SBA Communications Corp (SBAC) 2013 Q4 法說會逐字稿

Welcome to the SBA fourth-quarter results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with the instructions given at that time.

(Operator Instructions)

As a reminder, this conference is being recorded.

I will now turn the conference over to Mark DeRussy, Vice President of Finance. Please go ahead.

Good morning, and thank you for joining us for SBA's fourth-quarter 2013 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 on this call is forward-looking, including but not limited to any guidance for 2014 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 future results to differ materially from those expressed in any forward-looking statements we may make. Our statements are as of today, February 26, 2014, and we have no obligation to update any forward-looking statements we may make.

Our comments will include non-GAAP financial measures, as defined by 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.

With that, I'll turn it over to Brendan to comment on our fourth-quarter results

Thank you, Mark. Good morning.

As you saw from our press release last night, we had another strong quarter in all areas. We exceeded the midpoint of our guidance for leasing revenue and exceeded the high-end of our guidance for Tower cash flow, adjusted EBITDA and AFFO. Changes in the Brazilian exchange rate during the fourth quarter versus our guidance negatively impacted leasing revenue by $400,000 and adjusted EBITDA and AFFO by $200,000 each.

Total revenues were $335.4 million, up 14% over the year earlier period. Site leasing revenues for the fourth quarter were $292.5 million, or a 12.1% increase over the fourth quarter of 2012. As a reminder, on a sequential basis, approximately $3 million of site leasing revenue in the third quarter of 2013 was nonrecurring.

Our leasing revenue growth was driven by organic growth and portfolio growth, including our initial Brazil acquisition of 800 towers, which closed at the end of 2012, and our second Brazil acquisition of 2,113 towers, which closed in late November of 2013.

iDEN-related churn during the quarter had a negative impact of $1.3 million. The vast majority of our site leasing revenue continues to come from the US and its territories, with approximately 8.6% of total leasing revenue in the quarter coming from international operations.

Tower cash flow for the fourth quarter of 2013 was $217.6 million, or a 16.4% increase over the year earlier period. Tower cash flow margin was 78.3%, compared to 77.7% in the year earlier period. We have been able to expand our international operations with little impact to our Tower cash flow margins.

We continue to experience strong leasing demand, both domestically and internationally. Amendment activity continues to be strong, still contributing over half of incremental leasing revenue in the fourth quarter.

New collocation leases contributed just over 40% of our new leasing revenue added in the quarter. This is up from about 15% in the fourth quarter of 2012. The big four US carriers contributed approximately 90% of our consolidated incremental leasing activity in the quarter. We continue to maintain leasing backlog at record levels.

Our services revenues were $42.9 million, compared to $33.1 million in the year earlier period, reflecting generally higher activity levels and work mandated to us by our Sprint Network Vision contract and T-Mobile 4G Agreement. Services segment operating profit was $9.2 million in the fourth quarter, compared to $5.8 million in the fourth quarter of 2012. Services segment operating profit margin was 21.4%, compared to 17.6% in the year earlier period.

SG&A expenses for the fourth quarter were $21.7 million, including non-cash compensation charges of $4.1 million. SG&A expenses were $19.6 million in the year earlier period, including non-cash compensation charges of $3.3 million. Our overhead efficiency continues to improve as we grow. As a percentage of revenue, SG&A expenses were 6.5% compared to 6.7% in the fourth quarter of 2012.

Adjusted EBITDA was $209.4 million or an 18.3% increase over the year earlier period. Adjusted EBITDA margin was 65.3% in the fourth quarter of 2013, compared to 64.7% in the year earlier period, notwithstanding a much higher contribution from our lower margin services business. Approximately 96% of our total adjusted EBITDA is attributable to our Tower Leasing business.

AFFO increased 23.1% to $139.1 million, compared to $112.9 million in the fourth quarter of 2012. AFFO per share increased 21.6% to $1.07, compared to $0.88 in the fourth quarter of 2012. Net loss during the fourth quarter was $19.2 million, compared to a net loss of $52.6 million in the year earlier period. Net loss per share for the fourth quarter was $0.15, compared to a net loss of $0.42 per share in the year earlier period. Quarter-end shares outstanding were 128.4 million.

