believe we have positioned ourselves to have a solid 2013, reflecting both a strong global demand backdrop, as Jim just laid out, for tower space and the operational performance of our employees.

If you will please turn to slide 13 of our presentation, you will see that both our domestic and international segments had another strong quarter in Q4. Our US reported Rental and Management segment revenue increased by 7.5% and nearly eclipsed the $500 million mark for the first time in American Tower's history. On a core basis, which we will reference throughout this presentation as reported results excluding the impacts of foreign currency exchange rate fluctuations, non-cash straight-line lease accounting and significant one-time items, growth was 9%.

The majority of sites acquired during the quarter closed in late December, so the revenue contributions from those transactions were relatively modest to our quarterly results.

Finally, core organic growth, which reflects core growth on sites that had been in our portfolio for at least one full year, was 7.6% in the fourth quarter.

During the quarter, signed new business, which is a leading indicator of future revenue commencements, was at levels well over recent highs. In addition, churn continues to decline and was only 1.2% during the quarter.

Turning to our international segment results, reported fourth-quarter rental revenue was over 36%, with core growth coming in at nearly 45%. Core organic growth was over 13%.

Our international segment growth was positively impacted by the launch of our operations in Germany in early December, which contributed about $4 million to the quarter.

Our reported Consolidated Rental and Management revenue increased by over 15% to $740 million in the quarter, with core growth of over 19%. This growth was composed of core organic revenue growth of about 9%, which was driven by strong new business commencement activity on our existing sites, with the balance of our core growth attributable to the more than 14,000 news sites we have added to our portfolio since the beginning of the fourth quarter of 2011. About 90% of these new communication sites are located in our international markets and have a average tenancy ratio in the low ones. Consequently, we expect there to be significant future new business demand for these sites over the next several years.

Turning to slide 14, our reported adjusted EBITDA growth relative to the fourth quarter of 2011 was nearly 17%, with our adjusted EBITDA core growth for the quarter at about 20%. Reported adjusted EBITDA increased by about $71 million in the quarter, primarily as a result of an increase of roughly $115 million in total revenue, which was partially offset by an increase in direct expenses, excluding stock-based compensation expense, of about $29 million, including a $19 million increase in international past-due costs. Our direct expense growth during the quarter was favorably impacted by a one-time item in the US of approximately $5.7 million related to land rent expense.

Finally, SG&A, excluding stock-based compensation expense, increased $14 million from the year-ago period, driven in part by our international expansion initiatives, as well as investments we've made in our domestic business.

For the quarter, our adjusted EBITDA margin was 65% as compared to approximately 66% in the year-ago period. Excluding the impact of international past-due revenue, our adjusted EBITDA margin for the quarter was about 71% and our adjusted EBITDA conversion rate was nearly 75%.

During the quarter, adjusted funds from operations, or AFFO, increased by approximately $13 million or about 5% relative to AFFO in Q4 of 2011. This reported growth was impacted by several items, including about $15 million in one-time international cash tax payments primarily related to withholding taxes and audit settlements, approximately $6 million related to one-time startup CapEx in our new international markets and the impact of foreign currency exchange rate fluctuations. Adjusting for these items, core AFFO growth was about 12%.

Moving on to slide 15, and discussing our full-year 2012 results, the performance of our Rental Management business both in our domestic and international segments was also ahead of our original 2012 plans. Our Domestic Rental and Management segment reported revenue grew 11.3% to over $1.94 billion, our Domestic segment core revenue growth was just under 10%, and our core organic growth for the year was more than 7%.

This growth was driven primarily by the strong lease-up environment we saw all year in the US, as the carriers, led by AT&T and Verizon, continued to be extremely active in rolling out next-generation wireless networks. Similarly, as a result of the nearly 18,000 sites we have added to our international portfolio since the beginning of 2011 and the associated impacts of increased past-due revenue, as well as record levels of organic new business, our International Rental and Management segment reported revenue increased over 34% to $863 million, with over 50% core revenue growth for the full year. Core organic growth in our International segment was 13.6%.

In 2012, our International past-due revenue was $229 million, reflecting an increase of about $53 million.

On a consolidated basis for the year, reported Rental and Management segment grew 17.5% to a reported $2.8 billion, with core revenue growth of over 21% and core organic revenue growth of over 8%.

Turning to slide 16, for the full year 2012, our adjusted EBITDA growth relative to 2011 was about 18.6%, with our core adjusted EBITDA growth at over 21%. Our adjusted EBITDA margin was about 65.8% and our adjusted EBITDA conversion rate was 69%. Excluding the impact of past-due, our adjusted EBITDA margin would have been about 72%.

