SBA Communications Corp (SBAC) 2019 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the SBA fourth quarter results conference call. (Operator Instructions) As a reminder, this conference is being recorded.

And now let me introduce Vice President of Finance, Mark DeRussy. Go ahead, sir.

Thank you, Julio. Good evening, everyone, and thank you for joining us for SBA's Fourth Quarter 2019 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'll discuss on this call is forward-looking, including, but not limited to, any guidance for 2020 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, February 20, and we have no obligation to update any forward-looking statements we may make.

In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website.

With that, I will now turn it over to Brendan to discuss our results.

Thank you, Mark. Good evening. We had another solid quarter in the fourth quarter with strong operating and financial results in both our leasing and services businesses. Total GAAP site leasing revenues for the fourth quarter were $481.1 million, and cash site leasing revenues were $478.1 million. Foreign exchange rates were in line with our estimates for the fourth quarter but were a headwind on year ago comparisons.

Same-tower recurring cash leasing revenue growth for the fourth quarter, which is calculated on a constant currency basis, was 6% over the fourth quarter of 2018, including the impact of 2.3% of churn. On a gross basis, same-tower growth was 8.3%. Domestic same-tower recurring cash leasing revenue growth over the fourth quarter of last year was 8.2% on a gross basis and 5.6% on a net basis, including 2.6% of churn, 0.8% of which continues to be related to Metro/Leap and Clearwire terminations. The balance of domestic churn is from a variety of sources, including a number of smaller customers that are modifying or shutting down older technologies, some sites that were never on air that are not being renewed and some legacy consolidation churn.

Domestic operational leasing activity, representing new revenue placed under contract during the quarter, was down from the first half of the year and sequentially from the third quarter due to the industry-wide slowdown as our customers awaited resolution of the legal challenges to the Sprint/T-Mobile merger. Amendment activity was again the bulk of our domestic bookings with newly signed up domestic leasing revenue coming 71% from amendments and 29% from new leases. Although we had essentially no contribution to leasing activity from T-Mobile during the quarter, the big 4 carriers still represented 87% of total incremental domestic leasing revenue that was signed up during the quarter.

Our domestic application backlog is strong, and we expect that the closing of the Sprint/T-Mobile merger will drive a significant increase in incremental leasing activity as our customers invest heavily in their future 5G networks.

Internationally, on a constant currency basis, same-tower cash leasing revenue growth was 8.3%, including 0.6% of churn or 8.9% on a gross basis. We had another solid leasing quarter internationally, although our reported same-tower growth numbers are down from last quarter primarily due to the rolling off of a very strong fourth quarter of 2018 from this trailing 12-month calculation.

This quarter, Brazil was again the largest contributor to lease-up. Gross same-tower organic growth in Brazil was 11.6% on a constant currency basis and continue to have contributions from all 4 major carriers there.

During the fourth quarter, 84.6% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-U. S. dollar-denominated revenue was from Brazil, with Brazil representing 12.1% of all cash site leasing revenues during the quarter and 8.8% of cash site leasing revenue, excluding revenues from pass-through expenses.

Tower cash flow for the fourth quarter was $387.4 million. Our industry-leading domestic tower cash flow margin was 84% in the quarter. International tower cash flow margin was 69.7% and was 90.2%, excluding the impact of pass-through reimbursable expenses.

Adjusted EBITDA in the fourth quarter was $362.4 million. Our adjusted EBITDA margin was 71% in the quarter, up 50 basis points from the prior year period. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 75.7%. Approximately 99% of our total adjusted EBITDA was attributable to our tower leasing business in the fourth quarter.

AFFO in the fourth quarter was $248.8 million. AFFO per share was $2.18, an increase of 10% over the fourth quarter of 2018 on a constant currency basis.

During the fourth quarter, we continued to invest in expanding our tower portfolio. On December 6, we closed on the acquisition of 1,313 wireless sites in Brazil purchased from Grupo TorreSur for a total cash consideration of USD 460 million. These towers have 1.7 tenants a tower, are located in high-quality population centers and in locations that geographically complement our existing portfolio well. And they were purchased for less than 15x their anticipated 2020 tower cash flow.

