Crown Castle Inc (CCI) 2005 Q2 法說會逐字稿

Good afternoon. At this time I would like to welcome everyone to the Global Signal second quarter 2005 earnings conference call, and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period (Operator Instructions). Thank you. Ms. Donohue, you may begin your conference.

Good afternoon everyone rapidly to welcome you all to Global Signal's second quarter 2005 earnings conference call. Joining us today are Wes Edens, our Chairman and CEO; David Grain, our President; and Bill Freeman, our CFO. Before I turn the call over to Wes, as the operator mentioned this call is being recorded. And the replay number for U.S. folks is 800-642-1687, and for international callers it is 706-645-9291 with an access code of 8170384. This call will also be available on our website, www.GSignal.com.

I would also like to point out that statements today which are not historical facts may be deemed forward-looking statements. Actual results may differ materially from the estimates or expectations expressed in those statements. Certain of the factors that could cause actual results to differ materially from Global Signal's expectations are detailed in our SEC reports. I would also like to direct you to our earnings release for the full forward-looking statement legend. Now I would like to turn the call over to Wes Edens.

Thanks Lilly. Welcome everyone. Well it was quite a quarter that we just completed, the highlight of which we will spend some time talking about -- each of us, actually, at some level -- is the Sprint transaction which closed at the end of May. And there was a lot of other activity on the acquisition side that I would love to chat.

But before we get there, just review the financial highlights briefly. Adjusted EBITDA per share, $0.66 for the quarter. Adjusted FFO is $0.39. Leveraged cash flow or free cash flow that we're very focused on is kind of the most relevant metric of our business in many respects, $0.38. Then the dividends we paid, we increased to $0.45 per share.

So if you look at the one year report card for the Company, from the time we went public in June of last year we have grown the Company from a financial perspective substantially across the board. Particularly the dividend $1.25 going to $1.80 is up 44% over that period. And really all these financial numbers that I mention, are in fact a little bit short of what we expect the full quarter's results to be with the Sprint transaction funded.

In fact, we raised capital for the transaction funded it and paid a full quarterly dividend for that transaction on that equity, and yet the assets we purchased at the end of May just got one-third of a quarter productivity out of them.

So dividend policy for us, as I am sure you all know, we basically peg a dividend to what the then current run rate is. So obviously with the $0.38 leveraged cash flow number and a $0.45 dividend, we think that there is some good news in the business today. And I'm very optimistic about what the next full quarter of the transaction will hold for us.

The net income for the quarter was a loss of $9.4 million. That obviously is a number that reflects the financing cost, in particular the depreciation and amortization of the assets. Ironically, the net income being a loss from a tax perspective is good news for all of the taxable investors.

It is our expectation that the dividend we're paying at the Company, certainly this year and I think quite likely next year, and possibly in the foreseeable future, will not be taxable or taxable at a de minimus rate. So that's reflecting effectively a return of capital to us as shareholders and you all as well. So that is good news as well.

On the investment side, the Sprint transaction is -- it's hard to overstate the importance of this investment to us as a Company. Truly transformational. Our tower portfolio now has gone full cycle to where we feel like we have got the best portfolio of assets in any Company in the United States, 11,000 towers.

And if you look at our -- the measure a lot of people in the industry like to use in the percentage of your towers that are located in the top 150 or top 100 towers, 51% of our towers are in the top 50 metropolitan areas in the United States, 76% in the top 100.

The relevance of that of course is that you want to be where the people are, and the cell phone users and telephony users are. And obviously we have towers that now are, instead of (indiscernible) in mainstream America where the people are, where the growth is. We feel like we're going to certainly catch our share growth in the future as a result of the great real estate.

In addition to the Sprint transaction, which was obviously a very large one, we have stayed also very focused in buying assets one by one. To date, year-to-date we bought a total of $159 million in towers, 512 different assets, and continue to pursue those assets one by one. Probably the most difficult part of our business right now is the acquisition part of the business and David will give you some specifics on that.

Lastly, with the -- to kind of close off of the Sprint proportion of my thought, our Company today, from an organic growth, organic cash flow growth perspective, really is where we had hoped to get it to when we started this. About 85% of our revenues today are from telephony and investment-grade tenants.

The contrast to that, we first got involved the Company several years ago, approximately 70% of our revenues were from non-telephony and non -- or from paging revenues and SMR/LMR and the like, which obviously are technologies that are broadly in -- stable or in decline as opposed to the great growth prospects of the telephony.

