SBA Communications Corp (SBAC) 2010 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter 2010 earnings conference call.

(Operator Instructions).

I would now like to turn the conference over to our host, Pam Kline. Please go ahead.

Thank you for joining us this morning for SBA's first quarter 2010 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer, Kurt Bagwell, our Chief Operating Officer, and Brendan Cavanagh, our Chief Financial Officer. Before we get started, I need to get the standard SEC disclosure out. Some information we will discuss on this call is forward-looking, including, but not limited to any guidance for 2010 and beyond. These forward-looking statements may be affected by the risk and uncertainties in our business. Everything we say here today is qualified in it's 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 31, 2009, which documents is public available, publicly available.

These factors and others have affected historical results, and may affect future results, and may cause future results to differ materially from those expressed in any forward-looking statement we may make. Our statements are as of today, May 5, 2010. 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, any other information required by Regulation G, has been posted on the website, www.SBAsite.com. Brendan, will you comment on first quarter results?.

Thanks, Pam. Good morning. ,As you saw from the press release last night, our first quarter financial results were excellent. We exceeded the mid point of our guidance for site development revenues, adjusted EBITDA, and equity free cash flow. We were above the high end of guidance with site leasing revenues and tower cash flow. Once again, we had very clean quarter with no material unusual or one-time items. Total revenues were $148 million, up 9.6% over the year earlier period. Site leasing revenues for the first quarter were $128 million, or a 10.8% increase over the first quarter of 2009. This leasing revenue growth was driven by both, organic growth and acquisitions. Site leasing segment operating profit was $98.8 million dollars, or an increase of 12.4% over the first quarter of 2009. Site leasing contributed 97.9% of our total segment operating profit in the first quarter. Tower cash flow for the first quarter of 2010, was $100.8 million, or a 12.9% increase over the year earlier.

Tower cash flow for the first quarter of 2010 was $100.8 million, or a 12.9% increase over the year earlier period. Tower cash flow margin was 79.4%, compared to 78.7% in the year earlier period. Our service revenues was $20 million, compared to $19.6 million in the year earlier period, or a 2.2% increase. Services segment operating profit was $2.1 million in the first quarter of 2010, compared to $2.6 million in the first quarter of 2009. Services segment operating profit margins were 10.5% in the first quarter of 2010, compared to 13.3% in the year earlier period. Kurt will discuss services in more detail shortly.

SG&A expenses for the first quarter were $16.6 million, including non-cash compensation charges of $2.5 million, and acquisition related expenses of $2.1 million. SG&A expenses were $12.5 million in the year earlier period, including non-cash compensation charges of $1.6 million, and $0.4 million of acquisition-related expenses. Besides the non-cash compensation, the increase in SG&A was due to increased domestic headcount and expenses associated with existing and prospective international operations. We continue to believe we have capacity for material additional growth, with minimal need for additional overhead expense. We expect our adjusted EBITDA margin to continue to grow. Adjusted EBITDA margin was 62.2%, up from 61.4% in the year earlier period. Adjusted EBITDA was $91.4 million in the first quarter of 2010, or an 11.9% increase over the year earlier period.

Equity free cash flow for the first quarter of 2010, was $51.5 million, compared to $52.8 million in the year earlier period. Equity free cash flow per share for the first quarter of 2010 was $0.44, compared to $0.45 in the year earlier period. Net loss during the first quarter was $37.4 million, compared to a net loss of $17.9 million in the year earlier period. This increase in the net loss is due to higher cash interest expense in Q1 2010, primarily attributable to our high yield debt, as well as higher non-cash interest expense, and the nonrecurring gain on debt repurchases recognized in the first quarter of 2009. Net loss per share for the first quarter, was $0.32, compared to a net loss per share of $0.15 in the year earlier period. Weighted average shares outstanding for the quarter were $117.1 million, down slightly from the year earlier period due to stock repurchases.

In the first quarter, we acquired 36 towers, and built 21 towers, ending the quarter with 8,380 towers owned, and the rights to manage approximately 5,000 additional communications sites. In addition, in the first quarter, we contributed our existing DAS business, and approximately $32.3 million in cash for an equity interest in the DAS provider, Extenet. Excluding the Extenet investment, total cash capital expenditures for the first quarter of 2010 were $42.5 million, consisting of $2.2 million dollars of non-discretionary cash capital expenditures, such as tower maintenance and general corporate CapEx, and $40.3 million of discretionary cash capital expenditures. Discretionary cash CapEx includes $26.7 million, incurred in connection with acquisitions and acquisition earn outs, $8.1 million in new tower construction, and $1.9 million for augmentation and tower upgrades. With respect to the land underneath our towers, we spent an aggregate of $4.8 million to buy land and easements, and to extend ground lease terms. As of March 31, 2010, we own or control for more than 50 years the land under 28% of our towers. And approximately 70% is owned or controlled for more than 20 years. At this point, I will turn things over to Pam who will provide an update on our liquidity position and balance sheet.