We're very pleased with our ability to continue adding high-caliber sites to our portfolio at attractive prices. In addition to the GTS acquisition, we acquired 23 other communication sites during the quarter for $11.7 million, and we built a total of 170 sites in the quarter. Most of the added sites were located internationally. Subsequent to the end of the quarter, we acquired 11 additional sites for $11.9 million. As of today, we have under contract for acquisition and anticipate closing by the end of the second quarter on 166 additional sites at an aggregate price of $97.8 million.

We also continue to invest in the land under our sites, which provides both strategic and financial benefits. During the quarter, we spent an aggregate of $13.7 million to buy land and easements and to extend ground lease terms. At the end of the quarter, we owned or controlled for more than 20 years the land underneath approximately 71% of our towers. And the average remaining life under our ground leases, including renewal options under our control, is approximately 35 years.

Looking ahead now, our earnings press release includes our initial outlook for full year 2020. Even with the industry slowdown in the U.S. in the second half of last year and into the first part of this year, our outlook reflects another year of solid growth in our leasing business. We expect a similar level of domestic operational leasing activity in 2020 as we experienced in 2019. However, this year is anticipated to be back half loaded, whereas 2019 was much busier during the first half of the year.

Our outlook for 2020 leasing revenue is built largely upon the operational leasing activity we've had over the last 6 months. Our anticipated acceleration in lease-up in the second half of this year is expected to provide minor contributions to our 2020 leasing revenue. Similarly, although our guidance for full year 2020 services revenue is anticipated to be less than we saw during a very busy 2019, we expect to see a pickup in our services business in the second half of the year once the Sprint/T-Mobile merger has been closed.

In our international business, our outlook anticipates continued steady organic leasing contributions. We have incorporated consensus estimates of a slight weakening in the Brazilian foreign exchange rate from where we are today, assuming an average FX rate during 2020 of BRL 4.36 to USD 1.

Our full year 2020 outlook does not assume any further acquisitions beyond those under contract today, and it does not assume any share repurchases at all. We do, however, intend to deploy additional capital into both portfolio growth and opportunistic share repurchases.

Our outlook for net cash interest expense and for AFFO include the impact of our recently completed unsecured notes offering as well as the repricing of our term loan completed during the fourth quarter, each of which Mark will discuss in a moment. We estimate a relatively similar level of cash taxes in 2020 as we incurred in 2019, mostly related to international taxes and state taxes where we do not have any NOLs.

Finally, our outlook for AFFO per share is based on an assumed weighted average number of diluted common shares of $114.8 million, which assumption is influenced in part by estimated future share prices. We are excited about 2020 and particularly about the great opportunities that lie ahead for SBA over the next several years.

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

Thanks, Brendan. We ended the fourth quarter with $10.4 billion of total debt and $10.3 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 7.1x. Our fourth quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.8x.

On November 19, we repriced our $2.4 billion term loan from a coupon of LIBOR plus 200 basis points to a new coupon of LIBOR plus 175 basis points. Subsequently, on December 3, we entered into a series of interest rate swaps on $1.95 billion of that term loan, effectively replacing both of our existing interest rate swaps. The effect of these new swaps was to reduce our swap interest rate by approximately 30 basis points to a fixed rate of 3.78% through the maturity date of the existing term loan.

After year-end, on February 4, we issued $1 billion of new 7-year unsecured senior notes at an interest rate of 3.875%, our lowest-cost unsecured senior note issuance ever. The net proceeds of this offering were used to redeem all of our outstanding 2022 4.875% senior notes, pay the associated call premium on those notes and repay a portion of the balance outstanding under our revolving credit facility.

As of today, the outstanding balance under our revolver is $175 million. Pro forma for the senior note issuance, the weighted average coupon of our outstanding debt is 3.6%, and our weighted average maturity is approximately 4 years.

During the fourth quarter, we repurchased 859,000 shares of our common stock for $200 million or an average price of $232.77 per share. All the shares repurchased were retired. As of today, we have $624.3 million of repurchase authorization remaining under our $1 billion stock repurchase plan. The company shares outstanding at December 31, 2019, are 111.8 million, which is down 0.6% from December 31, 2018.

In addition, during the fourth quarter, we declared and paid a cash dividend of $41.5 million or $0.37 per share. And today, we announced that our Board of Directors declared a first quarter dividend of $0.465 per share or an increase of 25.7% over the last quarter. It's payable on March 26, 2020, for shareholders of record as of the close of business on March 10, 2020.

