SBA Communications Corp (SBAC) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for holding. Welcome to the SBA first-quarter results conference call. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions). As a reminder, the conference call is being recorded.

I would now like to turn the conference over to the Director of Finance, Mr. Mark DeRussy. Please go ahead, sir.

Thank you, Eddie. Good morning everyone, and thank you for joining us for SBA's first-quarter 2012 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer, and Brendan Cavanagh, our Chief Financial Officer.

Some of the information we will discuss in this call is forward-looking. This information includes, but is not limited to, any guidance for 2012 and beyond and other statements that are proceeded by or include the words believe, expect, intend, estimate, anticipate, will, may, could, should or similar expressions.

These forward-looking statements may be affected by the risks and uncertainties in our business and actual results may differ materially from the forward-looking statements.

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, including our annual report on Form 10-K filed with the SEC on February 27, 2012, 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, May 1, 2012, 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. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and other information required by Regulation G has been posted to our website, www.sbasite.com.

With that I will turn it over to Brendan to comment on our first-quarter results.

Thanks, Mark. Good morning. As you saw from our press release last night, our first-quarter financial and operational results were very strong. We exceeded the high end of our guidance for equity free cash flow, and our tower cash flow and adjusted EBITDA results were both near the high end of guidance.

Total revenues were $192.5 million, up 14.7% over the year-earlier period. Site leasing revenues for the first quarter were $172.9 million or an 18% increase over the first quarter of 2011. Our leasing revenue growth was driven by organic growth, portfolio growth and the straight line impact of our Sprint Network Vision agreement.

The vast majority of our site leasing revenue comes from the US and its territories, with approximately 6% of total leasing revenue coming from international operations. Site leasing segment operating profit was $137.5 million or an increase of 20.1% over the first quarter of 2011. Site leasing contributed 98% of our total segment operating profit.

Tower cash flow for the first quarter of 2012 was $132.4 million or a 14.5% increase over the year-earlier period. Tower cash flow margin was 80.4% compared to 80% in the year-earlier period. We continue to experience strong leasing demand both domestically and internationally. Amendments, which were predominantly from AT&T, Verizon and Sprint, continue to be numerous and contributed over half of our total incremental leasing revenue added in the quarter.

The big four US carriers contributed more than 75% of our total leasing activity in the quarter. We have a solid leasing backlog and expect that the second quarter will be another strong one in terms of customer activity.

Our services revenues for the first quarter were $19.6 million, right at the midpoint of our guidance, which compares to $21.3 million in the year-earlier period. Services segment operating profit was $2.8 million in the first quarter compared to $2.5 million in the first quarter of 2011. Services segment operating profit margins was 14.2% compared to 11.9% in the year-earlier period. We expect increasing volume in our services business throughout 2012 driven primarily by higher Network Vision activity from Sprint.

SG&A expenses for the first quarter were $17.2 million, including non-cash compensation charges of $3 million. SG&A expenses were $15.9 million in the year-earlier period, including non-cash compensation charges of $2.7 million.

As a percentage of revenue SG&A declined 50 basis points compared to the first quarter of 2011. We expect SG&A expenses to continue to increase modestly in absolute amounts, but decline as a percentage of revenue as we grow our portfolio.

Adjusted EBITDA was $121.5 million, or a 15% increase over the year-earlier period. Adjusted EBITDA margin was 65.9% in the first quarter of 2012, up from 63.7% in the year-earlier period, a 220 basis point increase.

Equity free cash flow for the first quarter of 2012 was $75.8 million compared to $63.6 million in the year-earlier period, an increase of 19.2%.

Equity free cash flow per share for the first quarter of 2012 was $0.68 compared to $0.56 in the year-earlier period, an increase of 21.4%. Our strong growth in equity free cash flow per share is a result of solid adjusted EBITDA growth combined with a lower share count.

This quarter we began reporting funds from operations, or FFO, adjusted funds from operations, or AFFO, and AFFO per share, which are conventional metrics reported by real estate investment trusts as well as by our two public company peers in the tower industry, American Tower and Crown Castle.

In the first quarter of 2012 FFO increased 49% to $59.8 million compared to $40.1 million in the first quarter of 2011. AFFO increased 19.6% to $75.9 million compared to $63.5 million in the first quarter of 2011. AFFO per share increased at an industry-leading pace of 21.8% to $0.67 compared to $0.55 in the first quarter of 2011.

We have provided historical data on these new metrics in our Reg G disclosure which can be found in the Investor Relations section of our website. Given the substantially similar nature of the AFFO and equity free cash flow metrics, we will replace equity free cash flow with AFFO beginning with our second-quarter 2012 earnings release.