In addition, AFFO increased by $143 million or 13.5% relative to AFFO in 2011 and 13.6% on a per-share basis. Core AFFO growth was nearly 19%. AFFO growth in 2012 was driven by our adjusted EBITDA growth, partially offset by increased cash interest expenses associated with the funding of some of our growth initiatives. This strong adjusted EBITDA and AFFO growth reflects our continued commitment to driving long-term, cash-based returns through accretive asset acquisitions and leasing up existing sites.

Turning to slide 17, we deployed nearly $570 million via our capital expenditure program in 2012, split about evenly between our Domestic and International operations. Some highlights of our capital deployments in 2012 include nearly $280 million spent on discretionary capital projects associated with the completion of the construction of nearly 2400 sites globally. Of these new builds, 250 were in the US, with the remainder throughout our international markets.

In addition, we continued to utilize our discretionary land purchase program in the US to acquire land interests under our existing towers in 2012, and spent over $80 million to purchase more than 500 land parcels under our sites during the year.

We also meaningfully extended the terms of another 500 leases. The fourth quarter represented an unprecedented level of activity in our land program, and as of the end of the year, we owned about 29% of the land under our sites and had a remaining lease term of over 22 years on the balance of our land leases. We were able to leverage our experienced teams to close these transactions at attractive multiples, underspending our original budget of $100 million. Acquiring land parcels has historically led to a reduction of about 2% to 3% in our land rent expense growth per year, and we will continue to selectively acquire land when we can meet our risk-adjusted hurdle rates, while also proactively extending our end-of-term maturities.

From a total capital allocation perspective, we deployed nearly $3 billion, including REIT dividend distributions of about $356 million to shareholders, nearly $570 million on capital expenditures and about $2 billion principally for the acquisition of nearly 6500 communication sites globally.

Finally, we spent about $46 million in the fourth quarter to repurchase shares of our common stock, bringing full-year total repurchases to approximately $63 million, pursuant to our stock repurchase program.

Moving on to slide 18, I'd like to spend a few minutes walking through how we expect the capital we spent on 2012 acquisitions to translate into revenue, tower cash flow and AFFO in 2013 and beyond. In 2012, we acquired nearly 6500 sites, 713 in the US, the remainder in a number of international markets, including our new Ugandan and German markets. On an annualized basis, we expect these sites, which have an average of about 1.3 tenants, to generate approximately $200 million in revenues, $130 million in tower cash flow and about $50 million in AFFO.

On a consolidated basis, the acquisition price for these transactions equates to a year one tower cash flow multiple of about 14.5 times or an NOI yield of about 6.9%. Our day one average multiple was a bit higher in 2012 compared to past years, given a greater proportion of US sites in the mix. We continue to believe that these types of results demonstrate our ability to pursue value-creating investments through our capital allocation process, and given the low current tenancy, expect these sites to generate growth in future years.

Turning to slide 19, I'd like to begin our 2013 outlook discussion with an outline of our expectations for rental and management revenue growth. Consistent with past practice, these numbers only include sites in our portfolio as of today, which includes the 883 sites we acquired in Mexico earlier this year, plus our expected 2013 build program. So these numbers do not include any additional pending acquisitions.

We currently expect that our full-year Rental and Management segment reported revenue will increase from $2.8 billion in 2012 to between $3.16 billion and $3.21 billion in 2013, representing year-over-year growth of $382 million, or nearly 14% at the midpoint, and core growth of approximately 16.5%. The overall increase in total rental and management revenue can be broken down further into a number of discrete items. First of all, about 4% of the growth will come from our contractual rent escalations from our existing tenants, which represents about $95 million of incremental cash revenue.

Second, at the midpoint, we expect approximately $160 million of our revenue growth will be generated from new business, including new leases and amendments on existing sites. In addition, we expect that about $210 million at the midpoint of our revenue will result from the incremental impact of our new sites which we've built or acquired since the beginning of 2012, and includes our expectation that pass-through revenue attributable to our new sites will increase about $56 million.

We estimate that consolidated churn will be about 1% and offset revenue growth by about $38 million. The holistic MLA structure that we have in place with three of our top four customers in the US is helping to keep domestic churn low.

Finally, we estimate that the net impact of our non-core revenue will negatively impact our growth in 2012 by about $45 million, which is primarily attributable to the impact of an approximately $30 million year-over-year reduction in straight-line revenue and the non-recurrence of several favorable one-time items in 2012. We currently expect minimal FX impacts on our results in 2013.

Moving on to slide 20, we expect our Domestic Rental and Management segment reported revenue to grow about 7.2% via mostly organic growth. We are projecting core growth in our Domestic segment to be over 10%. Embedded in our Domestic Rental and Management revenue segment outlook is our expectation that the very positive leasing environment we saw in 2012 will continue in 2013 as all four major carriers aggressively deploy 4G.

