Crown Castle Inc (CCI) 2012 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Crown Castle International Q2 2012 earnings call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session and instructions will be provided at that time.

(Operator Instructions)

I would like to remind everyone that this conference call is being recorded today, Thursday, July 26, 2012 at 9.30 AM Central Time. I will now turn the conference over to Ms. Fiona McKone, VP, Corporate Finance and IR. Please go ahead.

Thanks, Ron. Good morning, everyone, and thank you all for joining us as we review our second-quarter 2012 results. With me on the call this morning are Ben Moreland, Crown Castle's Chief Executive Officer, and Jay Brown, Crown Castle's Chief Financial Officer. To aid the discussion, we have posted supplemental materials in the investor section of our website at crowncastle.com, which we will discuss throughout the call this morning. This conference call will contain forward-looking statements and information based on Management's current expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurances that such expectations will prove to have been correct. Such forward-looking statements are subject to certain risks, uncertainties, and assumptions.

Information about the potential factors that could affect the Company's financial results is available in the press release and in the Risk Factor sections of the Company's filings with the SEC. Should one or more of these other risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Our statements are made as of today, July 26, 2012, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, today's call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA, funds from operations, funds from operations per share, adjusted funds from operations, and adjusted funds from operations per share. Tables reconciling such non-GAAP financial measures are available under the investor section of the Company's website at crowncastle.com. With that, I'll turn the call over to Jay.

Thanks, Fiona, and good morning, everyone. Let me start with a few summary comments, as outlined on Slide 3 and then I'll go through our results and outlook in greater detail. As you've seen from our press release, we had an excellent second quarter, exceeding the high-end of our previously issued guidance for site rental revenue, site rental gross margin, adjusted EBITDA, and AFFO. We continue to make good progress with the integration of NextG and the WCP assets we acquired earlier this year and are excited by the ongoing deployment with the wireless data networks. The strong year-to-date results and our expectations for the second half of the year allow us to meaningfully increase our 2012 outlook for site rental revenue, site rental gross margin, adjusted EBITDA, and AFFO.

Turning to Slide 4, during the second quarter, we generated site rental revenue of $518 million, up 13% from the second quarter of 2011. New tenant additions increased site rental revenue by 6%, reflecting the increased leasing activity driven by the four major carriers upgrading their networks. And the remaining 7% growth came from our two recent acquisitions. The contribution to site rental revenues from these acquisitions was approximately $6 million higher in the quarter than we had previously expected. Further, we were able to achieve certain cost synergies related to these acquisitions quicker than we had previously anticipated. Site rental gross margin, defined as site rental revenues less cost of operations, was $386 million, up 15% from the second quarter of 2011. Further, our network services continued to exceed our expectations, reflecting the level of network upgrade activity in the market. Adjusted EBITDA for the second quarter of 2012 was $379 million, up 18% from the second quarter of 2011. As shown on Slide 5, AFFO was $215 million, up 19% from the second quarter of 2011. And adjusted funds from operations per share was $0.74, up 17% from the second quarter of 2011. Further, while there were no significant nonrecurring items in the second quarter, I would note that we collected approximately $5 million in cash in the second quarter that we had previously expected to collect in the third quarter, which benefited our AFFO results in the second quarter.

Turning to investments and liquidity as shown on Slide 6, during the second quarter, we spent $95 million on capital expenditures. These capital expenditures included $29 million on our land lease purchase program. As of today, we own or control for more than 20 years the land beneath towers representing approximately 77% of our gross margin. We believe this activity is a core competency of Crown Castle and continue to enjoy significant success with this program, as evidenced by the fact that today, 39% of our site rental gross margin is generated from towers on land that we own, up from less than 15% in January of 2007. Further, the average term remaining on our ground leases is approximately 32 years. We continue to focus a significant amount of effort and capital on purchasing land beneath our towers and extending our ground leases. Of the remaining capital expenditures, we spent $7 million on sustaining capital expenditures and $58 million on revenue-generating capital expenditures. The latter consisting of $30 million on existing sites, and $28 million on the construction of new sites, primarily distributed antenna system deployment.

Further, during the second quarter, we used $51 million of cash to purchase a portion of our 9% senior notes, and 7.75% senior secured notes, including make-whole costs at prices we found attractive relative to these bonds' respective call dates. We ended the second quarter 2012 with total net debt-to-last quarter annualized adjusted EBITDA of 5.5 times, and adjusted EBITDA-to-cash interest expense of 3.1 times. As you saw on our press release last night, we reached an agreement with T-Mobile USA to extend the remaining term on all 7,300 existing leases to 10 years and granted T-Mobile rights to upgrade certain towers with radio equipment in connection with their network modernization plan. We expect this agreement to contribute approximately $20 million in site rental revenue to our second-half 2012 results.

Moving to the outlook for the third-quarter and full-year 2012, as shown on Slides 7 and 8, we expect site rental revenue of between $530 million and $535 million, and adjusted EBITDA of between $387 million and $392 million for the third quarter of 2012. Turning to our full-year 2012 outlook, based on our year-to-date results and our visibility into near-term leasing activity, we have meaningfully increased our full-year 2012 outlook from what we provided in April, increasing site rental revenue by $43 million, site rental gross margin by $36 million, and adjusted EBITDA by $63 million. This increase in our outlook for adjusted EBITDA is driven by a number of factors, including higher run rate site rental revenues than we had previously expected; the benefit from the aforementioned T-Mobile agreement; better-than-expected contribution from our recent acquisitions; and the expectation of continued strong performance from our services group. I'm delighted with the performance of our Business and our increased expectations for the balance of 2012. We now expect 2012 year-over-year site rental revenue growth of 13% and adjusted EBITDA growth of 17% and AFFO growth of 16%.

We expect to augment our AFFO growth through opportunistic investments in activities such as share purchases, tower acquisitions, new site construction, and land purchases. Consistent with our past practice, our outlook does not include the benefit from these expected investments. As shown on Slide 9, for 2012, we expect to generate approximately $850 million of AFFO and invest approximately $350 million on capital expenditures related to purchases of land beneath our tower, the addition of tenants to our towers, and the construction of new sites, including distributed antenna systems. Ignoring our borrowing capacity, the portion of our AFFO after expected capital expenditures represents $125 million per quarter of cash flow that we could invest in activities related to our core business, including purchases of our shares and acquisitions. As such, we remain focused on investing our cash in activities we believe will maximize long-term AFFO per share. I believe that this level of capital investment can add between 4% and 6% to our organic AFFO per share growth rate annually. In summary, we had an excellent second quarter as we continue to execute around our core business and we are very excited about the balance of 2012. With that, I'm pleased to turn the call over to Ben.

