Q3 2015 SBA Communications Corp Earnings Call

Nov 05, 2015 AM EST
SBAC.OQ - SBA Communications Corp
Q3 2015 SBA Communications Corp Earnings Call
Nov 05, 2015 / 03:00PM GMT 

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

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Conference Call Participants
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   *  David Barden
      BofA Merrill Lynch - Analyst
   *  Ric Prentiss
      Raymond James & Associates, Inc. - Analyst
   *  Amir Rozwadowski
      Barclays Capital - Analyst
   *  Jonathan Schildkraut
      Evercore ISI - Analyst
   *  Phil Cusick
      JPMorgan - Analyst
   *  Jonathan Atkin
      RBC Capital Markets - Analyst
   *  Matthew Heinz
      Stifel Nicolaus - Analyst
   *  Simon Flannery
      Morgan Stanley - Analyst
   *  Colby Synesael
      Cowen and Company - Analyst
   *  Brett Feldman
      Goldman Sachs - Analyst
   *  Walter Piecyk
      BTIG - Analyst
   *  Spencer Kurn
      New Street Research - Analyst

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Presentation
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Operator   [1]
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 Ladies and gentlemen, thank you for standing by. Welcome to the SBA third-quarter results conference call. (Operator Instructions) Also as a reminder, today's teleconference is being recorded.

 At this time, I will turn the conference over to your host, Vice President Finance, Mr. Mark DeRussy. Please go ahead, sir.

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 Mark DeRussy,  SBA Communications Corporation - VP of Finance   [2]
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 Good morning, everyone, and thank you for joining us for SBA's third-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 2016 and beyond. These forward-looking statements may be affected by the risks and uncertainties in our business. Everything we say here 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, November 5, 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 to our website, sbasite.com.

 With that, I'll turn it over to Brendan to comment on our third-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. We were above the midpoint of our guidance for site leasing revenue, tower cash flow, adjusted EBITDA, and AFFO and would have been at or above the high end for each of those items using the foreign currency exchange rates assumed in our last guidance.

 Total GAAP site leasing revenues for the third quarter were $372 million or a 6.6% increase over the third quarter of 2014. Eliminating the impact of changes in foreign currency exchange rates, total GAAP site leasing revenue would have increased 13.1% over the year-earlier period. Changes in the Brazilian and Canadian exchange rates during the third quarter versus the rates assumed in our guidance negatively impacted leasing revenue by $2.2 million.

 Domestic cash site leasing revenue was $306.9 million in the third quarter, an increase of 8.1% compared to the year-earlier period. On a gross basis, organic domestic cash site leasing revenue growth was 8%. On a net basis, including the negative impacts of 1.6% from iDEN decommissioning and 1.4% from normal churn, organic growth was 5%.

 Domestic tower cash flow for the third quarter was $251 million, an increase of 9.7% over the year-earlier period. Domestic tower cash flow margin was 81.8% compared to 80.6% in the year-earlier period. Approximately 60% of domestic lease-up revenue came from amendments, and the Big Four carriers represented 90% of total new domestic leasing activity. Verizon and T-Mobile continue to be the most active carriers, while AT&T once again showed a slight sequential increase in activity.

 International cash site leasing revenue was $53.5 million in the third order of 2015, an increase of 9.7% compared to $48.8 million in the year-earlier period. Eliminating the impact of changes in foreign currency exchange rates, international cash site leasing revenue would have increased 51.2%.

 On a constant currency basis, net organic growth for international cash leasing revenue was 11.5%. In Brazil, which represented 9.9% of global cash site leasing revenue in the third quarter, constant currency organic growth was 13%. Site leasing revenue not denominated in US dollars represented 11% of total site leasing revenue in the quarter.

 International tower cash flow for the third quarter was $36.6 million, an increase of 4.5% over the prior year or an increase of 41.2% eliminating the impact of changes in foreign currency exchange rates. International tower cash flow margin was 68.5% compared to 71.9% in the year-earlier period. The decline in margins reflects the acquisition from Oi in Brazil of 1,641 sites in the fourth quarter of last year and an increase in pass-through-related costs, which are included in both revenue and cost of revenue.

