SBA Communications Corp (SBAC) 2007 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to SBA Communications second quarter results conference call. At this time, all phone participants are in a listen-only mode. Later, there will be an opportunity for your questions. Instructions will be given at that time. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Vice President of Capital Markets, Pam Kline, please go ahead.

Thank you for joining us this morning for SBA's second quarter 2007 earnings conference call. Here with me to the are Jeff Stoops, our President and Chief Executive Officer, Kurt Bagwell, our Chief Operating Officer, and Tony Macaione, our Chief Financial Officer. Before we get started, I need to get the standard SEC disclosure out. Some of the information we will discuss on this call is forward looking, including but not limited to any guidance for 2007 and beyond. These forward-looking statements may be affected by the risks an uncertainties in our business. Everything we say here today is qualified in its entirety by cautionary statements and risk factors set forth in last night's press release and our SEC filings, particularly, those set forth in our Form 10-K for the fiscal year ended December 31st, 2006, and our quarterly reports on Form 10-Q, which documents are publicly available.

These factors and others have affected historical results, may affect future results, and may cause future results to differ materially from those expressed in any forward-looking statements we may make. Our statements are as of today, August 3rd, and we have no obligation to update any forward-looking statement we may make. Our comments will include non-GAAP financial measures as defined in regulation G, the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures in the other information required by regulation G is included in our earnings press release, can has been posted on our web site, www.SBAsite.com. Tony, would you comment on the second quarter results?

Thanks Pam, and good morning everyone. Our second quarter results were very solid and we met or exceeded the high end of our guidance on leasing revenue, tower cash flow, adjusted EBITA, and equity free cash flow.

We had a very straight forward quarter with no material, unusual, or one-time items. Total revenues were $100.3 million, up 14.8% over the year earlier period. Site leasing revenue for the second quarter were $79.6 million, up 27.7% over the second quarter of 2006, driven by strong organic growth in acquisitions. Site leasing segment operating profit was $58.4 million, up 29.2% over the year earlier period. Site leasing contributed 95.6% of our total segment operating profit in the second quarter.

Tower cash flow for the second quarter of 2007 was $58 million, a 26.6% increase over the year earlier period. Tower cash flow margin was 75%, approximately the same as the year earlier period. Our services revenues was $20.7 million, compared to $25.1 million the year earlier period, reflecting the impact of slower activity from AT&T in the second quarter, compared to the year earlier period, when AT&T was a much more active customer for us. Profitability in the segment improves materially, our services segment operating profit was $2.7 million, compared to $2.1 million in the year earlier period. Our services segment operating profit margins were 13% the second quarter. A strong improvement compared to the 8.2% in the year earlier period.

SG&A expenses for the second quarter are $11.6 million, or $9.5 million on a cash basis, when you exclude noncash compensation charges of $2.1 million. This compares to SG&A expenses of $11.5 million in the year earlier period or $8.7 million on a cash basis excluding noncash compensation charges of $1.5 million, and one time AAT integration costs of $1.3 million. We expect quarterly SG&A expenses to stay around these levels for the remainder of 2007.

Our net loss was $15.1 million, compared to a loss of $75.6 million in the year earlier period. Net loss per share for the quarter was $0.15. Our weighted average shares outstanding for the quarter were 103.2 million. Adjusted EBITDA, which excludes certain items such as noncash leasing revenues, and ground lease expense, and noncash compensation was $51.5 million the second quarter, which was up 30.5% over the year earlier period. Adjusted EBITDA margins was 52.5%, up from 45.8% in the year earlier period. Once again, equity free cash flow increased materially in the quarter, reflecting strong EBITDA growth, low weighted average cost of debt and stable nondiscretionary capital expenditures.

Equity free cash flow for the current period was $29 million an increase of 76.7% over the year earlier period. Equity free cash flow per share increased 64.7%, to $0.28 per share in the current period, up from $0.17 per share in the year earlier period. During the quarter, we acquired 68 towers, built 15 towers and ended the quarter with 5783 towers owned, and the right to manage over 5600 additional (inaudible) communication sites.

Cash capital expenditures in the second quarter was $51.4 million, of which we spent $1.6 million on maintenance tower CapEx, $1 million on augmentations and rebuilds, and $200,000 on general corporate CapEx. We also spent $43.9 million of cash and acquisitions, groundings, purchases, and earn outs and $4.7 million on new tower builds and new build work in process. With respect to the the land underneath our towers, we spent in total, $11.7 million in cash, and abide land and easements into expense certain ground lease terms. Our ground lease purchase program is going extremely well and we are significantly ahead of plan. At this point, I will turn things over to Pam, who will provide an update on our capital structure.

