SBA Communications Corp (SBAC) 2014 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the SBA third-quarter results conference call. At this time all participants are in a listen-only mode. (Operator Instructions).

And I would now like to turn the conference over to our host, Vice President, Finance, Mr. Mark DeRussy. Please go ahead, sir.

Thank you. Good morning and thank you for joining us for SBA's third quarter 2014 earnings conference call. 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, 2015 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 in 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, November 5, 2014, and we have no obligation to update any forward-looking statement we may make.

Our comments will include non-GAAP financial measures as defined by Regulation G. The reconciliation of these non-GAAP financial measures and their most directly comparable GAAP financial measures and other information required by Regulation G has been posted to our website, sbasite.com.

With that out of the way, I will turn the call over to Brendan.

Thanks, Mark, good morning. As you saw from our press release last night, we had another very strong quarter in all areas. We exceeded the high end of our guidance for leasing revenue, tower cash flow, adjusted EBITDA, and AFFO.

GAAP site leasing revenues for the third quarter were $349 million or a 21.4% increase over the third quarter of 2013. Domestic cash site leasing revenue increased 12.3% to $283.8 million and international cash site leasing revenue increased 167.1% to $48.8 million.

Our leasing revenue growth was driven by organic growth and portfolio growth, including our two recent acquisitions in Brazil. iDEN-related churn during the quarter had a negative impact of $1.7 million.

We continue to experience strong leasing demand both domestically and internationally. Amendment activity continues to be significant and represented the majority of incremental leasing revenue in the third quarter, reflecting a combination of coverage and capacity-related 4G spending by our customers.

The big four US carriers contributed over 80% of our consolidated incremental leasing revenue signed up in the quarter. We continued to maintain very healthy leasing backlogs.

Tower cash flow for the third quarter of 2014 was $263.8 million or a 24.6% increase over the year earlier period. Tower cash flow margin was 79.3%, compared to 78.2% in the year earlier period.

Our services revenues were $44.3 million compared to $44.6 million in the year earlier period. Services segment operating profit was $10.3 million in the third quarter compared to $9.4 million in the third quarter of 2013. Services segment operating profit margin was 23.3% compared to 21% in the year earlier period.

SG&A expenses for the third quarter were $26.6 million including non-cash compensation charges of $6.3 million. SG&A expenses were $21.8 million in the year earlier period, including non-cash compensation charges of $4.1 million. Increases were primarily attributable to increases in employee-related costs and specifically to headcount increases in Brazil.

Adjusted EBITDA was $254.3 million, or an increase of 24.9% over the year earlier period. Adjusted EBITDA margin was 67.5% in the third quarter of 2014 compared to 64.6% in the year earlier period. Approximately 96% of our total adjusted EBITDA is attributable to our tower leasing business.

AFFO increased 29.4% to $173.8 million compared to $134.3 million in the third quarter of 2013. AFFO per share increased 27.9% to $1.33 compared to $1.04 in the third quarter of 2013. AFFO for the third quarter includes a nonrecurring benefit of $7.4 million for coupon interest expense not required to be paid upon conversion of our 4% convertible senior notes.

Combined changes in the Brazilian and Canadian exchange rates during the third quarter versus our guidance positively impacted leasing revenue by $400,000, and adjusted EBITDA and AFFO by $220,000 each.

Net loss during the third quarter was $16.6 million compared to net income of $21.5 million in the year earlier period. Net income for the third quarter of 2013 was positively impacted by a $6.9 million gain on the mark to market of a currency hedge, and a gain of approximately $27.3 million on the sale of a bankruptcy claim against Lehman Brothers related to a hedge terminated in 2008.

Net loss per share for the third quarter of 2014 was $0.13 compared to net income of $0.17 per share in the year earlier period. Quarter end shares outstanding were 129.1 million.

In the third quarter, we acquired 94 sites for $79.9 million in cash. SBA also built 114 sites during the third quarter. We ended the quarter with 22,454 sites. 15,099 of these sites are in the US and its territories, and 7355 are in international markets.