In the fourth quarter, we acquired 2,138 sites for $321.1 million in cash. SBA also built 119 sites during the fourth quarter. We ended the quarter with 20,079 owned site; 14,886 of the sites are in the US and its territories, and 5,193 are in international markets.

Total cash capital expenditures for the fourth quarter of 2013 were $403.9 million, consisting of $5.7 million of non-discretionary cash capital expenditures such as tower maintenance and general corporate CapEx, and $398.2 million of discretionary cash capital expenditures. Discretionary cash CapEx for the fourth quarter includes $321.1 million, incurred in connection with tower acquisitions, excluding working capital adjustments and paid earn-outs.

Discretionary cash CapEx also included $21.7 million in new tower construction, including construction in progress, $23.3 million related to the purchase of new offices, and $14.8 million for gross augmentations and tower upgrades. Of the $14.8 million augmentation figure, approximately $10.7 million, or 73%, was simultaneously reimbursed by our customers, resulting in net augmentation cash expenditures to us of $4.1 million.

With respect to the land underneath our towers, we spent an aggregate of $15 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 the quarter, we owned or controlled for more than 20 years, the land underneath approximately 72% of all of our towers and 73% of our domestic towers.

At the end of the quarter, the average remaining life under our ground leases, including renewal options under our control, is slightly over 30 years.

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

Thanks, Brendan.

SBA ended the fourth quarter with $5.9 billion of total debt. We had cash and cash equivalents, short-term restricted cash and short-term investments of $175 million. Our net debt to annualized adjusted EBITDA leverage ratio was 6.8 times. Our fourth-quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.3 times.

During the fourth quarter, we paid $55.5 million in cash and issued approximately 192,000 shares of common stock to settle the warrants associated with our 1.875% convertible notes. We have no further obligation with regard to these notes and the related warrants. Earlier this month, we obtained a new seven-year, delayed draw $1.5 billion Term Loan B. The note was issued at 25 basis point discount to par.

The first funding of $750 million occurred on February 7 and we expect the remaining $750 million to fund next month. Interest will accrue at LIBOR plus 250 basis points, with a 75 basis point LIBOR floor. This spread, a LIBOR floor, represent a combined improvement of 50 basis points compared to our previous Term Loan B, which we issued in 2012.

Net proceeds from this financing were used repay in full the $290 million balance on existing Term Loan Bs and to repay the $390 million outstanding balance on our revolver. The remaining proceeds will be used to pay for our pending 2007 site Brazilian Oi acquisition and for general corporate purposes.

As of the end of the fourth quarter and pro forma for the recent financing, the weighted average coupon of our outstanding debt is 4.1% and our weighted average maturity is five years. We currently have no outstanding balance under our revolver and the full $770 million in commitments is available to us.

We did not repurchase any shares of our common stock during the quarter and currently have $150 million remaining under our existing $300 million authorization.

With that, I will now turn the call over to Jeff.

Thanks, Mark, and good morning, everyone.

As you have heard, we did have another very good quarter, nearing or exceeding the high end of our guidance across almost all key financial metrics. Once again, we led our industry in many important growth metrics.

SBA continues to perform in strong and steady fashion. Our organic leasing activity was particularly strong, all through 2013 and the primary reason for our outperformance. We experienced strong demand across our entire portfolio, both domestic and international.

In the US, we are seeing the benefits from that demand in both our Leasing and Services segments. We expect to benefit from these elevated levels of activity for the next several years, as carriers build out their initial 4G coverage footprints, to be followed by capacity spending as consumer adoption increases.

Commentary from our customers has been very clear that network speed and quality is now and will remain a primary focus. The path to better network speed and quality is more infrastructure. We're seeing strong activity in both amendments to existing carrier sites and new site locations in the US and our backlogs remain large and continue to replenish.