In addition to the high level of confidence we have in revenue growth through the contractual provisions in our holistic MLAs, we think we are well-positioned to capture incremental revenues above and beyond those agreements. As you would expect, we have not included any potential contributions from Dish, Clearwire or a national safety network buildout in our outlook numbers.

Turning to our International Rental and Management segment, we expect reported revenue growth of over 28%, with core revenue growth of almost 30% and core organic growth of nearly 10%. Throughout our international markets, we expect the strong leasing trends we saw in 2012 to carry over into 2013 as carriers deploy newly-acquired spectrum and further their investments in wireless data.

In Latin America, we expect companies such as Telefonica and America Movil to remain active in their 3G overlays. In India, we expect the large incumbent providers, such as Vodafone, Idea and Bharti, to increase their network investments as the regulatory and competitive environment improves.

In our three African market, we continue to see strong demand trends both in Uganda and Ghana, where the focus is still on voice networks, and in South Africa, where wireless data is becoming a reality.

Finally, we expect our German assets to perform well in 2013 as carriers begin their government-mandated rural 4G buildouts.

Turning to slide 21, we currently expect our reported 2013 adjusted EBITDA to increase over $210 million at the midpoint to between $2.08 billion and $2.13 billion, representing reported growth of over 11% and core growth of 14.8%. This reflects the strong rental revenue growth I spoke about earlier, as well as consistent year-over-year performance in our services segment.

In addition to driving revenue growth, we continue to remain focused on controlling costs in our business, and our outlook for adjusted EBITDA reflects a gross margin conversion rate, excluding the impact of increases in past-due revenue, of about 78%. In addition, cash SG&A is expected to come in under 10% of total revenue as we continue to leverage the investments we've made in SG&A over the last several years. We expect SG&A as a percent of revenue to trend down over the next several years as we gain incremental scale in our served markets.

We are also introducing our 2013 outlook for AFFO of $1.385 billion at the midpoint, representing growth of over $185 million, or 15.6%. On a core basis, we expect AFFO to grow by over 16%. Our outlook for AFFO reflects our growth in adjusted EBITDA and is impacted by the carryover of about $20 million in startup maintenance costs in Colombia, Ghana and Uganda. In addition, as we highlighted for you last quarter, we anticipate that our US maintenance CapEx in 2013 will include about $15 million in spending on a network operations center and lighting upgrades for certain towers. Once completed, we expect annual OpEx savings of up to $4 million as a result of these projects.

Our goal is to continue to deliver mid-teen AFFO growth as our sites continue to produce increasing levels of cash flow.

Moving on to slide 22, in 2013, we expect to continue to carefully deploy our capital through our capital expenditure program and selected acquisitions. We currently plan to spend between $550 million and $650 million in CapEx during the year, which includes the construction of between 2250 and 2750 new sites. In addition, we spent approximately $250 million on an acquisition in January, and are continuing to evaluate additional acquisition opportunities.

Given our build plans for 2013 and the acquisition we just closed, we currently expect to have about 58,000 sites by year-end.

Finally in 2013, our primary method of returning capital to stockholders is expected to continue to be our regular dividend. The amounts and timing of our dividend payments are at the discretion of our Board, but our goal is to deliver annual dividend growth in the 20% range over the next five years, as we discussed last quarter.

In addition, as part of our REIT planning, we expect to bring one or more of our international operations into the QRS structure during the first half of 2013. The principal reason for this event is that this is likely to drive additional cash tax benefits in local markets.

Turning to slide 23, I'd like to spend a moment to highlight a few points in our balance sheet. We ended the fourth quarter of 2012 with a last quarter pro forma annualized net leverage ratio of about 4.1 times, which reflects a full-quarter adjusted EBITDA impact from the acquisitions we closed in the fourth quarter. We continue to believe that we maximize the value of our firm by managing our capital structure within our stated target leverage range of 3 to 5 times net debt, and more specifically, around the 4 times level. We expect to continue to manage our capital structure consistent with these ranges.

In January of 2013, we completed a 3.5% billion-dollar senior unsecured note offering and used the proceeds to pay down existing indebtedness under our credit facilities. This demonstrated our ability to opportunistically access the capital markets at very attractive rates, and we are continuing to evaluate refinancing options to further optimize our capital structure.

We currently have liquidity of about $2 billion and believe that we are well-positioned to continue to utilize our strong, stable balance sheet to fund incremental, profitable growth for our business, while maintaining our leverage within our targeted range.