Total cash capital expenditures for the third quarter of 2014 were $140.5 million, consisting of $8.6 million of nondiscretionary cash capital expenditures such as tower maintenance and general corporate CapEx, and $131.9 million of discretionary cash capital expenditures.

Discretionary cash CapEx for the third quarter includes $79.9 million incurred in connection with tower acquisitions excluding working capital adjustments. Discretionary cash CapEx also included $24.3 million in new tower construction, including construction in progress, and $18.7 million for gross augmentations and tower upgrades. The substantial majority of augmentation CapEx is reimbursable to us by our customers.

With respect to the land underneath our towers, we spent an aggregate of $12.4 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 74% 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 approximately 33 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 quarter with $7.6 billion of total debt. We had cash and cash equivalents, short-term restricted cash and short-term investments of $500 million. Our net debt to annualized adjusted EBITDA leverage ratio is 6.9 times. Our third-quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.3 times.

During the quarter, and on October 1, we settled the remaining outstanding principal of our 4% convertible notes for $378 million in cash and 9 million shares of common stock. The settlement was neutral to our share count as the stock portion of the transaction was fully hedged.

Also during the quarter, we paid $327 million to early settle 32% of the outstanding warrants that were sold in connection with the issuance of the 4% notes. Subsequent to the third quarter, we have early settled an additional 7% of the warrants for $74.3 million. Pro forma for these settlements and based on recent stock prices, our warrant liability now consists of 5.1 million underlying shares with a value of a proximally $340 million. We expect to settle the remaining warrants in cash on or prior to the end of the first quarter of 2015.

On July 1, we issued $750 million in principal of senior notes. The notes have a cash coupon of 4.875% and will mature in 2022. The net proceeds from the offering were used to call our outstanding 8.25% senior notes, pay conversion obligations with respect to approximately $121 million aggregate principal amount of our 4% notes, and for general corporate purposes.

On October 15, we issued two tranches of secured tower revenue securities through our existing SBA tower trust, generating a total of $1.54 billion in gross proceeds. The offering had a weighted average coupon of 3.29% and a weighted average maturity of seven years.

Net proceeds from the offering were used to prepay in full $680 million of outstanding secured tower revenue securities, and to repay the $300 million outstanding balance under our revolver, which had been drawn to partially fund the October 1 settlement of our 4% notes as well as for general corporate purposes, including acquisitions and the settlement of warrants.

At the end of the third quarter and pro forma for the October 15 financing, we had $7.7 billion of outstanding debt with a weighted average coupon of 3.9% and a weighted average maturity of approximately 5.8 years.

We currently have no outstanding balance under our $770 million revolver. Based on specified covenants, we have available to us today the full $770 million under the revolver.

We did not repurchase any shares of common stock during the quarter and currently have $150 million remaining on our existing $300 million authorization. With that, I will turn the call over to Jeff.

Thanks, Mark, and good morning everyone.

As you have heard, we did have another great quarter, exceeding the high end of our guidance across almost all key financial metrics. Once again, we led our industry in many important growth metrics. Our organic leasing activity which has been particular strong this year, and materially ahead of our initial expectations, was once again the primary reason for our outperformance.

We are experiencing strong demand across the entire portfolio, both domestic and international. We are seeing the benefits from that demand in both our leasing and services segments. We expect to benefit from continued solid levels of activity for the next several years as carriers build out their initial coverage footprints, to be followed by capacity spending as consumer adoption increases.

Our customers have been very clear that network speed and quality is now and will remain a primary focus. There has been much commentary from our customers and peers about the current and expected growth in mobile data use, and much detail has been provided, so I won't repeat that here.

I will point out a few product events that I find particularly exciting. The first is the iPhone 6 Plus as well as similar large-screen smart phones. With the larger screens, these devices will facilitate much more mobile video traffic than has previously been the case, putting further demands on networks.

Next is Wi-Fi in the car. To provide that service, connection with a cellular network must be maintained. I think this will support additional infrastructure needs nationwide, particularly in less urban markets and highway corridors where SBA is particularly strong.

Third are the upcoming offerings of connected watches. While initially touted as communications devices, many say the greater innovation and use will come in healthcare, where at some point we will all be able to monitor our vital signs real-time and noninvasively. That is all pretty exciting stuff, and should certainly help support the need for additional wireless infrastructure going forward.