 Adjusted EBITDA in the third quarter was $275.2 million, an increase of 8.2%. Eliminating the impact of changes in foreign exchange rates, adjusted EBITDA growth would have been 12.8%. Changes in the Brazilian and Canadian exchange rates during the third quarter versus the rates assumed in our guidance negatively impacted adjusted EBITDA by $1.1 million.

 Adjusted EBITDA margin was 69% in the third quarter compared to 67.5% in the year-earlier period. Approximately 97% of our total adjusted EBITDA is attributable to our tower leasing business.

 AFFO increased 5.8% to $183.9 million in the third quarter compared to $173.8 million in the year-earlier period. Eliminating the impact of changes in foreign currency exchange rates, AFFO would have increased 12.9%. Changes in the Brazilian and Canadian exchange rates during the third quarter versus the rates assumed in our guidance negatively impacted AFFO by $1.2 million.

 AFFO per share increased 7.5% to $1.43. On a constant currency basis, AFFO per share would have increased 15% over the year-earlier period.

 Net loss for the third quarter of 2015 was $155.9 million or $1.23 per share. Net loss for the third quarter included a $112.1 million loss on the currency-related remeasurement of a US dollar-denominated intercompany loan with our Brazilian subsidiary and a $56.7 million impairment of fiber assets acquired in the 2012 Mobilitie transaction.

 In the third quarter, we acquired 225 communications sites for $79.2 million in cash. We also built 127 sites during the third quarter. These additional sites are located in both domestic and international markets. We continue to invest in the land under our sites, as this is both strategically beneficial and almost always immediately accretive.

 During the quarter, we spent an (technical difficulty) net of non-iDEN churn.

 I'd like to now turn to our initial full-year 2016 outlook. Our initial 2016 outlook assumes consolidated constant currency leasing revenue growth of 9%, and 7.5% net of churn. This growth rate is calculated as the anticipated percentage increase in recurring normal cash leasing revenue from the fourth quarter of 2015 to the fourth quarter of 2016., excluding growth from acquisitions, new tower builds, and the impacts of certain other tower leasing revenue items, such as pass-through expenses grossed up into leasing revenue, amortization of augmentation reimbursements, and our managed business.

 These other tower leasing revenue items represent approximately 10% of our 2015 cash leasing revenue. The methodology used for this calculation is consistent with how we have always historically calculated same-tower revenue growth for full-year guidance. We calculate our projected organic growth rate using fourth quarter over prior-year fourth quarter because we believe this most accurately represents the organic leasing activity actually taking place during the full year 2016.

 Domestically, in 2016, we believe our organic leasing revenue growth will come from continued steady contributions from Verizon and T-Mobile and increased activity levels with AT&T. We have not included any material contributions to our organic growth from Sprint and a reduced services contribution due to present uncertainty with the timing of their future network investments. Although we do believe we will see some activity from Sprint in 2016.

 Our 2016 outlook assumes domestic gross organic cash site leasing revenue growth of 9%, an increase over what we are now anticipating for full-year 2015. We believe domestic leasing activity will build throughout 2016 and early 2016 actual results will reflect second half of 2015 leasing activity, which we now expect in terms of signed business to be below our year-ago expectations and as evidenced by the slightly over 8% organic gross cash flow growth for 2015 that I mentioned earlier.

 Internationally, we are expecting constant currency gross organic cash site leasing revenue growth of nearly 11%, which is approximately the same as we now expect for the full year 2015. We are carefully watching the economic and political pressures currently affecting our customers in Brazil.

 While next year is predicted to be a continued recession in Brazil and our outlook is therefore conservative, continued network investment remains critical in Brazil. And thus, we expect our Brazilian assets will be a meaningful contributor to our organic growth for years to come.

 Last night's press release also includes a reconciliation of the midpoints of our 2016 outlook to our 2015 outlook for GAAP site leasing revenue. At the midpoints, our guidance includes the addition of $117 million in new cash leasing revenue. Approximately $25 million of this incremental leasing revenue is expected to come through portfolio growth, which includes new tower builds and the impact of acquisitions consummated in 2015 as of last night or pending under contract.

 The balance of the growth is anticipated to come from new leases and amendments signed up on our towers and existing contractual escalators, net of the negative impact of normal churn. This growth in full-year leasing revenue is made up of leases and amendments commenced during 2015, for which a full year's rent was not recognized during 2015, as well as new leases and amendments expected to be signed up and commenced during 2016.