Thanks, Jay. And thanks to all of you for joining us on the call this morning. As Jay just mentioned, we had an excellent second quarter, exceeding outlook for site rental revenues, site rental gross margin, adjusted EBITDA, and AFFO, and we are excited about our Business as we look forward to the balance of the year. As you know, there's a significant amount of activity in our industry currently, as all four major US wireless carriers are engaged in major network upgrades simultaneously and we are enjoying unprecedented visibility into future revenue growth, as evidenced in our increased guidance. In fact, leasing activity grew 15% in the second quarter of 2012 compared to the same quarter last year. The big four US carriers accounted for approximately 81% of our growth in the second quarter, and as expected, amendments made up approximately 90% of their activity in the quarter, as they continued to focus on upgrading their networks.

Further, as Jay mentioned, we recently reached an agreement with T-Mobile USA to extend the remaining term on all 7,300 existing leases to 10 years, and granted T-Mobile rights to upgrade certain towers with radio equipment in connection with their network modernization plan. We're obviously thrilled with our relationship with T-Mobile and look forward to assisting them in building out their network modernization plan. We'll be working very hard to ensure we achieve the operational efficiencies and deployment speed that both parties intended through this agreement. As the largest single provider of sites to the four largest wireless carriers in the US, we expect to receive an outsized benefit from the significant 4G upgrade activity from all of the carriers, which we believe is reflected in our current results and updated outlook.

In addition to the continued growth of our site leasing business, I am very pleased that our services business continues to perform very well, reflecting the significant level of network upgrade activity in the market. This success results from a diligent effort to capture more of the opportunities to assist our customers in all aspects of the installation process on our sites. This increase in services activity is attributable to the confidence our customers have in Crown Castle, as regularly expressed in our customer surveys that consistently rank us as delivering the highest customer satisfaction in the industry. This doesn't just happen by itself and I want to thank all of our employees for this terrific result. Further, in the second quarter, we made significant progress with the integration of NextG and the WCP assets acquired earlier this year.

The integration of the WCP assets is complete and the integration of NextG is on track and proceeding very well. I'm pleased that we have been able to retain approximately 75% of the NextG employees and have built a DAS and small-cell solution organization that we think is second to none around these core NextG employees. While these integration activities are ongoing, the business opportunity continues to grow and today we have over 2,000 nodes in the pipeline. The acquisition of NextG positions us as an industry leader in distributing antenna systems and builds on the DAS success we have already enjoyed. We are excited about our future prospects for the combined organization, as a market leader in this new extension of our business. I believe our strategy of focusing on the US market positions us well for the growth I believe lies ahead.

The US continues to lead in the deployment of 4G technology, with LTE networks well underway and it is the largest and fastest growing market for the mobile internet. As demand for data services is concentrated in the major cities, we feel we are best positioned to capture this opportunity with the highest concentration of sites and DAS nodes among our peers in the top 100 markets, with 71% of our towers located in the top 100 [ETA]s, where a significant share of the incremental leasing demand from LTE activity originates. As demonstrated in our current results, I believe our tower portfolio and the ability to execute for customers in the US allows us to capture this activity in the form of site leasing revenue growth, as the carriers continue to upgrade and add sites to meet this increase in consumer demand for the mobile internet.

Importantly, the shared infrastructure model that is the foundation of our business provides the wireless carriers the most cost-effective way to deploy network capacity, thereby allowing them to deploy 4G technology faster and at a lower cost than they otherwise would able to do. Further, as indicated by quarterly surveys from our customers, we continue to deliver the highest customer service in the industry. The combination of our customer-focused approach, together with the best assets in the industry, allows us to maximize the opportunity in the US market. In summary, we had a great second quarter. We have made terrific progress in integrating these recent acquisitions, and we are excited about our Company's position relative to the significant growth occurring in the US market. Further, as Jay indicated, we remain focused on investing activities that we believe will maximize long-term AFFO per share. And with that, operator, I think we are pleased to take some questions.

(Operator Instructions)

Clay Moran, Benchmark Company.

Good morning, thank you. Two questions, Ben. First off, could you just explain how the straight-line revenue guidance changed from the first quarter to the second quarter? It's up significantly more than the $20 million from T-Mobile. What's driving that?

Sure. I'll let Jay have a crack at that.

Yes, Clay, thanks for the question. As we -- we've got now basically two ways to look at our results. One way is from a traditional GAAP standpoint. You can look at our results on the top line, site rental revenue growth down through adjusted EBITDA, and then we've also provided the detail reconciling to an AFFO metric, which is more of a cash metric, so you can look at it either way. Specifically, there are basically two things that are driving the movements quarter-to-quarter. One of them is the T-Mobile agreement that we talked about, which is an increase in the site rental revenues that we'll see at the GAAP line of about $20 million in the second half of the year. The contribution on the cash side is about $1 million. And as we noted in the press release, those two numbers will converge over the next approximately four years.

The other item relates to the timing on cash collections and it's a relatively, as you know, relatively new metric for us. So we may be a tad bit conservative in terms of how we assume cash flows are going to come in over time. We obviously did better than what we expected in the second quarter. We probably, frankly, pulled through in the second quarter some of what we had previously expected to get in the third and fourth quarter. So over time, we'll probably get a little bit better at predicting exactly the timing of those. But it's -- in essence, we've added almost a working capital component to that metric. But pleased about the growth and I think you can look at it on a year-over-year basis and see that on either way you want to look at it, whether you want to look at it on a more traditional income statement, operating results basis, or if you would like to look at it on a cash basis, both of those line items are growing nicely.

Okay, thanks. And then second thing, can you just remind us about your Master Lease Agreements with the four national carriers? Do you have all four under MLAs now? And secondly, it sort of contracts out the revenue, can you talk about what percentage of the opportunity you think is recognized by these MLLs already under contract compared to what you see maybe in your CCI sites analysis? And then, secondly, you have a heavy contracted revenue base now, I assume. Can you talk about what that looks like and what it implies for the cash and GAAP growth rates going forward?

Sure, Clay. I'll try to take a crack at some of those. First of all, yes, we are pleased that with this signing of the T-Mobile agreement, we now have all four major carriers under long-term MLAs related -- and with rights to expand their network and add equipment to our sites. I haven't seen our draft yet of the Q, but I think with this T-Mobile, we would still be probably in the range of nine years on average life remaining and probably over $15 billion of committed revenue. Stand by for the Q on that next week. But it's a significant commitment and obviously makes us very comfortable with the long-term predictability of the revenue stream. The other thing you mentioned, though, is around this -- now, as Jay was talking about, you can pick your GAAP metrics, you can pick your cash metrics, whichever you like.