It has been clearly proven over time that wireless data growth in a world of limited spectrum, if service quality is to be maintained, requires more equipment. It really is that simple. The path to better network speed and quality is more infrastructure, and we are seeing the results in our executed new leasing business and backlogs.

As a result of anticipated continued strong demand from our US and international customers, we are guiding to strong organic leasing growth again in 2015. In the third quarter, we once again experienced strong leasing demand across the entire portfolio. Same tower cash leasing revenue growth was 14% on a gross basis and 11% on a net of churn basis, including iDEN-related churn.

The US led on a gross basis followed closely by Brazil. On a net basis, Brazil led the Company because there was no churn to speak of. These same tower results were well ahead of our expectations and the primary reason for the increase to our 2014 outlook. We attribute our leasing success to a combination of quality assets, strong execution, good contracts, and the excellent demand from our customers.

In the third quarter in the US, we executed high numbers of both new tenant leases and amendments. Amendment revenue once again made up the substantial majority of incremental leasing revenue in the US, approximately 70%.

AT&T and Verizon continue to be very busy, and represented once again the substantial majority of our new business in the quarter. We continue to have contributions from Sprint due to its Network Vision project and also now from the 2.5 gig project. T-Mobile remains active on its 4G upgrade and T-Mobile activity and has been accelerating as we have moved through the year. Our backlogs continue to be healthy.

We continue to see strong activity in our international markets. Leasing activity is mostly new leases, but there is a growing amount of amendment activity. We had a big leasing quarter in Brazil.

International cash leasing revenue and tower cash flow grew materially year over year, once again primarily due to portfolio growth. International tower cash flow margins were strong and only slightly behind those in the US, reflecting strong execution. I am very pleased with the progress we have made in Brazil year to date and look forward to continuing our positive momentum.

Next year we expect to build materially more towers in Brazil. We continue to finalize leasing relationships with the carriers, from which we expect an increase in our new leasing business. The Oi closing remains on track for December 1 and we expect to end the year with approximately 7000 towers in Brazil, making us the second-largest tower company in that market.

We continue to follow carefully the potential for consolidation of wireless carriers in Brazil. Should it occur, it may be disruptive short-term to the network development activities of those carriers involved. Long-term we believe it will improve the health of the market and lead to greater aggregate network investment.

Our services segment produced another quarter of strong results for us in the third quarter, once again with the primary contributors being Sprint and T-Mobile, as well as increased activity levels with Verizon. We expect continued strong services segment contribution for the remainder of 2014 and through 2015.

We have increased our services outlook for 2014. Our initial services outlook for 2015 is greater than what our initial 2014 outlook was, although less than our expected 2014 actual results. 2015 outlook for services reflects continued strength, but also some uncertainty as to the magnitude of Sprint's 2.5 gig activity in 2015.

Our operational performance across the entire Company was very strong in the third quarter. Strong tower cash flow and services margins drove our adjusted EBITDA margin to an industry-leading 67.5%, almost 300 basis points above that year ago margin. We think to have produced that level of margin while growing materially internationally and increasing SG&A expense to manage that international growth is a real accomplishment.

The strong adjusted EBITDA results we had in the third quarter drove our equally strong AFFO and AFFO per share results.

As our initial 2015 guidance indicates, we expect another strong year. Our 2015 outlook contemplates between 9% and 10% same tower cash revenue growth before iDEN terminations, which is the same level we guided to one year ago in our initial 2014 outlook, while below the 13% [gross growth] rate we actually expect now for 2014.

2014 has been an unparalleled year for organic leasing activity, well above our expectations a year ago in terms of revenue added per tower. While we anticipate strong leasing activity for years to come, our 2015 guidance reflects a return to levels of growth similar to what we experienced in 2011, 2012, and 2013.

On a net basis, our 2015 outlook also contemplates negative impacts of approximately 1% associated with FX rates as compared to rates experienced in 2014, and approximately $16 million to full-year leasing revenue associated with 2015 iDEN lease terminations, representing a little more than 1% of our projected 2015 cash leasing revenue.

