SBA Communications Corp (SBAC) 2010 Q4 法說會逐字稿

Welcome to the SBA fourth quarter results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions given at that time. As a reminder, this conference is being recorded. (Operator Instructions) I would now like to turn the conference over to your host, Director of Finance, Mark DeRussy. Please go ahead.

Thanks, Cathy, and thank you, everyone, for joining us this morning for SBA's fourth quarter 2010 earning conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer, and Brendan Cavanagh, our Chief Financial Officer.

Before we get started, I need to get the standard SEC disclosures out. Some of the information we'll discuss on the call is forward-looking, including, but not limited to, any guidance for 2011 and beyond. These forward-looking statements may be affected by the risks and 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, which documents are publicly available. These factors and others have affected historical results, may affect future results, and may cause financial results to differ materially from those expressed in any forward-looking statements we may make. Our statements are as of today, February 25, 2011, and we have no obligation to update any forward-looking statements 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, and other information required by Regulation G, has been posted on our website, www.SBAsite.com. Brendan, would you please comment on our fourth quarter results?

Thanks, Mark. Good morning. As you saw from our press release last night, our fourth quarter financial and operational results were strong. We exceeded the midpoint of our guidance for site leasing revenues and equity free cash flow. We were above the high end of our guidance for tower cash flow, adjusted EBITDA, and site development revenues. Total revenues were $165.5 million, up 14.2% over the year-earlier period.

Site leasing revenues for the fourth quarter were $140.1 million, or a 13.3% increase over the fourth quarter of 2009. This growth was driven by both organic growth and acquisitions. Site leasing segment operating profit was $110.4 million, or an increase of 15.6% over the fourth quarter of 2009. Site leasing contributed 97.1% of our total segment operating profit in the fourth quarter.

Tower cash flow for the fourth quarter of 2010 was $111.2 million, or a 14.2% increase over the year-earlier period. Tower cash flow margin was 80.3%, compared to 79.5% in the year-earlier period. This is the first time in our history, and I believe, the history of the industry, where 80% tower cash flow margins have been attained. We converted over 100% of incremental site leasing revenue into tower cash flow in the fourth quarter due to a variety of lower expense items, including those resulting from our ground lease purchase program, which are permanent in nature. These gains were partially offset by the impact of the less mature, lower margins towers we added in 2010.

Operationally, we saw a continuation of the strong leasing trends witnessed in the third quarter. Our incremental organic leasing revenue added in absolute dollars during the quarter was one of the highest in company history, with 93% of this new revenue coming from broad-band telephony carriers. New tenant adds again increased significantly the first half of 2010, and amendments to existing installations were very strong. Amendments, which were predominately from AT&T and Verizon, contributed almost one-half of incremental leasing revenue added in the quarter.Our leasing backlog right now is good, and we expect that the first quarter will be another solid one in terms of customer activity, and we expect strong levels of activity to continue throughout 2011.

Our services division had an exceptionally strong quarter, as well, as carriers made a year-end push to meet 2010 objectives. We continue to work for all the major carriers, and many of their program management firms and equipment manufacturers, performing our three core services of site development, construction, and technical services. Our service revenues were $25.4 million dollars, compared to $21.3 million in the year-earlier period, or a 19.2% increase. Services segment operating profit was $3.3 million dollars in the fourth quarter of 2010, compared to $2.6 million in the fourth quarter of 2009. Services segment operating profit margin was a healthy 12.8%, compared to 12.3% in the year-earlier period. From a revenue standpoint, we produced our strongest services quarter since the fourth quarter of 2005.

SG&A expenses for the fourth quarter were $18.4 million dollars, including non cash compensation charges of $2.6 million, and acquisition-related expenses of $3.4 million. SG&A expenses were $16.5 million in the year-earlier period, including non cash compensation charges of $2.3 million, and $2.2 million of acquisition-related expenses. Excluding the non cash compensation and acquisition-related expenses, the increase in SG&A from the year-earlier period was only $269,000, demonstrating the operating leverage inherent in our business model.