Thanks, Brendan. SBA ended the first quarter with $2.8 billion of total debt, with cash and cash equivalents, short-term investments, and short-term restricted cash of $148.9 million, resulting in net debt of $2.6 billion. At March 31, 2010, our net debt annualized adjusted EBITDA leverage ratio was 7.2 times, and our net secured debt to annualized EBITDA ratio was 2.2 times. Our first quarter cash interest coverage ratio of adjusted EBITDA to net cash interest was very strong, 2.5 times. During the first quarter of 2010, we repurchased approximately 265,000 shares of our class A common stock for $8.7 million, as part of stock repurchase program, and 2 million of our 2006 CMBS certificates for $2.1 million in cash. Since March 31st, we repurchased an additional approximately 168,000 shares of our common stock for $5.8 million in cash. As of today, we have approximately $234 million remaining under our stock repurchase authorization.

In February 2010, we terminated our undrawn $320 million credit facility, and replaced it with a new $500 million revolving senior secured credit facility. We can borrow under this facility for general corporate purposes, and amounts borrowed bear zero interest at the Eurodollar rate, plus a margin that ranges from 187.5 basis points to 237.5 basis points, based on leverage ratios. As of today, the $500 million remains undrawn, and fully available to us. Last month, we issued $1.23 billion of Secured Tower Revenue Securities, at a weighted average fixed interest rate of 4.6%. This issue was the largest financing in our history, and carried with it the lowest fixed rate we have ever been able to obtain for this type of security.

This issue consists of two securities, $680 million which has an anticipated repayment date of April 16, 2015, and $550 million with anticipated repayment date of April 16, 2017. Net proceeds from this issue were approximately $1.2 billion, and were use to repay in full the outstanding 2006 CMBS certificates. in the amount of $938.6 million. The prepayment consideration associated with this early retirement was approximately $38.5 million, and will be recorded as a second quarter expense. The remaining net proceeds will be used for general corporate purposes. Pro forma for this transaction as of March 31, 2010, we would have had $1.1 billion of convertible debt outstanding, $750 million of high-yield notes outstanding, and $1.23 billion of Secure Tower Revenue Securities outstanding. On a pro forma basis, as of quarter end, 100% of our outstanding debt was fixed rate, and the weighted average cash keep on our outstanding debt was 4.85% per year.

Additionally, on a pro forma basis, we had approximately $385 million of cash and cash equivalents, short-term investments and short-term restricted cash, and unused revolver availability of $500 million for total liquidity of approximately $885 million. With the completion of our Secured Tower Revenue Securities transaction, our refinancing goals have been fully met, with no material debt maturities prior to 2013, and with ample liquidity. The structure of our balance sheet has been materially improved, with financing now a mix of secured and unsecured debts from a variety of markets. Our debt maturities have been lengthened and staggered, so in no future year will we need to refinance more than 23% of our current debt. We believe our balance sheet is excellent shape, and it is where we want to be.

Finally I have a personal announcement to make. I have recently made the decision to resign from SBA, after almost 13 years -- I need a minute -- 8,000 towers and $11 billion in capital market activities, and with SBA being in such great shape, the time for me has and to do something else, although it does not sound like it right now. I have been working on completing my Masters degree, so I could possibly teach at the college level. I've thoroughly enjoy my career at SBA, and in particular, working with the investment community. While at SBA, I've had the opportunity to work with, by far, the best management team in the tower industry, and possibly, one of the best in any industry. Thank you to those on the call, and especially those in the room for making this a wonderful career experience. I will now turn it over to Kurt, to talk about operations.

Thank you, Pam, and we will miss you. Good morning, everyone. During the first quarter, we once again provided steady performance with good results from our employees here at SBA. As we have seen over many years, there's seems to be a never ending flow of activity in wireless. Our recurring revenues and cash flows, continue to increase to levels that consistently meet or exceed our forecasted expectations. In terms of customer activity, currently 3G implementation is still very active, 4G implementation has been steady for three quarters now, suburban and and small town WIMax is steadily being deployed, as are our specialized systems for air traffic control, law enforcement, backhaul, and many other applications.