Naturally, when you extend a contract out 10 years, as we have, 10 to 12 or 15 years, with all the major carriers, there's going to be a significant amount of straight-line impact to that. So, again, for those that may not be as close to it, revenue recognized before the cash is received. So we're required straight line that escalation. But when you look at the AFFO number, obviously that's all normalized for that. So if there's a significant amount of this straight-line line revenue hung up on the books, then what you can expect is you'll see a significant amount of growth in AFFO, as those natural escalators come through over the remaining years. And so I think we can look forward to seeing AFFO just having natural built-in organic growth, even before the market growth that we're excited to be seeing out there.

And then the last point around, try to quantify for you how much of the growth we've already, we've sort of got in the numbers, I wouldn't be able to do that for you. I -- we've sort of missed that every time we've looked at it, honestly. There's a lot going on that is driven by consumer demand for data services. And that's requiring continued upgrade of sites, expansion of existing of original footprints on what the original upgrades were going to look like. And then we fully expect that at some point in the future, we're going to see cell splitting, which will result, we think, in material co-locations around -- back to our CCI sites analysis on where we believe there are existing towers that can accommodate additional demand, where a carrier has a need in a market, particularly around capacity in cell splitting.

And that even leaves out the conversation around the whole DAS nodes and the small cell business that we've made a very large investment in and are very pleased with the prospects there. So we have very high expectations for that business. As we've told you before, we think that could account for 20% to 25% of our growth going forward and for such a relatively small component of our Company today, that's significant outsized growth relative to its size. And so I wouldn't be able to guess for you how much is pre-sold. We are very busy, as you can tell, with the service level of activity. We're going about as fast as we can right now. We're going to add the T-Mobile application volume into the pipeline. Very, very pleased about that. We're going to be adding some resources around that to accommodate that, and so it's a very good time to be working for all four carriers as they work to build out their networks.

Okay, great. Thank you.

David Barden, Bank of America Merrill Lynch.

Nice quarter. So first thing when I saw the T-Mobile announcement, Ben it just said to me that in terms of the risks of consolidation between Sprint and T-Mobile or Sprint and PCS or AT&T and Leap, that we've feared about this industry for a really long time. It struck me that maybe we've just de-risked this industry with respect to the consolidation issue for a long time. And I just wanted to sanity check that to make sure there aren't change of control issues or other kinds of contractual wiggles that would make that an overreach in terms of interpretation. And then the second question I had was just with respect to monetizing the T-Mobile relationship, you've given them rights to certain towers. Could you elaborate a little bit on how much room you have to monetize the things that T-Mobile does with the network through time a little bit more clearly? That would be great. Thanks.

Sure. First of all, I think your interpretation is correct. These contracts with all the carriers basically are committed for that primary term. And we've, as I said, depending on the carrier, 10 years, 12 years, or 15 years, and so these are committed contracts that would obviously have to be satisfied in any scenario you can come up with. Secondly, with respect to the T-Mobile agreement, we've disclosed the fact that the agreement gives them rights to modernize and upgrade certain towers. It's less than 100%, but we've been asked to not share any further details because we don't want to get into any of their particular proprietary upgrade plans. And so we're not going to go further in terms of talking about exactly what their plan is and the pace and all of that. I would clarify one thing around the $20 million of impact on a revenue basis this year. That is broken out roughly. About one-third of that is attributable to the straight-line impact of the renewal of the underlying base contracts. And then the other two-thirds of that $20 million would be attributable to the recognition of the commitment around the amendment activity, or the rights to upgrade the towers. So that's a little further clarification for you all. But beyond that, we're really not going to get into their specific rollout plan and what exact rights they have acquired from us.

And so just to clarify that last point, Ben, that is to say that for the go-forward upgrade of the network, which includes the remote radio head-ins under their architecture plans, you are charging them more money and then you're straight-lining that increase in the rents and that's that two-thirds of the $20 million?

That's correct.

All right, great. Thank you very much.

Would you add anything to that, Jay?

Okay.

All right.

Jonathan Atkin, RBC Capital Markets.

Yes. On T-Mobile, just a follow-up and then a question about Australia. So can you maybe give us a sense as to what the 2013 annualized AFFO contribution would be from the Master Lease Agreement that you signed with T-Mobile? And does concluding that MLA mean that you're not interested in the potential purchase of their towers?

Yes, Jonathan on the first question there, I guess the way I would describe it is, as we've previously disclosed, in about four years, those two numbers are going to be approximately equal. I don't think we're going to be so specific about disclosing the contractual terms at that step. As we have done with all of the carriers, we've taken a view -- and these kind of transactions are relatively new to the tower industry. You'll remember historically when carriers would go through the next upgrade cycle, they would typically want to pay us on a one-off basis. And so you would go through -- as we went through each amendment cycle, the carrier would come to us and we would negotiate on a one-off basis for each individual tower.

I think over the years, the carriers have gotten to the place where they believe that there is great value to trying to accomplish those cycles with greater speed and ease, and so over the last several years, as we've done with each of the carriers, we've gone through the process of delineating exactly what kind of equipment do they want to add to the towers, what timeline do they want to accomplish that over, and then contractually, we work that through in something that's relatively easy for us to help them move at the pace and speed at which they want to. So I think at the end of the day, really this is going to look like a market value transaction as the previous ones have that we've done. It's just contractually, we've accomplished it in a way that hopefully makes it a little bit easier for them to deal with us. And some of that, we think financially the returns have been there and are reflected in our results. And then we think the other benefit of it, as Ben has mentioned on the speed side, it's reflected in our carrier customer surveys where they believe we've accomplished this in a way that makes us easier to do business with.

Just trying to make it a little simpler. And then secondly, Jonathan, your question about a prospective T-Mobile tower sale, honestly, I wouldn't have any comment on that at all, honestly.

And then Australia slowed down in terms of the leasing sequentially. Just wondered if you can recap some of the operating factors that are causing that?

Yes, there's nothing hidden there. We've got a lot going on in Australia. It's just not all in the revenue stream yet. The backlog and the pipeline is building, and we don't give specific guidance on Australia, but I'm very pleased to say that I think you're going to see significant growth finally, after a pretty good flat spot for the last couple of years, while all the carriers are actively upgrading their network there's going to be more spectrum and we are really excited about the prospects for the next three years there. It's relatively small. It's about 5% of the total. So we don't spend a lot of time on this call talking about it. We spend a little bit of time working on it, though, and our team down there certainly does. And I think you're going to see by the time we get to the end of this year, materially higher run rate and we're really pleased about that.