2015 will be our last year of meaningful iDEN churn. Within our 2015 site leasing revenue outlook, we have included non-iDEN churn of approximately 1.5%. This churn rate is within our typical assumed range of 1.0% to 1.5%. Our churn estimate is based on termination notices we have received to date, and an estimate of potential future churn that might impact our 2015 results for which we have not received any notice to date.

The assumed churn includes our estimate of potential terminations that have been or may be received with regard to legacy leases with Metro, Leap, and Clearwire. We have had some acquisition-related churn with respect to these tenants since 2013, so we view it in the normal course. With regard to the legacy leases with these three tenants, they currently represent approximately $80 million of the Company's total annualized cash site leasing revenue. A portion of this revenue was contemplated to churn off during 2015 and is reflected in our outlook.

Based on amendments and extensions already received, communications with the parent carriers, and our own internal analysis, we believe at least 1/3 of this $80 million will be retained long-term. Incremental churn from these three carriers may keep our annual churn rate at the high end of our historical 1% to 1.5% range for the next two or three years, but we don't expect that there will be any additional material impact to our future growth rates.

We have included no material contribution in 2015 from DISH, public safety, or any other customer that was not reasonably active in 2014. Please keep in mind that our 2015 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.

The total non-cash leasing revenue in 2015 is estimated to be approximately $54.8 million compared to $57.4 million in 2014, a $2.6 million difference.

As is our custom, our outlook includes only those towers we own, intend to build, or have under agreement to acquire as of today, and we do not guide to any stock repurchases. We expect to end 2014 at the high end of our target range of 7.0, 7.5 turns net debt annualized adjusted EBITDA as we continue to settle for cash that warrants related to our retired 4% convertible notes, so as to prevent any share dilution.

Next year we intend to continue our historical behavior of investing in either portfolio growth and/or stock repurchases to maintain leverage within our target range. We believe this behavior has created and will continue to create superior value over time. With respect to portfolio growth, we will look both domestically and internationally and believe that we will continue to find attractive opportunities that will meet our investment requirements.

We are reaffirming our annual goal of 5% to 10% portfolio growth in 2015 while maintaining our target leverage levels. Our initial 2015 guidance reflects a lower percentage of portfolio growth reflecting, only those acquisitions we have under contract today. And if we are successful in consummating some additional acquisitions, I would expect our initial 2015 outlook to increase.

Our initial 2015 guidance reflects a level of discretionary capital investment well below 2014 levels and well below our guided AFFO. We will have significant liquidity that could be deployed for additional asset growth and/or stock repurchases. Based on our estimated 2015 year end run rate adjusted EBITDA, we could invest approximately an additional $1 billion into portfolio growth and still maintain our target net debt annualized adjusted EBITDA leverage levels.

Our access to capital and balance sheet are both in great shape. Our undrawn $770 million revolver and anticipated AFFO generation are more than sufficient to fund pending and plenty of additional investment activity. We have no refinancing obligations prior to 2017.

If we pursue additional investments, as is our goal, those would if necessary likely be funded with additional debt financing which is currently readily available to us at attractive rates. Our recently completed $1.54 billion tower revenue securities issue is a great example of our market acceptance. With that offering, we have established a debt structure that compares very favorably with our peers as to weighted average rate, tenor, and percentage fixed rate, although we choose to operate at materially higher leverage.

We intend to continue our balance sheet strategy and leverage targets, as we believe them to contribute materially to shareholder value creation.

In the aggregate, we believe our initial 2015 outlook is strong, with potential opportunities for improvement throughout the year just as has happened in 2014. Our focus next year is straightforward. Execute well against a favorable microenvironment, add quality growth assets and continue to take advantage if necessary of what is expected to be a favorable financing market. 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. Our employees 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 will remain extremely busy improving and expanding their wireless networks. We look forward to continued success as we finish this year and move into 2015.

Lori, at this time we'll take some questions.

(Operator Instructions). David Barden, Bank of America Merrill Lynch.