Our customers have again reported strong gains in data usage in revenues. And the prospects of even higher prevalence of wireless applications and utilization in the future remain strong. Our enthusiasm is constantly bolstered by research and forecasts on wireless data, one of which recently concluded the data would at least double annually for the next five years. For the first quarter, our most active clients were for AT&T, Clearwire and Verizon While the volume of new leases signed during the quarter was solid, the number and value of amendments to existing installations signed was even stronger, accounting for 37% of new the revenues signed this quarter. This was the highest proportion of new incremental revenue, attributable to amendments in our history. This shift was expected to extend the current technology objectives of our most active customers, and we expect the trend to continue for the foreseeable future. We also expect steady stream of new leases as well Pricing has continued to remain firm, as is supported by full equipment loads for voice, data, new frequencies, backhaul and backup power.

In regards to our operational expense on our own to towers, our team did a nice job needing quarterly expectations, on both the OpEx and CapEx fronts. We continue to lead the industry in tower cash flow margin, on what we believe is the youngest portfolio in the industry, in terms of average age, evidencing the very high-quality and cost efficiency of our towers. We believe our tower portfolio will continue to perform at most efficient levels in the industry, in regards to net augmentation CapEx and maintenance CapEx. During the quarter, we bought 36 towers, and build an additional 21. We expect higher numbers in both areas for the second quarter. Our backlog of new tower builds in process has reached a five-year peak, and the economics of these sites are very favorable. We've enjoyed excellent results on these new builds, due to strong lease up beyond the anchor tenants, giving us very good returns. We continue to build a mix of towers, a varied mix of towers with heights varying anywhere from 80 to 300 feet. Jeff will comment in more detail on our acquisitions, and the acquisitions market in a moment.

Our services division numbers for Q1 came in right on budget. Much of the work was focused on big four 3G and 4G rollouts, in addition to new cell sites, as well as work from a variety of other types of public, private, and governmental wireless carriers and system providers. The forecast for our services group is one of steady growth throughout each quarter of 2010. At this point, I will turn it over to Jeff.

Thanks, Kurt, and good morning. We did have a very good first quarter. The continued strength, stability and predictability of our business were once again clear in our results. That strength, stability and predictability is extremely valuable, and provides us with a future vision, against which we can confidently make strategic operational investments, and balance sheet decisions to the benefit of shareholders. I want to thank all employees and customers for continued success. Our employees executed very well in meeting the needs of customers, and those customer needs were and continue to be many. We continue to operate within a very favorable macro environment, as has been clearly demonstrated the results of our customers, the wireless carriers, network demand primarily from growing data use and new devices is soaring. Carriers response has been, and they have stated will continue to be increased investment in their networks, either to add capacity or to migrate to next generation technology.

Each carrier moves on these initiatives on their own schedule. Currently most of the activity is coming from three customers, AT&T, Verizon and Clearwire. This level of activity from these three is very strong, and we expect it to stay that way well beyond 2010. While we are currently seeing less activity from other carriers, over time we expect increase investment activities from these other carriers as well, as they address their needs to remain competitive, and to provide what the consumer wants. We agree with the commentary that second half leasing activity should be greater than first half, which bodes well for our 2011 financial results. In addition, since our last call, the national broadband plan has been proposed, calling for additional material amounts of additional wireless spectrum to be made available in the future. The net result of all these factors is that we expect many years of continued strong demand for antenna space, and related infrastructure from our customers. Since our last call, we accomplished a major refinancing success with our $1.23 billion issue of Secured Tower Revenue Securities.

Within a twelve-month period of time, we have successfully completed $3 billion of financings. Our balance sheet goals are fully satisfied with no indebtedness for three years, and much improved maturity profile. We continue to believe a net debt leverage ratio of 6.5 to 7 turns is the right level at which to run our Company. And we are just about at that range today. We intend to continue to invest in new assets, or return capital to shareholders, in the form of stock repurchases to maintain that leverage range. With financing goals met for the foreseeable future, all of our time and attention will now be on operating and growing our business.

We continue to increase the size of our portfolio through buying and building towers. We are on track to increase the portfolio by our goal of 5% to 10% this year. We have operational back office capabilities, and now the balance sheet to increase the size of our Company substantially. We continue to focus on buying and building growth assets that we expect will grow faster than our portfolio average. While acquisition activity has become more competitive and expensive on an absolute basis, the strong organic growth we expect coupled with our low cost debt capital, allows us to continue to acquire assets that we project will produce positive returns of above our weighted average cost of capital. Our geographic focus remains primarily in the US, and secondarily in other countries in the Western hemisphere. For US acquisitions, we target at least low double-digit returns, somewhat higher returns for US new builds, and even higher, high teens returns for international activities.