Net loss attributable to SBA Communications Corporation during the first quarter was $22.6 million compared to a net loss of $34.3 million in the year-earlier period. Net loss per share for the first quarter was $0.20 compared to $0.30 per share in the year-earlier period.

Weighted average shares outstanding for the quarter were $111.4 million, down from $114.4 million in the year-earlier period due to stock repurchase activity during 2011. Quarter-end shares outstanding were 116 million.

In the first quarter we acquired 78 towers and built 63 towers. We ended the quarter with 10,661 owned towers, an increase of nearly 15% versus the year-earlier period. 9,289 of those towers were in the US and its territories and 1,372 in international markets.

On April 2 we completed our acquisition of the equity interest of certain entities and affiliates of Mobilitie, LLC, which entities owned 2,275 towers, indoor and outdoor DAS assets, and had an additional 42 towers in development.

Pursuant to the terms of our investment in ExteNet Systems, Inc., we are presently seeking to negotiate a mutually acceptable sale of the DAS assets to ExteNet. As a result, we have excluded projected results from operations of the DAS assets from our second-quarter and full-year guidance.

Total cash capital expenditures for the first quarter of 2012 were $76 million, consisting of $2.8 million of nondiscretionary cash capital expenditures, such as tower maintenance and general corporate CapEx, and $73.2 million of discretionary cash capital expenditures.

Discretionary cash CapEx for the first quarter includes $44.9 million incurred in connection with tower acquisitions, exclusive of $600,000 of working capital adjustments and paid earnouts; $17.6 million in new tower construction, including construction in progress; and $4.4 million for gross augmentations and tower upgrades. The augmentation figure is a gross number and does not reflect cash reimbursements paid by our customers.

With respect to the land underneath our towers, we spent an aggregate of $7.2 million to buy land and easements, and to extend ground lease terms. Our investments in land are both strategically beneficial and almost always immediately accretive.

At the end of 2012 we owned or controlled for more than 20 years the land underneath approximately 70% of our towers. The average remaining life under our ground leases, including renewal options under our control, is 33 years.

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

Thanks, Brendan. SBA ended the first quarter with $3.7 billion of total debt. We had cash, cash equivalents, short-term restricted cash and short-term investment of $549 million, resulting in net debt of $3.2 billion.

Our net debt to annualized adjusted EBITDA leverage ratio was 6.5 times. Assuming the Mobilitie acquisition had closed on January 1 of this year, our pro forma net debt leverage at the end of the first quarter would have been 7.2 times, comfortably within our target range of 7 to 7.5 times.

Our first-quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 2.9 times. As of the end of the quarter our debt had a weighted average annual cash coupon of 4.6% and a weighted average remaining maturity of 4.1 years. 81% of our total debt was fixed-rate.

We were very active in the capital markets during and subsequent to the first quarter. In March we issued 6,005,000 shares of common stock in an underwritten public offering, which generated approximately $284 million in gross proceeds. In early April we used the proceeds from the equity offering to redeem $131.25 million in principal of 8% notes due 2016, and $131.25 million in principal of 8.25% notes due 2019 and to pay the applicable premiums. This transaction will result in annualized cash interest savings of $21.3 million and was immediately accretive to AFFO per share.

Simultaneous with the closing of the Mobilitie acquisition, we amended our credit facility to increase the committed availability under our revolver from $500 million to $600 million. We drew down a portion our revolver to fund the Mobilitie transaction.

Also, simultaneously with the closing of the Mobilitie acquisition, we entered into a separate credit agreement for a $400 million bridge loan, which will mature on April 1, 2013. The bridge loan currently bears interest at the Eurodollar rate plus 3.5%, or approximately 3.75% today.

The proceeds from the bridge loan and borrowings under the revolver were used to fund the cash portion of the Mobilitie transaction. The balance of the purchase was funded with the issuance of 5.25 million shares of common stock.

In the first quarter we did not purchase any shares of our common stock. We currently have $150 million remaining under our existing $300 million authorization. While stock purchases continue to be an important component within our overall capital allocation process, we continue to view them as opportunistic rather than systematic.

We believe our balance sheet is strong, our credit profile attractive, and that the current capital market environment should provide us with diverse and attractive sources of growth capital. We are currently in the market to further increase our revolver and issue term debt, the proceeds of which would be used to reduce revolver balances.

At this point I will turn the call over to Jeff.

Thanks, Mark and good morning everyone. As you have heard, we are off to a great start to the year, exceeding our internal plan across key financial metrics. We expected 2012 to be an active year for our customers, and the first quarter solidly met those expectations. AT&T and Verizon remain very active, and Sprint now seems to have fully engaged in the Network Vision project.