Good morning. Thanks for taking the questions. Thanks for all of the detail. I want to make sure, Jeff, I understand the kind of baseline core growth guidance, same-store sales domestically that you are giving.

You are seeing -- I think you said 13% [gross] right now, but you are expecting 9% to 10% next year, but that is before iDEN. If you could bridge the growth rate we have to now, realized in the third quarter year-over-year, to what you are guiding to and try to boil it down to a same-store sales domestic apples and apples core growth rate, that would be super helpful because there's obviously a lot of confusion with what's happening with Clearwire, PCS and LEAP.

And then I think the second question would be just in terms of AT&T and Verizon being busy, I think Verizon has been quite clear that they continue to plan to spend as much as they can. I think there's been greater questions about AT&T's network development momentum into the second half and into the first part of next year. Are you getting any sense that there is a slowdown there or revisiting what their rate of investment is in the network? Really appreciate it, thanks.

I am going to let Brendan chime in here, make sure I get this right. But the difference between the 13% and the 9% to 10% is basically three things. 1% of that is FX. 1% of that is just what happens when you add the same amount of revenue to a tower on a same tower basis, and then you carry that forward to the next year, which some people have called the law of larger numbers, which leaves 1% to 1.5%.

And that last delta is the amount -- it basically relates to the amount of revenue added per tower that we are forecasting now for 2015, or at least at this point in the year. And those are levels that we -- that's where we kind of were a year ago, David. And actually in probably each of the last three or four years, it was that amount of revenue added per tower. It just so happens that we had a blowout year, or are having a blowout year in 2014 and it actually does segue a little bit into your second question.

I mean one of the thoughts behind where we are guiding to right now is we are watching AT&T. There have certainly been widely reported expectations of their slowdown. I can tell you we are not seeing much, but we are perhaps seeing a little bit.

And then the other part of that will be as we are taking -- we will enjoy it as it comes, but not get too far out over our skis with respect to the magnitude of Sprint's 2.5G activity. We are kind of waiting to see how that pans out as well. So your two questions are related. Does that help?

Well, it does on the second part, for sure. If you could -- I am just trying to understand, if I take your next year's domestic same-store sales tower growth rate, net of regular churn of 1.5%, net of $16 million iDEN, what is that growth rate that you are starting out looking at?

All right. Well, first of all, we are talking about Companywide growth rates and you are trying to reduce it to US. But all of the comments are around Companywide growth rates, which is why the FX played -- that is why I gave that answer.

Right.

Brendan, go ahead. Take a shot at that.

So, basically, David, the way that it works is we are saying we are going to have 9% to 10% growth pre-iDEN churn and that is on a currency constant basis. So we are in the 7% to 8% range when you back out the FX impact and the iDEN churn.

As it compares to the current year, we are basically different for the reasons that Jeff mentioned, which are the law of large numbers it's just -- as we add the same amount, it is a lower percentage year over year. Plus, we are projecting 1% to 1.5% lease up. The other difference is basically churn.

The 13% is a gross number. The 9% to 10% is net of normal churn. It is not net of iDEN, but it is net of normal churn. So, really, you are comparing -- 10% to 11% compares to the 13% that we had for this year.

Okay. So 7% to 8% is the core baseline domestic growth rate apples and apples for the US market?

No, that is for the whole Company.

For the whole Company.

And that is net of everything.

Okay. Perfect. All right, we will work on that. Thanks.

Amir Rozwadowski, Barclays Capital.

Thank you very much. Just tailing on those prior questions around the growth rate expectation, it does seem as though you are taking a much more cautious approach to AT&T and to Sprint at the moment.

I am wondering, clearly, 2014 was a stronger growth rate and investment cycle than you had anticipated. What could drive further surprises to the upside when we think about 2015 right now, when we are looking at the different initiatives by the different carriers?

Well, keep in mind that the growth rates that we are putting forth today are exactly what the same ones we put forth a year ago. And obviously we were very pleasantly surprised by actual results well ahead of expectations. And what drove that was all four carriers having fair amounts of activity and continuing to not only complete coverage, but also begin to densify their networks for capacity.