On the international front, I am pleased to announce that we now have operations and own towers in Panama. We acquired 102 towers in Panama at prices that were immediately accretive to our valuation metrics. We think the towers have good growth prospects. We like Panama It has land use protections, good growth dynamics and four strong carriers that have many 3G and 4G network plans ahead. The currency is also tied to the US dollar, so will we have no foreign exchange risk. We hope to expand our business in Panama, and we are pursuing other opportunities in the West hemisphere. I do want to make clear, however, that non-US activity will be measured and small, in relation to our overall US investment, but we think exciting, from a return on investment and growth perspective. Currently our towers outside the United States and it's territories represent less than 2% of our portfolio, and we would like to see that number grow to 10% over time. That will likely take us several years to accomplish.

We intend to continue invest in the land underneath our towers, through both buying the land and extending the underlying lease terms. That activity continues to make sound strategic and financial sense. We also intend to invest additional amounts into Extenet, if the opportunity arises. We are very pleased with our investments and see a very bright future for DAS in general, and Extenet in particular. Lastly, I expect us to repurchase more of our stock this year, as I believe we will see attractive opportunities on both an absolute basis, and on a relative basis compared to acquisition opportunities. Our balance sheet position and strength gives us the ability to pursue all these investment opportunities. And we are excited as to what that can mean for the creation of additional shareholder value in the form of increased equity free cash flow per share.

I want to take a moment to recognize Pam, and her career with us at SBA. Pam joined SBA shortly after I did in 1997, and has been integrally involved in everything important to the Company involving financing, the capital markets, and much more. We would not be the success we are today without Pam, and on behalf of all of our shareholders, I want to it express our deepest thanks. We will miss her greatly. But consistent with her strong commitment SBA over the years, she has left us in great shape. Mark DeRussy, our Director of Finance, an individual well-known to most of you, will be taking over Pam's role as SBA's principal contact with the investment community. Mark has some very big shoes to fill, and of course I mean that figuratively, and we know he is up to the task.

We are very excited about the future here at SBA, the underlying drivers of our business remain very strong, with 4G now a reality, and expected to provide years of solid customer demand for leasing space and services. Our balance sheet is a great shape. Our employees are working hard, and executing well. We believe our prospects are excellent for future material growth, and equity free cash flow per share, and we look forward to reporting future results. Ruth, at this time, we are ready for questions.

Thank you.

(Operator Instructions).

First we will go to the line of Rick Prentiss with Raymond James, please go ahead.

Thanks, good morning, guys. And first, Pam, it has been a great pleasure working with you. And Mark, great luck and we wish you best of luck, having been here, and now there, I know you will do a great job. Questions for you guys this morning. First on guidance. Can you update us a little bit about how good your visibility is, usually with that kind of leasing pipeline, it seems like it is pretty solid. A question on how strong the visibility is for the rest of 2010, and what you see for 2011?

The visibility is good, we continue to have, and we've had this for years, about a good six-month forward look. So we are probably one quarter away, Rick, from pretty well knowing exactly where the quarter should -- or the year should end up, from an organic basis. Things are picking up, again, it is primarily with the three customers that we mentioned, that are most active although we are seeing some signs of activities elsewhere as well. As based on where these customers are, with their overall stated plans of technology migration, we think 2011 is going to be another good year as well.

And then it on the stock buyback versus M&A. You touched on it briefly in your remarks, Jeff, about expect more stock buybacks for the rest of this year. Are you implying an increased pace from what we saw in the first quarter also, and how do you look at one, where M&A prices are today, and how do you balance that versus stock buybacks, what's the process there for SBC?

Historically we have always favored portfolio growth, and we still do I'm kind of a jump off basis. But I have to say, in light of where our stock is trading, relative to M&A pricing, it is become a much closer call. Which is really the probably the driver of my comments, and I think you are perceiving them accurately, that you might see the pacing continue to increase. For us, it is about the same thing, increasing equity free cash flow per share over a forward five year period. And we weigh the two types of activities against those metrics. Where it is a tie, we would continue to say even if it is not a tie, if it is close we would continue to favor portfolio growth. Because we think we are buying for the most part towers, that have a higher growth profile than existing portfolio. We have plenty of back-office capabilities to support those new assets, with no additional material cost. It improves and increases our future financing base. And we've always thought growing EBITDA was a better way to get equity cash flow per share, than shrinking share count. Then again, where prices are on both the M&A and stock repurchase opportunity side, we are becoming more indifferent. And it is all about the numbers, and how we see things playing out over the next five years.