So we've taken that 70 -- that is down to only 50% today, and it is headed to single digits next year. I think a lot of the historical burden that we shared with respect to those tenants declining there -- their usage (indiscernible) of our towers is something that is behind us. We feel like it is all now focused on the telephony and the growth going forward.

Our goal, this not a prediction or anything but it is our goal with respect to the organic growth from our portfolio, is we really look to achieve 10, 12, 15% organic growth at the unleveraged cash flow of the Company. That translates into 20, 25% growth from a capital perspective if we are able to hit those numbers.

And although there is lots of heavy lifting to do to achieve these kind of results on both prongs of our key operational metrics, one is leasing towers up and creating positive cash flow going forward. Two is accretively deploying capital, buying towers that make sense to us and are accretive from the outset. Lots of heavy lifting to do around that. But we feel like our 10 to 15% translated into 20 to 25% growth in cash flow and dividend to you all, is something we feel like we have a great shot to do.

The (indiscernible) acquisition part of the business is the only real negative in this environment, as it has become increasingly competitive. But I will let David walk through a few samples there.

Lastly from my remarks, the capital markets -- we did our first follow-on transaction to our IPO that closed back in May. We raised $183 million. Obviously the stock price since then has been very positive for us. For many other companies in the sector, it has been a lot of good news. I think people perceive rightfully in my view that there is a lot of room to be optimistic about the wireless business as tenants, and thus to our cash flows as well.

From a capital markets perspective, we're very happy about not only the price of our stock but the liquidity of it. Average volume is up -- not quite doubled, but substantially from what was last year. The market capitalization of our Company has approximately doubled, coming from $1.5 billion from the start of the year to $3 billion today, so obviously it has been a wonderful six months in most recent quarter for us.

Total return to the shareholders, by every measure, of course has been terrific. We've managed to take the Company up roughly 150% (indiscernible) since we took the company public. So lots and lots of great news. So with that, turn it over to David.

Thanks Wes. Wes pointed out there is really two main areas that we spend our time focusing and we think about every day. That is the lease upside (ph) and also capital deployment. And the underpinning of all of that is really how we execute on the operating side, and really the quality of our operations. And lastly, toward the end of my comments I will give an update of where we are what USA Mobility with the Arch agreement, which has always been something we would like to wrap up.

On the lease upside, just in terms of the industry fundamentals the tone of the market is just terrific. Our clients are reporting great results both, financially and in terms of their subscriber growth and minutes of use. Now we're also trying to see some more activity on the data side.

Growth drivers are actually both coverage as well as capacity, and also upgrades. And actually we have seen more significant activity in the new build coverage area than we have in the past. That is encouraging that footprints are expanding.

Most active customers -- noteworthy national players in the business today, Nextel has been very strong for us, Verizon, and also Cingular. Between the three of those big guys, that covers 50%-plus of the new revenue we have been bringing on. But at the same time, this new activity is coming from recapitalized regional players and also reenergized players. Revol (ph) is the former Northcoast PCS that is back in the market. Cricket recapitalized back in the market and the MetroPCS is growing strong as well as others.

In addition, we also have the added benefit of non-voice players that are in the marketplace. ClearWire has been very strong for us so far this year. We expect more there, as well as QUALCOMM media flow (ph) also in the non-voice area. Lots of activity there.

In terms of pricing, rates are very stable and actually showing a slight uptick, just under 10% on improvement in the pricing in the market. It is largely based on the fact that the focus has been urban and suburban areas where the real estate is a bit more expensive and however your equipment loads a deployment, which are helping pricing as well.

A lot of the activity -- most of the activities really on the Sprint assets. The good news is that as we control these assets and really kind of peel things back, we've found that our expectations of backlog of leases is actually substantially larger than we believed it was going to be, almost three times as large a backlog as we expected. So that is very good. And we're also pleased about the forward pipeline we're seeing of new demand on those assets as well.

The integration of those Sprint assets has gone as planned, particularly from a cost perspective, both onetime costs and ongoing costs. I will let Bill talk a little bit more about that. So that is the lease upside.

In terms of capital deployment, here again as Wes mentioned, the market is definitely more competitive. We have players, new entrants into the market that are well capitalized. But we continue to remain active. We maintain our discipline, and we've been finding lots of opportunities. The deals that we do have to be accretive right from the start. That is our mantra and we've been able to get lots of deals done in that way.