Thanks, Tony. The second quarter was a quiet one for us in the capital markets. SBA ended the second quarter with $1.555 billion of commercial mortgage back pass-through certificates outstanding. $350 million of 0.375% convertible senior notes. $228.6 million of cash, restricted cash and short term investments and net debt of $1.676 billion.

We expected our cash balances combined with our growing cash flows from operations will be more than sufficient to meet our capital expenditure needs through the end of the year, even with our strong acquisition backlog. We did not repurchase any shares of our common stock in the second quarter. Our net debt to annualized adjusted EBITDA leveraged ratio was 2.1 times at June 30th, 2007. All of our debt is fixed rate with a weighted average cash coupon of 4.9%. Our cash interest coverage ratio of adjusted EBITDA to net cash interest was very strong, 2.6 times, compared to 2.0 times in the year earlier period. Now, Kurt, would you please provide an update on operations.

Thanks, Pam and good morning. As you can see by our numbers, we are very pleased with the Q2 results in our performance. Revenues and margins were strong. Costs were in line or better than expectations.

We continually to steadily grow our asset base and finished the quarter with strong backlogs. Our customer base overall remains active. History continues to repeat itself in that each quarter some carriers are slowing down the program and planning for the next. Some are picking up activity, and some just steadily deploy. Overall, the organic leasing activity in Q2 was very high as we had our best gross lease up quarter per tower in a year and signed more new co-location tenants than at any time in the last five years. Our customers continue to add to and refine their networks to produce high quality service for voice, data, and video. Continued heavy subscriber increases and subscriber minutes of use increases are also driving the action. There is intense competition between the carriers to improve their networks, in an effort to attract more users or reduce their turn.

In the second quarter, we saw good activity from Verizon, MetroPCS, T-Mobile, Cricket, and Clearwire. It's expected that Sprint/Nextel, AT&T, and T-Mobile will pick up in the second half. We are just starting to see signs of that activity for both new leases and amendments to existing leases. In Q2, 83% of the new leasing business signed on our towers was derived from new tenant agreements, while 17% came from amendments to existing agreements. This is a higher mix of new tenant agreements than we have seen in the recent past reflecting more geographic expansion, new carriers entering markets for first time and slightly less overlay work.

We expect the overlay amendment activity to be higher in the second half of 2007 in terms of total dollars signed. 93% of the new revenue signed on our towers in the quarter came from Telephony and other major broadband carriers. Rental rates for new tenant leases remain solid. An average tenant rents across our entire portfolio increased yet again to $1,767 per month, up from $1,752 at the end of the first quarter. At the end of the quarter, we had 14,212 signed leases, representing an average of 2.5 tenants per tower. We expect this pattern of increasing average monthly rents to continue each quarter.

Same tower year-over-year revenue growth on the towers we owned for more than a full year, June 30, was 10.5%, net of turn and 12.2% excluding Cingular, AT&T churn, which we view as one-time in nature and different from ordinary churn. Same tower cash flow growth was 13.5% net of churn for the same period and 15.2% excluding Cingular, AT&T churn. Based on the second quarter results of our peers, our organic growth rates, once again, led our industry and reflect the high quality and desirability of our towers. We're doing a great job on minimizing the costs associated with our tower portfolio, resulting from both the hard work of our employees and the high quality of our assets. We're the industry leader in lowest maintenance and augmentation costs per tower which is the direct result of the fact that we have, compared to our peers, the highest percentage of towers in our portfolio, built specifically for the independent tower ownership business.

On the asset growth front, we purchased 68 towers and built 15 more in Q2. Bringing our total owned tower base to 5,783. We have purchased an even greater number of towers already this quarter. We have a strong acquisition backlog. We expect the new build activity to continue to grow each quarter throughout the rest of the year. On both classes, new assets, the subsequent leasing activity has been very strong. We claim to continue to push hard with our plan of growing our asset base in a steady, high quality manner.