Okay and which form are you taking the stock buyback, is it a 10b5, is it a closed open window process?

It is a 10b5 process, that we typically have in place during both opened and closed market periods.

Great. Thanks guys, Pam, enjoy it, and Mark, we look forward to your larger role.

Thank you. Next we will go to the line of David Barden with Banc of America, please go ahead.

Hey, guys thank you for taking the question. And again, Pam, thanks for all your help over the years. Just a first, question I guess, Jeff, you've, last quarter I think suggested there was some optimism about portfolio growth this year, even [STK] maybe even being at the mid-to higher end of the 5% to 10% expectation. And one of the reasons was that you went after small portfolios in harder to find corners of the market, and they could have impact on your business that they could not on other players. Since American towers, Cincinnati Bell buy, there has been a sense that maybe all the sellers expectations have gone up. I was wondering especially looking at the 36 towers you bought here for $650,000 a tower, whether we need to maybe reset expectations for portfolio growth, in addition to increasing expectations for the stock buyback? Thanks.

I think you might adjust your dial slightly, Dave. I don't think it is a material change. Based on what we announced through yesterday, and assuming we hit mid point of our new build guidance, we are about 5% today, with build most of the year ahead of us. I still continue to feel good about getting close if not to that 10% level. I don't know that we will get above 10%, and I don't feel particularly unless there is some wonderful deal which of course we will obviously jump on and take advantage of,but I do, again we try to be extremely mindful of the math. And if I'd produce better or we produce better equity free cash flow per share, at 9% portfolio growth, and some stock buyback, versus 11% portfolio growth, that is something we will consider. We are talking matters of degree, here. I don't think there's really any change from when you and I spoke at CTIA.

Okay. If I can follow up on that with respect to comments about second half being greater than first half. Is that being driven still by the kind of big three active participants in the first quarter, or are you seeing times of the pipeline of the rest of the market is starting to get geared up as well?

More so, the three big customers that we've enjoyed so far this year. There are other activity out there as well. We talk about leasing activities being bigger in the second half than the first. Keep in mind, and I think this is consistent throughout the industry, we are talking about the process of actually signing up leases and amendments, which for the investment community doesn't show up until the financial reports get reported, which typically has a six-month lag. So we are talking about the look at our backlog , what our channel checks are showing us, and what our levels of operational activity are showing

Great, thanks Jeff.

Okay, thank you. And next we will go to the line of Jason Armstrong with Goldman Sachs. Please go ahead.

Hey, thank you, and good morning. And I echo the thoughts on Pam, thanks for all your help. Maybe first question, back to the acquisition topic, but maybe a different angle. If we look at the disparity in multiples so far, over the course of the last 12 months or so, where the smaller portfolio verse are really getting bid up, multiples are expanding. But the bigger assets, at least as we sort of measure in the public equity community, if anything you're seeing multiples contract this year. So I am wondering, do you see an opportunity farther up market, maybe some of theses mid market or bigger portfolios, were you haven't necessarily seen the same multiple expansion. And how should we think about that? And then second question on just quickly on Harbinger SkyTerra. Can you talk about that at all, are you having conversations yet, and can you frame what that might mean, at leat initially for your business? Thanks.

Yes, you are right, Jason on the mid-market, it takes two to tango. There has to be some, not only willing buyers but willing sellers. We would certainly pursue those activities if they were available. We would obviously be mindful of where our public equity was at the time, if we were making a deal. I think all that stuff is possible, and could result in some larger growth, at good prices, but we'll just have to see. A lot of that is going to be outside the control of the buyer, obviously, up to the seller. In terms of Harbinger, we are involved in some communications. There is some activity, they're getting themselves organized. We are optimistic, and hopeful, that really turns into something meaningful. Obviously it is not yet, and it is still kind of on the drawing board. But it is real, it seems to be real.

Okay, thanks.

Okay, thank you. And next we will go to the line of Mike McCormack with JPMorgan. Please go ahead.

Thanks. Hey, guys, thanks. Can you just make a quick comment on the new amendments coming on, and some of the new leasing activities, whether it is more 3G or 4G? I know you pointed out the three carriers, so if you could identify one, certainly it would be 4G. But maybe some parameters around where you are seeing the growth there? And then secondly, it seems like the towers operators are talking about the second half ramp, is there any relation to the comments from Verizon, the phased approach, maybe there is a second quarter where there is no phase going on, and then they start to re-up phase two in the second half? Thanks.