Finally, on DAS, maybe update us on how many nodes you operate and how that business has scaled since you closed on the NextG acquisition, and has the growth been primarily indoor or outdoor?

Yes, probably not going to reconcile each node for you. Just give you directionally that the pipeline continues to build. We've spent a lot of time obviously on integration activity, getting the folks set up, getting the organization set up. At the same time managing a significant amount of backlog that NextG brought with them that we had on our side as well. We're seeing good activity both indoor and outdoor. Everything we had expected in the -- our under-riding thesis about that investment, it's early days, but it's coming true in terms of the carriers' desire to add small cells as a solution to provide capacity in places where macro tower sites won't suffice. we've taken the market through that in a lot of the detailed discussion we're not going to repeat, but we're very excited about what we see there and can't stress enough, particularly if they're listening, the talent we've acquired with NextG, we're thrilled about. And combined with our execution capability and balance sheet frankly, the ability to fund this going forward, we think we've got a winning team.

Is there significant room to improve on, I'll call it the co-location cycle time, or have you already -- or had NextG already realized these sorts of improvements over the last several years?

Yes, I think there's -- the real opportunity here is to add additional tenants on the existing systems, at the same time building more systems. And we are working hard to bring that cycle time down. NextG was the master at speed in terms of building. And the talent that's now resident in our shop around that, we think we've got a really good formula for going fast. Again, it requires a carrier to have a need and depending on the carrier and the location, that need is in various stages of maturity. But we think it's certainly coming towards us. And really excited about what we see.

Thanks a lot.

Phil Cusick, JPMorgan.

Hello. This is Richard Cho for Phil. Just wanted to ask, what the level of activity was outside of the big four in the quarter and are you expecting any kind of pick-up, and is that in guidance?

Yes, Richard, as I mentioned, about 80% or so of our activity were the big four, so that leaves 20% for the rest. And it's pretty steady with what we saw last year. It's not huge, but there's some work going on. And wouldn't get into it and to reconcile it customer by customer. The big four represent about 80% of our activity right now, but there certainly is work going on at the Clearwire level, MetroPCS, and Leap, so wouldn't diminish that in any way, shape or form. They certainly rely on us and we rely on them for accomplishing their network objectives.

And with the strong network services revenue, is that coming from one carrier or multiple carriers? Can you give us a little color on that and then how it should trend for maybe the third quarter and rest of the year?

It's a good broad-based mix across really all the carriers. As you can imagine, we're very busy on Sprint Network Vision right now. We anticipate moving forward with T-Mobile, as that application volume starts to load up, now that we've got this agreement signed. We've been very active and pleased with the relationships with Verizon and AT&T. So given the visibility we have and evidenced by the guidance we've put out and the implied network services business growth in the EBITDA guidance for the balance of the year, we feel pretty good about the visibility for the second half of this year and frankly on into next year. We'll just have to see. As we all know, if you're a student of history in this business, you know that can be volatile sometimes and so we're always a little bit careful about how we forecast that. But given the activity in the market right now, we're sort of in unprecedented times with the activity and the opportunity on the services side.

Richard, specifically in the outlook, we've assumed in the third quarter that we get a contribution from the services business very similar to what we had in the second quarter. And then in the fourth quarter, the contribution from services is expected to be down about $5 million and, as Ben mentioned, as we get further away from the date at which we are at currently and predicting that services margin, it becomes more difficult to predict exactly where it's going to be, so we're generally hair cut current levels as we go out further. So fourth quarter is a step down from Q3; Q3 about the same as Q2.

Great. And for the last question, you talked about the 2,000 node pipeline. What is the timing that we could see that coming online and when might it make a noticeable impact? Are we talking much further out or something more near-term, as now that things start to ramp back up?

Typically, that pipeline will look like between 18 and 24 months, and obviously there's nodes coming online every day and then we're continuing to build the pipeline. When we bought NextG, the pipeline was right around 500 nodes. We've put a number on air and have continued to build the pipeline. But I would tell you generally we've got about 18 to 24 months in that pipeline.

Great. Thank you.

James Ratcliffe, Barclays.

Good morning. Thanks for taking the question. Two, if I could. First of all, you highlighted NextG and WCB synergies. Should we be looking at that as a change in the trend line of EBITDA that you think you get out of those businesses going forward, or more of a timing to capture the synergies? And secondly, if you could update us regarding land assets for the towers there on leased land, what the mix of owners of those land pieces are and what level concentration there is? Thanks.

Sure. James, on your first question around synergies, it's bringing forward synergies that we had previously thought would take us longer to accomplish. On a run rate basis, we've now got about $2 million a quarter related to the acquisitions that we put in. When we underwrote the transaction, we had assumed it would take us much longer than that to accomplish it. As Ben mentioned, we've brought across 75% of the employees. So a lot of that synergies that we have achieved is frankly a non-people-related cost. And there may be still some additional synergies here, but we certainly didn't do this transaction for synergy. So I wouldn't want to hold out hope that there's a lot more synergies to come. Most of this is really around the activity and opportunity that we see in the DAS business. Your second question around PEPs, yes, I appreciate you noticing. We continue to work very hard on that front and have found a great deal of success. We started this program very early in the industry and so as we look at the number of sites that are in the hands of third-party acquirers of ground leases, it's a very, very small number. The vast majority of our sites, to the extent they are still on leased land, the 60% that are on leased land, those sites would almost entirely be outside the hands of third-party acquirers of ground leases, so we're typically dealing with an individual who just controls one or two sites. So there's just a very small number of sites in concentrated hands.

Thank you.

Ric Prentiss, Raymond James.

Couple questions. First, back to the T-Mobile MLA. It looks like the T-Mobile one is maybe more reminiscent of the AT&T transactions from the Sprint MLA from the standpoint of you've done the step function up. T-Mobile and [in see it] appears whereas the Sprint one was more touch it as you go. Is that the correct way of thinking of it?

Yes, I think it is. I think it's exactly how Jay was describing it. We find a lot of value and our customers do in simplicity. And so if we can contract up front for basically what the payment with the value of that amendment is going to be, then it removes all the paperwork and pricing individual sites. They know what they have. We can both go as fast as we possibly can and not get tripped up with paperwork in the interim on pricing individual sites. So it provides certainty of pricing to them and then the requirement for us is we have to book it, obviously if it's a commitment. But for everyone's benefit, again, you've got full disclosure. There's the GAAP numbers if you like or there's the cash numbers if you like. So you can look at revenue and EBITDA, all of which will eventually turn to cash, or you can look at AFFO, which would be the natural growth through those payments, whether they are structured as actual fees for sites as they come on board or whether they are embedded in the escalator, just a grossed-up escalator, it frankly doesn't matter. You're going to see it in the very same way. It's going to be a contribution to AFFO over time.