 The variance in foreign currency rate assumptions between the 2015 outlook, which contemplates an average Brazilian exchange of BRL3.33 to $1, and the 2016 outlook, which contemplates an average Brazilian exchange rate of BRL3.85 to $1, has negatively impacted site leasing revenue in the initial 2016 outlook by $28 million. This represents a 1.9% headwind in 2016 relative to the midpoint of expected 2015 leasing revenue.

 The reconciliation also includes two items expected to impact comparable results in 2016, but not thereafter. The first is iDEN. While Sprint's rights to early terminate iDEN leases have ended, there will be a carryover impact from iDEN leases that churned throughout 2015, representing a year-over-year loss of approximately $20 million in revenue. This represents a 1.4% headwind in 2016 relative to the midpoint of expected 2015 leasing revenue.

 We are also projecting a $14 million reduction in full-year leasing revenue associated with a decline in the amortization of reimbursed augmentation CapEx. As you will recall, when we augment a tower to accommodate additional equipment being added by one of our customers to that tower, we typically are reimbursed the vast majority of those expenditures.

 Those capital contributions, which are essentially rents pre-paid by the tenant, are recorded as deferred revenue on our balance sheet and are amortized into site leasing revenue over the initial term of the leasing agreement or, in the case of amendments, over the remaining current term of the associated lease agreement.

 The significant levels of leasing activity experienced in late 2013 through mid-2014 resulted in much higher amounts of augmentation CapEx and ultimately much higher amounts of amortized reimbursements. The impact of the amortization of these expenditures typically lags the timing of the leasing activity by about a year. And we saw peak levels of this revenue in the fourth quarter of 2014 and first quarter of 2015.

 We've seen this amortization revenue steadily decrease throughout 2015 in conjunction with lower leasing and augmentation activity. We don't expect to see future material year-over-year declines in augmentation revenue after 2016. And we could see an increase in 2017 based on our estimates of increased US leasing activity in 2016.

 Amortization of augmentation CapEx reimbursement in 2016 is estimated to represent approximately 2% of 2016 estimated site leasing revenue, levels similar to that of 2013 and 2014.

 We are excited about our opportunities in 2016. Our 2016 outlook demonstrates the underlying strength of our core business and provides for ample opportunity for improvement through organic growth and additional investment, which we intend to do, to stay within our leverage targets.

 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 of Finance   [4]
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 Thanks, Brendan. SBA ended the quarter with $8.5 billion of total debt. We had cash and cash equivalents, short-term restricted cash, and short-term investments of $121 million. Our net debt to annualized adjusted EBITDA leverage ratio was 7.6 times. Our third-quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.4 times.

 On October 14, we issued $500 million of new secured tower revenue securities through our existing SBA Tower Trust. The offering had a cash coupon of 3.156% and an anticipated maturity of 5 years. Net proceeds from the offering were used to repay the $280 million outstanding balance under our revolver as well as for general corporate purposes. At the end of the quarter and pro forma for this financing, the weighted average coupon of our outstanding debt is 3.8% and our weighted average maturity is approximately 5 years.

 During the quarter, we repurchased 2.2 million shares of common stock for $250 million at an average price per share of $113.87. Quarter-end shares outstanding were $126.1 million. Since the beginning of 2015, we have repurchased 3.5 million shares of common stock for $400 million at an average price per share of $114.27. This represents a reduction in shares outstanding of just under 3%. We currently have $750 million of authorization remaining under our stock repurchase program.

 We feel really good about our balance sheet strategy and additional capital, if needed, remains readily available. We intend to maintain our target leverage in the 7 to 7.5 times range. Our primary capital allocation focus is portfolio growth that meets our investment return requirements, which could be augmented with share repurchases if prices we believe are below intrinsic value, as we have done this year.

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

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 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [5]
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 Thanks, Mark, and good morning, everyone. As you saw from our results last night, we executed well in the third quarter, with key metrics coming in above the midpoints of our guidance and at or above the high ends using the currency assumptions in our last guidance.