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

Thanks, Mark, and good evening, everyone. The fourth quarter was a strong finish to a very good year for SBA. We delivered solid financial results in both our leasing and services segments, finishing at the high end of guidance for tower cash flow, AFFO and AFFO per share and exceeding the high end of our guidance range for leasing revenue, total revenue and adjusted EBITDA. Our full year financial results also finished above the high end of our initial 2019 guidance given in February of last year for leasing revenue, services revenue, tower cash flow, adjusted EBITDA, AFFO and AFFO per share.

We produced over $2 billion in revenue for the first time in our history, and we grew full year AFFO per share by 11.7% over 2018 and by 13.1% on a constant currency basis. We also grew our portfolio at the high end of our 5% to 10% goal, and we expanded into an attractive and exciting new market, South Africa. We completed several debt transactions, improving our cost of financing with each one. We bought back over 2 million shares of our stock at an average price of $231.87, and we began paying a quarterly dividend ahead of schedule.

All of this was accomplished notwithstanding the domestic industry-wide slowdown for our customers during the second half of the year resulting from the uncertainty surrounding the outcome of the T-Mobile/Sprint transaction. As I said, 2019 was a very good year for SBA.

Looking ahead now to 2020 and beyond, we are very excited about the prospects for SBA. We anticipate the resolution of the legal challenges to the T-Mobile/Sprint transaction will set us up for significant network investment by our U.S. customers involved in the transaction, including DISH, beginning in the second half of the year. In order to meet their required 5G coverage goals, the new T-Mobile will require meaningful upgrades across their combined portfolio, deploying 2.5 gigahertz spectrum to legacy T-Mobile sites and 600 megahertz spectrum to legacy Sprint sites. These efforts will drive amendment activity for SBA.

DISH, now on track to be the clear fourth nationwide facilities-based carrier, will need to invest heavily as well, deploying a brand-new 5G network across the country. DISH's build-out will drive new colocation opportunities for SBA. And Verizon and AT&T each have their own 5G initiatives ahead, which we believe will lead them to embrace the new competitive landscape and continue to invest significantly in their own networks.

The release of more 5G-enabled devices and the advent of more and more new 5G applications will be continued catalyst for the network investment required to support these technologies. The initial 5G deployment cycle has really only just begun, particularly as it relates to macro sites and the deployment of mid-band spectrum and massive MIMO architecture. And we expect it to be a very long cycle. The anticipated auctions of CBRS and C-band spectrum later this year will only serve to further support this upward investment trajectory over the next several years.

Outside of the U.S., the future for our international business looks bright as well. Our leading market in terms of new leasing activity has continued to be Brazil, our largest international market. During the fourth quarter, our presence in Brazil got even larger with the acquisition of over 1,300 sites from GTS. This acquisition brings our site count in Brazil by almost 10,000 towers. We saw activity in the fourth quarter from all 4 major carriers in Brazil, primarily around their 4G networks, and the future prospects in this market look strong.

From a macro level, Brazil has seen economic stability largely restored with pension reform approved, inflation under control, record-low interest rates driven by 4 consecutive rate reductions and increases in foreign direct investment. The Brazilian foreign exchange rate, however, has been somewhat volatile and generally continued to weaken. We are optimistic that the positive economic trends in Brazil will ultimately translate into a more stable exchange rate. Nonetheless, our 2020 full year outlook does reflect the headwind from the Brazilian real compared to last year.

Across our other international markets, we anticipate steady leasing contributions during 2020 as well as the largest contributions to our portfolio growth. On a company-wide basis, we are again targeting 5% to 10% portfolio growth in 2020. In order to achieve this level of growth, we will have to identify one or more quality tower portfolios at appropriate price levels. I'm particularly proud of our track record in selecting -- in selectively acquiring high-quality assets at disciplined prices, and I'm confident we will be able to continue and identifying and securing these types of opportunities.

In addition to portfolio growth, I expect us to continue to execute well on further enhancing our capital structure as well as our capital allocation to stock repurchases and cash dividends. On the capital structure front, we had a very strong 2019, completing our largest single tranche ABS deal in the company's history at a very attractive rate, repricing our $2.4 billion term loan with a 25 basis point reduction at par and subsequent to year-end, closing on our lowest-cost, high-yield issuance in company history.