Specific site level activity with Sprint increased materially in the first quarter. We also saw a good start from T-Mobile. In February T-Mobile announced their plans to add LTE, which is anticipated to occur through a technology overlay in a manner similar to other nationwide carriers, and which we believe will be the focus of much of T-Mobile's tower level CapEx this year.

We are in the process of discussing the terms, economics and timing of the overlay with T-Mobile. And while we expect work to start on this overlay this year, it is unclear to us at this point whether or not we will recognize any revenue from the overlay in 2012.

We are also seeing similar strong demand from our international customers. Carriers continue to enhance and upgrade their networks to next-generation technology to keep up with strong secular demand for high-speed wireless data. We expect to benefit from these factors for the next several years as carriers build out their initial coverage footprints to be followed by capacity spending as consumer adoption increases.

In anticipation of continued strong demand for wireless infrastructure, we have been very busy growing our Company. In the last six months we have added over 3,000 towers to our portfolio, increasing the number of towers we own by over 30%. Towers were added in all seven countries in which we operate, with the biggest addition being the closing of the Mobilitie transaction on April 2.

A top priority for us is to complete the integration quickly, smoothly and to recognize maximum efficiencies. The assimilation and integration of those towers is going well and we expect the process will be fully complete in the next quarter or two.

We continue to believe that we will see good additional opportunities for portfolio growth as we move through the year. That belief was a driving factor behind our decision in March after we announced the Mobilitie acquisition to issue 6 million shares of common stock, the proceeds from which were used to retire 35% of our high-yield debt.

That transaction restored our pro forma post-Mobilitie leverage to pre-transaction levels and put us back within our target leverage range, restoring our positioning for additional portfolio growth.

We were very pleased with that transaction as we were able to issue equity and reduce debt in a manner and at a price that was immediately accretive to equity free cash flow per share and AFFO per share.

In addition to the equity issuance, we here have taken and are taking a number of steps to restore our capital resources and liquidity to pre-Mobilitie levels. We have closed on $500 million of debt financing at an average interest rate of LIBOR plus approximately 325 basis points. And we are currently in the market to raise up to an additional $300 million of increased revolver capacity and term loan debt, which we expect we will be able to access at very attractive rates.

With our increased view around AFFO for the year, we expect to have substantial resources and liquidity with which to move forward to continue to grow our portfolio.

We expect our additional portfolio growth in the US and Canada will come from a mix of acquisitions and newbuilds, while it will be mostly all newbuilds in Central America. We continue to be in the middle of a large greenfield build in Costa Rica, which was the single biggest source of our new tower builds in the quarter and expected to be for the year, although we will build towers in all of our countries this year.

Internationally we continue to grow materially. Today we own almost 1,600 towers outside the United States and its territories. We are very pleased with our international progress and financial results. We have established ourselves as the preeminent tower company in the countries in which we operate in terms of resources and the number of towers we own.

We expect to be presented with more opportunities for growth in these countries. We will also continue to review opportunities in additional countries for a potential fit to our business model.

As you can see from our new guidance, we expect the Mobilitie acquisition to materially increase almost all of our financial metrics this year. Beyond the positive impact from the Mobilitie acquisition, we see continued strong demand for our assets and services as we move through 2012 and beyond.

Before we open it up for questions, I want to recognize the contributions of our employees and customers to our success. We have been very busy these last three months and I am proud of our efforts. Our employees work really hard to achieve the goals of our customers. Our customers are, and we think will remain, extremely busy improving and expanding their wireless networks.

Our employees do a great job, our customers recognize that, and as a result we are a preferred provider for our customers' network needs.

We look forward to continued success as we move through 2012. Eddie, at this time we are ready for questions.

(Operator Instructions). Jonathan Atkin, RBC Capital Markets.

A couple questions. With regard to DAS and ExteNet, do you foresee any future capital calls or capital contributions to that entity?

And then with respect to the S-band I just wondered if you're seeing any preparations for a buildout of those licenses?

Not yet on the S-band question. We haven't seen any real tangible signs of that, although those folks know we are in a business of leasing tower space, so it would not be unusual -- it would be unusual for us to be the first folks in the loop there.

In terms of DAS and ExteNet, we don't have any additional obligation to contribute capital to ExteNet. I think as ExteNet grows, and they do desire to grow, there will be a need for additional capital there and they will look to their existing investors to supply that capital.

And we will be happy to look at that at that time. And all things being equal, without really knowing what the terms are yet, we would have an interest in increasing our investment in ExteNet, but we have no obligation to do so.