In the services segment of our business, Q2 revenue was at $20.7 million, and the segment operating profit was $2.7 million or 13%. Q2 revenue was down 17% from the year ago quarter, the segment operating profit was up 31%. We're very pleased with our gains and profitability of the segment, as we focus on profits over volume. Lower services revenue was due primarily to reduced bookings from AT&T which historically has been one of our top two services customers. It would be a mistake for people to misconstrue our services revenue as a good indicator for our leasing business as our services businesses is always much more reliant on one or two customers in any given carrier. Other carriers that we don't perform as much services business for were extremely busy, as evidence by our leasing results and increased leasing guidance.

AT&T was not as busy in the second quarter but we are starting to see AT&T become more active. We continue to anticipate this year will be a more traditional year for services, with each subsequent quarter growing versus the previous one. Overall, our operations at SBA continue to be strong and we believe 2007 will be a solid year for the industry and especially for our company as our clients continue to expand their networks. At this point, I will turn it over to Jeff.

Thanks, Kurt and good morning, everyone. We had another very strong quarter at SBA, meeting our exceeding the high end of our guidance and exceeding consensus estimates for leasing revenue, adjusted EBITDA, and equity free cash flow. I am going to keep my comments brief because our strong results speak for themselves, particularly our organic growth rates of substantial growth in equity free cash flow per share. All in all, we had a very good first half of the year.

We believe that the second half will be even better. We continue to operate in a very favorable customer demand environment, as we have discussed we expected AT&T and T-Mobile will be more active in the second half, leasing tower space than they were in the first half. And that all the other carriers will remain at least as active as they were in the first half of the year. Our leasing and services backlog supports our expectations and we are starting to see increased activity in the field. The operating results of our wireless carrier customers were once again good and all major wireless providers have publicly confirmed plans to invest material sums in their wireless networks.

The last couple of months have been very active in the wireless business, including the announcement of a number of acquisitions and partnerships involving our customers. We view the acquisitions of the rural carriers as good news for our industry as we expect AT&T and Verizon to roll out their full suite of wireless services and products to these markets over time. Perhaps the most importance to us is the announcement from Sprint and Clearwire of their partnership to share one nationwide WiMAX network. We view this announcement as increasing the likelihood of development of a nationwide WiMAX network. While it does mean that Sprint and Clearwire will probably not both build out the same 4G market at least at the same time or initially we always viewed that prospect as somewhat speculative and certainly not something that we ever counted on or planned for. We continue to be very active with both Sprint and Clearwire on developing 4G networks and expect to stay active.

The upcoming 700 megahertz auction is also capturing a great deal of attention. While we can't predict the winners, the amount of attention the auction is getting and the number of parties interested indicates to us that the auction will be successful, and the spectrum developed. We expect our industry will materially benefit from the 700 megahertz auction, particularly from the accelerated build-out requirements. When you put all of these factors together, you have an environment that we expect will continue to produce very strong organic growth for the foreseeable future. Our organic growth rates have been very strong, and we expect to continue to produce strong double digit organic revenue growth going forward.

With our strong organic growth and our expectations that it will stay strong for the foreseeable future, we have a continued interest in growing our tower portfolio with high quality assets. We are having very good success in that regard. We have a significant number of towers under contract to acquire, and are actively pursuing additional opportunities. We are also continuing to build towers and buy the land under our towers. We continue to focus on acquiring towers that on average have fewer tenants per tower than our current portfolio, and as good or better growth prospects at acquisition prices that we believe will in the long term produce returns materially above our cost of capital. We are staying disciplined and have chosen not to pursue a number of opportunities where we did not think we could produce our desired returns. Having said that, however, we are well ahead of where I thought we would be year-to-date on the number of quality towers we have acquired or have under contract to acquire.

I'm very confident that we will meet the high end of our goal of expanding our tower portfolio 5 to 10% this year of quality assets. We have funded these acquisitions primarily with cash, but we have also used some stock, because it was either required by the seller, or we chose to conserve cash for other acquisition opportunities that we know or expect will require cash. In every case, where we issued stock, the transaction was immediately accretive to equity free cash flow per share. We did not repurchase any shares of our stock in the second quarter, as we continued to review a number of additional acquisition opportunities out there that we believe would be better investments for our shareholders. If those acquisition opportunities do not work out for us, we continue to have board authorization in place to repurchase an additional 2.8 million shares from time to time through December 31, 2007.