And then maybe looking at that certain towers again, because they have committed to all 7,300 sites, but the radio modernization site is only on certain sites. I know you said you can't really get into a lot of specifics because T-Mobile doesn't want you to. Maybe look at it this way. T-Mobile has said publicly they want to touch 37,000 of their 50,000 or so cell sites in this phase in '12 and '13. Does your certain number include all of those that are in their 37,000, or just a certain subset of that? Not trying to put a number to it, but just trying to understand?

Yes, I understand, Ric. I understand. And we're not able to give you that detail. And so there's a little bit of a question for all of you, as to, well, is there any upside beyond what we've just reported? And I would argue that, that will depend on T-Mobile's success and their own deployment plans and we'll just have to wait and see. But I would ask you to respect their confidence and they have asked us to keep it between us and what their deployment plans are. And so those questions are probably better directed towards them.

Doesn't hurt asking.

Yes.

The final question for me is, Jay, you mentioned how you have kind of $120 million per quarter available cash to use for the buyback, M&A, site building, land, et cetera. As you think about potential transactions out there, does that then limit you to $250 million or so in the second half of the year? Where would you take leverage for the right transaction? Just trying to understand where we see the balance sheet versus the potential use of funds?

Sure. No, it's definitely not a limitation, $125 million a quarter. I think it's just becomes a baseline for the amount we would expect to spend around acquisitions or share purchases or frankly maybe increasing CapEx around distributed antenna systems or other areas. As we think about the capacity that we've built into the balance sheet, and we've historically talked about a target level of leverage of somewhere between 4 to 6 times debt-to-EBITDA. And we're now in the position of basically approaching kind of the mid-point there. So we have some capacity that we could use to -- on a transaction that we thought was attractive. And each of the things that we look at, whether it's share purchases or tower acquisitions, they go through the same filter. And the first filter is around weighing the various merits of alternatives, and any acquisition that we would look at has to pass the test of showing more accretion than we could have otherwise achieved by buying back our own towers via share purchases. And once we get past that measure, then it comes down to a question of how do we want to finance that particular activity, whether it's share purchases or tower acquisitions, and as we've said over time, depending on what the returns are, there's a possibility that we may go a little bit outside of that targeted level of leverage for the right opportunity.

As we did with NextG.

As we did with NextG and WCP, which we financed both of those with debt and cash flow. As long as we have a path towards quickly getting back inside that targeted level of leverage. So, I think certainly we're not going back to the early days of the tower industry and wouldn't expect to see us go much beyond from a covenant standpoint, I should say, we can't go outside of 7 times debt-to-EBITDA. So there's sort of a cap there on how far outside of the targeted level of range could we go for any particular activity. But we would be willing to go above that targeted level of leverage for the right opportunity, but have historically tried to manage the Business inside that targeted level of leverage.

I think that also that goes back to the previous conversation about the contracted revenue stream we have. When you start thinking about leverage with the nine-plus years of contracted revenue, makes you a little more comfortable with leverage, particularly given the cost of leverage today.

And the cost of debt, still staying pretty attractive out there?

Yes, I think if we were to finance today in the high yield space, it would start with a 5% and we would be somewhere in the 5%s today. The bank market continues to be pretty healthy. I think we have a number of opportunities. The structured loan market is attractive. So I think we have a number of different markets where we could go and finance ourselves.

Great. Thanks, guys.

Simon Flannery, Morgan Stanley.

Thank you very much. Good morning. When you put our guidance for this year, you did talk about some churn coming through, I think primarily from Alltel. Perhaps if you would just update us on what was the impact in the quarter, and is that all pretty much done with at this point? And I think you also suggested that there would be limited upgrade activity or renewal activity versus some prior years. Obviously, you've got this big T-Mobile contract, but perhaps give us, again, mid-way through the year, how that's all playing out versus your expectations? Thanks.

Sure. In the first half of the year, and we mentioned this on the last quarter call, in the first quarter, churn was lower than what we had previously expected. And in the second quarter, churn came in lower than what we had expected. So we did a little better in the first half of the year than what we had expected. Our outlook for the full year assumed that about 70% of the churn we would see in 2012 would occur in the first six months of the year and 30% in the back half of the year. We've not changed our assumptions for the churn in the back half of the year, so I think for the full year if you were trying to reconcile to our prior comments that we made going into the year, we would expect churn to be better than what we had previously expected.

And is that because the -- whoever -- the Verizon or whatever -- they've decided just to keep those sites for their own use? Or it just--?

Well, what I would tell you is across the board, that happens. We go into any given year and we have, similar to the leasing side, we were only going to have about three to six months worth of visibility around how carriers are thinking about leases as they come up for renewal. And as they come up for renewal, we'll start to try to estimate what it's going to look like. Sometimes they tell us and, again, we probably had a situation the first half of the year similar to what we've seen over time, and that is while they may talk about taking down cycles [at a late date], they take down a few less than what they maybe originally had planned or articulated and I think the same thing happened to us in the first six months of the year. We'll just, we'll update you as we go, but I think back half of the year has a lighter impact from churn. The second part of your question in terms of what do we expect to see in the second half of the year, I don't think there are any large renewals to be accounted for in the outlook. Certainly beyond what we've talked about or alluded to and don't think we'll have any, at least that we know of or have planned, items that would move the numbers, other than the typical organic activity that we would see in a business.

Great. Thank you.

Brett Feldman, Deutsche Bank.

Thanks. And just to clarify one last point here on guidance, we've been speculating before about the potential impact of T-Mobile's LT upgrade. As a result of the MLA, that is in your guidance now for the second half of the year, correct?

Right, that's correct. Yes.

And based on the way its structured, it seems like it's somewhat irrelevant how quickly they move through the balance of 2012. You pretty much have locked in what you're going to get [there]?

That's correct.

Right. Commitment. That's correct.

All right. Thanks for clarifying that. And then just to follow up on a question I had I think on your last call, when I was asking about NextG, now that you've had the sort of operations under your control for a while, and you have a much bigger funnel here of nodes, have you started to reassess the way the contracts are written? For example, are you starting to become more of a capital provider around the build-out and therefore taking in higher recurring fees? Because that's really the opposite of the way NextG had built its business as an independent company.