And then on augmentation CapEx how do you anticipate that trending in terms of dollar amounts compared to the most recent quarter? And if you could maybe remind us what portion of your lease and amendment applications require you to contemplate deploying augmentation capital to the site?

I will let Brendan speak to the trends, but in terms of the percentage, about 10% of our leasing activity requires some type of augmentation, most of which historically and currently gets reimbursed to us by the customer.

Jonathan, on the trends, we aren't -- we're not seeing that much of a change from what we have seen over the past year. Generally speaking with some of the changes in the wind loading requirements as the carriers amend their leases we are having to do some augmentations to bring them up to code. But that really isn't that different now than it was a year ago, because we have had a substantial amount of our leases coming from amendment activity for now the last two years.

Thank you very much.

Phil Cusick, JPMorgan.

A couple things. First, if I look at the guidance, given the strength in the first quarter and the strong 2Q guidance, it seems like second-half implies a little bit of a slowdown on a year-over-year basis. Is this a level of conservatism or is there something you see coming that things ease off a little bit in the second-half?

I don't think we read it that way. I think we have guided to a relatively steady full-year level of activity. And maybe walk us through your analysis off-line, but we really don't see -- and there's certainly nothing that we know of today that will cause us to think that organic leasing demand is going to be dropping over the course of the year. We do not believe that; we think it is going to stay strong.

And is it fair to assume that Sprint and T-Mobile are pretty backend loaded and much more impactful in 2013 than 2012?

Certainly on the T-Mobile LTE overlay project. And as far as Sprint is concerned, yes, we have -- we believe that we will have a bigger -- SBA will have a bigger 2013 on the Network Vision CDMA overlays than we will have in 2012.

Good. Last thing, the revenue share on the Mobilitie assets with T-Mobile just seems to be an opportunity to capture some value if you could maybe buy that revenue share from them. Has there been any discussion of that or is that under consideration?

Well, yes, I don't want to -- I think your identification of that opportunity is absolutely correct. And it is something that could be a possibility, and rather than playing that out in public, why don't I just say that it is an idea that we are aware of.

Good, thanks, guys.

Ric Prentiss, Raymond James.

A couple questions. First just, one, I appreciate the AFFO. That is nice to have the industry all reporting that. Can you confirm, is your definition the same? I assume you guys kind of look through all the details of what American and Crown are doing. I just want to confirm is it the exact calculation the same way?

We believe it to be.

Okay. Second question on the guidance, and I assume -- have you explicitly put in T-Mobile and/or Clearwire into your guidance yet or are you still waiting for it to show up in 2012?

We are still waiting.

Okay. And then, Jeff, when you mentioned that you thought T -- you're looking at would there be much revenue recognition in 2012, you would think that they -- with their announcement in February, hopefully they're working on their plans now -- you would think there would still be a little bit coming in 2012 with the majority coming in 2013, just for them to get active.

Yes, I think that is very likely, but until we actually start getting amendments on our sites and understand what the timing of the revenue recognition is, we are going to be very conservative around that.

I mean, it is all going to happen. It is just a question of what is it Q4 or Q1 or how much in each. But it is -- I will say that the activity around T-Mobile's seriousness and moving forward here is pretty high.

You are waiting for the whites of their eyes and the green of their cash to show up.

(laughter). We have usually found that to be the better way to go.

And just one quick one on the DAS business. You mentioned you are looking to sell it by the end of 2Q. Would that be a sale that you would get cash, increased equity stake in ExteNet, or how should we think about what the proceeds might look like?

Well, the obligation is for cash. What we actually end up doing could be a mixture of things. We are looking for a win-win situation for both SBA and ExteNet here, so we're going to kind of stay flexible as we see where this shakes up.

Great, thanks, Jeff.

David Barden, Bank of America.

Thanks guys for taking the questions -- a couple. Just looking at the discretionary CapEx guidance, guys, and then comparing that to your Mobilitie, if I take last quarter's discretionary CapEx number, subtract it from this quarter's number, compare it to the $1.1 billion that you spent with Mobilitie and adjust for the $30 million of new tower sales, it suggests that you guys are putting in about a $237 million sale value for the DAS business in there. I was just wondering if you could confirm or alter that analysis as necessary?

And then, second, Jeff, if you could talk us through not just the Sprint side of the transaction, but as we look ahead for the next two or three years could you refresh our memory about how you see the net of Sprint and the Nextel network shutdown, which Sprint recently announced they want to accelerate, is going to impact the business? Thanks.

David, it is Brendan. On the CapEx item, that guidance and our disclosure around discretionary CapEx is discretionary cash CapEx, so the equity portion of the Mobilitie deal is not reflected in those numbers.

