Q1 2015 SBA Communications Corp Earnings Call

Apr 24, 2015 AM EDT
SBAC.OQ - SBA Communications Corp
Q1 2015 SBA Communications Corp Earnings Call
Apr 24, 2015 / 02:00PM GMT 

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Corporate Participants
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   *  Mark DeRussy
      SBA Communications Corporation - VP, Finance
   *  Brendan Cavanagh
      SBA Communications Corporation - EVP and CFO
   *  Jeff Stoops
      SBA Communications Corporation - President and CEO

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Conference Call Participants
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   *  Jonathan Atkin
      RBC Capital Markets - Analyst
   *  Ric Prentiss
      Raymond James & Associates - Analyst
   *  Will Howlett
      Macquarie - Analyst
   *  David Barden
      BofA Merrill Lynch - Analyst
   *  Simon Flannery
      Morgan Stanley - Analyst
   *  Colby Synesael
      Cowen and Company - Analyst
   *  Brett Feldman
      Goldman Sachs - Analyst
   *  Michael Bowen
      Pacific Crest Securities - Analyst
   *  Amir Rozwadowski
      Barclays Capital - Analyst

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Presentation
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Operator   [1]
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 Welcome to the SBA first-quarter results call. (Operator Instructions). As a reminder, this conference is being recorded.

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

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 Mark DeRussy,  SBA Communications Corporation - VP, Finance   [2]
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 Good morning, and thank you for joining us for SBA's first-quarter 2015 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 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 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 statement we may make.

 Our statements are as of today, April 24, 2015, and we have no obligation to update any forward-looking statement we may make.

 Our comments will include non-GAAP financial measures, as defined in Regulation G, and other key operating metrics. 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, sbasite.com.

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

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [3]
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 Thank you, Mark. Good morning. As you saw from our press release last night, we had another very strong quarter in all areas. Notwithstanding FX headwinds during the quarter, we were above the midpoint of our guidance for site leasing revenue, and met or exceeded the high end of our guidance for tower cash flow, adjusted EBITDA, and AFFO.

 GAAP site leasing revenues for the first quarter were $369.7 million, or a 19.5% increase over the first quarter of 2014. Domestic cash site leasing revenue increased 11.1% to $298.5 million, and international cash site leasing revenue increased 92.5% to $57 million.

 Eliminating the impact of changes in the foreign currency exchange rates, site leasing revenue would have increased 22.7% over the year-earlier period, and international cash site leasing revenue would have increased 121.8%.

 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 $1.4 million. We continue to experience solid leasing demand, both domestically and internationally. Approximately two-thirds of our incremental leasing activity in the quarter came from new leases. The big four US carriers contributed approximately 70% of our consolidated incremental leasing revenue signed up in the quarter.

 Tower cash flow for the first quarter of 2015 was $284 million, or a 19.6% increase over the year-earlier period. Eliminating the impact of changes in foreign currency exchange rates, tower cash flow would have increased 22% over the first quarter of 2014. Tower cash flow margin was 79.9% compared to 79.6% in the year-earlier period.

 Our services revenues were $40.4 million compared to $36.2 million in the year-earlier period. Services segment operating profit was $9.5 million in the first quarter compared to $8.8 million in the first quarter of 2014. Services segment operating profit margin was 23.5% compared to 24.3% in the year-earlier period.

 SG&A expenses for the first quarter were $29.9 million, including non-cash compensation charges of $6.9 million. SG&A expenses were $24.7 million in the year-earlier period, including non-cash compensation charges of $4.5 million. The increase in cash SG&A over the first quarter of 2014 was due primarily to increases in personnel and other support costs associated with our portfolio expansion over the last 12 months, as well as an increase in medical insurance costs.

 Adjusted EBITDA was $271 million, or an increase of 19.6% over the year-earlier period. Eliminating the impact of changes in foreign currency exchange rates, adjusted EBITDA would have increased 21.9% over the year-earlier period.

 Adjusted EBITDA margin was 68.5% in the first quarter of 2015 compared to 67.8% in the year-earlier period. Approximately 97% of our total adjusted EBITDA is attributable to our tower leasing business.

 AFFO increased 20% to $184.6 million compared to $153.8 million in the first quarter of 2014. AFFO per share increased 19.5% to $1.41 compared to $1.18 in the first quarter of 2014.