We feel great about the rest of the year. We have increased the midpoint of our full year guidance for a number of metrics, reflecting our strong first half of the year results and our expectations for an even stronger second half. We are particularly excited about our expectations for continued material growth in equity free cash flow per share. SBA is currently in a sweet spot for equity free cash flow per share growth, as evidenced by our 65%, year-over-year growth, and 22% sequential quarterly growth. We expect stong growth in equity free cash flow per share to continue. I believe 2007 is shaping up to be another very good year for SBA, and we look forward to reporting future results. And Gayle, at this time we are ready for questions.

(OPERATOR INSTRUCTIONS) We'll go to Jonathan Atkin with RBC Capital Markets. Please go ahead.

Good morning. A couple of questions I noticed your build guidance was lowered by 20 towers for the year and was that driven by more M&A than you thought or just zoning issues. What is driving that? And then in terms of the M&A activity, the 68 towers in 2Q and the 99 so far in 3Q, what is the typical -- any multiple -- the transaction size in terms of number of towers, capacity to the assets, region of the country? Can you give us a flavor for the profile of the towers that you have been acquiring recently?

Yes. On the -- on the first question, Jonathan, it's not really cause -- the new build number is not caused by M&A as we have plenty of capital to do both. It continues to be driven by a difficult operating environment, where zoning and having the right first tenant on the tower, up front, before we build it continues to be the gaining issues in our ability to produce more volume. So it's all about operational issues and having the things in place that we require to have in place before we build the tower. But we're working hard at it and as Kurt said, expect to continue to wrap that up as we move from quarter to quarter.

What we're buying, actually varies quite a bit from a single tower transaction to I think the largest we have under contract is probably 60 towers. And it varies on the multiple, depending on the maturity of the tower. We are paying anywhere from 13 times tower cash flow for more mature assets to 20 times tower cash flow for assets that are essentially new builds. I would say the average is probably around 17 times type tower cash flow multiple run rate on day one at, I would guess, 1.5 tenants per tower on average, which is not only accretive to our existing valuation, but it also, we think, offers a better road profile not -- I mean our growth profile is great but at 2.5 tenants, we are buying towers that are below that, which we believe will be obviously as good as our portfolio growth profile and probably will accelerate it given the difference in starting tenants. We are extremely pleased with what we are being able to accumulate out there in the acquisition market, and, you know, it's really a testament to our hard work and the fact that we have been in this business for 10 years, and we do have a great network out there and we are prepared to buy good towers, one at a time if it makes sense to do so.

Thanks. And then in terms of services margins, what has been driving some of the increase there?

Just by the price points, Jonathan, in general, on some of the work. We have been pretty selective with that. And part of the revenue shift we're doing very well with our set acquisition services which is a higher margin business than our construction services. It's a lower volume business but a higher margin and it's more on the front end of the carrier deployment. So that's up quite a bit year-over-year.

And then finally, I think you have been in the market for a fairly senior operations person. Can you fill us in on any management changes?

We -- we just hired a new vice president to head up our new build efforts. So you are very observant. And we have that person started Monday, and it's a fellow well known to us and we are expecting some good things.

Thank you.

We'll go to Clay Moran with Stanford Group. Please go ahead.

Good morning. Can you talk a little bit about the factors that have enabled this surge in tower buys. It seems clearly to be an acceleration in the rate there. And is this pace sustainable? Or how long is this pace sustainable. And then, Jeff, do you foresee a time when the opportunity to acquire towers in the U.S. slows down such that you would start to look overseas?

What is sustaining -- or what's creating the dynamic environment today, Clay, is in many respects the same factors that have made it competitive on the new build side. There are a lot of very entrepreneurial people who have been around this industry for years who are out there developing towers on their own, new builds one, two, five, ten at a time. And their goal in life is to get them developed, get a tenant or two on them and then sell them to folks like us. They don't have the long-term capital structure in place that allows them to hold those assets. They can build them at what is a good price for them, sell them at what they think is a good price to us and we can buy them at what we think is a great price for us going forward. So that's -- that's the dynamic there.