Yes. I would say directionally, Brett, that's going to happen over time. It's not dramatic. And again, you probably wouldn't see that in our reported results anyway, because it's all revenue, whether they make a contribution up front or they put it all in rent. That's all revenue to us that runs through the P&L. So you probably wouldn't be able to detect that from the statements. But I am going to confirm to you that I think over time you'll see that move more towards a rent model, less towards a capital upfront model. I don't know how fast that's going to move, but I would emphasize also that we think the shared economics of the tower model absolutely are in play in the DAS model. And so the whole attractiveness of a third-party independent owner like ourselves being involved is that we can effectively share the economics among multiple carriers exactly the way we do with tower model. And that becomes very compelling, particularly when you stack against -- on top of the economics, the difficulty of siting, of getting systems built, installing the fiber, and the value of the pole attachments and everything once you have that system built, that's a very valuable asset. And then to the extent you can make that very attractive from a perspective of economics, that it's ultimately the shared model, we think it's very compelling and drives co-location in a very significant way, as well as new node opportunities, which we are seeing no shortage of right now.

Brett, I think your question last quarter, if I remember correctly, was how around how have things changed in the DAS space, and in the early days, we distributed [the incentives] with businesses. They were either funded by private equity or very lowly capitalized firms and they were trying to build these systems with basically zero cash out of pocket from the firms building the systems. And we are obviously willing to put capital at risk in order to drive and think about the business on a longer-term business. So today when we're building the systems, we're putting real capital at risk beyond any capital that would be received from carriers associated with building those systems. And then our returns are accomplished by making these multi-tenant systems, rather than in the early days of a lot of these distributed antenna systems businesses where they were trying to basically make a return with a single carrier and get all of their capital back day one.

We've taken a very different approach. And I think generally across the board in the industry, it's become, it's starting to look more and more like the tower industry. And I think we think over time that will continue to happen. With the one caveat, as I think I mentioned last time to you, some of this business is driven by what venue are you putting the activity into. And so there are certain venues and locations where the upfront amounts become far more important to a venue or to the provider of the space than ongoing rents. And so we will structure the receipts of cash with carriers more commensurate with what the underlying venue or owner desires. But -- and generally, it's been such. It's more generally moving towards the traditional tower model where we put real capital at risk and our returns are achieved by sharing.

All right. Great. Thanks for clearing it up.

Jonathan Chaplin, Credit Suisse.

Thanks. So two quick clarifying questions. First, on the accounting for the T-Mobile transaction, looks like about 100% of the revenue in, in 2012 is non-cash. So does that mean that it all gets booked as escalators? And then my second question was again on the 2,000 nodes, could you give just us a rough sense, I'm assuming those aren't in guidance. Can you give us a rough sense for, assuming those come on, what 2,000 nodes would generate in incremental revenue and EBITDA? Thanks.

Yes, in your first question, I think the way I would describe it is the uplift to revenue is a indication of what will ultimately be collected in cash in future periods. And so in a simple example, Jonathan, if a carrier were going to pay us $100 in year one and $105 in year two, then on the GAAP revenue lines, we would record $102.5 in each of those two years. So in the first year, there would be $2.50 of, if you thought about it this way, of non-cash revenues. And in the second period, your cash receipts of $105 would be greater than the GAAP revenue line. So you would have, in essence $5 of cash and $2.50 more of cash than you did showing up in the GAAP statements. So that's what we're saying. And by telling you that it takes about four years or so until those numbers get back, then you have some estimation of how long that's going to take.

Frankly, on the back side of it, you're in the reverse position. So in, in the second half of the agreement and the years beyond four years, what will happen is your cash receipts will be greater than that recognized on the income statement. So I think over time, and I think it's always helpful to look at more than one metric, but over time, I think people can look at either just looking at the operating results from those top line growth, or if you want to look at it on an AFFO basis, then that removes that noise of whether or not it's GAAP reported revenues or cash receipts and can just look at the cash. And generally speaking, based on the way revenues are recorded in the industry, those cash numbers are going to show slightly higher growth rates than on the GAAP reported numbers. And that's just a function of those, as I gave you the simple example, of seeing the continual benefit of the step-ups in escalations over time. And that will fall all the way through to the AFFO line.

So just to follow up quickly on that, Jay, so I get how the straight-lining works, but it seems like one-third of the increase in revenue was from an extension, which I would have expected to show up in the straight-lining impact. And then two-thirds of it is from amendments, which I wouldn't have thought there would be -- I would have thought there would be roughly two-thirds of the increase in revenue would show up as an increase in cash as well. So I'm just wondering how the amendment piece is being accounted for? Whether it's just--?

Sure.

We do it the same way. So the way you would think about this, when you start to talk about the timing of cash payment, the goal of these transactions from the carrier standpoint, was to accomplish speed and ease. And we shared that goal. So if you were to think about it in a more normalized sense, obviously no carrier is going to go and put all of that equipment up on the first day. And so what the goal is, is to match the timing of cash receipts similar to the activity that we would expect over time. And so that's the way each of these agreements with the carriers have been structured. And so that's why it's not in your simple example, that's why it's not two-thirds cash day one. Obviously the space has not been utilized day one, and so the agreements are structured to reflect more of the activity and the real activity on the sites rather than structuring them as a pre-payment for that.

More closely is when those sites would actually come on the air. But whether it's embedded in the escalator or actually could be denominated as just a fixed fee on a takedown schedule of sites, what results in the commitment -- when it's a commitment then we are required to then go ahead and book the revenue on a straight-line basis. And so it's really irrelevant whether it's baked into the escalator or just a schedule of fixed payments based upon a takedown schedule commitment on sites. We've done it both ways, by the way, depending on the carrier. And either way, we're required to book that revenue upfront. And then the cash would more likely -- more appropriately track as those sites are designed to come on the air.

Okay. That makes a lot of sense. Got it, thanks.

Yes.

Your next question comes from--

Oh, one more. You had -- I'm sorry, Jonathan. You had one more little [nit] there on the 2,000 nodes. Let me We've said that before to you. So call it 650 leases, if you were to think about it that way. I'm not, again, reconciling these 2,000 nodes. There could be some higher or lower than that. But generally, that's a pretty good rule of thumb.

Jason Armstrong, Goldman Sachs.

Hello, thanks, guys. Couple questions. Jay, you gave some good detail earlier on the implied, incrementally, the [dot] contribution from the services business. I'm wondering if we can take it down to the AFFO level to just understand the impact there, the $25 million increase in guidance for the year. How would that split between services versus site rental? And then, Ben, you talked about the land aggregators earlier. Obviously we saw a number of deals for aggregators back half of last year, beginning of this year. I guess the question from my side would be are you still facing the same competition for individual land plots? It would indicate that the aggregators are there still -- they may be smaller but they're still competitive and they're starting to build portfolios again -- or have we seen them just back off in general as competitors? Thanks.