As you know, we obviously were successful with the Sprint portfolio. There's other carrier portfolios that we've been successful with -- the Triton portfolio. And there are more that are out there. We cannot control the timing of those. But we have had a very steady diet of small deals and also ground rights, even in the midst of the Sprint activity, so that is good.

So as Wes pointed out, for the first half of the year we got about $160 million worth of deals closed at accretive yields right out of the chute. And in terms of deals in the forward pipeline, another $250 million of deals that we would expect to close or are under LOI at this point. For 2005 we would expect that $4 to $500 million of capital will be deployed, and we would hope to be able to do the same going forward.

In terms of the ground rights specifically, we have been very active in this space. And purchasing the dirt underneath our towers, these are accretive investments. It increases our cash flow, eliminates a renegotiation risk when these leases come up, and also extinguishes any revenue sharing that we may have going forward on some of these sites.

So the current ground pipeline right now is over $100 million. And these yields are even higher than the yields we achieve on the towers were purchased. But again, the real key is to make sure we execute our operations very efficiently.

And there is always great challenges when you do significant transactions like the Sprint deal, and you can't always know exactly what you're going to find. The good news is, we found a lot more backlog of activity on the Sprint sites as we took them on. But now we're really focused on the blocking and tackling that is required to get this stuff done.

Here's where the investment that we made in the systems, the business processes, and also the people has really been paying off, because I think we executed very well on the first stage of the integration process and continue to move forward.

In that vein, we have added a number of employees. We started the year with about 200 employees. We've nearly tripled our asset base, but added roughly about 100 employees to our employee base, very high-quality people that we brought on in the first half of the year and have now have an experience curve, and we've been able to train them. So they are fully engaged in the organization.

The last piece I wanted to mention, which of course is the offset to lease up is really churn, and that is the USA Mobility contract. The deal is not inked yet, so we're not going to going too much detail about it. But I can tell you we're very close to a transaction.

Through the process, we have developed a very good relationship with the management of USA Mobility, have a very good sense of their business. And clearly, it is a business that is in decline. But at the same time, we built those numbers into our projections. So as Wes pointed out what he believes the growth rate of the Company will be, all of the changes that may happen with USA Mobility are built in there. With that, I will turn it over to Bill who will talk a little bit about the financials.

Thank you David. I'm going to start and get some of the highlights financially of the quarter, then go into a little more detail with respect to the P&L, and sort of wrap up by talking about the financing activity that we had in the quarter, which was a very active quarter.

Adjusted EBITDA was up 70% to $40.5 million, which equates to $0.66 per share. Adjusted FFO on an absolute basis, or nominal basis, was up 35% to $24.1 million, which equates to $0.39 per share. As Wes indicated, we had a net loss of 9.4 million, which is $0.16 per share.

Three items really contributed to that, which was the increase in non-cash depreciation and amortization at the Sprint sites. The integration costs we are incurring, which are not capitalized with respect to those sites. And then interest on the financing of the Sprint sites.

Now to get into a little more of the detail for the quarter. Revenue was up $34 million to $78 million in quarter. Sprint contributed about 22 million of the increase, and is reflected in our numbers from May 26.

On a full quarter basis, we would expect Sprint to contribute about half of our revenues. We would expect the smaller acquisitions that we've done to contribute about 15% of our revenues. And we would expect the original core sites to be the balance, about 35% of our revenue. And also as Wes mentioned, we're about -- 78% of our revenue is now coming from the telephony tenants.

Our tower cash flow of $48 million was up 58%. But on a margin basis, tower cash flow was down. That solely relates to the Sprint sites where we have lower tenants per tower than on our core sites or other acquired sites. And we would expect the margins on these Sprint sites to pick up fairly quickly as we add additional tenants.

We believe that about $0.90 out of every $1.00 of additional revenue on the Sprint sites will fall to the tower cash flow line into the bottom. And as David said earlier, we have a good backlog of applications on those sites. And we hope to begin seeing the impact of the margin increase fairly quickly.

SG&A in the second quarter came in at $8.4 million. Sequentially from our first quarter, that is up about $2 million. As David indicated, we added a lot of employees, about 100 employees to our original base of about 200. The increase in SG&A is principally related to those employee costs and the overhead associated with them. And we still feel comfortable.