In terms of -- it is pretty straight forward based on the three customers that we have discussed, as the primary contributors of our incremental lease up. AT&T's work is primarily 3G, Clearwire's is, of course, all 4G, and Verizon's work today is mostly 4G, LTE amendments activity. So it is perhaps easier to directly trace why the activity is occurring. And in terms of the Verizon thing, I think that was really taken out of context. I mean they have three years of steady work to hit phases one, two, and three, and whatever.

And the comments about we have done what we need to do to hit phase one. Well, that did not take anyone in the industry by surprise, because you better have your stuff -- you better have your ducks in a row, at least six months before you want to launch something, or you're not going to be ready to go. What all that meant, was they are moving from one phase to the next. And it is a continuous and steady amount of business for us, and others in the industry. And we think we have years of that ahead of us. We do, having said that. we think all the folks we talked about, plus some others will be a little more active, as we move into the second half area.. Then the first, perhaps for no more than a historical reason, that that is really what carriers do over their history, is they work on annual budgets, and they want to make sure they get it all spent by the end of the year. Fourth quarter is typically always big for that reason.

Okay, thanks, Jeff.

Thank you, And next we will go to the line of Simon Flannery with Morgan Stanley. These go ahead.

Thanks very much. Good morning. I was wondering if you could just expand a little bit on the Extenet transaction, and how we should think about the opportunity there going forward? I think you talked about perhaps investing more money there. And then, beyond the 4G and 3G spend, you talk a little bit about rural WIMax, air traffic control, some backhaul, is that sort of amounting to a meaningful demand in aggregated, and any more color you can provide there, would be great. Thanks, and also to Pam, best wishes, and thanks for all your help.

Simon, I will take the first part of that and Kurt, can take the second. We, we I think we've -- and I think I have been very clear and open about our reasons for Extenet. We invested in Extenet, because we, a, think that the DAS business is great, and, b, had a wonderful little DAS business, but what was I thought was five years behind, what Extenet was in terms of it's capabilities. scale, reach, all those things. So we kind of made the classic decision of trading up. And we took what was probably the sixth largest DAS business, and turned it into a piece of the first or second. Our goal over time is to continue to support Extenet both operationally and financially. We have a meaningful minority investment. We're very active with helping guide the company, along with the other investors. And we think and it would be our intent to increase our investment in that over time, because we think it is a good business to be in.

Simon on the other types of network activity out there. There is this new air traffic control system that is being implemented. I have seen estimates it's going take up to 20 years to totally finish every facet of it. But it has been active lately. It's not in relation to the broadband carriers, it's not major. But it is great credit quality kind of stuff, and we think very long term good revenue.

Some of the rural WIMax, and I say rural, but a lot of it is small town stuff, and it's companies like open range out there actively deploying, there is a lot of government stimulus money. The product is being well received. I think that there is a great need for that it is finally hitting home. Again it is not massive in relation to broadband carriers, but it adds a couple points here and there, and we think it is good long term revenue and profit. As is some of the wireless backhaul we're seeing. We like it, it is a nice, add to all the other business we do.

And any stats on the fiber-to-the-tower now, where that is, where you see that going over the next year or two?

It is definitely in full motion right now. We are in the 20% range at least. And it is moving every day, there is major fiber projects happening in every region of the country. We are involved in some of these in our services division. It has taken a variety of forms, in terms of who the providers are, whether it's telcos, cablecos, powercos, they are providing it. But it is in very high gear with all the carriers. It will continue.

Great, thank you.

Thank you. And next we will go to the line of James Ratcliffe with Barclays Capital, please go ahead.

Morning, thanks for taking my question. And Pam, congratulations, and best of luck. On amendments, can you talk a little bit about how large they are typically, in terms of the upscale of revenue per tenant? And in addition, if you could talk about -- I know there was some talk earlier about the larger portfolios -- but particularly what you see about the future of the carrier tower portfolios, and if those are likely to stay in house, or you expect to see them in the marketplace at some point? Thanks.

James, the amendment activity, is varied. And it varies specifically as to the amount of equipment that is being added. Amendments typically range from $300 to $600 per month. In some cases, where there is a lot of additional equipment, we've added over $1000 per month, in particular cases. So, they do vary. They are equipment specific, and it is something that we think given, the migration paths, and particularly, we are not even there yet, but as AT&T moves into 4G, in years to come, it is just going to be continuation amendment activity for the industry. I lost your second question.

Carrier portfolio.