Turning to slide 24, and in summary, I'd like to spend a few moments recapping our key milestones in 2012 and outline some of our goals for 2013. In 2012, we delivered solid growth in our key revenue, adjusted EBITDA and AFFO metrics. In addition, we continued to invest in our business by adding nearly 9000 sites to our portfolio, while entering two new markets. We invested nearly $3 billion globally during the year, which included returning more than $400 million to our shareholders. We continue to believe that these investments have positioned American Tower and our shareholders to benefit from the rapid worldwide adoption of wireless services for many years to come.

As evidenced by the outlook we've issued today, we believe that 2013 will be another very solid year, driven by strong demand for our communications real estate throughout our global footprint. In combination with our longer-tenured assets, we expect the more than $9 billion investments we have made over the last five years to drive compelling cash returns in 2013.

Finally, we will continue to carefully manage our balance sheet and seek to opportunistically access the capital markets at favorable rates as we seek to make incremental investments in growth.

Thank you for joining us on the call today, and operator, we will now open the line for questions.

(Operator Instructions) Phil Cusick, JPMorgan.

Can I get a sense of how Germany slots in your international portfolio? Before, I guess you had said that South Africa, India and Brazil are kind of anchor countries. Where does Germany fit in there?

Germany is exactly in the same category. It is, we think, the best market with respect to geopolitical and macroeconomic characteristics. Of course, there are four multinational wireless carriers there. KPN is our counterparty, but we also obviously have business already with the other three, which are T-Mobile, Vodafone and Telefonica.

So it is really right down the middle for us as an anchor store market, so to speak, in the European region.

Great. And of your -- I guess guided to like 2000 builds, can you give us a sense of where that would break out to, kind of what countries we would see more builds in than less?

Like in 2012, I would expect the US to be probably north of what they did in 2012, probably in the 300 range. We are building significantly, as we have been, in India, so we are probably building in the 100 per month kind of range. We would expect a little bit of a tick-up in Latin America, as we are seeing more 3G being deployed in those markets, with the balance in Africa.

And I guess kind of a final quick one, in terms of SBA entering Brazil, do you expect any changes or difficulty growing in Brazil now with another competitor?

No, not at all.

Thank you.

David Barden, Bank of America.

Thanks for the call and all the detail. Tom, just last year, you guys were able to map out kind of a very specific range for dividends, which was helpful because of the moving parts that AMT has with some of the NOL coverage of the income. And obviously, that guidance helps the market kind of tag where the rates could come out. I know you said five-year growth in the 20% range for dividends. But if you had any more color for the plan for 2013, it would be helpful.

And then the second question was just kind of digging into the core growth numbers, especially for the domestic business guys, obviously, those numbers are going to be benefited in fourth quarter and in 2013 by the kind of acquisition portfolio. If I was going to look at same-store sales growth for the domestic business, could you kind of share with me what did the fourth quarter look like? What are you imbedding same-store sales growth for your towers into the 2013 outlook would be helpful. Thanks.

Yes, that's an easy one. If you take a look at the chart -- I forget what page number it is -- talking about the domestic revenue growth, that core organic growth metric that we talk to is exactly what you are referring as the same-store tower. It is the growth on those towers that we've owned for at least a year. So I think of that as same tower growth, and it has been in kind of the 7.5% range. In 2013, we are looking at 7.4% core organic growth.

The overall core organic growth is a bit higher because of the decline we see in straight-line in 2013 versus 2012. But we've always talked about kind of core organic growth in the US in that 6% to 8% range. We're smack in the middle of that for 2012 and 2013. And the International core organic growth to be 200 to 300 basis points higher. In 2013, outlook is right at 10% core organic growth in our international markets. So it is consistent with what we've seen and what we would expect.

On the dividend question, it is subject to the discretion of our Board obviously. What we had said last quarter -- or what we had said at this same time last year, and the reason that I gave guidance out on it, was that there were a lot of moving parts. It was our first year to pay a dividend. So I know it was very difficult for investors to understand exactly where that number would be, so we laid it out at the $0.80 to $0.90 and ended up at $0.90 in terms of a dividend, or the $355 million.

So that is why the last quarter earnings call, we talked about it being a 20% growth over the next five years. And hopefully that will give people the right expectation of what they should expect the 2013 through 2017 dividends to be, but even specifically 2013.

And David, the other way to get to it as a confirmation is we continue to sort of guide to 100% payout of US taxable income, and you can project that way as well. But it should be a fairly predictable and stable dividend flow.

Great. And if I could, just one last kind of housekeeping item. Obviously, the new market expansion expenses in CapEx were kind of a recurring one-time adjustment that we've been working through in 2012. Could you kind of map out how we should be thinking about 2013 for those expenses and the run rate?