I think we said once before that we thought it would be about $14 to $1500 a site to manage these sites. And we still feel comfortable that it the number. And you should expect to SG&A increase sequentially in the third quarter. It is not all of the employees who were on board for the entire second quarter.

There is also a new line item in our P&L I would like to briefly touch upon, and that is the Sprint integration cost, which was $3.2 million in the second quarter. This relates to nonrecurring costs incurred in connection with our integration of the Sprint assets. It does not include the cost of operating these assets on an ongoing basis.

What is principally included in these costs is the cost of reviewing tenant and ground leases and loading the data into our systems, physically inspecting the sites and the tenants on the sites, the physical condition, purchasing (indiscernible) engineering and other tower-related documents, and organizing all of the documents associated with these sites into an electronic database so we can easily access them on a futuristic basis as we operate our sites.

We would expect to complete these integration tasks by early Q4 and are well on track for that.

With respect to financing activities, it was a very busy quarter. We completed two equity transactions, issued 16 million shares, and raised $433 million. And as Wes said, like all tower (ph) stocks, our stock has performed well since these transactions occurred.

On the debt side, we also completed two transactions. One is the bridge financing, $850 million which we put in place in connection with the Sprint site. It is a one year term with two six-month extensions, currently priced at LIBOR plus 150. With swaps, it is fixed at 585.

We also put in place an acquisition facility back in April, $200 million facility that is used essentially to bridge the small deal (ph) and ground right purchase program, currently priced at LIBOR plus 175 to 2, depending on leverage. And at June 30, we had $125 million available to continue to fund deals on that line.

We would expect to refinance both of these facilities for a third mortgage loan in the not too distant future. Based on all of the swaps that we have in place, and the cost incurred when we did our last deal, we would expect permanent financing to be somewhere around 5.5% on an all-in basis.

And with that I can turn it back over to Wes and see if there's any questions or to Lilly to open it up.

If we could just open it up for Q&A.

(Operator Instructions) Jonathan Atkin, RBC Capital Markets.

A couple of questions regarding paging; wondered if you could ballpark the percentage of revenues that might come from paging as we look out one year or two years, etc.? I think Wes you alluded to that, but if you could maybe talk a little bit more about that --?

This is David Grain. I will speak to that. At this point it has dropped to just below the teens, double digit. And we would expect it actually to drop-down into single digit toward the end of 2006. That is our expectation. It's obviously a function of the fact that we're growing top line with all of our telephony customers, particularly on the Sprint sites. Then of course whatever impact we have from the USA Mobility agreement.

And with that agreement, is it a matter of equipment? What is the nature of the churn? Is it fiscal churn, equipment being removed from the tower? Or is it just step downs in the rent, more like revenue (ph) churn? What is going on with those networks?

I can't go into a lot of detail. What you're asking is me is what were the terms of that agreement, and I will absolutely share those as we get things inked. But at this point, as I pointed out, we have a very clear sense of how that businesses is going to operate. We will have quite a bit of predictability going forward, which we're pleased about. As we have more concrete information we'll share that with you.

And on the CapEx side, just kind of wondering what portion of -- for every 100 lease applications, roughly what percentage of the time to do have to think about upgrading or augmenting the tower in order to accommodate the new tenant? And is that -- are you finding the experience different with the Sprint portfolio than with your other assets?

As we said before, one out of every five or six applications do we see the need for (technical difficulty) EBITDA-enhanced CapEx. And again, we apply the same investment discipline that we do when we are buying towers, where we really need to see a particular return on. And in no case have we seen anything less than a 50% return on the capital that we've put in these towers.

Our experience on the Sprint tower so far as really no different than that which we have seen on our core portfolio. We've only owned it for two months now, but that is what we have seen up to this point, and we do not expect anything different from that.

And what is the typical reason for the pickup in business on the Sprint towers?

I think it is a combination of things. Number one, as you can imagine toward the end of a transactional sale process there's a lot of things going at a Company, and there was probably some pent-up demand that we were able to take advantage of, which we expected.

I think number two, obviously the fundamentals in the industry are just so strong that the buildup has really accelerated over the last few months. So now that we have our arms around it, we're fully operational with the assets, we're processing all those applications and we will get them closed.

Michael Rollins, Citigroup.

Good afternoon. I was just wondering if you could be a little bit more specific around some of the impacts of the acquisition in the quarter, and in particular if you actually had a pro forma 2Q revenue number. And could you give us (technical difficulty) (indiscernible) of how that might compare with the 1Q numbers, for example for the Sprint towers or some of the organic sites? That would be great. Thank you.