Adjusted EBITDA was $102.7 million, or a 15.9% increase over the year-earlier period. Adjusted EBITDA margin continued to grow, and was 62.7% in the fourth quarter of 2010, up from 61.6% in the year-earlier period. Equity-free cash flow for the fourth quarter of 2010 was $61.4 million, compared to $48.8 million in the year-earlier period, an increase of 25.8%. Equity-free cash flow per share for the fourth quarter of 2010 was $0.53, compared to $0.42 in the year-earlier period, and increase of 26.2%. Our strong growth in equity-free cash flow per share is a result of solid adjusted EBITDA growth, combined with stable net interest expenses, stable other non-discretionary expenditures, and a declining share count.

Net loss attributable to SBA Communications Corporation during the fourth quarter was $39.2 million dollars, compared to a net loss of $43.5 million in the year-earlier period. Net loss per share for the fourth quarter was $0.34, compared to a net loss per share of $0.37 in the year-earlier period. Weighted average shares outstanding for the quarter were 114.9 million, down from 116.9 million in the year-earlier period, due to stock repurchases in 2010. Quarter end shares outstanding were 114.8 million.

In the fourth quarter, we acquired 405 towers, built 41 towers, and decommissioned 40 towers, ending the quarter with 9,111 towers owned, and the rights to manage approximately 5,300 additional communication sites. Total cash capital expenditures for the fourth quarter of 2010 were $175.3 million,consisting of $2.8 million of non-discretionary cash capital expenditures, such as tower maintenance and general corporate CapEx, and $172.5 million of discretionary cash capital expenditures. Discretionary cash CapEx for the fourth quarter includes $147.8 million, incurred in connection with acquisitions, exclusive of any working capital adjustments. $13.4 million in new tower construction, including construction in progress, and $2.5 million for augmentations and tower upgrades. Net of reimbursements, we spent only $1.1 million on discretionary tower augmentations, reflecting the high quality, high-capacity nature of our towers. For the year, we grew our portfolio of owned towers by 9.5%, which was at the high end of our goal for 5% to 10% growth in 2010.

Of the 9,111 towers we owned the end of the fourth quarter, 8,790 were in the US and its territories, and 321 were located in international markets. With respect to the land underneath our towers, we spent an aggregate of $10 million to buy land and easements and to extend ground lease term. Our investments in land are both strategically beneficial and immediately accretive to equity-free cash flow per share. As of December 31, 2010, approximately 31% of our tower sites were located on land that we own or control for more than 50 years, and approximately 68% of our tower sites were located on land that we own or control for more than 20 years.

At this point, I'll turn things over to Mark, who will provide an update on our liquidity position and balance sheet.

Thanks, Brendan. SBA ended 2010 with $3.1 billion of total debt, including a $20 million draw-down on our revolver. We had cash, cash equivalents, short-term investments, and short-term restricted cash of $97.7 million, resulting in net debt of $3.0 billion. At December 31, 2010, our net debt to annualized adjusted EBITDA leverage ratio was 7.2. And our net secured debt to annualized adjusted EBITDA leverage ratio was 2.8, including a $20 million draw under our credit facility. Our fourth quarter cash interest coverage ratio of adjusted EBITDA to net cash interest was very strong at 2.7 times.

We continue to believe our balance sheet is in excellent shape, as we have no material debt maturities prior to 2013, and we have ample liquidity. As of the end of the fourth quarter, 99% of our outstanding debt was fixed rate, with a weighted cash coupon of 4.9% per year, and a weighted average maturity of five years. In addition our cash, short-term investments, and short-term restricted cash of $97.7 million, we had available to us $480 million under our revolver for total liquidity of approximately $578 million as of the end of the fourth quarter. If we desired additional liquidity, we believe various capital markets are currently available to us and are attractively priced, providing us with financial flexibility as we execute our growth strategy.

During the fourth quarter we repurchased approximately 279,000 shares of our common stock for $10.3 million. At the end of 2010, we had 141 million remaining under our stock repurchase authorization. Stock repurchases continue to be an integral part of the overall capital allocation process to maximize shareholder value, and remain to be a tool to be utilized opportunistically, rather than systematically. As of December 31, 2010, we have cumulatively repurchased 3.2 million shares at an average price of $33.80 per share. At this point, I'll turn it over to Jeff.