Internationally, we are seeing strong growth in new cell sites, with a lot of basic 3G coverage builds still ongoing in our markets. We look forward to the build out of 4G in many of our international markets in the future.

As a result of anticipated, continued strong demand from our US and international customers, we are guiding to strong organic leasing growth once again in 2014. A portion of the increase in our 2014 leasing revenue outlook is due to higher than anticipated -- previously anticipated organic leasing activity.

In the fourth quarter, in the US, we had a very busy quarter with respect to new leasing business and we signed up another high number of both new tenant leases and amendments. Our customers are requesting larger equipment loads, which has a favorable impact on rate.

AT&T and Verizon continue to be very busy and represented well over half of our new business in the quarter. As a result, the Mobility and TowerCo assets we acquired in 2012 outperformed because they were under-indexed to AT&T and Verizon.

We saw another material contribution from Sprint due to its Network Vision Project and T-Mobile remains active on its 4G upgrade. We have just started to see 2.5G business from Sprint and have yet to see any 700 MHz business from T-Mobile, although there is a chance both could contribute to leasing revenue in the second half of 2014. Neither is yet reflected in our leasing outlook for 2014.

Our services segment produced another strong level of activity for us in the fourth quarter, once again, with the primary contributors being the Sprint Network Vision and T-Mobile 4G projects. Services revenue of over $170 million in 2013 was an annual record for SBA by a wide margin. Our services backlog remains high. We expect continued strong services segment contribution through 2014, although we do expect that our 2014 outlook reflects our work on the Sprint Network Vision Project tapering off. As the work we were contracted to perform nears completion, some of which will be offset by new work on Sprint's 2.5 GHz initiatives.

We continue to see strong activity in our international markets in both leasing activity and portfolio growth. Leasing activity is mostly new leases but there is a growing amount of amendment activity. We had a busy year end in Brazil. We closed on our first acquisition from Oi of 2,013(sic-see press release "2,113") sites and entered into agreement to acquire another 2,007 sites from Oi, which is scheduled to close March 31.

We will continue to look for additional acquisition opportunities in Brazil, although now having gotten to scale, we believe that our strategic needs have been satisfied. We are in the process of establishing substantial new build and leasing capabilities in Brazil. We now have about 35 experienced employees in Brazil; on our way to 50 to 55 by year end. We will continue to expand our Brazilian work force as we grow, but with much of our back office functions located in the US, we expect our Brazilian overhead to grow in the future at a fraction of the rate of growth we expect in Brazilian revenue.

With respect to portfolio growth, we had another strong year, exceeding the high end of our portfolio growth goal in 2013. We're off to a very strong start in 2014 and we anticipate exceeding the high end of our annual goal by the end of the first quarter. We will continue to look for additional opportunities, certainly in our existing markets and potentially some new markets, although our preference currently is to stay in the Western hemisphere.

With our leverage currently below our target range of 7 to 7.5 times net debt to annualized adjusted EBITDA, and within the target range pro forma for the pending Oi transaction, we are seeking additional portfolio growth, notwithstanding already having exceeded the high end goal of 10% annual portfolio growth on a pro forma basis. Our 2014 guidance reflects only those acquisitions we have under contract today and if we are successful in consummating some additional acquisitions, our 2014 outlook could increase.

We have plenty of resources with which to pursue additional portfolio growth. Our access to capital and balance sheet are both in great shape. Our recent $1.5 billion Term Loan B transaction was very successful and resulted in our lowering our weighted average cost of debt, increasing our average tenor and putting over $150 million into the bank. That additional cash borrowed and currently unused negatively impacts our 2014 outlook for cash interest expense, but the terms were very attractive and we like the liquidity.

Our cash on hand, undrawn $770 million revolver and anticipated AFFO generation, gives us more than $1 billion of available capital. We have substantially more available when you consider our ability to sell all or a portion of our 4% convertible notes due October 2014 and stock to maintain target leverage should we find a large, attractive acquisition opportunity.