Yes, we talk about kind of another $20 million of startup CapEx in 2013 from Uganda, Ghana and in Colombia. And we would expect it then to level off. We have some additional maintenance CapEx that we're spending in our US operations relative to the [knock]. And as I mentioned, the lighting systems of about $15 million.

But if we didn't go into any new markets, you would expect that maintenance CapEx to really just grow with the incremental towers that we would in fact be building. So we would expect that to tail off.

And David, even though we've mentioned it on three or four calls, it is the three same markets the whole time, the less-developed Uganda, Ghana and Colombia. So those are the types of locations where we've had to upgrade some of the sites to meet our specifications. But in countries like Germany, we don't have that issue whatsoever, and we didn't in South Africa either. So those are the ways to kind of look at this to know that this is not an ongoing kind of recurring issue.

All right. Perfect. Thanks, guys.

Simon Flannery, Morgan Stanley.

Thank you very much. Good morning. Jim, you had mentioned some interesting commentary about the importance of densification around voiceover LTE and video. As we see Verizon and AT&T concluding a lot of their kind of initial coverage, how are we starting to see that move to that second level of densification? Is that something that is going to be a material factor exiting 2013, or is that more of a 2014 factor?

It will probably begin to layer in in 2013 with certain carriers, and then on to 2014 and beyond. The way that the engineering community kind of refers to this is Phase 1 build, Phase 2 and Phase 3. So Phase 1 build we expect to be done -- and again, Phase 1 is dominated by overlays on existing sites, which is driving most of the tower industry's 4G business right now.

Verizon and AT&T are the two leaders in this deployment schedule, so to speak. Our expectation is Verizon will have Phase 1 essentially complete, which is in our view is 300 million POPs or more, covered by the end of 2013. AT&T, our expectation is they will be in the same situation, again 300 million POPs covered, by year-end 2014. And then Sprint and T-Mobile will probably get there -- our estimation, again, is about 20 -- by the end of 2015, they will be at 300 million POPs respectively.

So as you sequence those Phase 1 schedules out, Phase 2 tends to follow very quickly after. And so you will see throughout -- to the end of 2015, overlaps between Phase 1 and Phase 2 among the carriers. And Phase 2, you do start to see the densification happening.

What sort of -- do you think that is enough growth to continue the same sort of trajectory, the high-single-digit organic that we've been seeing for the last couple of years?

We do think so, and it's a matter of a combination of consumer demand and the carriers, the wireless carriers' ability to meet that demand profitably. We think as long as those two things continue to happen, that given the competitive dynamic in the US and really most of the other markets we are in, you are going to see active network deployment to stay competitive among the carriers. And in the US that has been justifying about $25 billion to $30 billion of CapEx over the past few years annually. As you all know, we think that is fully justifiable in the next few years as these companies continue to roll out.

It is really important to note only about 10%, as I said, of handsets out there today, or less than 10%, in the US are 4G LTE. And one of the things that our technical advisors have provided to us is when they compare a 3G phone's monthly network burden to a 4G phone's monthly network requirements, it goes up by 5 times from 3G to 4G per month. So when you start going from 10% to 20% to 30%, 40%, 50% penetration of these phones that are using 5X capacity, you're going to have to keep investing in your network.

Great. Thank you.

Jason Armstrong, Goldman Sachs.

Thanks, good morning. Maybe a couple questions. First on the 2013 guide, just as we think about the progression through the year, is there anything that would make this year different as it relates to front-end or back-end loading and pacing of the guidance?

Then second question, Tom, I think you've got some CMBS debt callable in the May/June time frame. To what extent was that built into the AFFO guidance and in terms of refinancing that at lower rates? Thanks.

Sure, Jason. In terms of the loading, I would see pretty consistent with 2012. It was pretty well even throughout the year. I think it was maybe 45% in the first half, 55% in the second half. I would expect similar kind of trends, probably more along a 50-50, so pretty even throughout the year.

And with regards to the financing as I mentioned earlier, we based our guidance based upon the towers that we had on hand and kind of the balance sheet that we have on hand. So the answer is no, we haven't reflected any changes in our future funding or benefits or the impacts of refinancing of anything on our balance sheet.

That's great. Thank you.

Jonathan Atkin, RBC Capital.

Yes, I was interested in the international core organic growth. You gave an estimate of 10%, and if you could maybe highlight among your largest international markets which ones you see performing strongest relative to that 10% bogey. And then also on international with regard to the possible use of MLA structures, you talked about the use of holistic MLAs in the US. And to what extent might you use that internationally going forward?