 Combined changes in the Brazilian and Canadian exchange rates during the first quarter, versus the rates assumed in our guidance, negatively impacted leasing revenue by $1.2 million, and adjusted EBITDA and AFFO by approximately $700,000 each.

 Net loss during the first quarter was $79 million compared to net income of $1.4 million in the year-earlier period. Net loss for the first quarter of 2015 included an $84 million loss on the currency-related remeasurement of a US-dollar-denominated intercompany loan with our Brazilian subsidiary.

 Net loss per share for the first quarter of 2015 was $0.61 compared to net income per share of $0.01 in the year-earlier period. Quarter-end shares outstanding were 129.4 million.

 In the first quarter, we acquired 59 communications sites for $42.6 million in cash. SBA also built 107 sites during the first quarter. We ended the quarter with 24,393 sites. 15,151 of these sites are in the US and its territories, and 9,242 are in international markets.

 Total cash capital expenditures for the first quarter of 2015 were $121.4 million, consisting of $7.4 million of nondiscretionary cash capital expenditures such as tower maintenance and general corporate CapEx, and $114 million of discretionary cash capital expenditures.

 Discretionary cash CapEx for the first quarter includes $42.6 million incurred in connection with acquisitions, excluding working capital adjustments. Discretionary cash CapEx also included $31 million in new tower construction, including construction in progress, and $22.2 million for gross augmentations and tower upgrades. The substantial majority of augmentation CapEx is reimbursed to us by our customers.

 During the quarter, we spent an aggregate of $14 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 73% of our 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.

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 Mark DeRussy,  SBA Communications Corporation - VP, Finance   [4]
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 Thanks, Brendan. SBA ended the first quarter with $8 billion of total debt. We had cash and cash equivalents, short-term restricted cash, and short-term investments of $108.6 million. Our net debt to annualized adjusted EBITDA leverage ratio was 7.3 times. Our first-quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.5 times.

 During the quarter, we settled the remaining outstanding warrants related to our 4% convertible notes for $150.9 million in cash, of which $15.6 million was actually paid in the second quarter. There are no further obligations related to the 4% notes or these warrants.

 Also during the first quarter, we amended our revolver by increasing the size of the facility from $770 million to $1 billion, and by extending the maturity date to February 2020. We also reduced the interest spread by between 37.5 basis points and 50 basis points, depending upon the leverage at the borrower level. We currently have $235 million outstanding under the revolver; and, based on specified covenants, we have available to us today $765 million. At the end of the quarter, our total debt carried a weighted average coupon of 3.9% and a weighted average maturity of just under 5.5 years.

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

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

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [5]
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 Thanks, Mark, and good morning, everyone. As you have heard, we started the year with solid results, exceeding either the midpoint or the high end of our guidance across almost all key financial metrics.

 Organic leasing activity and strong expense control were the primary reasons for our outperformance. We continue to see solid demand across our entire portfolio, both domestic and international, as well as in our services segment. Projections of smartphone penetration and use of wireless data remain robust.

 Corporations as varied as Google, Facebook, IBM, General Motors, and Microsoft have materially increased their focus on, and investment in, wireless, which is expected to further increase usage. Satisfying this type of growth will require additional network capacity, either in the form of more spectrum; more infrastructure; or, as has historically been the case, both.

 Carrier willingness to invest in additional network capacity has been well evidenced recently with the AWS-3 spectrum auction in the US, as well as other spectrum auctions internationally. We expect solid levels of activity for years to come as carriers (technical difficulty) network capacity as use of wireless data, including voice-over-LTE, marches ever higher.

 The revenue opportunities for SBA from the AWS-3 spectrum auction alone should last for years once deployment has begun, which we expect sometime in 2016. After that is the planned 600 megahertz auction which we think will bring similar opportunities to SBA. The need for, and the catalysts behind, additional network investment continue on, and we see no end in sight. These dynamics are at play in all our markets, both domestically and internationally.

 In the first quarter, we experienced solid leasing demand across our entire portfolio, both domestic and international. Same tower cash leasing revenue growth compared to the year-ago-prior period was 10.5% on a gross constant currency basis and 7.5% on a net of churn basis, including iDEN-related churn.

 Our domestic same-tower growth rate was 10.8% on a gross basis and 7.3% on a net basis; while our international organic growth rate was 10%, both gross and net, on a currency neutral basis. Our international growth rate reflects the initial inclusion of 2,100 low-cost wireline towers we purchased in Brazil in our initial Oi acquisition. We attribute our leasing success to a combination of quality assets, strong execution, good contracts, and excellent demand from our customers.