 We had many areas of operational success. Of particular note, we expanded our industry-leading adjusted EBITDA margins by 150 basis points to 69% versus last year. Our industry-leading tower cash flow margin grew to 80%, and we through our AFFO per share 15% versus last year on a constant currency basis. We are very focused on our margin performance, as we view it as a gauge of our operating performance.

 We continued to see stable leasing activity, both domestically and internationally, and our services business had another strong quarter. In the US, activity levels with Verizon and T-Mobile continue to be steady as they invest in their networks, deploying new spectrum, filling in coverage gaps, and adding further network density in order to handle the never-slowing pace of mobile data consumption growth.

 AT&T increased their contribution to our leasing results for the second consecutive quarter and early indications are that we will see continued increases in leasing levels with AT&T in 2016.

 Domestic applications are growing, although in terms of signed domestic business year to date, we are behind our expectations of a year ago, as Brendan mentioned earlier. Activity levels with Sprint remain very low. They have publicly discussed increased investment in their network as early as next year and we are excited about the prospects of what that could contribute to our growth.

 However, as Brendan mentioned earlier, given a lack of clarity around the scope and timing of Sprint's network investment, we've included very little incremental contribution from them in our initial 2016 outlook. We'll obviously continue to monitor their network plans closely.

 Internationally, we had a very good third quarter, with gross same-tower cash revenue growth of almost 12%, a mix of leasing activity across all of our markets and with a variety of carriers, and building 92 towers internationally. Demand for our international towers remains solid; just under 70% of international leasing activity came from new leases on existing sites, with the balance coming from amendments.

 Claro and Telefonica were the two most active international carriers during the quarter. Our largest international market, Brazil, continues to perform well on a constant currency basis. It was our best same-tower gross organic growth market year over year at 13%. We continue to have operational success building new sites for our customers and securing new leases and amendments on our existing portfolio.

 While the current recession in Brazil certainly has some near-term impact on our customers there, we are still enjoying solid organic growth. We feel very confident in the long-term potential of our Brazilian assets.

 Carrier networks in Brazil significantly lag those here in the US. 4G deployments have just barely begun. The deployment of 700 megahertz spectrum in Brazil is still to come. And the demographics of the population heavily support expanding wireless consumption. Near term, we expect Brazil to be under continued economic pressure, but these facts and many others support many years of wireless network in the future.

 In keeping with our desire to seek out new international investment opportunities that provide long-term growth prospects and increased shareholder value, we are pleased to announce that we have entered into Ecuador through an acquisition of 130 sites. This transaction will leverage our institutional and cultural knowledge of Latin America, a region which we continue to believe will be a strong long-term driver for SBA.

 We believe Ecuador will be very similar in operation and results to our Central America markets, where we have enjoyed tremendous success. The wireless market in Ecuador consists of three carriers -- Telefonica, America Movil, and CNT.

 The population is about 16 million, which would rank as the fifth most populous state in the US. Ecuador has a mobile penetration rate of 120% almost entirely using 2G (technical difficulty) our average cost of debt. With our solid access to financing, capital allocation remains the top priority for the management team and for me personally. We expect to have over $1 billion of capacity to invest next year within our target leverage range. Our liquidity will be over $1.5 billion counting the cash we generate.

 Our portfolio growth goals continue to be 5% to 10% per year. I'm confident we will hit at least the low end of that goal in 2015. Our first preference for capital allocation remains to invest in quality assets that meet our return hurdles, both domestically and internationally, as we believe quality asset growth at the right price is the best way to increase long-term shareholder value.

 However, if we do not believe those right opportunities exist, we are quite comfortable using our leverage capacity to buy back our own stock when we believe the share price is below intrinsic value, as we've demonstrated during 2015. Most of our acquisition growth in 2015 will be in the US, although the pricing environment continues to be very competitive.

 We have passed on more US acquisitions this year than we have done, either due to asset quality, price, or lease terms. We continue to believe many opportunities will be available for M&A growth in the future -- certainly enough to consume all of our investment capacity if we so desired. But it will remain our focus to be disciplined and continuously reevaluate our options for allocating capital.

 That discipline this year has resulted in approximately two-thirds of our almost $1.2 billion of investment dollars going into capital expenditures and acquisitions and the remainder into stock repurchases. This year, we have spent $400 million on stock repurchases, reducing our share count by 3.5 million shares thus far at prices we believe were well below intrinsic value. This is a return of capital to shareholders of approximately 3% on a market cap basis.