Our outlook assumes we use cash on hand to call the remaining $244 million of our 8.25% percent senior notes and contemplates a $1.3 billion debt refinancing to fully cash settle our 4% convertible notes without any settlement for stock. So a tax-free refinancing is contemplated there. We anticipate seeking such refinancing in the third quarter and we have assumed a 4% refinancing interest rate in our 2014 outlook.

As our guidance indicates, we expect the current strength in our business to continue through 2014. Our 2014 outlook continues to reflect same Tower cash revenue growth similar to 2013 in the 9% to 10% range before iDEN terminations. We have included no material contributions in 2014 for many customer that was not reasonably active in 2013, so that would exclude Dish and Public Safety. We are anticipating in our services outlook some Sprint 2.5G activity, although not yet in our leasing outlook.

Please keep in mind that our 2014 outlook reflects site leasing revenue on a GAAP basis, while our Tower cash flow, adjusted EBITDA and AFFO outlooks are all on a cash basis. Total non-cash leasing revenue in 2014, for the straight-line impact, was expected to be approximately $44 million.

In the aggregate, we believe 2014 will be another strong year for SBA. Our focus this year is straightforward: execute well against a favorable macro environment, add quality growth assets and continue to take advantage of what is expected to remain a favorable financing market. With our annual portfolio growth goal already under contract, leverage within our target range and tremendous liquidity, we look forward to continuing to improve our international capabilities and realizing strong revenue growth on our high-quality assets.

We believe we have SBA ideally positioned for future success. We expect to, once again, produce material growth across a number of key metrics, including growth in AFFO per share.

Before we open it up for questions, I want to recognize the contributions of our employees and customers to our success. Our employees work really hard to achieve the goals of our customers. They do a great job, our customers recognize that, and as a result, we are a preferred provider for our customers' network needs.

Our customers are, and we think we will remain, extremely busy, improving and expanding their wireless networks. We look forward to continued success as we move through 2014.

Amanda, at this time, we're ready for questions.

Certainly.

(Operator Instructions)

First question, Rick Prentiss, Raymond James.

Jeff, I want to go back on where one of the last things you talked about, the same Tower revenue growth. I think you said 9% to 10%; now is that GAAP non-cash?

No, that's cash, definitely cash. The way we look at that is we take out everything that we had in Q4 of 2013 and look at where we're projecting to be in Q4 2014 and then taking out the impact of the acquisitions; I think it cancels out to about a 9% to 10% growth rate.

And then the iDEN termination, or iDEN churn that will be in 2014, how much of a negative is that, that we come down off that number?

Approximately 1.5%.

Okay. And is there the ability to look at what that growth rate is domestically versus internationally since you have now increased the portfolio by the fourth quarter?

Yes, I mean it's -- yes, we're still getting Brazil off the ground, but we're probably 8% to 9%, US, and then the remainder in international, so you are talking 300 basis points, 400 basis points higher because of the lower number of sites and the lower amount of revenue off which that's basing. All in, company-wide 9% to 10% before iDEN.

Makes sense. There's been a lot of consternation, it seems, with FX rates the way they're going; people trying to figure out, given that international might be 11% to 13% growth. How does FX affect that? How do you look at return on invested capital on those international portfolio given that growth rate you're saying?

Well we're looking for, over time, 300 basis points to 500 basis points above what we're expecting in the US, which would be a low double-digit number. So as we move through our five-year-plus time horizon, Rick, that's what we're modeling and expecting to get.

And comforting -- with the FX, you can't control FX, obviously, but comfort that still put money to work in Brazil, you mentioned you're looking at acquisitions in the Brazil market?

Well, we're -- we believe there will be some additional assets available. And we will continue to -- no, my point in my comment was we feel like our strategic geographic flag has been planted with enough scale that we're in good shape there to proceed on a more of a build-to-suit basis. But just as we have always in the US, we'll be looking for good acquisitions that make eminent financial sense going forward.

So there's still a lot of comfort that in investing in international, even in Brazil, is going to be a good return?

For the right price.