In the quarter, we said Sprint towers contributed about $22 million of revenue. We owned those for -- roughly from May 26 onward, or exactly from May 26 onward. So that should give you a feel of what the quarter would look like if we would have owned it on the entire basis.

And Q1, I did not own those assets. So I really do not have all of the financial detail and do not have financial statements that I can actually give you what that would look like.

I ask the question only because it just did not seem like, Michael relative to some of the pro forma numbers that you have given out in your SEC disclosures, that the Sprint revenue ramped significantly from the annualized rate during 2004.

So maybe if I could ask it a different way then, were there any other sort of headwinds to revenue as you integrated the business that were onetime in nature that may have affected the disclosures from the SEC documents around the Sprint towers versus what is in the second quarter numbers?

The second quarter numbers did not change materially from the SEC filings. The gap in timing between those two is close, obviously. I think as David said, there is a very substantial backlog of applications onto the site, and so we think that obviously the revenues from those assets both are and will be changing substantially from what they were at the time we filed and broke them out separately.

But during the first six months of the year, five months of the year before we owned them, no the numbers in respect to those assets did not change all that much. And that is going to be reflected in the much higher backlog and what we think will be much greater lease up of those assets in the next quarter or two.

Rick Prentiss, Raymond James.

Couple of quick questions for you guys. First look at internal growth and then second external growth. On the internal growth side, you're talking obviously very positively about the Sprint towers. We have heard a lot of discussion from Sprint and Nextel where they wanted to like massive collocation at each other's sites as they get ready to merge here, probably just a few weeks ago way.

Do think that is reflected yet in the backlog of applications? Or is that something that you could see even a further ramp-up in? And also when Nextel were to come collocate on one of your Sprint sites that you what now own or are leasing up, what actually is involved?

And then on the external growth side, talk to us a little bit about the pipeline. What kind of M&A prices are you seeing out there as far as yields go? And how important is scale to the business, if you need any more? (inaudible)

First of all, as I mentioned before, when you take a look at the backlog of applications that we have, there is a large portion that is really Nextel and that is very positive for us. And those are new collocations. I think the question you were asking is really, okay, fine, now that you own the Sprint assets what portion of the Nextel collo is really going to be within the Sprint agreement and therefore soak up capacity that they still have in their agreement.

The answer to that is these new collocations that I pointed out, which are largely made up of the three big carriers, none of that is within the previously reserved space that Sprint has, number one. Number two is, we take a look out. We have had conversations to understand what's happening on the idea (ph) network, what the rollouts are going to look like there.

Here again, it is hard to say exactly how much of the available capacity that Sprint has will be soaked up with the idem (ph). Suffice it to say that with roughly three lines, three antennas left on average in some of those sites for Sprint, the iden (ph) rollout will really use more than that amount of capacity.

In addition, as you think about the ground space that is going to be required for some of the Nextel activity, there is no reserve incremental grounds space on the part of Sprint. So all of that will be another opportunity to talk about the leases again. Does that answer your question?

Yes that is it. And in (ph) the pipeline?

In terms of the general strength of the pipeline?

Yes. (technical difficulty) (inaudible) what kind of pricing you're seeing on the M&A environment, what kind of yields or multiples, and how important is scale? Between (ph) you guys (indiscernible) scale up, it looks like, pretty effectively and (technical difficulty) (indiscernible) site. There is some debate in the tower industry about how big you need to get to get critical mass and where the (indiscernible) (technical difficulty) returns are.

First of all, let's take a step back. One of the important risks that we probably did not talk enough about in our earlier comments is really the consolidation risk, and what (indiscernible) impact that could have on us. No question about it, that is one of the major risk factors in the business going forward. It is unclear exactly what it's (technical difficulty) (indiscernible) see, and we have not seen any deconstructions that we have been asked to focus on. I don't expect to see any -- even late next year or maybe not even until 2007.

But in terms of the overall pipeline and how we see that and how we're dealing with that, we would expect that there are, again, as I said, about three times as many applications as we originally thought we would see. Our competition, or rather our ability to execute on those relative to some of the other tower companies out there, I do not see any risk in losing those applications. There is well over 1000 that are still in the pipeline at this point.

In terms of the acquisition market, yes, you're right. There is definitely more competition. But what we're seeing is that the small program that we have, we have a lot less competition there. It is really medium-size, larger medium-size deals that we're seeing competition in.