Got it.

So when you're looking at the increase from last quarter's guidance to this quarter's guidance, which includes Mobilitie, there is $850 million of cash CapEx associated with the purchase price on Mobilitie. So I think when you take that into account, that will help you. There is no assumption around proceeds from the DAS sale netted out of there. So this is just a pure gross CapEx without any assumptions around what we're going to get back there.

So you have taken it out of the numbers, but you have put nothing in to reflect any possible sale or other adjustment?

We have slightly adjusted our net cash interest expense, which would be reduced due to the paydown with the use of some proceeds from that, but the CapEx line would not change.

Got it.

As far as the looking forward, David, on the iDEN, as we have described previously, the deal that we have with Sprint gives them the right to staged terminations of most, but not all, of their iDEN leases with us over a period from the middle of 2013 through the end of 2015.

So we expect to see continued growth. While those terminations may cause our growth to be slightly less than it otherwise would have been, it is still going to be, at our expectation, positive growth along all the major financial components moving forward. But the period of time in which those terminations are allowed to be facilitated by Sprint is the middle of 2013 through the end of 2015.

Got it. And could you just refresh my memory. So if we assume that they're going to come off 2013, 2014, 2015 roughly equally, what percentage of revenue potential headwind offset by the CDMA growth are we talking about?

Well, we are down now to -- total iDEN exposure is around 6%. And we believe that roughly the rest of the agreement we have cut with Sprint, which is CDMA refresh across all sites and some changes in the cash escalators, will approximately offset that loss, assuming it all occurs as Sprint has the rights to terminate.

Got it, all right, great. Thanks, Jeff.

Jonathan Chaplin, Credit Suisse.

I'm wondering if you could comment a little bit on the organic -- if you leave aside the impact revenues you are seeing from the LTE upgrades, Network Vision, what you are seeing just in organic sell-side growth from the four major carriers to satisfy capacity requirements?

We are seeing -- you're talking about brand-new macro sites, right?

Yes, exactly.

As opposed to overlays or equipment added to existing sites.

Exactly.

We are seeing some of that, but we are not seeing as much as we have in years past, where carriers were not more fully focused on overlays. And I don't think that should come as a surprise to anyone. It certainly does not come as a surprise to us; it is very logical. It actually reminds us of how Verizon handled the EVDO Rev A upgrade and a few others handled technology upgrades in the past.

So with budgets now being directed towards getting these overlays done and getting 4G deployed on a nationwide basis, you would expect to see less brand-new macro sites, and we are. But we do think that as that happens, again with history, as the overlays come to completion, with history as our guide, we expect that is when the macro site capacity infill cell splitting will really pick up.

Got it. And then one housekeeping question. On the Mobilitie -- on the sale of the DAS business, is there one quarter's worth of DAS revenue and EBITDA in guidance or is there no DAS revenue and EBITDA in guidance at all?

There is no DAS revenue in any of the guidance.

But you will collect one -- you will collect from April -- assuming you sell it at the end of the quarter, you will one quarter's worth of revenue and EBITDA, right?

You will, but the reason we did not include it is when you sell that business it will get discontinued line of business sale treatment under GAAP, and we probably would have backed that out of results anyway. I mean, we will get the cash, but it probably would not show up in our GAAP numbers because of the accounting treatment. (multiple speakers).

Got it.

It would be -- those assets would be considered assets held for sale and the financial operating results would go through discontinued operations. But potentially -- I mean, if it doesn't end up getting sold it will come back in and we will have to adjust for that, like other --.

Okay, thank you very much.

Jonathan Schildkraut, Evercore Partners.

Great. Thanks for taking the questions. A few here, if I may. First, in terms of some of the M&A activity that has gone on, there have been three large ground least portfolios which exchanged hands in the last 12 months or so. That has been something where you guys have been a little bit more incremental work, and I was wondering about your perspective on that.

And then, secondly, I was wondering if you could give us some color on Verizon's 700 megahertz rural buildout program, whether you are saying any participation there have an impact on your business?

And then, finally, the international business really scaled as a percent of revenue in the quarter, and I was wondering if that was due to particular markets coming online or something else behind your numbers? Thanks.

On the M&A, Jonathan, we looked at -- we looked at everything, including those ground lease portfolios. And while they are good assets and will produce long-term growth, we think the growth rates there relative to what we picked up with Mobilitie, certainly at a price adjusted basis, are less.

So we have a very good position with our ground leases as they exist today. We didn't really see any strategic point in those portfolios. Just like we look at everything else, it really comes down to a financial analysis, and we just decided that we saw better opportunities elsewhere. And Mobilitie is perhaps the best example of that.