 In the first quarter, in the US, the leasing demand environment was similar to that which we experienced in the fourth quarter of 2014, and consistent with our expectations when we first put forth our 2015 outlook in November: solid, but below the record activity levels we saw in the first three quarters of 2014.

 In total, we executed high numbers of both new tenant leases and amendments. Revenue from new leases was greater than that from amendments, and represented approximately 60% of the incremental leasing revenue in the United States.

 Verizon and T-Mobile represented the majority of our new business in the quarter. AT&T was active, but at reduced levels compared to the year-ago period. The reduction in activity with AT&T was expected, and is not surprising or concerning, given the large amounts invested by AT&T in the prior 36 months.

 Contributions from Sprint, due to its 2.5 gigahertz and Clearwire upgrade projects, remain about the same as the last several quarters, with an increasing amount of discussion around Sprint's next-generation network plans.

 Our backlogs continue to be healthy. We continue to expect that leasing activity levels will be higher in the second half of the year, which, depending on timing, may or may not impact 2015 results. At a minimum, this will bode well for 2016.

 We continue to see strong activity in our international markets. As expected, new leases represented the majority of the activity, contributing approximately 80% of the total incremental international leasing revenue added in the quarter. International cash leasing revenue and tower cash flow growth grew materially year-over-year, once again primarily due to portfolio growth. International tower cash flow margins were strong, although below year-earlier margins due to the two Oi acquisitions we closed last year.

 GAAP requires us to mark up our revenue and expenses by the amount of ground lease expenses reimbursed to us by our customers, so the true economic cash flow margins in Brazil are much higher.

 I continue to be pleased with the progress we're making in Brazil and look forward to continuing our positive momentum. While we are disappointed with the negative movement of the Brazilian real against the US dollar and the resulting impact on our 2015 outlook, we remain convinced that Brazil will be an excellent long-term investment.

 While the near-term economic picture in Brazil is challenging, demographic trends, smartphone sales, network needs, new spectrum, and the competitive carrier dynamic all lead us to continue to believe that Brazil will be a growth market for network investment for many years to come. Our investment focus for Brazil for the remainder of the year will likely focus on newbuilds and smaller acquisitions, and we would like to reinvest all of the Brazilian real we are generating back into the business.

 Our services segment produced another quarter of strong results for us in the first quarter, once again with the primary contributor being Sprint, as well as solid activity levels with T-Mobile and Verizon. We expect a steady services segment contribution through all of 2015.

 Our operational performance across the entire Company was very strong in the first quarter. We posted record tower cash flow margins in the US of 81.9%. Strong tower cash flow on services margins drove our adjusted EBITDA margin to a record 68.5%. We think to produce 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 first quarter drove our equally strong AFFO and AFFO per-share results.

 Our updated 2015 outlook reflects essentially the same views on carrier activity, organic growth rates, and services as we put forth in November, increased for some additional investment in portfolio growth but decreased to a greater extent from unfavorable changes in the Brazilian real to US dollar exchange rate.

 Our 2015 outlook now contemplates approximately 9% gross same-tower cash revenue growth on a constant currency basis before iDEN churn. We have included no material contribution in 2015 from DISH, Public Safety, or any other customer that was not reasonably active in 2014.

 Our balance sheet remains in great shape, and additional capital, if needed, remains readily available. We intend to continue our balance sheet strategy and maintain our existing leverage targets, as we believe them to contribute materially to shareholder value creation.

 We have returned our focus on capital allocation back toward portfolio growth and share repurchases. 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. Our primary focus remains in the Western Hemisphere.

 Our new tower build activities are off to a good start, and we are reaffirming our goal of 5% to 10% portfolio growth in 2015 while maintaining our target leverage levels. If we are successful in consummating some additional acquisitions, I would expect our 2015 outlook to increase.

 I want to thank all of our employees for their hard work in the first quarter, and our customers for continuing to entrust us with their business. We look forward to continued success as we move through 2015.

 And Christie, at this time, we are ready for questions.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions). Jonathan Atkin, RBC.