We're not seeing meaningful competition as we approach our ground rights (indiscernible) at our own towers. So that is positive. And we do believe that our capital deployment will be on track through those two avenues.

Okay. And as far as scale, do you guys think you've hit that now with tripling in size and the ability to generate (indiscernible) (technical difficulty) 90% incremental revenue, (technical difficulty) cash flow?

I think one of the key things that Wes and Bill pointed out were really that 78% of our revenues are now coming from pure telephony players. And then an incremental 6 or 7% are really coming from other investment-grade tenants, and the very, very secure government revenues. So that is positive.

And then the experience we're having so far, in terms of the permanent costs in the business, indicate to us that there is still a lot of industrial logic to consolidation and being able to spread more towers and more revenue over the existing SG&A we have in the business. So I don't think we're going to run into any surprises there.

When you get to the (indiscernible) (technical difficulty) phase of this industry, which we're kind of going through a maturation of the business, and focus on operating efficiencies in cost to deliver our (ph) services from our perspective becomes critical.

I think it is our hope that we will have SG&A cost next year, the year after (technical difficulty) will be less than 10% of all revenues. I think our other competitors are modestly higher than that, 12%, 13%, 14% when you look at the different businesses as far as -- in some cases you are not comparing exactly apples and apples, but marginally higher than us.

We think on balance that scale, 11,000 towers is one of the absolute largest companies in the sector right now. And we now have the operating capacity to absorb marginal assets at very, very low incremental cost. And as (indiscernible) get competitive, if they are competitive that becomes a very important competitive aspect of our business.

Great. Kind of the beauty of the tower business. Good luck guys.

Sam Martini, Cobalt Capital. (ph)

Just two questions. You gave the Sprint revenue. Did you give the offset in SG&A that you expected to step up on a run rate basis? And also, in terms of the Sprint tower backlog, is there augmentation expense that you think you will need to spend to accommodate the backlog? Or the towers are actually suitable today? Thanks a lot.

Bill Freeman. First, we did give that we think on a full-year basis the sort of step up in SG&A is going to be 14 to 1500 per tower. And so if you take that by the 6600 towers, you get the annual total step up that we would expect to see, we saw -- (multiple speakers)

That is annual?

That is an annual number. We saw a big piece of that coming through in Q2, but did not see all of it. So sequentially, you will see a step up as you go into Q3, and I think you will hopefully see us hit the less than 10% number that Wes was talking about at the beginning.

So 66 million roughly run rate revs, and about 10 million rough run rate SG&A step up?

The $22 million that you looked at, we bought these assets May 26. So it is not times three. It is something slightly (multiple speakers).

Sorry, 260.

As you ask the question about what sort of CapEx we would expect to augment towers is necessary in order to accommodate this new lease up, again, our experience in our core portfolio we do not expect to be very different in the Sprint portfolio. So that is (indiscernible) -- one in five of the new leases that we add. And again, the type of payback that we get on an EBITDA-enhancing CapEx is quite strong. And we use the same investment discipline to determine whether we go forward on that basis.

So no material difference?

Precisely, no material difference.

Nice job guys.

Paul Hollen (ph), EMC Capital.

My question basically is on the Sprint tower portfolio. When you guys started, you had 1.8 tenants. And it sounds like your backlog is quite large. My question is number one on pricing, if you think the 10% appreciation that you talked about applies to the future tenants on that? And how quickly, basically, since there is a lot of greenfields on those towers, how quickly can you get that up and what are you -- what are your goals looking out 6, 12, 18 months?

We will not tell you too much about the goals going out further. But again, as I did talk about what I saw in the pricing of the market where it (indiscernible) slight pick up, the 10% improvement in the pricing. Yes, that does apply to the applications we have that are coming off of Sprint towers.

Jonathan Atkin, RBC Capital Markets.

Just a quick follow-up on the new line item. What would be a good estimate to use for the all-in integration costs between late May and then through early 4Q?

I think if you look at the balance of what it is going to be, we're probably halfway there from what is going through the P&L. Obviously there's a lot of costs related to titling the assets and things of that sort, which get capitalized into the assets. These are those which are not capitalized.

Okay, thank you.

(Operator Instructions) At this time there are no further questions.

Great. Thank you, everyone, for participating with us today, and we look forward to reporting to you next quarter. Thanks everyone.

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