Thanks, Mark, and good morning, everyone. We did have a very good fourth quarter and full year 2010. I want to thank all of our employees and customers for that. Our employees executed very well in meeting the needs of our customers,and those customer needs were and continue to be many.

We continue to operate within a very favorable macro environment. As you have heard directly from our customers, the wireless carriers, network demand, driven primarily by growing data use in new devices, is soaring. Cisco's February 1 white paper projects global mobile data traffic to grow 26 fold between 2010 and 2015, which is a compound annual growth rate of 92%. Carrier response has been, and they have stated will continue to be, increased investment in their networks, either to add capacity to migrate to next-generation technology, or both. We see this occurring domestically and internationally. Currently, this level of investment is very strong, albeit unequal among our carrier customers. We expect carrier demand in the aggregate and investment to stay strong and at current pacings throughout the year. Organic growth prospects remain strong, and we still expect organic growth rates in 2011 will be slightly better than those we enjoyed in 2010.

As to specific carriers, not much has changed since our last report. AT&T and Verizon are very busy with us for new leases and particularly amendments, T-Mobile is currently next most active for us, followed in no particular order by Sprint, Clearwire, Leaf, and Metro. We expect this relative activity to remain materially constant as we move through the year, with some potential for increased second-half activity from Sprint and Clearwire, based on their public statements. Our international assets, while still small in contribution, are showing great demand and are leasing up ahead of expectations. Our updated guidance reflects a steady lease-up environment at current levels of activity without any second-half pickup. The increase to the mid-points of our full-year 2011 guidance for site-leasing revenue, tower cash flow, and adjusted EBITDA should be attributed mostly to asset growth activity.

With respect to asset growth, we grew the portfolio 9.5% in 2010,and we are one again targeting, and confident in achieving, 5% to 10% portfolio growth in 2011. As you can see from our towers acquired year to date in our backlog, we are off to a very good start. We expect to grow the portfolio both in the US and internationally, with the growth divided approximately equally between the two.

We expect international growth to occur primarily in Panama and Costa Rica. In Panama, we already own over 300 towers, and have over 100 additional towers under contract to buy or build. In Costa Rica, the spectrum options have now taken place at America Movil and Telefonica a have been awarded nation-wide licenses. We believe our efforts to develop towers in Costa Rica, which we started now almost three years ago, are going to be very rewarding. We are now working full-speed for both America Movil and Telefonica, working on hundreds of sites in various stages of development, and ready for construction. Our guidance now assumes approximately 200 towers built in Costa Rica by year end, mostly in the second half of the year. There is a good possibility that the actual number is much greater. We're excited about our international activities, and we will continue to look for new opportunities that we expect will produce greater returns on a risk-adjusted basis, than current US opportunities.

We worked very hard on capital allocation. Currently, we see a number of additional acquisition opportunities in both the US and internationally that we believe will satisfy or exceed our investment goals. As a result, we feel very good about our chances of once again meeting our portfolio growth target this year. While acquisition pricing remains elevated, it does feel stable.

We continue to favor portfolio growth when we can buy and build towers that meet our investment criteria, which consist primarily of achieving a certain rate of return over our weighted average cost of capital. We target a certain positive spread over our [WAC] for US assets, and require a greater spread for international assets. When acquisition opportunity meets those return requirements, we then decide whether our shareholders would be better off with us pursuing the acquisition or repurchasing our stock, with better off being determined by relative accretion to equity-free cash flow per share over the next five years.

Sometimes that analysis will favor the acquisition, and sometimes it will favor the stock repurchase. Stock prices tend to vary say more frequently than private asset prices, and as a result, good stock repurchase opportunities will arise from time to time. We have taken advantage of some of these opportunities in the past, and I believe that similar opportunities will be presented to us in the future where we can repurchase our stock at prices below what we believe is intrinsic value.

Because we believe we will see attractive opportunities for both asset growth and stock repurchases this year, it is likely that we will stay fully invested in 2011, which is to say we intend to run the company at current leverage levels. We are very comfortable at our current level levels. We have been managing our balance sheet at these leverage levels for almost two years now. Our cost of debt and our access to additional capital has never been better.