 We have many options to invest capital. We believe our continued thoughtful approach to capital allocation will create significant additional value for our shareholders for years to come.

 As we head into the final stretch of 2015, we now start to look forward to 2016. The years ahead hold many exciting prospects for SBA. Our core business is very strong and expected to stay that way. Operational excellence will remain a priority.

 We expect to see increased leasing activity from our domestic customers. In the US, we expect to see continued progress around a new public safety network, the 600 megahertz auction, and the start of AWS-3 spectrum deployments. We will continue to invest to grow our portfolio in the US and internationally and it is likely we will add one or more geographic markets to our portfolio in 2016. We will continue to carefully allocate capital to produce the best results for our shareholders long term.

 Wireless growth around the globe continues to trend higher. Opportunities will be plentiful and we are excited to be a key component of that phenomena. We look forward to reporting our final 2015 results on our next call.

 And Tony, we are now ready for questions.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions)

 David Barden, BofA Merrill Lynch.

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 David Barden,  BofA Merrill Lynch - Analyst   [2]
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 I guess two questions. Obviously, the stock is down 8.5% because the guidance for AFFO growth of 4% compares to where I think the Street consensus was was closer to 12% to 13%. And I think people are trying to figure out the bridge.

 And I think Brendan, maybe you gave us -- if I take that 4% and I add back 2% currency and then I add back 2% for the lower amortization, which is non-cash, I'm up to more like 8%. And then if I took the $1 billion of investing capital and I bought back 7% of the stock, I'd be at 15% growth or I could be buying tower stocks.

 But maybe you could kind of -- if you have a sense of it, kind of waterfall this for us so we can kind of bridge where maybe the Street was and where you are and what the reasons are. And then I guess just -- well, let's focus on that first. Thanks.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [3]
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 Okay. Well, there's a few things. I think a lot of them were covered in the press release or in the comments that I made earlier, but let's just kind of walk through them quickly. When you start off with leasing revenue, as we indicated, it is negatively impacted by a few things.

 We've got augmentation reimbursements, which is the amortization of reimbursements of capital that we're spending to upgrade our towers for tenants. We expect that to be down and that's due to less activity -- really, less leasing activity during the year from our customers. So that's about a 1% headwind to revenue and more to AFFO.

 The iDEN churn year over year represents almost 1.5% to revenue and again more to AFFO. That's $20 million and that's because the vast majority of the iDEN leases that are churning off this year churned off October 1. And when you take the remaining three quarters of revenue that we recognized during this year that we will not have next year, that obviously impacts the growth as well.

 FX is a huge impact as well. We're looking at about $15 million on the AFFO line of negative impact from that as well. As you go further down, we obviously have increases in some of our direct leasing costs, but not abnormal. Some of those come through acquisitions that we did and some of those are just increases in ground leases and other standard increases in our other operating costs.

 We also have a decline in our services margin. As we indicated in our guidance to services revenue, we are showing a decline year over year. And a lot of that is basically due to a stoppage or a slowdown in work that we're expecting from Sprint versus what we saw this year in the services business. But the margin that's generated through that business is also down obviously as a result of the volume being down. So that negatively impacts it as well.

 And then just generic overhead standard cost of living type increases there. So I think when you figure all those things in, unfortunately a number of those put a weight on our year-over-year AFFO growth. But those are really the only issues, and when you strip all that way -- and a lot of it is noise in that it's temporal -- and you look at the core organic growth rates, we do expect them to be better next year, actually, than this year and fairly consistent with where we were a couple of years ago before sort of our peak leasing activities.

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 David Barden,  BofA Merrill Lynch - Analyst   [4]
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 And just on that kind of core performance point, I think in the script, you and Jeff both referenced something about how a year ago, you thought the growth would be better than it turned out to be and that that's a part of the story or -- but I've only kind of seen guidance seem to ratchet upward net of currency. So I'm trying to understand those comments.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [5]
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 Last year when we first talked about what our guidance implied from an organic growth rate standpoint, we thought that we would be somewhere around 8% net for 2015. As indicated in the press release and our comments today, we now expect that that number will be closer to 7% net, down about 1%.