And Rick, we do consider FX when we're looking at what our plans are and one of the ways that that's mitigated is that all of the escalators in our lease agreements in Brazil are tied to inflationary indexes down there. So those tend to come at a much higher rate, which is a mitigant to the risk of a weakening FX rate.

Okay, and then augmentation, thanks for the color on that $15 million on the quarter, 73% reimbursed. If you look at your 2014 guidance, what's the expectation of what augmentation is and the CapEx and what reimbursement might be?

Well, the augmentation is in at roughly what we had for this year, so you're looking at somewhere in the neighborhood of $50 million to $60 million for the year. From a reimbursement standpoint, we would expect that to continue at a similar clip although that doesn't -- when we give guidance, we're putting the gross amount in our discretionary CapEx so the reimbursements are capitalized and amortized into income over the term of the lease agreement that they're related to.

Exactly, so you spread that over 7 to 10 years, or whatever the remaining lease is.

Right.

Okay, thanks, guys.

Next, David Barden, Bank of America.

Thanks for taking the question. Just a couple. Just first, Brendan, it feels like or sounds like the iDEN churn has not been, at that the worst case, which you baked into your guidance. Do you -- would you still have, I think the worst case baked into the forward outlook, but do you have some kind of increased level of comfort or communication with Sprint on their intentions and the expectation that maybe this is more of an overly conservative view with this stage of the game?

I think the second question is, real quick, a smaller one is, just on the subsequent to the fourth quarter ending disclosures, you talked about a small portfolio that you bought that you implied value per towers is $1.5 million, which is a big number. I was wondering if you could kind of elaborate a little bit on that deal.

And then just lastly, in terms of on Rick's question, this international, there 're obviously a lot of other international portfolios that's been thrown out there in Africa and India. Your wheelhouse has been, really, the Latin American and to lesser degree, Canada markets. Are you interested in venturing further field, or are you comfortable in your home base here? Thanks.

David, first on the iDEN, we have been assuming worst case, which is made up of two things, which is the total number of leases that they're entitled to terminate in any one quarter and we would assume that they terminate the highest dollar leases first, for purposes of guidance. They have been terminating their full allotment in terms of number of leases each quarter; however, they have not necessarily been the highest dollar leases first.

Based on what we've learned to date, we were able to pick up about $1 million to our revenue guidance for 2014 based on actual notices versus that worst case assumption. It is possible and probably likely that there will be some additional pick-up during the year. We continued with the convention though that we've been using and frankly, I think that pick-up will be relatively immaterial. And as we get further along, the -- what's left, the average becomes closer to what we would expect them to terminate.

Right.

On the acquisitions, David, we did acquire some very high cash flow sites, high quality towers that had some really nice tenants beyond the big four folks like the Coast Guard and guys who are -- were very comfortable with big installations, big dollar rents. We acquired that for a mid-teens multiple. We are very happy with that transaction, but that was what that was all about.

And in terms of future expansion, we are deciding this year how much additional international growth we're going to pursue on a pro forma basis. We have about 15% of our revenue internationally; 10% of that -- well, two-thirds of that is in Brazil. So we are considering where we want to go.

Given that there will be some limits on how far we want to take that, which I can't define for you today, we are likely to be able to satisfy everything we want to do inside those limits within the near term by continuing to stay in the Western hemisphere. So that makes not impossible, but I think unlikely, that, at least for the next year, we do anything outside the Western Hemisphere.

Great. Okay, Thanks For the Color.

Next, Jonathan Atkin.

Yes, I wondered in Brazil, if you could tell us of the portfolios that you -- and the towers that you have bought broadly based on what lease-up you -- contribution you saw? And now that you have a team on the ground, how do you feel about integrating all the systems and records? Are you ready -- is it going to be further and further within your ability to accommodate on the other sites or you would have more back office work that you need to do?