Our full-year guidance for 2011 implies that, without additional investment beyond our discretionary capital expenditure guidance, leverage will decline as we move through the year. As such, we have more appetite for investment in portfolio growth, stock repurchases, or both. With our projected equity-free cash flow and our credit facility, we have more than enough liquidity to increase investment through the year to maintain current leverage levels. With the low interest costs that are currently associated with accessing such liquidity, we would expect any additional investment to be immediately accretive to equity-free cash flow per share.

We expect that all of what we have discussed here today will allow us to produce material future growth in equity-free cash flow per share. It remains our primary focus for financial results. With no need for any refinancing until 2013, our interest expense is, as is projected today, relatively stable. As a result, on a steady share count, any material growth in adjusted EBITDA will translate into material growth in equity-free cash flow per share. Evidence of that is shown by our actual fourth quarter actual results, and first quarter and full-year 2011 guidance, which implies equity-free cash flow growth of more than 20% year-over-year.We hope to do even better with increased investment, organic lease-up higher than that assumed in our guidance, or both.

We look forward to a very successful 2011 and look forward to future reports. Cathy, at this time, why don't we open it up for some questions.

(Operator Instructions) The first question comes from David Barton from Bank of America.

Hi, guys. Thanks for taking the question. A couple, if I could. Just first, Jeff or Brendan, can we talk about the guidance, just revisit. With respect to your comments, Jeff, that you're looking at second-half potential of restarting of some demand from Sprint Clearwire, can you just refresh what your basic expectations are from them? Are you expecting positive contributions in order to get your numbers from Sprint Clearwire, or --and so, how much?

And I guess the second question I have is, we're having tons of conversations in the market right now, the longer the Sprint and Clearwire thing goes on, about all the permutations and combinations of ways it could ultimately get resolved. Things including Light Squared and all these other potential issues. I think one of the conversations we're having with people is that there's this sense that shared networks or cooperative builds are in some way a subset of merger risk in that, the more that guys get together, the less opportunity there is for the tower companies to profit from it. But I know that there are lots of contractual and nuances to these relationships that allow you guys to profit from different spectrum bands and different things. So, could you elaborate a little bit on how a tower company like yourself can profit from a combined or cooperative build plan, if that ends up being the option that Sprint and Clearwire choose? Sorry for the long question.

That's fine, David. On your first point, let me be clear. Maybe I was not. Our guidance that we just revised assumes current levels of activity. My comments about Sprint and Clearwire maybe doing more activity in the second half of the year should be viewed as upside and not as necessary to hit the existing guidance levels. What we have -- if everything stayed the same as it were today, we feel very comfortable with the guidance that we put out. Does that answer that question?

Perfect.

On the other point, you're absolutely right in terms of the contractual limitations on equipment sharing, at least as SBA has structured its portfolio. The recent rumors about Sprint and Light Square, which I've just read about, the same as everyone else, that would not -- if, in fact, that happened, that would result in additional revenue opportunities for us/ Because there would have to be amendments negotiated and additional revenue negotiated, because Sprint does not have the right to share its equipment under our contracts unless it, in fact, owned the spectrum, and that's the key differentiator. So, it should not -- for those who view equipment sharing as the same as a merger, at least from a contractual perspective, that would be wrong.

All right. That's clear. Thanks, Jeff.

Okay.

Jonathan Schildkraut, Evercore Partners.

Jonathan, are you there?

Hello. Can you hear me?

Yes.

Great. Just two quick questions. First is on the SG&A side. In terms of net of the stock-based comp and the acquisition costs, as you laid out in your prepared comments, SG&A as a percent of revenue continues to fall, 8.2% in 2008, all the way down to 7.5% for 2010. And I was wondering if you can give a sense as to whether we're going to see continued scaling here, and how we might look at this going forward, in terms of whether it's absolute levels of spending or the long-term leverage you expect to get?