During the fourth quarter, we also received an across-the-board increase in our credit rating from Moody's, evidencing not only the high quality of our business but also the liquidity and stability in our capital structure. We continue to actively evaluate our existing capital structure and look for further opportunities to take advantage of the current low interest rate environment in order to both extend maturities and improve the cost of our debt.

With regards to capital allocation, we again had a strong year in 2019, not only growing our tower portfolio by almost 10%, but we also repurchased our stock opportunistically, investing over $470 million to retire over 2 million shares. And we commenced paying a dividend in the third quarter. We expect to continue returning capital to shareholders through both share buybacks and dividends during 2020.

On the dividend front, we're very pleased to announce our first quarter dividend today. Our dividend represents an almost 26% increase over the dividend paid out last quarter, and I believe that will represent one of the highest dividend increases this year anywhere, certainly in the real estate investment trust space. Our current dividend represents approximately only 20% of our 2020 outlook for AFFO, meaning that we have substantial capital still available for portfolio growth and share repurchases.

In addition, maintaining our leverage in the high 6x to low 7x range provides us with even more capital to continue investing in the business. We are positioned extremely well to take advantage of all future opportunities and continue growing AFFO per share.

Finally, I'd like to again thank our team members and our customers for their contributions to our success in 2019. It truly was a great year. With their continued contributions, we are very excited for a tremendous 2020 and beyond.

And with that, Julio, we are now ready for questions.

(Operator Instructions) We have Jessie Cusick for our first question.

It's Phil Cusick from JPMorgan. It sounds like as we model 2020, we should think about the first half activity similar to the fourth quarter activity and then ramping in the back half. Can you give us any update on the Sprint/T-Mobile or DISH cadence of potential network planning and when those 2 start to really impact numbers?

A lot of discussions, Phil, but no real operational activity yet, of course, given the fact that there is no closing. And while I believe that things will begin to move pretty quickly, particularly on the T-Mobile side, DISH had their own commentary yesterday as to the cadence of what they will be doing, but on the T-Mobile side, I think that will go quickly once the deal closes. But I think we're going to have to wait and see as to when that happens. They need to get through the California PCS and I think some other things. I think there's a lot of folks ready to go, but they're just waiting for the starting gun.

Okay. And then a separate topic, can you give us any early read on the South Africa business, sort of how you think about that now that it's under your belt and attractiveness of other markets as you look out over the next year?

Well, we like South Africa a lot. I mean within our 4 years of investment there, we took close to 1,000 towers and actually beat 1,000 today. I'm not quite sure of the count, but it's getting awfully close to over 2 tenants per tower with a very good return on investment. Dynamic market, a lot of room for additional greenfield builds, all the things we look for. So we're very excited about the ability to continue to grow in that market. We will continue to look for markets like that. We think there are some out there. They're not 10s or 20s of those kinds of markets, but there are some out there, and we're going to continue to pursue them. And if you don't mind, I'm not going to name them.

Okay. And then if I can just follow up and be even more explicit since we're almost 2 months into the quarter. It looks like we should be assuming that activity in 1Q is probably even below 4Q. Is that a good starting point?

Well, I don't know if you should assume it is below. But I think you should take the comments about things came to a pretty abrupt slowdown, at least with respect to several customers in August. And the reason things came to that slowdown have not changed as of today.

Next question is from Spencer Kurn from New Street Research.

Could you just remind us of your average remaining lease term with Sprint? And how are you thinking about approaching the decommissioning of Sprint's network? Do you see value in signing any agreements that would minimize churn? Or would you take a similar approach as you did with iDEN and coordinate a steady decommissioning schedule?

Yes. Spencer, on the overlap, the average remaining terms for the Sprint leases on sites where they overlap with T-Mobile is about 4.5 years.

Yes. And I am confident given the complexities of what will need to be accomplished by the new T-Mobile transfer that we'll have an opportunity to address those issues. And again, we have no kind of religious opposition to MLAs. And if it makes sense for both parties, as we have in the past, we would do more.

Great. And one other question. Could you just talk about the amendment pricing that you tend to see for mid-band spectrum, like 2.5 or potentially CBRS and C-band, and how that relates to what you've been seeing for low-band spectrum over the last couple of years?