Yes, Jason, on your first question, I would tell you typically, while not getting into [graded] amount of detail, but typically services we would expect that contribution on the income statement to flow through to the AFFO line, in about the same period in which it's received. So if you want to take -- if you're trying to reconcile either by quarter or by year, you can basically assume those amounts fall down to the AFFO line. And we obviously think about it on a more consolidated basis. So as we're figuring out those numbers, we may have hair cut here or there some of that impact, so it may not tie exactly. But generally speaking, that's what I would assume.

Secondly, on your PEP, we use the term PEP for fully extension program. Sorry for the acronym. But with respect to the aggregators that are out there, they are still in the market and they are still competitive and we are losing very, very few sites. We're very aggressive in the market. When we need to, we will win. That's sort of become our practice. The way we think about buying land, today we have about 60% of our portfolio financed in an off-balance sheet vehicle, with landowners. And so when we looked at buying the property, again, assuming that we have confidence in the tower, which we typically do, there will be a few exceptions, but generally we like our sites. When we look at buying our sites, we're thinking about refinancing debt, because it's otherwise off balance sheet. And so that typically is a lower equity return than a aggregator who is out there to make a private equity-type return. And so it's not very hard for us to win. And given our relationships with our landlord and the fact that we've been at this for about six years, we've got very good relationships with landlords. They certainly know to call us and you're seeing that in our results. And so I would say we're losing -- it's just a trickle. I mean, every now and then it happens, but very rarely.

That's helpful. Thanks a lot.

Jonathan Schildkraut, Evercore Partners.

Thank you. Two questions, if I may. First, in terms of the outperformance in the quarter, the $6 million that you attributed to DAS and WCP, could you give a little more color on how that broke out between the two. And then how should we think about the WCP platform going forward? Is this an area that you're going to continue to invest in, that is land leases in general, or ground leases in general that might reach beyond your portfolio. And then I guess my second line of questions would be around some of the stuff coming out of Washington, DC. Two areas. First, we're hearing a lot about potential spectrum sharing and that would be really interesting to hear how you think about spectrum sharing versus the introduction of new spectrum into the marketplace and the potential impact on the towers? Thanks.

Sure. On the first question, the outperformance, I think the main goal and you've followed us for long enough to know that we really don't like to get down into the sub-units and start reconciling quarter-to-quarter movements. But thought it was important in this case, because really this is the first quarter at which we operated these acquisitions. And it more speaks to us just being relatively conservative in terms of how we thought the revenues and adjusted EBITDA were all probably going to come through on those two acquisitions as we underwrote them. They are more heavily weighted in terms of the benefit that we got. They are more heavily weighted towards NextG, both in terms of the revenue benefit that's flowing through, as well as the synergies. But I think you now have the baseline for those two acquisitions.

With regards to WCP and the benefit there, we acquired a number of rooftops associated with that. We believe, as we've talked about and highlighted, as the movement for the carriers moves more and more towards the mobile internet and providing high speed data networks in densely populated areas, in areas where frankly there are no towers, these rooftops become an opportunity. So we think we may see some opportunities there in the rooftop space. Most of what we underwrote, though, frankly was an annuity and looking at the escalators underneath ground leases. So, and I think if you were to look at the growth profile, that's probably a little bit lower than traditional towers and certainly much lower than what we would expect in the DAS business. But we do think there is some upside around the rooftop portfolio.

Yes, and then we've already seen some co-location that results in revenue share for us that wasn't underwritten early on. That's been early days encouraging. And then the -- your last question, Jonathan, around spectrum sharing, yes, let me go back over a little history with everybody. We are a big advocate of anything that basically gets more network and more carriers on the air in the most efficient way. And our best example of that, although it was a trial and hasn't amounted in anything really so far because of other issues, was Sprint's attempt to network share elements and spectrum with LightSquared. And we were very supportive of that undertaking. We came to an agreement that we think was effective for all the parties. It provided additional compensation for us, but at the same time, provided LightSquared an opportunity that was significantly more attractive than trying to build out on their own. And we would be a big supporter and advocate of that going forward and would do whatever we could to help someone who had spectrum and wanted to share it with an incumbent going forward. So you might look for more of that in the future and we would be a big supporter of that.

Yes, Ben, I guess I was thinking about spectrum sharing more of between the government and the commercial entities and that's what the FCC's been talking about. And I guess I have a hard time visualizing how that would happen from an equipment perspective and understanding the potential benefits of the tower operator and I was hoping you might delve into that?

Not into specific detail. I guess one of the key tenets of the business is that we do restrict our customers to only transmitting spectrum that they own or control. And so we're not going to put a customer in business to compete with us around these towers that we own. That said, again, previous comments and experience, we're very accommodating and recognize the efficiency in play when people can share. And we're an advocate of getting more spectrum on the air and more entrants in the market in the most efficient way possible and sharing not only the network, but obviously the common elements of the infrastructure like towers and the ground make perfect sense. And so where we can do that, where it's reflective and light-loading on the tower, and it's literally just spectrum sharing, we can price it accordingly and we've got a history of doing that.

All right. Super. Thank you for taking the question.

Sure.

Michael Rollins, Citi Investment Research.

Thanks for taking the questions. Just a couple to follow up. Throw my T-Mobile question in, which is -- and forgive me if you said this earlier. But have you characterized what the remaining lease term on average was for T-Mobile prior to them signing the extension for 10 years? And then secondly, if you could talk a little bit more about the components of revenue growth within the second quarter, so I think site rental revenue was up something like 13% year-over-year, and maybe you could break that down to what was internal growth versus external acquisitions, and then maybe throwing in, escalators or churn? Whatever specificity you could give there would be fantastic? Thanks.

Sure, Mike.

Sure. On the first question, T-Mobile's maturity was about 4 to 5 years previously, so we extended that from 4 to 5 years to about 10 years -- now, keep in mind, when I say that, it's an average of 4 to 5 years, so what happened with the portfolio now is they basically all moved out 10 years from now to a date in the future and currently they could have had anywhere from a month to 7, 8 years remaining on the lease. So it was a mix previously and then moving all of those leases out to a future date. But on average, I think the number was right around four to five years. Second part of your question around revenue, we grew revenue, site rental revenue, 13%. And the components of that, about 6% of that would be organic growth. You could think of that similar to a same-tower sales type number.

And then 7% was coming from the acquisitions that we've done. The -- as we've talked about in the previous quarters, we expected churn to be a little bit higher in the first two quarters of 2012 than what is typical. And so the growth in escalations was offset with that churn. So really just two components that drive the revenue growth. And typically, over the last several years, with regards to the organic revenue growth or same-tower sales growth, if you want to think about it that way, that number's been running in the 4% to 5% range. So we're running at a level today that's about 20% above the last couple of years roughly, just to give you some sort of gauge as to how has the Business done, and the majority of that 6% growth is coming from amendments to existing sites as the carriers deploy the next generation technology.