In terms of Verizon's 700 rural buildout, we are seeing some activity there with some of the partners that Verizon has chosen. It is certainly incrementally positive, but it is not necessarily material to our results.

And international is ramping up nicely. The first quarter reflects the first full quarter of our 580 tower acquisition that we completed in Central America in the fourth quarter, so I would say most of the increase stems from that.

But we are thrilled with how international is going in general. It is up to 6% of revenue now. That may actually scale back a little bit as Mobilitie enters the picture, but we expect it will continue to grow quickly, and we are excited about it and looking forward to continuing our activities.

Thanks. Just one more if I may. In terms of the equity clawback feature in the two -- you know, the 8 and the 8.25 notes, have you guys fully exhausted it at this point?

Yes, we have.

Thank you.

Simon Flannery, Morgan Stanley.

On the international portfolio you talked about looking for other opportunities there. Are you considering expanding outside of Central America and Canada? Could you -- a little bit more color there.

And then if you could just talk after finally closing the Mobilitie transaction, if you could just talk a little bit more about the opportunities you see there around things like lease-up opportunities and efficiency gains and so forth, any updated thoughts? Thank you.

You know, international expansion, we continue to look for more opportunities. Our focus continues to be in the Western Hemisphere. So you should assume then that that really leaves South America as a point of interest for us. We will look outside the Western Hemisphere. There are a lot of benefits to us to stay in the Western Hemisphere -- language, proximity to South Florida, travel, same time zones, things like that. So I would rank that first, but not necessarily the only place we will be looking as we move forward.

And in terms of Mobilitie, while it is early yet, we are very pleased with how things are going so far. The lease-up pipeline continues to move through, the assimilation is going well. We think the assets are very good quality. And as we have stated from the beginning with respect to this transaction, we think these towers will be ideally situated when we get to the cell splitting capacity infill stage that we believe will follow the basic 4G overlay rollout.

And when do you see that? That all set in general to complete by 2013, so do we see some cell splitting late 2013 or is it really 2014 and 2015?

I think you may see some in 2013. They're going to start to identify areas before that and it will -- I think they will know where some of the needs are. The question will be where are the budget dollars? But I think that is right. You start to see it in 2013 and then in earnest in 2014 and beyond.

Thank you.

James Ratcliffe, Barclays.

Good morning, thanks for taking the question. Just two, if I could. First of all, if you could talk a little bit about your willingness to raise exposure to T-Mobile. At this point you are clearly with Mobilitie above the industry and how you think about customer concentration.

And, secondly, if you would just give us an update on the build-to-suit market in the US, if the dynamics have changed in that at all, but still economics are kind of challenging. Thanks.

Yes, on the customer concentration, James, T-Mobile now pro forma for Mobilitie is about 18% of our site leasing revenue. So that would be third behind AT&T and Sprint and slightly ahead of Verizon.

We look at customer concentrations. We think T-Mobile is an excellent credit. I think the real issue here is not credit worthiness but potential consolidation down the road, which we would certainly take into consideration as we looked at future opportunities. But as a credit, but I'm not sure how you couldn't be comfortable with T-Mobile.

In terms of BTS -- and this ties a little bit to what I said earlier about the -- where the carriers are spending their dollars, new -- brand-new cell sites versus amendments and overlays. The BTS market particularly where it is an RFP or competitively bid process we do find competitive. We don't really get most, well, if any of our new build from that type of process. Our new builds are more relationship-driven, strategically-driven by our own intelligence out in the market where good spots are.

I don't know that the economics are changing so much out there as there is, again, because all four carriers are now focused on amendments and overlays versus necessarily newbuilds -- and I don't want to overstate that because there is still plenty of new builds going on, but not to the same degree that perhaps there were a couple three years ago. And we think that all comes back as you get into the cell splitting and the overlay process.

So we don't really see that as affecting us that much, again, because we don't really play in the build-to-suit RFP competitive bid processes.

Thank you.

Jason Armstrong, Goldman Sachs.

A couple of questions. Just maybe on the guidance hike, if you can offer a little bit more granularity on what dollar amount you assume for Mobilitie over the course of the year, what dollar amounts associated with other tower additions you had in the quarter, and then what you left out from the sale of the DAS assets?

And then second question, it seems like the variability in the range of outcomes attached to Leap and Metro certainly has increased. Can you just remind us of revenue exposure to those two companies? Thanks.

This is Brendan. I will take the guidance question. So for the full year, we have assumed Mobilitie contribution for tower cash flow of around $44 million, and adjusted EBITDA contribution of around $42 million. And our revenue contribution is approximately $77 million.