And secondly, in terms of the build-out towers for this year, based on your guidance for discretionary cash CapEx, with some, I think, reasonable assumptions on lease acquisitions and augmentations, as well as looking at the announced acquisitions, it sort of implies a per-tower build cost of, call it $160,000 to $190,000. And you had indicated that there would be a split between domestic and international. So, I was wondering if you might lay out some of the build cost -- expected build cost on a per-tower basis, as it applies to the US and then for some of the markets that you're pushing into?Thanks.

I'll start with your last question first, and you're absolutely right. The implied math that you just talked about is really an average of what we would spend in the US and Canada, which are more in the mid-$200,000, $250,000-ish range per tower versus the approximately $150,000 that we would expect to spend for new builds in Central America. So, there is a wide difference in the costs of the CapEx for new builds in North America versus central America. That's why you come up with those numbers.

On the SG&A, I don't know where it goes. We believe it will always go lower. It certainly has the potential to always go lower as a percent of revenue. I think you will see year-over-year steady improvement. You may see some quarterly bumps as we move into new markets, kind of like a stair-step function, where we have to get set up and then gain scale in those individual markets. But directionally, we think we will continue to reduce SG&A as a percent of revenue, and I'm not sure there's any end to that.

Great. Now, in terms of the portfolio numbers that you gave us in the US and on the international, were you counting the Canadian towers in the US number ?

No.

Okay. Thank you.

Rick Prentiss, Raymond James.

Thanks. Good morning, guys.

Hi, Rick.

A couple of questions, if I may. First, piggy backing on your answer to David's question, about how a customer would need to own the spectrum, how would that relate to Sprint Clearwire, where Sprint owns the majority of Clearwire, contributed its own spectrum into Clearwire. Is there any nuance there, that if Clearwire or Sprint -- which has been discussed on both their calls, about co-locating some equipment. How would that be looked at on your contracts?

I believe, it has to fall mainly on the lines of consolidation and legal ownership. If they're not consolidated, they do not get -- they are not considered owners of the spectrum.

Okay. Also, in the constant rumor knockdown camp out of Barcelona, a couple weeks ago there were some rumblings that a customer thought that they were going to be able to maybe turn off sites early just for extending leases. What are your thoughts about what your contracts say and the value of that cash flow?

Yes. Our contracts would not allow that. That certainly is a desirable goal by that particular customer, and there will be a variety of conversations around that topic.

Okay. And then the final question I've got for you. That helps clear up some of those rumors that were bouncing around out there. A lot of carriers are starting to put in LTE. You mentioned how AT&T and Verizon are very active, your top guys. Up in Canada, Rogers is going putting in LTE much earlier than I think anybody expected. Even US Cellular last night -- or yesterday afternoon on their call said they were getting ready to go to LTE this year and will probably build it next year, which is very early for them. When somebody puts on LTE on your towers, what are you seeing as far as what actually occurs? Is it more antennas? Is it more coax? I'm just trying to gauge -- when a carrier tells us, -- Hey, you're right, we need to put in LTE -- what should we expect the work at a tower would involve?

That's a question that varies by carrier, Rick. For AT&T, so far, it's been fairly equipment-heavy and specific. Similarly, but perhaps a bit less so for Verizon. And even less so for Metro, because what Metro has done right up to this point is mostly software upgrades and staying within their same antenna configuration to provide LTE. So you really have quite a range across the board depending on whether LTE is going to be used inside the same frequency or not.

Probably also has to do with how much capacity they're using, because right now it's probably still early stage?

Right. You'll have capacity issues. You'll have issues around whether they can take out some existing equipment, replace it with LTE. Are they able to kind of switch that capacity, or if they're full out and have no spare capacity, then it's going to be purely additive to get to LTE.

Great. Thanks, Jeff.

Jonathan Atkin, RBC Capital Markets.

A couple of questions. One, on international, as we look at the full-year numbers, what kind of percentage are we talking about for the overall mix as you exit this year? And then, on some of the LTE amendment activity, you're -- unlike your two peers, you didn't sign an MLA with one of the major carriers, and is that affecting your ability to get incremental business from that customer, because they would be motivated to leverage the MLA as much as possible?And then the new tower build number went up on -- actually, scratch that.On the tower decommissioning, the 40 towers, that was higher than we've seen in the last several years, and I wondered what were some of the factors behind that.