Really, the only site that we've had for any period of time, Jonathan, were the 800 Vivo sites, which we probably added 20 to 30 leases on; happy with those numbers. The telecom towers stop came in September; I know we've added some leases there. Probably a little bit on the Oi, 2,113. Obviously, we don't own yet the Oi 2,007. So where we are is we are continuing to develop and master terms and conditions with the carriers, which is a process and a norm that we need to have down there to truly be hitting on all eight cylinders.

That process is well underway. We're almost done with everybody there. We are adding some folks. We will continue to improve our leasing capabilities and transfer as quickly as we possibly can, the skills, the culture, the methods that we've learned in the United States over the years to Brazil. But, no, we still have a little bit more to do down there in terms of people cultivation.

And then in the US, can you tell us how much of your growth was basically MLAs running versus kind of falling outside of activities relating to MLAs with the carriers that you found them with?

With the -- I think the T-Mobile MLA was all already included because that had a stepped-up escalator over time. So some of that contributed in the fourth quarter but not any different than where it had been previously.

On the Sprint deal, we recognized, on a cash basis, the amendments as they're installed, although they were -- the payment terms were obligated. So there were some, but a little bit --. The vast, vast, vast majority, Jonathan, which we've intimated, because we said most of the activity was from AT&T and Verizon, was outside of any MLA-type structure.

Makes sense. Thank you very much.

Next, Jonathan Schildkraut.

Thank you for taking some questions here. So I -- two questions that jump out. First on the international side, just to dig in a little bit more. Jeff, you talked about that 15% of the revenue being pro forma, about 10% coming from Brazil. I also -- we talked about in the past that a good portion of your revenues outside of the US are US dollar denominated, so I just wanted to make sure I understood if it was just the Brazil that is foreign currency denominated amongst the international?

And then my second question has to do with Sprint Spark and T-Mobile 700 MHz. If those carriers pick up activity around those two spectrum bands in the back half of the year, how does that roll through the reported numbers at SBA given the MLAs? Thank you.

On the international, the only other country that is not US dollar denominated, Jonathan, is Canada, which is a fairly small piece of the remaining 5%. On the -- and I'm sorry your last question, on the Sprint and the T-Mobile, the T-Mobile 700 MHz is totally outside their existing 4G modernization agreement with us.

And the Sprint 2.5G could fall inside or could fall outside depending on how much on a per site basis, the agreed-upon equipment bucket has already been filled before the 2.5G equipment comes on. So that will be determined on a site by site basis. We know that there will be some additional leasing revenue, because we know some buckets have been filled. Can't tell you how much at this point.

Okay, great and if I can just ask one more question, we're going through the calculation around the converts for later this year. We're showing, I don't know, call it, $825 million, $850 million of incremental capital on top of the face value. I just want to make sure that, that's in line with what the Company is seeing. And then I was wondering if there were warrants similar to the 1.75% convert warrants. Thanks.

Jonathan, that number is in line with what we think is obviously subject to change depending on movements in the stock price but that's in the right range. And that really is the value on the warrants, because we have a bond hedge that offset the notes that effectively makes some settable at just their face amount out. So it's really the warrants that drive that incremental premium, that $800 million, $850 million that you're talking about and they are similar to the previous deal; they just have different terms --

Thank you for taking the questions.

Next, Michael [Rollins].

Okay, thanks for taking the questions. Two; first of all, on EPS, I think you had mentioned some asset impairments, and I'm sorry if I missed it, but if you could talk a little bit about that. And then secondly, with regards to Sprint, we talked a lot about the 2.5 GHz, but I wanted to go back. Sprint just talked about an additional $50 million cost coverage using 800 MHz and [1900] MHz, and I think heretofore you have said that is also not in your contemplated 2014 guidance, as well. And if that is the case also, are you seeing activity there, and can you give us some color around that? Thanks.

I'll take the first one, the asset impairment question. There was a -- there's a higher amount of what we call asset impairment and decommissioning costs, and it's really this year relative to previous years. And it's really attributable to a concerted effort on our part this year to focus on towers that are, over the last 17 years, that are underperforming sites that we made a focus on decommissioning those sites, recovering some of the costs that we incur on a regular basis associated with those sites.