Our most active markets in 2012, I'd put South Africa right at the top of the list. Incredibly busy leasing environment with Telcom, which is sort of the government-sponsored carrier, Vodacom, and MTN all deploying 3G data at a pretty rapid rate. We were the, again, first-mover commercial leasing company in South Africa with our Cell C acquisition, and the timing happened to be very fortuitous for us on that one.

In addition to that, in Latin America, both Brazil and Mexico drove excellent new business. Both of them had Nextel deploying 3G aggressively. But in Brazil, you also had America Movil, Telecom Italia and Oi filling out their 3G networks, as well, on a pretty rapid pace. All four of them -- actually all five of those carriers in Brazil are trying to get ready for the World Cup and the Olympics, and there are some requirements for them to have coverage for those events that are pretty extensive.

In Mexico, Telefonica was also very active, along with Nextel, as they try to stay competitive with Telcel and 3G. So those are a few examples.

And then the last one I'll offer is Colombia, another really good surprise almost for us, that our timing was as fortuitous in that again 3G starting to roll out. A company called UNE has a 4G network rollout that has started. And the two major incumbents are, again, a couple of our big multinational customers, which are Millicom and America Movil there, as well as Telefonica. So those are some of the real highlight markets for us.

For 2013, we think India is going to step right back up again, once the spectrum auctions are completed in August -- or sorry -- in March, rather, of this year. And what you will see there is the major carriers with the financial capacity will have the additional spectrum in hand to go ahead and keep deploying their networks, which is the right answer over there.

Finally, on the MLA front, first of all, I want to clarify everyone's understanding of what these holistic MLAs really are really quick. These master lease agreements aggregate all the existing individual contracts for a given carrier under a very specific set of rights. They are not capped, they are not all you can eat. Whenever those rights are exceeded -- and some of the parameters include additional equipment on towers above limits, they include types of spectrum that aren't in the original rights, they are going to number of towers that you don't have included in the deal. So for example, T-Mobile has only got half of its sites with us in the holistic deal. There are a lot of parameters that can be exceeded. Those parameters tend to have been based by mutual agreement with us and the carrier on the carrier's original buildout assumptions. And if those buildout assumptions, which they often do, get exceeded because customer demand is greater or because technical specifications didn't quite get met by the OEM, et cetera, you are going to see, and we are seeing, fairly extensive over and above amendment billing that is going on with essentially all of our holistic deals right now. So just to clarify, that is the structure.

Secondly, it tends to be useful when there is a lot of amendment activity going on. So we don't have these deployed yet in our international markets because 95% of our new business in the last quarter in the international markets was co-locations and new leases. So there will be a time when we will be able to apply these holistic agreements in the more advanced markets. That will probably be the next few years, though.

Thanks for the clarification. Finally, on international, you talked about bringing in one or more markets into the QRS. Can you talk a little bit about the savings at the local level that you would hope to realize from that?

Actually, just to -- on to -- want to add to Jim's comments, first of all, on the kind of core organic growth. Also keep in mind that almost half of that core organic growth that we see having in the international markets is coming from escalations. So as we continue to build and build out new markets there, we have that constant escalator that continues to give us our advantage, if you will, in those markets for growth.

Relative to the REIT structure, we will look first of all at our more mature markets, if you will, in terms of who we would be bringing into the REIT. And there is a technical nuance really within kind of the REIT structure that to the extent that we have it in our REIT, we are able to recharacterize the debt in the local markets, and as a result, potentially have a higher rate of interest in those markets. So that is what is really driving the cash tax benefit in those markets. It can be up to $5 million to $10 million in 2013 for us, depending upon the timing and the market that we bring in. But we think that justifies bringing it back into the REIT.

Thank you.

Brett Feldman, Deutsche Bank.

Thanks for taking the question. I actually wanted to go back to clarify the master lease agreement stuff that Jim was just talking about to make sure I understand this. We are so aware of the heavy level of activity on towers now being driven by the upgrades. But I think as you were pointing out, all of that upgrade work -- not all of it, but a lot of it is covered in the MLAs, meaning that it sort of is irrelevant how much activity there is. Isn't that correct, that your MLAs are really dictating the pacing of your new revenue maybe more so than the actual activity levels?

I think that's a fair characterization among the big four -- three of the big four carriers that have the holistic agreements. We feel that is good news, which means the trajectory of the revenue growth from those three carriers is -- first of all, it is positive, and second of all, it has a floor on it. The most important specific benefit in that regard of these agreements, Brett, is that American Tower has zero iDEN churn exposure in the next number of years because of the agreement we have with Sprint. So we have eliminated all iDEN churn. We have a minimum revenue ramp growth rate with those three customers, which, as I've pointed out, we are adding over and above revenues in all those cases at some level on those.