There's a couple different private equity folks, back folks out there that have made the decision to sell for reasons that were unique to their own private equity funds, you know, whether it's timing or raising a new fund. So it's just a lot of different factors out there that are -- that are pretty unique to each individual seller, but when you add it all up, it's allowed us to have a great pool of opportunities. I think a lot of the reasons that I have just described will continue to play themselves out for the foreseeable future. A number of towers have been built over the last couple of years by people other than -- you know, the big three tower companies. Those will be people who will be looking to monetize those over time. So we feel pretty good about -- you know, I don't know if we will get 10% every year. We are pretty confident we are going to get it this year. And our goal for next year will be a similar 5% to 10% portfolio growth. We feel pretty good about that. But after that, you know, the crystal ball gets a little more cloudy. At some point, you know, I would think there may be a reduction in the opportunities. We're going to test that a little bit. We really think that our best value creation continues to occur here in the United States. But before we would ever reach the point where we would come to you and say, look, we can't grow the company anymore, we would certainly look internationally. I do fully expect in the future to do that. But it's not something that we need to do today to deploy the capital that we want to deploy and we have plenty of opportunities right here in the U.S.

Okay. Is there any change competitively in the U.S. M&A market?

It's a little bit more competitive. I mean, based on the answer I gave to Jonathan, you know, probably last year, a year ago, the answer would have been our average was maybe 15 times to 16 times, and now it's 17 times. Although, we view the lease up environment today as better than we would have viewed it a year ago. So we are extremely happy to be getting the quality assets that we are getting ahead of what we continue to believe will be a lot of lease-up activity over the next couple of years. So in that respect, you know, maybe it's a little bit more competitive, but the -- the number of players out there who are competing with us, and who they are, and what their financial resources are, that really hasn't changed that much.

Okay. Thank you.

We'll go to Gray Powell with Wachovia. Please go ahead.

Good morning. Thanks for taking the questions. I just have two quick ones. In terms of new entrants, such as Leap Wireless, MetroPCS, and Clearwire. Just generally speaking how far in advance of a market launch do you typically see them putting equipment on towers? And then looking forward what do you expect to be the bigger components of incremental demand? Traditional spending from the big four or the impact of emerging carriers?

Gray, this is Kurt, I'll take the first one. You no, typically I would say six to nine months they are putting equipment on some of the first towers they lease. They will equipment on some of the last towers that are included in their launch, right up until a couple of weeks before the launch. But they have to get started on the market launch six to nine months in advance with deploying some of that equipment.

And on the second, Gray, a year ago it was more heavily stilted towards the traditional big four and we continue to think that they will still be the predominant source. I mean, T-Mobile has a lot of work to do and others will continue to invest in their network. But this year, the -- the contribution from the emerging carriers and I assume in that category, you have defined Leap, and Metro, and Clearwire. You know, those guys have contributed a higher proportion of our incremental revenue growth than they historically have. We would expect that to continue. If you obviously have to weight one category as where the biggest number will come from, it's -- it's -- we still think it's still going to be the traditional big four.

Okay. And then just on a different subject. As you look at your growth in free cash flow, compared to the opportunities to reinvest in your business, do you think that you are going to -- that you are going to continue to focus cash entirely on growing the portfolio or is there a chance sometime maybe 12 or 18 months for a more meaningful share repurchase program?

We always have the opportunity to be a share repurchaser. And we will be a share repurchaser at the point in time that I think that's a better use of our capital than continuing to add high-growth assets. I mean, that's the heart of our strategy right now. We always have share repurchases ahead of us, but we are out building our portfolio today with quality assets ahead of what we think will be a very high growth period.

Okay. Great. Thank you very much.

And we'll go to Ric Prentiss with Raymond James. Please go ahead.

Thanks. Good morning, guys. A couple of questions for you. First, Jeff, you said, one of the exciting parts of your story, which is the growth of the portfolio 5% to 10% a year. What are your thoughts about going elephant hunting? I mean, there's the T-Mobile book out there that has I guess about 5600 towers. What are your thoughts about the big tower portfolios? And then another question, Sprint and Clearwire were talking about -- obviously exciting news of getting those networks built, but also the possibility of some infrastructure sharing within markets. Clearwire maybe co-locating at Sprint sites. What is your view on that, please?

Well, in the first topic, I mean we would approach any opportunity, Ric, kind of with eyes wide open. We did a big deal last year, which worked very well for us. We don't view any deal as a must-have because of any strategic reason. We are fine the size we are but it's all about growth that accelerates growth in equity free cash flow per share. If we can do a deal that does that, we are interested. If the deal can't be done on terms that would do that, then we're not. AAT is a great example of a deal that really worked well for us in growth and equity free cash flow per share. So, yes, we would be happy to look at a bigger deal on the right financial terms. We -- you know, we'll -- we look at them one at a time or -- or there on up. In terms of -- in terms of Clearwire and Sprint, I mean, you know, from a -- I think the heartier question is can Clearwire come in and somehow take advantage of existing Sprint contractual rights and add equipment. At least at SBA, our leases are very specific. None of our customers have the right to come in and just add equipment. We don't see any particular worries there about any type of ability of Clearwire to come in and use existing Sprint locations and somehow not capture what we would otherwise get from a new tenant on that perspective.