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 Jonathan Atkin,  RBC Capital Markets - Analyst   [2]
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 I was interested in your thoughts on the DAS opportunity and how you might participate in that, apart from your existing minority stake in ExteNet. And then internationally, was interested in the -- I didn't quite understand that 80% number, new leasing, 20% amendments. If you strip out portfolio growth, I guess what I'm interested in is, particularly in Brazil, what's driving the growth on a same-store basis? Is it new leases or is it amendments, coverage built, et cetera? Thanks.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [3]
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 Yes, I will cover the international one first, Jonathan. Yes, the 80% is not portfolio growth. It's incremental revenue. So obviously 80%, the vast majority of that activity is coming from new leases, as you would expect, in markets like Brazil where there is still tremendous coverage needs.

 On the DAS side, the business certainly has some attractions. We are participating today in terms of a number of small cell deployments. We're actually signing up a bunch of small cells on a number of our towers. It's interesting; they are generally being placed at the 30 foot mark, and we're getting what we think are some very fair and good rents for that. So we continue to watch the area. It looks to be developing positively, and we expect to continue to pay attention there.

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 Jonathan Atkin,  RBC Capital Markets - Analyst   [4]
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 And then any thoughts on what's going on in Mexico, either from an outside perspective or potentially participating in that market?

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [5]
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 I think we're going to continue to watch how things develop, particularly with the Telesites spinoff, and see what that does to tower competition in that market.

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 Jonathan Atkin,  RBC Capital Markets - Analyst   [6]
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 Thank you.

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Operator   [7]
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 Ric Prentiss, Raymond James.

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 Ric Prentiss,  Raymond James & Associates - Analyst   [8]
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 The first question I've got is on the external growth. Last quarter, you guys mentioned you thought some more deals might close by the end of 2Q. Now it seems like those deals have maybe slipped into 3Q. Talk a little bit about the timing of closings, and also prices being paid. It seems like price per tower is high, but that's not the best metric, but we don't really get to see how much tower cash flow is coming in.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [9]
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 Ric, it's Brendan. On the timing, as we signed up a few additional deals, we are basically letting you know that we expect all of the deals that are under contract to close by the end of the third quarter. Some of them will probably close during the second quarter, which you can probably tell from our guidance around second-quarter CapEx. So, there's not really slippage in terms of timing. It's more just added some deals that will actually be in the third quarter.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [10]
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 Yes, and on the pricing, Ric, there continues to be a strong bid for quality US tower assets. Depending on the maturity of the asset, you are looking at high-teens to low-20s tower cash flow multiples.

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 Ric Prentiss,  Raymond James & Associates - Analyst   [11]
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 And any update on your NOLs and the REIT conversion? The reason we ask is the MSCI is going to introduce the new real estate section, which could attract some more generalists into the tower space, but only if they are a REIT.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [12]
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 Yes. Well, Brendan, why don't you give an update on the NOL, and then I'll our share our thoughts on REIT conversion.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [13]
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 Yes, we still have a substantial federal NOL. It's approximately $1.3 billion today. We did have a little bit of taxable income in 2014, but it was miniscule, to say the least. So we still have pretty much our full NOL at this point. And I think from a timing standpoint on a REIT conversion, we have done a lot of work to prepare ourselves to convert whenever we feel the time is right. But so long as we have the NOLs and we feel good about our strategy, I think for the time being we are content to stay on the same path.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [14]
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 Yes, I would only add to that that we got ourselves ready to go, Ric, when there were some proposals made a year -- perhaps a longer ago now, that looked like they could change the definitions and the qualifications for REIT status. That no longer appears to be a front-burner item, or even a mid-burner item, in Congress ahead of the presidential elections. So we are continuing to watch all that carefully. But as Brendan said, we believe it's in our best interests and those of our shareholders to not really convert into a REIT before we feel we have to.

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 Ric Prentiss,  Raymond James & Associates - Analyst   [15]
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 I think previously you'd thought that was kind of back end of this decade. Is that still the thoughts?

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [16]
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 Yes. Maybe slightly earlier; a lot of our investment has been done internationally, which has less impact on our projections related to future losses in the US. So I would say somewhere around maybe 2018 would be the current estimate in terms of timing.

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 Ric Prentiss,  Raymond James & Associates - Analyst   [17]
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 Great. Thanks, guys.

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Operator   [18]
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 Phil Cusick, JPMorgan.

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Unidentified Participant   [19]
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 Hi, this is Richard for Phil. Just wanted to follow up on the international. Are you seeing any negative impacts to the economy or the (technical difficulty) builds given the FX issues? And then on the small cells, it seems like this is a business that you might be able to develop on your own. Is that something that we should look for?