The reason I ask -- sorry to interrupt you. The reason I ask is some investors are pointing out like this is sort of a peak activity year, because upgrades are so intense. But as we get through the upgrades and we get to the point which we think we're going to get to, as you refer to as Phase 2, where carriers start adding new sites again, that activity is generally above and beyond what is contemplated in the MLAs. So we could we see a scenario where activity goes down because upgrades are lighter but the amount of activity that creates new revenues goes up? Or do I misunderstand how the MLAs work?

I don't think you're misunderstanding it, but I do think the carriers are going to take advantage of the rights they do have. And frontloading them benefits us and actually benefits them. It benefits them because they can get the signal out faster if they kind of frontload the activity that you're talking about on our towers with the holistic agreements.

But also, the Phase 2 and 3 refreshes will also go first, we hope, on our towers as well. So there is kind of a mutual benefit to having the holistic agreements, which allow for, in theory, the complete set of additional equipment you need on existing towers over a period of years. Right, Brett? So that is what the holistics are designed to do. They are not designed to meet your Phase 2 requirements.

So Phase 2 requirements, which are going to start between a year and three years from now, your hypothesis, I think, is correct, is that can be incremental business to ATC under these agreements, but then again, there is a schedule to the holistics as well. We are working with our carriers to synchronize, that they get increasing value for increasing tower lease revenue to us over time, and we're trying to work with them so that is both fair and benefits ATC.

Great. Thanks for clarifying that.

Batya Levi, UBS.

Great. Thanks. Just a follow-up on the last question. As we see the carriers approach the end of Phase 1, do you anticipate that they will continue to spend on 3G capacity to support the higher usage that they have? Or do you envision 3G capacity -- 3G spending to be completely replaced by 4G going forward?

What I think is beneficial about our holistic agreements is it doesn't matter to us. So you have, as a carrier, rights to so many antennas, so many lines, so much ground space per existing contract with us under these holistic agreements. And therefore, we are agnostic as to whether that equipment is 3G or 4G.

At the bottom of it all, we do think, depending on the deployment schedule, there will be carriers that we've been talking about that are going to have to continue to invest in 3G as they do their handset changeouts over the years, because, again, all-in, it is less than 10% 4G handsets right now. So 80% to 90% of what is going on out there is still being covered by 3G. Those usage per month numbers are also going up. So again, your hypothesis I think is correct. There will be 3G investment, but hopefully that will add to this over and above opportunity for us with some of these carriers.

Okay, thanks.

John Stewart, Green Street Advisors.

Thank you. Jim, when you're looking at doubling the business over the next five years, can you give us a sense for what that mix between acquisitions and organic growth would look like? And also, what do you think is the opportunity in Europe?

I think rough parameters would be we could probably get halfway there as far as doubling the financial performance of the business with our organic growth opportunity. Another, call it 10% to 15% or more with build-to-suit activity, and the balance could be mergers and acquisitions. That is a way to double essentially the AFFO over a five to six year time frame. Those can be some of the major ingredients.

And Europe?

I'm sorry -- could you repeat that portion?

Just how -- what is the opportunity set to expand in Europe?

That will be a characteristic of the situation with the carriers in each country and their willingness to divest towers at prices that we would be willing to pay. We've had a team in Europe for five years now, and we did our first deal two months ago. That could be the opening of other carriers coming to the same sorts of asset price points that we can find attractive or it may not be. So it is really just a complete function of the opportunity set as these carriers reconsider ownership of towers and what they would be willing to part with those towers for.

Okay. And did I understand you to say that one half of T-Mobile's sites are covered under the MLA?

Yes, that's right. Half of the sites are under the T-Mobile MLA, and if they need to exceed that, there will be another renegotiation conversation, which I'm sure will be constructive if they need it, between American Tower and T-Mobile.

And what is the percent of covered sites for the other two major carriers?

They are 100% of the existing sites at the time we signed the agreements.

Got it. Thanks.

Just to clarify that, that they don't include build-to-suit since then, they don't include acquired towers that we've brought on since then in the United States.

Got it. Thank you. One quick follow-up for Tom. Could you kind of explain for us what land rent one-timer was during the quarter? And then sorry if I missed, but what is the budget for land acquisitions in 2013?

First of all, the budget for land acquisitions in 2013 is around $100 million. And in terms of the particular item, we looked at a transaction that we had done recently and we just adjusted the lives on that particular transaction, and as a result generated a one-time benefit in the quarter.

Thank you.

Kevin Smithen, Macquarie.