We don't want to get too specific. The incidence of CBRS amendments haven't been that numerous yet. And there's really only, of course, been one customer that has deployed mid-band in the massive MIMO architecture. And I would say the amendment pricing has been reasonable, fair and consistent with all the other types of amendments that we've done over the years in terms of size and weight and all the things that have kind of gone into the way we've conducted our business.

Next question is from Colby Synesael from Cowen and Company.

We had an expectation that churn domestically in the U.S. have come down or improved in 2020 versus '19. It doesn't look like that's happening. I was wondering if you can give some color around that.

And then secondly, as it relates to the GTS acquisition, I appreciate you gave, I think, sub-15x tower cash flow. But I was wondering if you could just be more explicit and tell us what the expectation is for revenue and EBITDA in 2020?

Yes, Colby. First, on the churn. It is down slightly because -- in terms of the same-tower analysis due to the falling off of the iDEN churn that took place in the fourth quarter of last year. But as we look out to next year, some of that reduction due to the loss of the iDEN is being offset by a little bit of a slight elevation in Q4 churn notices. They're coming from a variety of miscellaneous items. I mentioned some of those items in the scripted comments.

There's a number of smaller customers that are kind of modifying or shutting down older technologies, for one. An example of that is we had one regional carrier who had previously entered into some leases with us for 4G installations that we have recorded in the past as lease-up, but those were separate and apart from their preexisting leases for their 3G installations, which they're now decommissioning. And so we've had a few slugs of things that were a little more than what we typically see, and because it's happening in the fourth quarter, that carries over into the 2020 numbers.

GTS?

Oh, on GTS. Yes. So on GTS, the numbers around tower cash flow contribution or EBITDA contribution is approximately $30 million for next year, a little over $30 million, $31 million. Now that can be affected, of course, by where the FX rate shakes out. But that was our expectation when we put the guidance together. And from a revenue standpoint, it's approximately a little more than $40 million, $42-ish million.

Next question from Simon Flannery, Morgan Stanley.

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guidance. How are you thinking about AT&T and Verizon? We obviously heard Verizon last week talking a lot about densification, but the FirstNet project is moving along. So is that fairly level year-to-year? Or any big changes you might call out?

And then you touched on CBRS there a minute ago. We got the auction coming up. How are carriers you're talking to thinking of deploying that? Is that still very much in a small cell, indoor-type environment? Or do you think there might be potential to use it more broadly on macro cells?

First question, Simon, is our guidance assumes essentially the same or certainly materially the same contributions from AT&T and Verizon. And in terms of the CBRS, primarily because of this tower and -- which, of course, affects the range, the CBRS will be more of a small cell, indoor. But there will be some macro uses as well, and we were actually -- we have some applications for outdoor uses. So it will be across the board. But we don't think for -- at least for SBA, the CBRS spectrum will be nearly as impactful as C-band spectrum will be.

Next question is from Ric Prentiss with Raymond James.

A couple of questions. One, how should we think about the process flow as far as when applications start coming in with the T-Mobile/Sprint merger with amendment activity that applications could turn into revenues? Is it a 3-month, 6-month process or possibly longer?

It depends on what they want to do. Amendments can go quicker, have a history of going quicker, certainly much quicker than brand-new leases. So yes, I would use 3% to 6% as opposed to 6-plus on a colo.

Makes sense. And like you said, you're not opposed to MLAs, particularly given the complexity of this thing. Is there the possibility of doing -- involving DISH in it as well? DISH, on their call, talked about how they're interested potentially in some of the Sprint decommissioned sites. So what's the process for them to take over those leases or weave it into an MLA?

Well, we got to know what leases you're talking about, first. And we're not anywhere close to that. And then you have to match up heights and terms and things like that. The -- my personal opinion is while there will be a lot of business from DISH and the freeing up of space and the inventory of what is available will be great for both DISH and the tower industry, the exact matching up of existing Sprint or T-Mobile leases that are to be decommissioned, that's going to be a tougher match.

Sure. Makes sense. And then I think we've heard from AT&T that their FirstNet project was, "maybe 75% done," but I'm sure that's probably not equal across the whole country. As you think about how much you've seen touches from AT&T, can you give us an indicator of where you think they are on the project based on your sites?

Yes. I think their 75% includes a lot of advanced work. I think from our perspective, we think it's closer to 50%.