The balance is primarily made up of the new M&A that we signed up, which is relatively small. When you're looking at EBITDA you're talking about -- basically about $1 million from the M&A that we've signed up since the last time that we gave guidance. And the rest of the increase is a combination of the beat in the first quarter and some other small things around organic growth.

But generally it is made up of Mobilitie and those other two small things. The DAS component is basically $16 million annually of Tcf and EBITDA. And we have left out basically three quarters of that at this point given that we closed Mobilitie at the beginning of this quarter.

In terms of Leap and Metro, Metro is I believe around 3% of site leasing revenue, and I think Leap is around 2%.

Great, that is helpful. Thanks, guys.

Suhail Chandy, Wedbush.

Thanks for taking the questions. Two questions if I may. One, how has -- given that your leverage ratio is now back in the target range, and given your exposure to T-Mobile, you know, pro forma for Mobilitie expense how does that change your appetite for potential participation in T-Mobile's portfolio?

Well, it is kind of like the prior question. We would take credit concentrations and customer concentrations into consideration in things that we do to move it forward.

Our leverage is back to where it was pre-Mobilitie. And we did the Mobilitie transaction through a combination of debt and equity financing. And we would be looking at similarly sized opportunities the same way. We are very much focused on being around our target leverage range and not exceeding it for long periods of time. So all that gets taken into consideration as we look at future opportunities.

Last question. In your press release you mentioned that you have agreed to purchase an additional 116 towers. Can you possibly give us the location of those towers, is that US or overseas?

They're mostly in the US.

There is some in Canada, but most of them are in the US.

Some in Canada, yes. Most US.

Great, thanks. Congrats on the quarter.

Brett Feldman, Deutsche Bank.

Thanks for taking the queston. Just two quick ones. Now that we are several quarters into the LTE build at both Verizon and AT&T, I am just wondering, what are you seeing on some of the original sites that they hit with those upgrades? Are you finding that they are already coming back to add additional capacity or going to new levels, or is that an opportunity you still see mostly in front of you?

And then, secondly, a lot of the 700 license holders have buildout requirements -- geographic buildout requirements they need to meet by the middle of next year. I am wondering if you are already starting to have some sort of license preservation buildout discussions with those license holders? Thanks.

On the latter one, we have -- it is not really license preservation. I think they are really going fast to actually get the stuff deployed, particularly at AT&T and Verizon.

And on the equipment, I am sure that we are seeing repeated touches to the tower where new equipment gets added. Even after certainly the first 3G or 4G installations occur there is some fine tuning and additional equipment being added. So it really is a continuous process.

Just on the -- that first question about the buildout requirements, the licenses are concentrated at T and Verizon, but there is a fairly wide number of holders. Have you started seeing people you usually haven't done business with, whether it is Cox or rural providers or even just spectrum speculators who are coming to you, or maybe that is just something they would have to deal with later in the year or early next year?

Yes, haven't seen much of that yet.

Okay, thank you.

Michael Rollins, Citi Investment Research.

Good morning. Thanks for taking my question. I was wondering if you talk a little bit more about internal growth with respect to what you saw in the first quarter and what the internal growth in dollars is anticipated to be within the guidance that you have laid out for 2012? Thanks.

Yes, the -- well, I will let Brendan speak to the numbers, but one of the points that I think is worth discussing on that topic, Mike, is we took from the start of our guidance, first put out in November, a pretty robust view of growth in 2012. And we are actually pleased to say that that continues and we continue to have a robust view for the rest of the year.

So we have been really expecting this for quite some time. And we actually are pretty proud of the precision by which we can guide to our expectations and actually meet those. But in terms of the organic component, Brendan, can you give Mie some guidance there?

Mike, we are looking -- it has changed a little bit with the Mobilitie assets and their makeup, but we are looking at approximately 8% of organic growth, and that is a combination of obviously new lease-up and amendments as well as escalators, net of churn. So we have historically been in the 8% to 9% range, and now we are still holding in there but probably a little bit less simply because of the size.

Yes, and to be clear, that has -- there is no change around our pre-Mobilitie view of lease-up. We viewed it very strongly; we continue to view it very strongly. And when you factor in the Mobilitie assets with the revenue share component, that is where you end up.

Thank you very much.

Colby Synesael, Cowen and Company.

Just two questions if I may. Number one, as it relates to the AFFO guidance, there is about a $33 million range between the low end and the high end. I am just curious if you could talk to us about what would actually have to happen to put you towards the low end or towards the high end -- what is the biggest impact that could get us towards the bottom or the high end?