Yes, Brendan,you want to take the percentage of international revenue in '11?

Sure. Hi, Jonathan. We would expect by the time we get to the end of the year on a run rate basis, that we'll be producing roughly 10% of our revenue from international sources. So, we have a lot of stuff in the pipeline for this year. We would expect to be up and running by year end.

Okay. And then the MLA?

Yes. On that issue, we've done business with all of our customers, including that particular one, over the years without an MLA. We have a standard course of dealing with these folks, and their 3G and 4G strategies are to come back to existing sites and leverage off that existing infrastructure. So, that's happening for us. We're -- as you can tell from our results, we're getting a lot of amendment activity. It remains extremely strong. I don't think we're disadvantaged one bit by not having done that kind of deal.

On the decommissioning side, we did decommission around 40 towers. You can chalk that up to a cleaning out the closets exercise. A lot of those towers go back to 1999, 2000, when we had a practice, in some cases, of building without an anchor tenant, which we don't do anymore. So, we built a bunch of naked towers back then, and this is some leftovers from that period of time. We're actually -- we'll probably clean out a few more over the course of 2011, and we're getting down below -- 2% of our tower base has no tenants on it. We expect that number will drop as we move through the year.

Great. Thank you very much.

James Ratcliffe, Barclays Capital.

Good morning, guys. Thanks for taking the question. Two, if I could. First of all, on the capital structure, clearly comfortable at current levels. For the right sorts of deals, how high would you be willing to push the capital structure, and how do you sort of think about that process?

And secondly, on the technology side, thoughts around the potential impact of the, I believe, Light Radio product that Alcatel was talking about at MCW? And both for sort of more traditional gas type applications and whether it has relevancy to the traditional stand-alone tower model? Thanks.

On the leverage, James, our views there really haven't changed for the right acquisition, and right is a very expansive term for financial, strategic, operational reasons. We would take leverage up in into the 9s on a net-net basis without crossing into double digits, but we would only do that if we saw a very rapid ability to again delever down into the 70s in a fairly short period of time.

In terms of the Light Radio news, there's a lot of noise about that. I don't think there's really any real specs that are out yet. We've talked a lot about it with our internal experts and our external experts, and we think it's one more development in small cell technology that's going to allow carriers to do more to target certain areas of coverage where they might not have had the economic solutions before.

But, you know, at the end of the day, to truly deliver great service, you have to have height, you have to have power, you have to have [back pull], you have to have security, you have to have weather proofing, and we really don't see this product as being a threat to macro sites. If anything, it should allow macro sites to work better with other types of sites and even more ubiquitously and homogeneously spread wireless coverage. But we'll be watching as the trials come out and as more information starts to be known about this product.

Great. Thanks.

Simon Flannery, Morgan Stanley.

Thank you very much.Good morning. I wanted to touch base on international if I couldYou talked about really focusing on Panama and Costa Rica. Are you looking at other markets in Central America or looking to do more in Canada, or have you really sort of decided that Panama and Costa Rica is really going to fulfill most of your international growth aspirations for the next year or two? Thanks.

No. We are looking to grow Canada. And actually some of our guidance on both new builds and acquisitions have some additional Canada assets in there, and we are looking, Simon, for additional markets. We like to keep exploring opportunities. I don't know if we'll enter any new countries this year, but we will continue to look.

Jason Armstrong, Goldman Sachs.

Hi, thanks. Good morning. A couple of questions. First, on the incremental tower activity, whether it's buys or builds, obviously continues to skew international. I'm just wondering if you can comment on the domestic market and why we're sort of continuing to skew away from it?Is there just too much competition for assets driving prices up, or a lack of sellers? Maybe just help us think through that. And then secondly just an update on [DAZ], just what you're seeing through your JV, and is there room for more emphasis there? Thanks.

Yes. On the US , the only reason we will do more international -- not more, but even potentially the same amount internationally as we will in the US this year, Jason, is because of the number of towers we're going to build in Costa Rica. From an M&A perspective, I am confident that the US numbers will far exceed the numbers. So, I want to make sure that's clear. My comments were really skewed because of the new build function.