These are non-revenue producing sites, or iDEN-only sites, where we've determined that Sprint will no longer be using those sites so we've decommissioned those. So basically what goes through that line is the cost of writing down the carrying value of those assets, as well as the actual cost of taking down the tower to the extent that we do that. Most of that line is a non-cash item to write-off as opposed to actual cash expense.

On the Sprint, we have not seen a lot yet of that although we have seen some that's come in the form of brand-new leases and outside of the existing MLA agreements.

Okay and again, that's not contemplated in your 2014 guidance; correct?

No, it is not.

Okay, thanks.

Next, Jonathan Chaplin.

Thanks for taking the question. This is Spencer Kurn calling in for Jonathan. One of the biggest concerns amongst investors is the potential impact of a Sprint/T-Mo merger. I was just wondering if you could talk about how you view the impact, the potential impact of the merger? And just in general, what impact have you seen from consolidating events?

Well, one of the benefits and one of the reasons that we did enter into a MLAs with Sprint and T-Mobile was to reduce the risk of that possibility, Jonathan, and in doing so, we got greatly extended lives. So our average T-Mo lease now has six years left but our average Sprint lease now has eight years left. The overlap where they're both on the same site, if you lost the shortest term lease of those two, it's about 6% of revenue. And that, of course, if it occurs at all, would be spread out over a long period of time.

The big consolidation that you might draw comparisons to, although it's very dissimilar was when Cingular acquired AT&T. Now that was very different because they're working on the same technologies and it was a much easier integration. I think the commissioning there was much less, or had a much greater potential.

At the end of the day, we had, on a combined basis, higher revenue from that combined company than we did from each of its predecessors, because they still had a lot to do on their networks to now support new services for the combined subscriber base. And we think that something similar would occur if Sprint and T-Mo ever got together, although the initial integration would be much more difficult. I think the initial decommissioning would be much lower because the disparate technologies that they both use.

Got it. Thanks, guys.

Next, Phil Cusick.

Hi, this is Richard for Phil. Just a clarification on the Sprint Spark stuff. That seems like it's going to be on a case-by-case basis, but how would you move that into guidance? Is it something that you need to get better clarity around or sizing of it, or is it just something that is going to come through in the results that you get through?

The latter; we'll just probably take it in through actual results. And then on the T-Mobile side, would that warrant another MLA or updating an MLA or do you think that the 700 would be more on a site by site basis? Don't know the answer to that yet. It's still a little early. T-Mo hasn't even acquired Spectrum, yet although there have -- discussions have begun as to how it might get deployed.

Great, thank you.

Next, [Amir Rozwadowski].

Yesterday, one of your peers talked about an aspirational goal of doubling their AFFO per share by 2017. I think one of the things that the Street struggles with is keeping your leverage target, particularly in the outyears. So I was hoping you could help us understand better the long-term capital allocation, how acquisitions, buybacks fits into all of that.

Yes, our primary focus has been and will continue to be portfolio growth that meets our returns. We think growing AFFO per share is preferable by growing the top line and the EBITDA line, but having said that, giving the strength in the organic business and the quality of our assets, we can create a lot of AFFO per share growth through buying back our stock.

If we -- if the world changes on the capital market side, we would obviously take those changes into account and perhaps look to adjust our leverage levels today. We're extremely happy and convinced that where we are levered and what our target leverage range is, is the right place to be.

If we only became a stock repurchaser, we may bring that down some. But in terms of our particular aspirational goals, I would, as we've talked about it all along, our aspirational goal is at least 20% compounded AFFO per share growth for the foreseeable future and that clearly gets you more than a double in five years. And I think a good and solid component of that and where people should easily see that the way we do is by maintaining target leverage provided the capital market stays the same.

Got it. Thank you.

There are no further questions at this time. Please continue.

Well, thank you all for joining us and we look forward to our next get together when we record first-quarter results. Thank you.

That does conclude our conference for today. Thank you for your participation, and for using AT&T Executive Teleconference service. You may now disconnect.