The other question I had has to do with T-Mobile. As it relates to their 4G LTE buildout is it your expectation that these guys will go and sign an MLA, and if so, is it your expectation that will probably fairly similar to the one that you signed with Sprint? Thanks.

On the AFFO guidance, the range of AFFO is really a function of several components. One being -- the main one being adjusted EBITDA, and the other ones -- the other large ones being net cash, interest expense, as well as our nondiscretionary CapEx.

So basically the range is set based on the size of the ranges of each of those things. And if we were at the worst end of each of those other items we would be at the low end of the AFFO guidance. And vice versa, if we were at the high end of all those items, we would be at the high end of the AFFO guidance.

So I guess if I could just --.

So the size of the range is a function of those components. But we tend to focus on the midpoint as being the likely outcome. And that is where we focus, and it is very unlikely that we would be $15 million, $16 million, which I believe is the swing to the lower end from the midpoint, off.

Interest is a big component of that, but most of our interest costs are fixed, so we don't really think that is going to be a huge variable. It would really be in the tower cash flow and EBITDA lines. We don't really see the low end as being a realistic worry.

Yes, I guess what I was just getting at was fundamentally what is the biggest impact that could swing that number?

We -- given the fact that Mobilitie is new, we are working a bit -- we are taking a bit of liberty with the range that we have put out there, but you should not really take that to mean that our business is any less precisely predictable than it has been over the years.

And in terms of your second question, refresh my memory -- what was that one again?

Just asking about T-Mo and likelihood of signing a MLA (multiple speakers).

Yes, they are -- a Master Agreement could be possible, if we can reach agreement on all the specific terms and conditions, including the specificity with which the equipment would be listed and identified.

There are a lot of different moving parts in the Sprint agreement, so other than calling it a Master Agreement, that would probably be the only similarity between the two. If we do something with T-Mo in that area should be much more straightforward and almost single-issue specific.

Great, thank you.

Kevin Smithen, Macquarie.

I wondered if you could talk a little bit about your relationship with ExteNet? It appears from industry data that DAS should grow at 2 to 3 times the rate of macro sites in the US. And I guess, wouldn't it makes sense to either bring this in in-house, or if you're not interested in running a DAS business, why not IPO it while the growth rates are still really strong? Either way it seems like you would be creating value.

Yes, we have high hopes and expectations for DAS and our ExteNet investment. I don't think, Kevin, we have -- I don't want to speak to what -- ExteNet is a separate and independently run company. Remember, we were just a minority investor that has a say, but not the say, on how things go. And we are continuing to work and help ExteNet grow. And as I mentioned earlier, we do have an interest on the right terms and conditions to increase our investment.

So I think you should read that as a positive relationship and a positive interest in the business segment in ExteNet going forward. Where and when and how that actually plays out is yet to be determined.

All right, thanks, that is helpful.

Chris Larsen, Piper Jaffray.

Hi, thanks for taking the questins. Just a couple. First, just to clarify on your Sprint comments, you talked about the contract going through 2013 to 2015. Was that -- you said something about inferring growth throughout that contract. Is that to infer that Sprint's contract with you will be substantially increasing through that entire period?

And then, secondly, are you seeing any activity out of DISH, given that they are hoping to get their licenses in the not-too-distant future?

And then I third question, if I may. PCS, MetroPCS is talking about deploying microwave. Any -- can you quantify any sort of impact that might have if microwave begins to take off with either them, or anyone else for that matter?

I will do the DISH activity first. We haven't seen any of that yet. We are watching all the reports that you are watching. And again, as I mentioned earlier, they know we are here to lease space, so they are -- I don't know that they necessarily need to seek us out first, but we have not seen any activity yet.

The Sprint iDEN comments were specifically limited to just the iDEN component of the agreement that we have with Sprint. There is a staged ability for Sprint to terminate most, but not all of the iDEN sites that they have with us. And that, again, is 2013 -- middle of 2013 through the end of 2015.

And it will have an impact on growth rates during that period of time if they choose to exercise those, but not anything that we think is overly material, particularly when you have the offset from the CDMA side as well.

And on the final question, microwave is -- obviously, that is a plus for our industry. Microwave installations can run anywhere from $250 to $300 a month for a small single microwave dish to over $1,000 if it is a two-way microwave, a send and receive installation. So we are always hopeful that microwave as a form of backhaul continues to increase in this country the way that it is in Europe and other places.

Great, thank you very much.

Zach Horat, Macquarie.

I think Kevin took care of our questions. Thank you.

Eddie, I think we have time for one more.

(Operator Instructions). There're no questions in queue, sir.

Great. Well, I want to thank everybody for joining us today, and we look forward to next time when we report our second-quarter results. Thank you.

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