In terms of the US market, it's steady. There's a lot of opportunity out there. There is stability in prices, although, as I mentioned there's still a -- pre-fall of 2008, they're fully priced, which is where they've been, at least in our view, for the last 6 to 12 months. But there's no lack of opportunities out there, and I think you'll see us growing materially just in the US, but when you combine it, even more

And just if I could follow up. I think there was hope at one point that with a number of other tower companies sort of positioning potentially for a T-Mobile tower sale or another big portfolio coming into the market, that maybe it would open up a lot of opportunities in different angles maybe at the lower end of the market. Is that playing out?

A little bit. But I wouldn't -- I'm not sure I would agree with the assumption that a bunch of our competition for assets is just sitting on the sidelines waiting for that opportunity.

Okay.

Yes. I'm sorry. Your second question?

The second question was an update on the DAZ business, what you're seeing through the JV.

Yes. We are very, very happy with the level of activity and acceptance in that business that we're seeing through our investment in [Expadex], and we continue to be interested in expanding our ownership and our investment in that company should situations and needs arise. But it's definitely a product and a part of wireless that's here to stay, and I think we'll continue to see material growth.

Great. Thank you.

Phil Cusick, JPMorgan.

Hi. This is Richard in for Phil. Just wanted to ask, given the incremental activity this year and how much carriers have guided to smartphone ramps and how much adoption that they're planning on driving, how much of the activity this year is 4G related versus 3G upgrades and expansion?

That's a tough one. I would say somewhere around 50/50 with maybe a 10% skew either way. There's clearly still a lot of 3G work being done.

And I guess with the 4G activity, do you expect it to ramp into next year, and how long do you think it can go on given that a lot of activity's still 3G?

I think we have years to go in terms of fully developed 4G networks, and multiple. Three minimum. Another year and a half from now, I can give you a better view as to how much further beyond that it may extend. But as we sit here today, it's at least three years of a lot of work to be done to get 4G out there.

And I guess the last question, you mentioned going up to nine times for the right type of assets. Do you see any out there? And I guess with the current environment being so strong and maybe getting stronger, would that change your opinion, or is it more looking at assets and price, or just quality of assets?

Ye. It's all of the above. We've been at this a long time and have managed this company through two difficult credit markets, capital markets environments. So, our views on leverage are shaped by fairly long experience. What we do around the deal will be very much-deal specific and financial return oriented. I'm not going to get into specifics as to which deal may make sense to do that or not. not, but there theoretically deals where we would have that type of appetite. But it would take a very, very good deal, one that made absolutely clear and inarguable sense for our shareholders for us to do that.

Great. Thank you.

Michael Bowen, Guggenheim.

Okay, thank you very much. First question I have is, last quarter you mentioned that, I believe, you had purchased 512 towers. I think that was for the $166 million, and that you had planned to close, I think all of those by the end of the first quarter, if I'm not mistaken. If you can give us an update on that? I think the majority, if not all, of those were in Panama.

And then I may have missed it, but have you provided a tower expansion percentage for 2011?Is it going to be similar already to the 5% or 10% you mentioned for 2010? Although, coming in at 9.5% might lead us to go higher on that, soI'm curious there.

And then lastly, on decommissioning the sites, are they naked towers? Is this all just an expense of taking it down, or are you actually selling some of these towers to others, or able to? Thanks.

Yes. We've sold some, but it's de minimus dollars that you wouldn't even see in the financials. It's all naked towers, and actually, what you see is pickup in cash flow, because you've saved expense by decommissioning those sites. We are targeting 5% to 10% again this year for portfolio growth. We think we're in pretty good shape to do that, and we have closed --if you look at our press release last night, you see what we've closed year to date. That is some of those towers, plus what we closed in the fourth quarter that we had previously disclosed as under contract. And Brendan, do you know how many of those were international?

Last quarter about half of them were international. They were under contract, and we closed about half of those roughly, so -- in the quarter.

And do you think, out of that 512, you're still on track to close them all by the end of the first quarter?

Well, we've already closed a bunch. So, the answer is yes. What you're referring to is our press release of October.