Carrier portfolio. I tend to be a bit pessimistic, that there will be carrier portfolios made available. I think carriers, because the technology is changing. And I think it has surprised even them. if you go back 10 years as to what the additional equipment needs would be over time. I think until the music stops playing, in terms of technology upgrades and new equipment needs, carriers will be less inclined to sell their portfolio than they perhaps they have been in years past. Now, but one driver of course is financial. If there is a good financial reason for a particular carrier, that overcomes what I think is the operational bias to hold the assets, that will cause some things to spring forward. But we will just have to wait and see.

Thank you.

Okay Thank you. And next we will go to the line of Brett Feldman with Deutsche Bank. Please go ahead.

Thanks, and definitely congratulations, and thank you to Pam. I just want to follow up quickly on amendments. When we talked to carriers about some of their network upgrade plans, sometimes they say we can do this with minimal amendment, or we can do this entire upgrade without making any amendments to our leases whatsoever. Based on how your leases are structured, what is the actual trigger for whether you get an amendment on some type of activity on your tower.

Any type of new or changed equipment.

Would that include some antennae swapouts, or would there have to be some incremental increase in the amount of capacity that they are using?

No, that would include antennae swaps.

So basically all the 3G and 4G stuff, is a revenue generating event, for you guys.

Not every single bit. In some cases, not many, there are swaps that add zero weight, zero anything, and in the interest of partnership, we don't charge anything for those. But the percentage of those is very small.

What if they reduce their footprint worth it putting a new base station that happens to be smaller than the previous one. Do they get a step down, or that is not not contemplated in your leases.

That is really not contemplated.

Okay, that was helpful. And then just -- going back to international, you gave a lot of great color about what your envisions are. But what it really sounds like, is that you are not planning on doing what maybe some of your peers have done, which is to go very big particularly maybe into some emerging regions, and maybe get 25% or more of your business, into those types of markets. I am just curious, what are some of those hurdles, that you were not able to get over, in terms of thinking about that size of the international exposure, particularly in emerging markets.

I don't know if they were hurdles as much as, Brett, as seeing continued good opportunities in the United States. Being at a relatively fully optimized balance sheet that didn't -- I mean we don't need to go out and invest $1 billion. In fact, we would not want to do that anyway, because of it would perhaps, knock our balance sheet off its optimized position that we are currently in. It's not so much that we look and said, gee, here is a huge opportunity to make a quantum leap, but for the following reasons we aren't going to do it. It's more, actually, we came about it on hundred degrees from the opposite, which is we always want to have enough geography to fulfill all of our balance sheet optimization goals, in terms of capital to invest through asset growth. So while the US is big, we continue to think it will be our primary spot for investing for years to come, if not forever. We wanted just to have additional places to go, where we can deploy that capital in ways that our big enough to be meaningful, but they just don't need to be that big for us to meet our overall Company growth and balance sheet optimization, and most importantly, equity free cash flow per share goals. It is not like we looked and said, gee, don't like that. It's that we really didn't need to look big, and we wanted to look smart.

Okay, thanks for taking the question, and good luck, Pam.

Okay, thank you. And we will go to the line of Gray Powell, please go ahead, with Wells Fargo, please go ahead.

Good morning, and thanks for taking the questions. And Pam, thanks for all the help over the years. You are, definitely, definitely going to be missed. So a couple quick questions, obviously we are set to see the big eight growth in wireless network traffic, because of data services. In your opinion, how much of the carrier work to meet this demand, actually involves putting more antennas on towers, versus doing things like backhaul?

It's a mix, I am not sure we can give you an exact percentage. Kurt, chime in, if you think there is a more specific answer. It's a little bit of everything. Obviously, the 4G work for both Verizon and AT&T, involves new spectrum, so you have got to have new radios, which in all of cases, require new equipment, both on the ground and at the tower. Obviously, Clearwire's a brand new network, so there is a lot of tower infrastructure. In terms of fully offering the service, definitely there is a big part of it, as being the increased backhaul. It's hard for us to answer that question with specificity, because we are generally aware of what is going on, in terms of backhaul at the site. But remember, that every carrier gets the right to bring in their own utilities provider. So whether they are bringing in fiber or copper, I'm sure they're not ringing in what much copper these days, mostly fiber, but it's not necessarily what we are in the know on..

Yes, some of the word out there, there is, with the capacities issues that some people have been experiencing because of the data usage, some of it has been at the cabinet level, they can take care of it there. Some of it's at the backhaul pipe level. And some of it can't be accomplished by either of those, and they've got to increase cell density. So, it's as Jeff said, it's a real mixed bag between the carriers, their spectrum position, the number of existing technologies they operate. A lot of different moving parts.