As far as touching your sites?

Yes. In terms of work yet to be done.

Sure. Okay. And last one from me. You mentioned CBRS could be some indoor systems or small cell systems. What's your appetite given your balance sheet and your ability to put money to work on a shared infrastructure to get involved in maybe neutral host, indoor systems? And how big could that opportunity be? And what's the time line?

Well, our appetite for the right deal is quite large. The -- finding the right opportunities are more difficult. There are asset-by-asset type of opportunities. And we are pursuing that area. We've actually added some resources there because we do think there will be some good opportunities, but it's an asset-by-asset hunt.

And the time frame as far as -- is it kind of more like a '21 event where it starts becoming noticeable then for the industry?

Well, I mean there's things going on now. And now there are folks that are building out DAS systems that I think will be converted to CBRS and folks that are interested in types of technologies today that will be converted to CBRS. So it's evolving. Our -- just like we have always approached the tower business, we're very much focused on looking for the best assets.

Okay. And then congrats on the nice return on your stock buyback. That was very attractive, obviously.

Well, thank you.

Next question is from Brandon Nispel from KeyBanc Capital Markets.

Two, if I could. You guys are obviously excited about sort of the second half of 2020 relative to the second half of 2019. Can you maybe just help quantify to us what you would expect to see from a increase in the backlog perspective from a year-over-year basis?

Secondly, Jeff, you talked a lot about massive MIMO antennas. Have you been able to sort of determine in your conversations with customers how deep into the network those type of antennas will need to go and then maybe further be able to quantify for us what that would mean in terms of an amendment?

I think they're going to go fairly deep to achieve true 5G outside of the dense urban markets. All of the work that I've seen indicates that that's what you need in the macro world. And you really do need to see the mid-band spectrum to do it, which I think explains a lot of the different carrier spending patterns.

I don't want to get too much in -- I think I commented enough on the amendment pricing earlier about how that gets priced. So if you look back at Spencer's question, you'll have your answer there.

And in terms of the backlog, it all depends on when these deals get done. I mean these -- the backlogs, I think, will grow very, very quickly and could grow -- they could double or more in fairly short order. I do believe a lot of work has already been done in terms of what needs to be done to the network. It's really a question of when is the deal going to be approved. Then we -- then I do -- as I think I said 6 months ago, I think you'll see a lot of activity.

And I guess if I could follow up. Is there anything that you need to do operationally to prepare for that? And any limiting factors such as tower climbers that could mix or the growth doesn't come in as fast as you expect?

We tend to retain -- given our size of our company and our benefit plans, we're a pretty good employer. And we will tend to use our tower climbers to make sure that the work will get done on our towers, make sure that the amendments and the colos on our towers get done, so we can prioritize there. So we'll be okay. There will be some general shortages in the industry, but I don't think it will be catastrophic. I mean it will be an issue, but we always get through it as an industry.

Next question is from Nick Del Deo from MoffettNathanson.

I assume it's a very small number, but can you share the number of domestic towers you own that effectively can't accommodate another tenant? And sort of related to that, is there any reason a player like DISH wouldn't be satisfied with the height of the RAD centers you tend to have available?

Second question, the answer is no. First, I'm sure we have some, but I -- 30, 40...

Very, very small.

So an immaterial number?

Yes. I mean the towers -- there are towers that require augmentations, but virtually every site we have can be augmented to accommodate additional tenants. So it would be de minimis.

Okay. Got it. And then when you're negotiating with an upstart network like DISH, are you inclined to try to get some sort of guarantee from the parent company on the lease? Or are you satisfied with the wireless operating today being the sole signatory?

That's probably more information than we'd like to talk about on the call.

Next question is from Brett Feldman from Goldman Sachs.

I guess it came out during the trial that DISH has signed a master service agreement to cover over 30,000 sites. I'm not entirely sure what those are, but I'm curious whether you're a party to any of them and if they've made any commitments to you.

And then second, you've not done a significant amount of domestic tower M&A recently, and there's a range of reasons you've cited for that in the past. But one of them was -- there was this big mismatch between the valuations of private tower assets in the U.S. and where your stock was trading. Your stock has obviously performed a lot better. I'm wondering if that's changed the math such that there might be more opportunities to make domestic accretive acquisitions or if asset quality is really the gate factor as opposed to price.