Okay. And then with the 700 megahertz auction coming up, will your services business get any benefit as people look through the process or is it really after people win spectrum that your services business might get a piece of that business?

Historically, it's after. If you look at last year's AWS auction, you know, other than a few calls about what kind of resources do you have, the real action doesn't start until people win.

Great. Good luck, guys.

Thanks, Ric.

We'll go to Brett Feldman with Lehman Brothers. Please go ahead.

Thanks for taking the question. Pam mentioned earlier you were not very active in the capital markets in the second quarter. Tell me, maybe just review what your plans are going forward with regards to incremental financing, especially when you think about some of the volatility we've seen in the mortgage markets. Do you still think that that market is going to be open to you going forward or do you think you will have to start looking at other forms of debt financing as you add leverage?

We -- we think that market, the CMVS market for towers, Brett, will continue to be open. We are tracking things pretty carefully there. You know, the market is there -- I mean the rates may move up and down a little bit, but as people continue to work through and look at the various asset classes and look at the results being produced by the tower industry, they will quickly conclude that what we have is very different from subprime mortgages. So we do see that market continuing for us. We have a -- we are very pleased with our capital structure and flexibility today. We have a lot of cash that we have sitting on the balance sheet ready to utilize. And we also are building a large pool of unincumbered towers that we can use for other financing if we so choose. By the time we close the towers that we have under contract, we will have over 1,000 towers outside our existing securitization, unincumbered, $15, $20 plus million of tower cash flow that's totally free for us to use for additional financing if we so chose. We feel pretty darn good about our ability to continue to access financing to stay in our target range of, you know, 6 to 8 times and continue to execute our plan.

So based on the current plan and that growth in the cash flow outside of the securitization, when would you normally expect to go back to the market? Is this something you think you will do a couple of times a year, it it an annual event, or is it hard to pin down right now?

It's kind of hard to pin down. It really would vary based on the acquisition opportunities that we see, but kind of in a regular, you know, $100 to $200 million per year of new investment, you could probably safely assume that we would go back to the markets once a year or so to kind of re-top up the gas tank to eight times leverage and then delever, invest and then that process would repeat itself kind of once a year.

Okay, and one more question on a different topic. You eluded to a lot of the network initiatives there, that should keep leasing levels pretty healthy for sometime. I know you are not ready to give '08 guidance or anything like that. But if you could just maybe qualitatively talk about the backlog of business you have right now and maybe how that has compared to similar points in time in previous years? In other words do you feel your visibility is incrementally higher than it has traditionally been or is it about the same?

The length -- the length of the visibility based on applications is about the same, because carriers -- you know, they -- they kind of work three to six months ahead and that's it. The -- the magnitude of our backlog, though, is great, particularly compared to, you know, where we have been the last couple of years. We are coming off, you know, what I think is the best July we have had in five or six, seven years in terms of new leases signed up. So we feel -- I mean, all of that stuff is real and it's hard evidence of a very vibrant leasing background. But then the more qualitative aspects are just the -- the ongoing dialogue that we are having with every carrier about what their plans are longer term and it adds up to a -- to, you know, just a lot of work between now and the end of 2009.

That's great. Thanks. Appreciate it.

(OPERATOR INSTRUCTIONS) We do have a question from Ahmar Ahmad from Owl Creek. Please go ahead.

Yes, I just wondered if you could expand on why you used some shares to purchase towers versus pure cash.

Because we see other opportunities out there that will require cash. It's basically a maximization of our capital resources.

Okay. But I guess I'm just confused because it seems as if you have, I guess maybe like $16 million of, I guess, shares used for CapEx and you are still planning on spending about $66 million cash. I guess are you finding yourself able to raise cash for these purchases?

No. What -- what you don't know is what we are looking at that's not under purchase and sale.

Okay.

We have no further questions at this time. Please continue.

Gayle, thank you. And everyone on the call, thanks for joining us, and we look forward to our next report.

Ladies and gentlemen, this conference will be available for replay after 5 p.m. eastern time today through August 17th at midnight. (OPERATOR INSTRUCTIONS) We thank you for your participation.