All that can still be there today. The operational needs we think are just as strong today as they were then. I think the real issues that we are taking a conservative view on today are budgetary issues with respect to several of our clients, as opposed to operational needs, which are every bit as strong as they were this time a year ago when we were basically guiding to the same type of growth rates.

That's very helpful. And then if I may, one other area of new spectrum build has of course been T-Mobile 700 MHz A block. You mentioned some of the commentary around Sprint. I was wondering if you could provide us a little bit of commentary around where your expectations are for that network build, in terms of within the context of your growth rate anticipation.

Yes, we believe Sprint will be very active in certain markets with its 2.5G, but I don't have any or much more insight beyond what they have pretty publicly stated, which is that they are going to focus their initial efforts on certain more urban markets. And really, what we do with Sprint next year will be a function of what the geography is that they tackle on that project.

And apologies, on T-Mobile's 700 MHz A block?

I'm sorry; I thought you were referring to Sprint. No, the T-Mobile actually is, as I mentioned, very active. And it is mostly with A block work, although we are just, I believe, on the cusp of starting more 700 MHz business. And actually that is -- we are -- within our guidance we expect T-Mobile to be stronger, Verizon to continue its strength and then as I mentioned earlier, a bit of conservatism around AT&T and Sprint. That is how we are viewing the four US customers within the context of next year.

Perfect. Thank you so much for the incremental color.

Phil Cusick, JPMorgan.

This is Richard for Phil. Just to follow-up on David's question, it looks like you are implying that the US domestic organic growth rate is about 6%. What was it at the beginning of last year when you guided? Was it around this level or a little bit higher, and is that 6% number kind of correct?

It is a little bit higher than that, closer to 7% for the US. And that would be fairly consistent because we had the iDEN, similar iDEN churn expectations last year as we do this year. So I would say it's basically about the same as it was a year ago.

And then the other (technical difficulty) churn is probably taking the place of other churn this year?

Well, our other non-iDEN churn expectations are probably slightly higher going into next year, but not really outside of the range that we typically expect. We usually see 1% to 1.5%. We have over the last year or two probably been closer to 1% in actuality, and we are projecting 1.5% going into next year, but it is not a material difference.

So that as you are tallying up the differences, that would be 50 basis points.

And final question, I guess not looking out too far ahead, but for 2016 then, as iDEN churn goes away and there's only this churn left, things should get better in 2016 on a churn basis?

Yes.

Great. Thank you.

Kevin Smithen, Macquarie.

This is Will for Kevin. We were wondering how do you evaluate a share repurchase plan versus M&A opportunities. Specifically, if Verizon were to break up its tower portfolio, would that make it more interesting to you relative to a share repurchase?

Well, that is a difficult question to ask. Ultimately whether we are interested any particular acquisition or not will depend on the price and the terms. And if we find the price and the terms attractive, and we can fund the transaction, stay within our target leverage levels or at least be around those such that we can easily be within them within one year, we will be interested in that transaction (technical difficulty).

Now at the same time, we will be looking at stock repurchases depending on where the price of the stock is and evaluating one versus the other. As we have always stated, and I think our behavior has been consistent, when it is kind of a jump ball, we favor portfolio growth because we think EBITDA growth, when well executed and well priced, is the best way to create additional shareholder value.

That is very helpful. Thank you.

Simon Flannery, Morgan Stanley.

Good morning. This is Armintas for Simon. I was hoping to get more color on the trends in Brazil. Obviously American Tower had a strong quarter and you seem to be reiterating similar commentary.

And also on the portfolio growth, are you considering other markets? I know previously you said 25% to 30% of total revenue from non-US dollar denominated revenues, so if you were to grow the portfolio instead of share buybacks, would you look at Brazil or some other markets? Thank you.

Yes. We still are of a mind with the 25% to 30% non-US as a current limitation. Our guidance next year -- about 13.5% of revenue would be in Brazil, the only real non-US dollar denominated country to speak of, so obviously well within that. So Brazil has been good. Activity levels are up.

We are watching how the recent elections shakeout in terms of where the country's interest rates, inflation rates, the pace of investment go. But the needs for Brazil remain tremendously strong in terms of additional infrastructure. The consumers want it. The government wants it. So we remain very bullish in Brazil and would continue to look for additional opportunities there.