Yes.

So, you can tell from what we did in the fourth quarter that we actually did most of it in the fourth quarter. We've already done some. So, I would say that the answer within materiality basis is yes. We will get all of those closed by the end of the first quarter.

And we subsequently, obviously, added other stuff under contract, so --

All right. Thank you.

Brett Feldman, Deutsche Bank.

Hi, thanks for taking the questions. A follow quickly on the discussion about Sprint and their planned decomissioning of the iDEN network. I might have missed this, but can you just remind us, what percentage of your revenues, your leasing revenues, come from stand-alone iDEN leases, and what the weighted average remaining tenure is on those leases right now?

It's 7% or 8%, and it is a weighted average of probably five to six years.

And so any discussions you have with [MU] would expect to be, at minimum, made whole on those contracted revenues, correct?

Yes, either through dealing with those or through something else, right.

Okay, I just wanted to clarify that. And then, this is a bigger picture question. If we look at the maturity structure of your balance sheet, it's better than it's ever been in your history. You're essentially staggered out over about 10 years. But when we look at how volatile your stock has been over the last 10 years, ti seems like a lot of that volatility is based on the perceived risk year equity, depending on what your maturities are, so it seems like an area where you could always maybe do better. I'm just wondering, do you think you're seeing opportunities in the credit markets to take out those maturities even farther? Is it a goal to maybe get to a 20-year maturity structure? And if not, I'm just curious how you think about that.

I think philosophically, Brett, we would certainly agree with all that. There are wonderful low-cost opportunities to issue debt today, which we are carefully monitoring, that would allow us to further stagger and lengthen our maturity structure. The issue is, what do we do with the money. You know, we don't have any liquidity needs today. We don't have any debt that is refinanceable today without an added cost, either prepayment or premium-type penalties. So, it's really a question of, do you just take a bunch of debt to put cash on your balance sheet for staggering and maturity purposes, and I'm not sure that's the right decision. But I think that the message here is we have more options and opportunities today around our debt structure than we've ever had before, and the cost of capital today for additional debt, at least today, are extremely good.

Great. Thanks for taking the question.

Cathy, is there anybody else?

Greg Powell, Wells Fargo.

Good morning. Thanks for trying the questions. Most of them have been answered, but I still have a couple. You already touched on this a little bit, but based on your announced acquisitions and new builds, it looks like you're already at about 7.4% tower portfolio growth for 2011, and you still have the rest of the year to go. So, should we expect you to grow the portfolio in excess of 10%, or should the pace of acquisitions slow down a little bit going forward?

I can't answer that one. I mean, if the opportunities are there, we will acquire and build more towers. So, there is a chance it goes above 10%.

Okay.

We'll know it when we get there.

Okay. And can you just talk about what you see the high level -- comparing this 4G upgrade cycle to the 3G cycle that we have the last three to five years? And along those lines, do you have any updated stats on the typical radius of a carrier cell site, how that's shrunk over the last few years and what you expect going forward?

Yes. The cell sites have certainly shrunk. We're down to, in more heavily populated areas, a mile, in some cases less. And in general, cell sites have been steadily shrinking for 20 years now. And again, you have to be carrier specific in your answer, because in two of the cases -- two guys, Clearwire, Light Squared are talking about brand-new nation-wide networks, which would require huge green field builds. AT&T and Verizon are a little different. They're rolling out their 4G on top of their existing 2G and 3G networks. But the level of activity and the number of sites that have to be touched under either scenario are very large. And as we commented earlier, we're very early days yet, and expect this 4G migration trend to last for a minimum of three years, and perhaps longer.

Okay. That's all I've got. Thank you very much.

(Operator Instructions) There are currently no more questions in the queue.

Great. Well, everyone, thank you for joining us today,and we look forward to the next reports as we move through 2011. Thanks.

Ladies and gentlemen, this conference will be available for replay after 12.30 today through March 11, 2011. You may access the AT&T teleconference replay system at any time by dialing 1-800-475-6701, and entering the access code 190732. Again, that number is 1-800-475-6701, access code 190732. That does conclude the conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.