And if I could just follow up, when you think about structuring leasing deals and then the deals with your customers, there's obviously different things that you want versus like a T-Mobile in this situation. Do they look at the lease extension as a way of paying you more money over time, but limiting their upfront cash costs or did you want to insist on that longer duration to give you more visibility into revenue from this customer, given just all the different things that could happen in this industry over the next number of years? Thanks.

Yes, Mike, there's an operational reality there I would ask everyone to think about and that is that when the carrier goes in and puts those, that significant amount of capital in that network, they want price certainty and so we'll go in and typically the conversation goes pretty easily around let's go ahead and get price certainty on a brand-new term, call it 10 years in this most recent case, which gives them price certainty on how this ultimately is going to happen with the additional equipment. So I wouldn't really be able to split out for you, what's the conversation about the renewal and what's the conversation about the amendment, they certainly go together, but they are symbiotic because frankly they want the price certainty for the longer period to amortize their new investment in the network.

And I don't think -- I think in general as we would look at each of these transactions, we would place a very low value on just the pure extension by itself. I mean, we've never set out with the aim of trading away value and run rate to get an extension, because we frankly, as we have found, we went through the whole renewal cycle with now all of the, virtually all of the major carriers, which makes up 75% of the revenues in the business almost, and we went through the first 10 years of the industry, came up to those renewal periods and have now extended them. And the thesis in the business was that these were, this was critical infrastructure that they need and have since said they've made a significant amount of capital investment in. So we've never believed that as we got towards renewal periods that there was really any necessity to trade away value and haven't done so in any of the agreements. The upside here is really related to whether or not the carriers wanted to make a commitment and be certain about the activity that they were going to put on the sites or not and then the rest of the movement in revenues has just been the natural effect of moving from the back side of having more cash than the revenues we're recording to now being on this side of it, where the revenues all take a big step and now we'll grow back into that and over the next several years move back to the mid-point and then on the back side of the contract.

And then one last question if I could, just, if you look out over the long-term, I think you guys have some sale leaseback deals, where at the end of that, there's a buyout to the carrier. What's the totality of that future buyout, if you aggregate all the agreements you've done through the years? And how many years off is that when we're thinking in terms of present value implications?

I think the only one that -- and I'm not sure entirely what you mean. If you mean can someone buy out the future rent payments for us, typically those do not exist. We've talked about -- the only contract that I can think of that might have some runoff of revenues in the future would be around Sprint's iDEN network that would have been the legacy Nextel. And as we talked about, when we did the Sprint agreement, we gave them certain flexibility and certain rights to be able to take off the air sites in around the range of 2014 and '15 and we've said that's sort of 2% to 3% of consolidated revenues, if they were to go down that path and decommission those sites. But other than that, there's not really buyout type provisions where folks can walk away from leases that they have committed to. I'm assuming that's what you're driving at.

No, what I was actually thinking through was, and I thought it was with Sprint, is, speaking of Sprint--

Yes, Mike, I think -- yes, let me take a quick crack at it. And it's in the K, so you can go pull up the K if you want. But it's the Sprint portfolio we acquired through Global Signal, as I recall it was a prepaid lease structure, which has been used in the industry many times and I believe the original term was 32 years. Today, it would be about 6 off of that probably, so about 26 years remaining, give or take. And the present value of that buyout, Jay, have a--?

It's about $400 million.

Give or take. It's in the Q.

Perfect.

About 26 years out.

And are there other -- so that's what I was curious about. Are there others that we should be aggregating on top of Sprint, or is Sprint the only one that we should be aggregating?

Well, technically BellSouth was the same way. It was 99 years. So I guess we're at about 89 years left, just to be complete.

Very helpful. Thanks, guys.

Okay. You bet.

Batya Levi, UBS.

Great, thanks. Just a follow-up on the straight-line. I believe you increased the midpoint of the guidance coming from straight-line revenue by $50 million and about $20 million is from T-Mobile. Can you talk about where the remainder is coming from and maybe just second question on FiberTower-- I believe you wrote down most of your investment there, but is there anything that you're carrying on the balance sheet that you need to write down? Thanks.

Sure. On the second question, there's nothing left on our FiberTower investment. We've written all of that down. On your first question, we increased revenue guidance by about $43 million. Of that, about $20 million of that related to the agreement with T-Mobile that we talked about. And the balance of it would come from a combination of where we thought the run rate was in the second quarter going into the back half of the year, where we thought leasing is in the core business, and then the comments that I made earlier around how our two acquisitions, WCP and NextG had performed out of the gate, and so those run rates were higher than what we had previously underwritten in the acquisition models and then also on a run rate basis coming into the business higher than what we had put into our previous outlook. Those two things, a combination of about $12 million to $13 million from the acquisition, $6 million actually in the second quarter, that's about $18 million. And then the $20 million from the T-Mobile gets you most of the way towards the uplift in revenue and the rest of it would be basically where the run rate was in the base business pre-acquisition.

Just to clarify, my question was more about the increase in the straight-line revenue. I think that went up by about $50 million versus your prior guidance. And I believe $20 million of that is T-Mobile. I was wondering why you think that the straight-line component would be a bit more, $30 million more than what you originally expected?

Yes, Batya, that probably goes to my comments around our conservatism, around the timing of cash collections. We obviously did much better in the second quarter than what we had provided in the outlook going into the second quarter. And so that's more of a working -- it's almost in essence a working capital measure and we've probably been a bit conservative as we think about the back half of the year. But $20 million of it would relate to T-Mobile and then the balance of it, we'll just see how the year goes and see where ultimately cash comes out.

Okay, thanks.

Sure. Let me wrap up. I thought everybody has been very patient with us while we went through all the questions. Thanks for your time this morning. Just to wrap up strategically. Look, it's very important to take a step back and look at where we sit in this industry and with our business in particular. We're in the middle of an unprecedented wave of build-out as the carriers are all making very profitable investments, as you look at their current results. Profitable investments to add broadband internet capacity through 4G services into these networks. We're able to do that in a very efficient way, something we're very pleased about. And we're going to work very hard to drive AFFO per share growth into the high teens for the full year this year. That's not quite guidance, but you know we always have stretch goals around here and off of the big base, the bigger base every year that we drive, if we can get into the mid to high teens and maybe even get lucky and hit 20% one day, an outsized goal I have, we would be thrilled to death. So very pleased with what we see. We're working very hard and look forward to visiting with you on the call next quarter. Thanks very much.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. You may now disconnect your lines.