And we would also look elsewhere in the Western Hemisphere where we are not today, particularly in South America. And I think that will be our focus for the next year, as opposed to anything outside of the Western Hemisphere.

Thank you.

Ric Prentiss, Raymond James.

It's Ric; a couple of questions. One, last year I think you started at $16 million of iDEN churn and I think I heard you say iDEN churn in the quarter was only $1.7 million. So where did iDEN churn -- is it looking like it is going to end up in 2014?

In terms of its total impact on 2014, it is going to end up closer to $14.5 million-ish, with an expectation for Q4 here.

Okay. And the expectation for 2015 is that $16 million again on those least favorable terms as far as the most expensive sites come off first?

Correct. Yes.

And when you look at the rest of the world, Jeff, you'd have to maybe set up more SG&A platforms as you look around the world. How do you think about -- again, it is not this year, as you just mentioned, but how do you think about what regions of the world might be interesting? And what would be involved in setting up the platform? And like in Brazil where you acquired a Company that brought in some talent, how long does it take to set up other geographic focuses?

Well, a key issue would be how you would go in. Do you go in kind of de novo where it is going to take a year? We have never actually done that. We have gone in and always had some local existing talent on the ground where you can really get up and running quite a bit faster.

As I think about the world, I think you probably would need -- right now one of the attractions South America for us is we can share a lot of SG&A within our Latin American markets. I think you would have to break up the rest of the world into at least three regions, probably each one deserving of its own mini SG&A group. And that would be Europe, Africa, and Asia would be the three components.

So we haven't gotten anywhere close to doing any of that yet. We have thought about it, of course, some. But I think the real key to the answer of your question, Ric, is how you go in there.

Sure. Makes sense. And maintenance CapEx seems to be going up a little bit as we look at the guidance in 2015 being $30 million to $40 million versus what had been kind of high $20 million range. Is that just that your asset base is getting larger with the growth in the portfolio? Or is there something changing on the maintenance side?

Yes, it is a mix of a few different things. That is part of it, that we obviously have a lot more assets that need to be maintained. We are doing some work on some of our older assets to make sure that they are kept up, or we expect to, anyway. So we have increased it for that.

And that nondiscretionary CapEx also includes some general corporate stuff, such as IT projects and other system-related initiatives. So it is kind of a mix of all of those things.

Is there some special projects in IT that would cause it maybe to drop back down in 2016? Or is this kind of what we should expect on a run rate basis for the long-term?

This is probably toward the higher end of what we would expect on a run rate basis. But of course the portfolio will continue to grow. We would expect to. So I would imagine that would offset any lesser amount.

Great. Well, we will look for you, Jeff, wearing your iWatch in your connected car using your fablet. But -- (multiple speakers)

I think that is probably illegal in some states. But we will give it a shot.

Good luck, guys. Thanks.

Thanks.

Spencer Kurn, New Street Research.

You guys have been growing significantly faster than your public company peers pretty much all year, and your guidance is starkly different than the other company that is giving guidance. Could you talk about from your perspective what is it about your portfolio that grows faster? Is it tower co on mobility assets, or are your sites located in better areas? Any color on how you view your business and why you have achieved superior growth rates would be really helpful.

Yes, I think it is a combination of many things. It is the ability to select assets probably a little bit better, given some of the very large portfolio some of our peers have bought. A lot of building has gone on here over the years. So we had the good fortune to create a lot of our assets, and we actually bought from other people like us who work boulders for the tower industry.

I think we have also -- we've been very faithful to a pricing discipline over the years, where every additional incremental piece of equipment that a customer wants to put on, for the most part we are able to monetize. And I think the combination of all of those things, plus we execute well. We really do believe that our services business and our services roots make us better operators. I think the combination of all of those things adds up to the highest growth rates in the industry.

Got it. Thanks.

Thank you. I will turn it back to our speakers now.

Great. Well, we appreciate everyone joining us today and we look forward to our year-end Q4 call, which should be sometime in February. Thank you.

Thank you, ladies and gentlemen, this concludes our teleconference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.