But you got to have both.

Got it ,that makes sense. Just switching topics. I realize that it is small today, but can you just talk about the economics of Panama, tenants per tower, the rents, margins and then just the tower cash flow tower multiple on assets you purchased.

Yes, I am going to answer generally, because we are a little -- we just want to provide too much detail, because we are out there trying to build things. I will tell you that in terms of price per tower, we paid around $200,000 per tower, for about approximately 1.5 tenants per tower at good multiples. The prices in the region, are although in terms of tenants are not quite at US levels, but not far off. There are better savings on the expense side, in these markets . So the tower cash flow multiples on day one, are pretty much in line with our other acquisitions. Not quite where our portfolio is, because we are buying stuff that is less mature, but in line with our other acquisitions. So, while you might adjust the topline in the expense line, a little bit, Gray, the margins and certainly the return on investment, we think will be better. And that is consistent with our belief that we should be seeking and obtaining higher returns from our international activities and we are. And we are pretty confident, it's going to do

Okay, great that is very helpful. Thank you very much.

Great, thank you. And next we will go to the line of Michael Rollins with Citi Investment Research. Please go ahead.

Hi, good morning, and thanks for taking the question. Just wondering if you could talk a little bit more in terms -- I know you talked a little bit already about the priorities for your investment dollars. How would you rate land purchases these days, relative to some of the other activities around share repatriation, or cash repatriation back to the shareholders? Do you think it is more of an opportunity to keep buying land, and help that cost structure, and the leasing relationship with those suppliers over time?

Yes I think you are right on it., Mike. I ranked purchases over one. We really do that that's a much as an investment, as much as a repayment of debt. We are going to at this tower site for a long time, potentially forever. To buy in the land or extend the lease at prices that are immediately accretive to our cost of debt today, plus you are retiring an obligation that increases over time. So it just makes all the sense in the world. I mean if we only had one last dollar to invest, obviously depending on price, but all things being equal, we would buy in the land.

And the issue for us, is that we will work hard at it not everyone wants to sell or extend their lease. And we just have a lot more capital to deploy in terms of where we want to optimize our balance sheet, then we can invest in the land program. But that is, those opportunities are right at the top of our prioritization.

Thanks very much.

(Operator Instructions). We will now go to the line of -- back to the line of Rick Prentiss with Raymond James. Please go ahead.

Thanks, I just wanted to make sure everybody had their chance to ask some questions. But I did have a few more on Panama, if I could. Jeff did you kind of set the stage to be the tower company in Panama? Or do you expect carrier portfolios to operate their own, or just kind of what is the competitive dynamics from a tower business down there? I know they have the four carriers which is an attractive area.

Well, they for the most part own their own towers, there are some other independent operators. We think we are the biggest, now. And hope to stay in that role. We think that there are going to be opportunities to both buy and build towers. They are not too far along in their 3G rollouts down there. The spectrum positions are 30 to 35 MHz. no real 4G plans yet. So, and we think the growth opportunities are good.

It's not so much from carrier tower portfolios, it's kind of picking up some of the independents and building them?

Yes. We are always going to stay open for those things, but we wouldn't go into a market contingent on carrier portfolios being available.

Makes sense. And the other part of the question, I think in prepared remarks, Brendan was talking about the SG&A levels, kind of running in the $14 million, $15 million . But sounds like that you don't need that more to the SG&A to handle both Panama and any other international expansions, is that

Unless we jump the international materially. And that is not in our plans today.

Okay, and then final question is, how much cash do you want to keep on your balance sheet? I heard you want to keep the leverage in the right 6.5 and 7 zone, to moderate the amount of absolute debt. How much cash do you want to keep on the balance sheet at any given time, now that you have laddered the maturities and all?.

It doesn't need to be more than $100 million, and it could be less than that. And today we are well above that, and enjoying those 0.25% returns that we get on our cash. (Laughter).

Great, thanks, guys.

Okay, thank you. And there are no further questions in queue, please go ahead.

Well, we appreciate everyone joining us today. And we look forward to speaking with you with our second quarter results, thank you.

Thank you, ladies and gentlemen. This conference will be made available for replay after 1 PM Eastern Time today, until May 19, 2010 at midnight. You may access the AT&T executive playback service at any time, by dialing 1-800-475-6701, and entering the access code of 154006. International participants may dial 1-320-365-3844. That does conclude our conference for today. Thank you for your participation. You may now disconnect.