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [20]
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 We could develop that business on our own. And as I mentioned earlier, we are watching all aspects of that very carefully, so you should stay tuned on that front.

 And on the international side, there's not any direct evidence that the reais and the Brazilian economy is directly impacting carrier activity. But we believe, in general, Richard, that there has to be some impact that has permeated all through the Brazilian society, and the carriers down there are not immune to that. So I can't quantify for you what exactly that impact is. But I do think the reais and the general economic conditions down there do have an impact.

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Unidentified Participant   [21]
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 Great, thank you.

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Operator   [22]
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 David Barden, Bank of America.

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 David Barden,  BofA Merrill Lynch - Analyst   [23]
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 Jeff, I think you alluded to the possibility that the second half would be much more heavily weighted than the first half. I guess Verizon and AT&T clearly under-spent in 1Q, but reiterated their full year. Are you getting a sense that maybe the second quarter isn't seeing a catch-up? Or is there any other kind of caveat there?

 And then the second question was just on regards to your conversations with Sprint on the next-generation plans. Are you getting any kind of color that there is a potential breakout here for the Company on that? As they do seem to be kind of lacking a network story, then we've heard so much about them working on it, that it would be great to get your insights on where they are on that. Thanks.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [24]
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 Yes, on your first question, David, you are exactly right. We have not yet -- well, first of all, we do believe that carrier activity is going to pick up in the second half, but we haven't seen it yet. And because we haven't seen it yet, we did not reflect it in an increase in our outlook. And it's really exactly that simple as to where things are sitting today. We do believe it's going to happen. But until we actually see tangible signs of it, it's not going to show up in our projections. So that's where we sit today.

 On the Sprint side, there's a lot of discussions going on. And there's some pricing discussions going on and a variety of different things about the next-generation network plans. Very exciting, and I think are going to bode very well for our Company. What's unclear is the timing of that and whether that is going to have a material impact on our 2015 results. And, again, because we don't have certainty around that, that is not included in our outlook.

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 David Barden,  BofA Merrill Lynch - Analyst   [25]
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 Got it, okay. Look forward to hearing more. Thanks.

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Operator   [26]
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 Simon Flannery, Morgan Stanley.

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 Simon Flannery,  Morgan Stanley - Analyst   [27]
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 Going back to Brazil on the currency, can you just remind us of the escalator structure to the extent that weaker currency drives inflation higher? Presumably you can recapture some of that via your escalators. So how does that work? What's your portfolio looking like in terms of inflation exposure, and any sort of time lag associated with that? And maybe you could just touch on Central America as well, any updates on trends there. Thanks.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [28]
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 Simon, on the FX or escalators in our leasing contracts, all of our tenant leases in Brazil have escalators that are tied to an index, a cost-of-living index, basically a CPI equivalent, that reflects inflationary rates. So, to the extent that those are higher, which tends to be the case when we have this weakness that you are seeing relative to the US dollar in terms of FX rates, they tend to be higher. The timing of us to get the benefit of that, though, depends on when those leases escalate. And so they all escalate at different dates. A lot of them escalate on the acquisitions that we did in terms of the leasebacks, typically on the anniversary of the closing dates.

 So, for instance, on April 1 we had a fairly sizable escalation due to the second Oi deal that we closed April 1 of last year. And that was at a much higher rate than previous escalations we'd seen. But we generally don't see it until we actually hit those escalation dates.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [29]
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 Yes, as terms of Central America, Simon, everything there is escalated on a fixed rate like we do in the US, because everything is paid in US dollars. But in terms of activity, we had a great second quarter in Central America. We actually had a number of pleasantly surprising, large deployments, particularly in Panama, that have -- for the entire region -- that put us well ahead of plan there for the year. So Central America continues to go very well for us.

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 Simon Flannery,  Morgan Stanley - Analyst   [30]
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 Great. Thank you.

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Operator   [31]
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 Colby Synesael, Cowen and Company.

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 Colby Synesael,  Cowen and Company - Analyst   [32]
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 You mentioned -- again, I think for the second quarter now -- increased interest in buybacks, but obviously we didn't see any in the first quarter. Is it fair to assume that we could see them as soon as the second quarter? Just give us a little bit more color on exactly what you're thinking right now as it relates to buybacks, and how that's different.