Yes, you have a high level of new builds in your 2013 guidance. I was wondering if you could go through roughly what the CapEx per new tower built is by region in Europe, Africa, LATAM, US and India. And do IRRs differ on build versus buys in each region?

First of all, just on the -- for 2013, the build is pretty consistent with 2012, a little bit of an uptick, but not significant. There is absolutely a significant amount of opportunity for us for builds throughout the globe.

In terms of the CapEx [days] you well know they do vary significantly by market. In the United States, they are kind of in the $250,000 range. To Latin America, they are probably in the $175,000 range. To India, they are in the $50,000 to $60,000 range. And in Africa, they are probably in the $190,000 to $200,000 range.

The IRRs that we are looking for with regards to capital that we are spending in those markets, it is consistent with the IRRs that we are looking to be consistent with when we are doing a deal. So if you take a look at the United States, we are looking at high-single-digit kind of cost of capital, and in Latin America, it is 300 plus basis points on top of that. In Asia, it is 400 on top of that. And in Africa, it is 500 to 1000, depending upon the market, that we would be looking on top of that.

And yes, the IRRs on a build-to-suit day one are generally higher than they are in the acquisition side. That is why it is kind of our -- after paying a dividend, that's the first place that we like to put our capital.

Got it. Can you give us an update on average tenants per site for the different regions?

In the international markets right now, it is about 1.5 times. In the US markets, it's like 2.6. So overall, it is about two times. In our Asian markets, it is up in the 1.7 kind of range. In our African markets, it is probably in the 1.4 range, if you will, getting into some of those markets with single tenant towers out of the gate. And in Latin America, we've picked up some single tenant towers there, and it's probably in the 1.5 times. And in Germany, it is about -- the deal that we had just done, it is in the 1.6 to 1.7 times.

That's very, very good transparency. Thanks a lot.

Ric Prentiss, Raymond James.

Thanks for getting me in under the wire there, guys. A couple of parts. If you think above the growth, organic growth, I think you mentioned that Clearwire, Dish and FirstNet are not in the 2013 guidance. We've been hearing that Clearwire is starting to show up on their [two five 8000 build plan]. So just want to confirm, Clearwire is not in your guidance and could be some upside if they were to continue.

On the external growth side of the growth, appetite for carriers to sell towers around the world, you had a very successful year in 2012 adding them. It sure feels like Latin America carriers are getting it as far as co-location and selling towers, so just want to make sure we're right on that.

On straight-line adjustment, pretty significant drop from 2012 2013, combining revenue and expense. It looked like a negative 132 going to a negative 104. I just wanted to make sure as we think forward into 2014, 2015, is it that same kind of level of drop that we should see?

And then quick one, NOLs, kind of what did we do from 2011 to 2012 NOLs. It's a long laundry list, but I don't think they are too complicated.

How many questions do you get to ask?

I figured Barden and Richard got a bunch in the beginning. Anyway.

I didn't write them all down, so let me hit a couple of them and then you will, I'm sure, fill in the pieces of ones that we haven't answered.

Relative to NOLs, we spent -- probably we utilized just under $200 million in 2012. I would expect 2013 to be somewhere between $200 million and $300 million of NOLs utilized. So that was that question.

Relative to straight-line, as you said, we had an uptick in 2012 of about $25 million. About $30 million decline, as you pointed out, in 2013. And probably normalized going forward at kind of a consistent level of decline, given the contracts that we have in place. And that will largely be offset by the cash escalators that we see going forward.

What else did you have on the list there?

Organic growth. Clearwire. I think I heard it is not in the guidance, but we are seeing them actually start to show up. Just wondering (multiple speakers) --

That's right. It's not in the guidance, and they currently represent a relatively small piece of our overall revenue. If we see some meaningful uptick that would impact guidance, we'll reflect it there. But there is no really impact of any Clearwire activity in the guidance as we speak.

Finally, I can give you a break, Tom. On the willingness of wireless carriers around the world to sell tower assets, it is increasing on one hand. It is not increasing across-the-board with every multinational coming to the same conclusion at the same time. But we do believe that there will be opportunities and activity in pretty much every region that we are operating in. And we will use our standard evaluation process to determine if any of those assets should trade to us. And if we meet our criteria, you will see us act. And if we don't, you may not see a trade or someone else may get it.

But I do think it is something that many carriers are considering. But they also view it is as important and strategic, and that attitude moves over time and not necessarily instantly to sell.

Sure. Makes sense. A lot of questions, but quick great answers. Thanks, guys.

I think that concludes our call this morning. Again, really appreciate the time you spent with us. And to the extent you have any follow-up calls, please give Leah or myself a call. Things again.

Thank you for your participation. This does conclude today's conference call. You may now disconnect.