Yes. Brett, my belief on the first question is that when DISH was building out their IoT network, they did sign up a number of master agreements, including one with us. And in the course of that, a number of companies, including us, submitted all their portfolios so that DISH was able to analyze those and figure out which of those towers would be suitable for that project. And now they're able to do the same for the broadband network. So that is what that statement was all about. But that was under kind of a different -- that was under the narrowband project. But the work that they did about how many towers that they've analyzed that would be suitable for their uses, that was true.

So your second question in terms of the M&A, some of the stuff that we announced is actually more of what we have in the pipeline is in the U.S., actually. And there are -- there's still -- there's a lot of price competition still. There is some varying quality of folks who have done some things that -- to their terms and conditions that we don't really like. But there are still some good assets out there that we will pursue. And clearly, as we look at where we trade and things like that, we would take that into consideration. But we are very interested, as we always have been, in adding quality assets to the portfolio.

Are you finding that valuation -- the valuation gap has started to close or private multiples just expanding in conjunction with the public space?

Well, we took about a 4 turn jump in -- after the T-Mobile/Sprint deal got announced. But I can't say I've seen private multiples jump 4 turns in 2 weeks. But who knows? Who knows? So let's just say, hopefully, the gaps closed a little bit.

Next question is from David Barden from Bank of America.

Just on the dividend hike, obviously, the percentage is fairly eye-popping, Jeff, as you pointed out. The dollars aren't necessarily all that large. But I was wondering if you could kind of lay out where you think the -- what kind of message you want to say. This is -- is this what SBA can do? Is a dividend growth stock for some extended period of time, is this more of just a signaling about your conviction in the next cycle? It would be helpful on that.

And then the second question kind of related is just given how strong the stock price move has been that we've seen in the last 6 or 9 months, at what point do you start thinking about a split to try to make it easier for more money to kind of find its way into this, given that it's an income growth REIT story?

Your kind of perception, your former way you kind of talked about the dividend is correct, David. When you -- when we kind of thought about this, it's more to give a longer, higher growth trajectory because as we model things out, the first dividend we would have had to pay when we got to the exhaustion of the NOLs, frankly, will be higher than the dividend we're paying now. So you'd have to start out high and then of course, grow it not by the same pace.

So by doing this, we can grow it at a faster rate, which some people are going to like. We can control our remaining NOLs. And frankly, we can pay out less of our AFFO. So we think it's a win, win, win, win, which is why we chose to be in to pay it early. And even though we start small, we can grow it faster.

And then on the split, I'm ashamed to say I really hadn't thought of that. Do you think that's something we should do?

I think people would love it.

All right. Well, we'll give it some thought. All you, analysts, weigh in. Send Mark your thoughts...

We'll take a sell poll. Just everybody in the next question.

There you go. We'll take a sell-side poll.

And the next question is from Batya Levi with UBS.

I'm for it, too. In terms of the -- maybe given the faster growth outlook that you were expecting as we exit the year, can you also remind us where you would like to be in terms of your leverage target? I think as you started to grow the dividend, you potentially thought that you might come inside the 7 level. But any updated thoughts there?

And then a second question on how you think you're positioned in terms of the rule footprint that T-Mo is expected to build over the next few years? And how you think about the leasing amendment mix to change as we exit the year into next year?

Well, if you looked at our guidance, Batya, if we don't spend some money on something, whether it's stock repurchases or portfolio growth, we're going to be in the mid-6s in leverage. And that's not where we want to be. So we want to be high 6s to low 7s. So that's the -- that's kind of the new area, I think, where we're targeting. And again, if we see something great to buy, we'd be very pleased to go above that for a temporary period of time. I mean the cash flow generation power of the business is pretty amazing.

So on your second question, I think we're going to be very well positioned with T-Mobile. They are a very good customer of ours. We have a close relationship. We have a lot of work to do with them. And I think we will be a very active partner in terms of both amendments and colocations, just as we were in the first half of last year prior to the August central shutdown.

And speakers, no more questions so far.

Great. Well, we really appreciate everyone joining us on kind of our year-end wrap-up, and we look forward to sharing our 2020 results with you as we go. Thank you very much.

And that does conclude our conference for today. Thank you for your participation and for using AT&T conferencing services. You may now disconnect.