 And then the second question, I think you mentioned your guidance contemplates same-tower gross [excuse me] -- organic growth of around, I think, 9%. Can you break that out by international versus the US?

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [33]
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 On the stock buyback, Colby, everything we do from a capital allocation perspective starts with where we want to capitalize the Company. So, keeping the business levered at 7 to 7.5 times -- now that we've satisfied the warrants, don't have to devote capital to that any longer -- means we're going to have a lot of money that we're going to be able to invest.

 Our primary focus, as it always has been, will continue to be portfolio growth. But to the extent that we don't find opportunities there that we like that meet our return requirements, we will be directing those funds towards stock buybacks.

 I'm not going to sit and tell you how much on any particular quarter. I don't think that's in our best interest to do that. But I will tell you that now with the warrants behind us, the odds of stock buybacks have gone up quite a bit.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [34]
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 And Colby, on your second question about the growth rate of 9%. We expect the domestic growth rate to be very close to 9% as well, with the international being higher at just north of 10%.

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 Colby Synesael,  Cowen and Company - Analyst   [35]
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 Great. thank you.

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Operator   [36]
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 Brett Feldman, Goldman Sachs.

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 Brett Feldman,  Goldman Sachs - Analyst   [37]
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 We've seen so many large portfolios trade in the US that a lot of investors are of the opinion there's not much left out there anymore. Since you still remain focused on portfolio growth, I was hoping you could just give us an assessment of what you see. Are there any carrier portfolios that are maybe smaller scale that you might be interested in? And, in general, do you think that there are enough privately held towers you might be able to acquire in the US that meet your return criteria? Or is that one of the reasons why you were thinking you might do more and more buybacks?

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [38]
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 Well, going back years, Brett, to the time when we made the decision to go international, it really stemmed from this issue, which is that we want to continue to have enough of a geographic playing field so that we can stay fully invested to our target leverage desires through portfolio growth.

 So, as the world has progressed, there's been less and less available in the US in terms of big deals. But I will tell you -- and our results, I think, show and our backlogs and the things that we're working on that aren't yet under agreement -- there's a lot of smaller opportunities there that give me great confidence that we can certainly hit the low end of our portfolio growth goals of at least 5% and maybe more, in the US.

 There's plenty of opportunities, through building and buying, to allow us to do that. And that will get weighed against international opportunities, or that will get weighed against stock repurchases. And we will allocate capital that we think will result in the best long-term value creation for our shareholders.

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 Brett Feldman,  Goldman Sachs - Analyst   [39]
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 And just as a follow-up, to the extent you are still buying assets in the US, are you buying traditional tower assets? Or are you increasingly finding that rooftops, or land acquisitions, or things that are sort of close adjacent to what you do, are also part of those acquisitions as well?

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [40]
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 No, we are buying traditional towers.

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 Brett Feldman,  Goldman Sachs - Analyst   [41]
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 Great. Thank you for taking the question.

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Operator   [42]
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 (Operator Instructions). Michael Bowen, Pacific Crest.

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 Michael Bowen,  Pacific Crest Securities - Analyst   [43]
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 A couple. I guess first, Brendan, I just wanted to get clarification. I think last quarter you had stated that the international growth would be slightly more than 13%. And I think a minute ago, you said north of 10%, so if you could just clarify that.

 And then the second question, there was a new antenna law passed very recently down in Brazil, supposedly allowing faster deployment and other such things. I was wondering if you guys had -- I'm assuming you have seen it, and if you could comment on how that may or may not impact the business down there, that would be great. Thanks.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [44]
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 Michael, the actual growth rates that we saw internationally just a quarter ago was about 13%. We're projecting a little north of 10% for this year, because we're now rolling in the impact of the wireline sites that we added at the end of 2013. And those we expect to, frankly, grow at a slower pace, because they were much lower-cost sites.

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 Michael Bowen,  Pacific Crest Securities - Analyst   [45]
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 Okay.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [46]
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 And we do -- yes, we're very aware of the new law. We're optimistic. It has a shot clock feature, similar to what was adopted here in the United States. The trick down there, Michael, will be -- do the municipalities actually embrace it and adopt it and follow it? And if they do, it should lead to simplification, certainty, and speeded up newbuild processes.

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 Michael Bowen,  Pacific Crest Securities - Analyst   [47]
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 Is there any timing on when that goes into effect? I didn't see anything in the release that I saw.

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [48]
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 I'm not familiar with that. My understanding is it is either in effect now, or to go in effect shortly.

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 Michael Bowen,  Pacific Crest Securities - Analyst   [49]
------------------------------
 All right. Thanks, guys.

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Operator   [50]
------------------------------
 Amir Rozwadowski, Barclays.

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 Amir Rozwadowski,  Barclays Capital - Analyst   [51]
------------------------------
 Just going back to understanding your thought process around the demand environment. Certainly there are, as you mentioned before, some building expectations that the spending in the US will be second-half-weighted. You folks have seemed to be taking a more conservative approach to not factoring that into your outlook right now.

 But also we've got Sprint deciding on what they are doing in terms of their build; T-Mobile focusing on a bid out of low-band spectrum; and, of course, the AWS-3 spectrum auction. How do you think about, not just over the course of this year, but over the mid- to longer-term demand cycle that we're seeing right now? Do you expect current trends that seem to be at a trough spending environment to gradually improve and continue for some time? Or how should we think about that trajectory?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President and CEO   [52]
------------------------------
 Yes, we're very, very excited about the future, Amir. And what is at play right now is a historic lull in some of our customers' spending, which we don't think by any stretch can be or will be long-term, particularly as we look at the AWS-3 rollout. So as we think about the Sprint next-generation project, the AT&T AWS-3, the work that T-Mobile has yet ahead of it, and what Verizon has done on a steady basis through the years, I think 2016-2017 and beyond are pretty exciting times.

 So I do believe that these current quarters that we're in -- last quarter, the fourth quarter -- I think are aberrations, and that these will be worked through as carriers come off of their spending break and get back to their historic, steady, heavy investment in network.

------------------------------
 Amir Rozwadowski,  Barclays Capital - Analyst   [53]
------------------------------
 That's very helpful. And then lastly just a quick follow-up. Public Safety?

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 Jeff Stoops,  SBA Communications Corporation - President and CEO   [54]
------------------------------
 Yes.

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 Amir Rozwadowski,  Barclays Capital - Analyst   [55]
------------------------------
 And when can we start to see builds around that? Is that factored into your outlook currently for 2015?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President and CEO   [56]
------------------------------
 No, it is not, and we're optimistic and hopeful that by the end of 2016 we can start to see some activity.

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 Amir Rozwadowski,  Barclays Capital - Analyst   [57]
------------------------------
 Perfect. Thank you so much for the incremental color.

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Operator   [58]
------------------------------
 Kevin Smithen, Macquarie.

------------------------------
 Will Howlett,  Macquarie - Analyst   [59]
------------------------------
 This is Will on for Kevin. Thank you for the question. We were just wondering if we can get an update on tenancy per tower in Brazil, and maybe in the domestic market, and how that has changed over the past 12 months.

 And then also, if you had in any color -- you said you were participating in a couple of small cell deployments. Do you have any sort of characteristics you can give us on the number of small cells being deployed per some geographic area, or on a specific tower location?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President and CEO   [60]
------------------------------
 Yes, I will take the small cells. The deployments that we're seeing are on our towers, in towers that are located on the edges of urban markets. And what we've seen most commonly are three small cells, one on each face of the tower; basically a sectorized installation there.

 We're not involved, other than through watching our investment in ExteNet and watching the industry, yet through some of the other small cells type deployments that are going on, on streetlamps and things like that. So our direct exposure right now is through our own towers, which we are pleased to see.

 In terms of tenants per tower, they will not have moved at all in Brazil, given the amount of new product that we have added to our portfolio over the last year. I'm guessing we're around 1.3 tenants per tower, 1.4. You can call Mark and get some specifics on that.

 And we are moving up slightly the tenants per tower in the United States. I think we're now -- maybe have gone from 1.9 to 2. And on these trends, which are more new leases now than they were amendments, we would expect that to continue to increase.

------------------------------
 Will Howlett,  Macquarie - Analyst   [61]
------------------------------
 Thank you.

------------------------------
Operator   [62]
------------------------------
 And there are no further questions at this time. Please continue.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President and CEO   [63]
------------------------------
 Great. Well, thanks, everyone, for joining us, and we look forward to reporting our second-quarter results. Thank you.

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Operator   [64]
------------------------------
 That does conclude your conference for today. Thank you for your participation. You may now disconnect.




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