 Again, that's measured fourth quarter 2015 to fourth quarter 2014. That's what we were projecting last year, similar to what we're doing this year. And when we look ahead to where we would be in the fourth quarter, we expect that it will be lower.

 And a lot of that is driven by the timing of when we expected to see organic growth. I think if you'll recall, early in the year, we talked about an expectation that we would see a ratcheting up as we got into the second half of the year of 2015. We really haven't seen that, and so as we get here to the back half of the year and we measure our same-tower growth by looking back essentially on activity that's taken place over the trailing 12 months, we recognize that by the end of the year, our run rate will be less coming out of this year than we anticipated when we gave guidance a year ago.

 So that impact of the second half of the year of 2015 being slower affects the full-year to full-year guidance comparison from 2015 to 2016 I think a little bit lower than what would've been expected previously.

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 David Barden,  BofA Merrill Lynch - Analyst   [6]
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 Got it. Okay. Thanks, guys.

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 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [7]
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 I would just add when you look at the guidance and you try and do year-over-year comparisons, what makes up 2016 results is activity that occurs between September of 2015 and the end of August of 2016. Because after that, activity doesn't really turn into a financial result. That's just the lag that's always been in the industry.

 So I think the point about expecting 9% to 10% this time last year, and as you see, we are trending now down towards 8% and that has been moving down as we moved through the year, it basically shows that we're a little bit behind on the business that we expected this year. And the fourth quarter over fourth quarter is very important for the run rate that enters next year.

 And that's really -- besides all the specifics that we've already talked about, that's the reason. We are seeing less US domestic business in the second half of the year than we thought we would a year ago.

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 David Barden,  BofA Merrill Lynch - Analyst   [8]
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 And do you attribute that to forces at work that mean that revenue is never coming, Jeff? Or is it coming in 2016, but we just kind of stutter stepped a little bit and into 2016, 2017, we are back to normal?

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 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [9]
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 Absolutely. I think we all know that there have been some of our customers this year who have had huge cash needs away from their typical network investment. And I'll tell you the biggest source of confidence to me.

 A year ago, we were coming off this huge 2014 year. And we saw applications -- a year ago, we saw applications declining and we reflected that in our 9% to 10% growth, which was obviously less than what we had done previously.

 Today, applications are growing. So I view that as a very important sign that what we saw this year with a particular customer too is temporal and that the 20-year history of investing for network goes on.

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 David Barden,  BofA Merrill Lynch - Analyst   [10]
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 Perfect. Thanks, Jeff.

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Operator   [11]
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 Ric Prentiss, Raymond James.

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 Ric Prentiss,  Raymond James & Associates, Inc. - Analyst   [12]
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 A couple follow-up questions. As David pointed out, the augmentation, the amortization is non-cash, but it does flow into AFFO, given the way you are amortizing it.

 It looks like last year -- third quarter, fourth quarter of 2014 -- it definitely ramped up augmentation CapEx to like $20 million, $30 million. Now it seems like we're heading back down to maybe $10 million a quarter level.

 Is that what we should be expecting is that augmentation capital, which you get reimbursed for partly, is heading more towards a $40 million run rate versus what had peaked at about $80 million? Is that kind of what you are suggesting to us?

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [13]
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 I think you are a little high on what it peaked at. It wasn't quite that high; it was probably more like $70 million was the peak. But that's correct. We have it going down.

 But I will say that one of the things that is a potential upside here is that as leasing activity increases, which we expect it to do, there is -- this kind of tracks with that because the more activity you have, the more carriers touching towers, the more towers that are touched, the more likely it is you will have these augmentations for which we will receive these reimbursements.

 So that number we would expect will settle out and perhaps be higher by the time we get to 2017. But it's really kind of peaked out this year because it's trailing the high activity levels we had in 2014.

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 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [14]
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 That's a part of our business, Ric, that will go on. But in terms of the variability and the magnitude of the year over year, we don't expect to see that again.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [15]
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 Yes. And one thing -- maybe I'll clarify one point. You mentioned it being non-cash. It's non-cash in terms of the timing, but it is cash revenue. We are actually receiving that money and then amortizing it in.

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 Ric Prentiss,  Raymond James & Associates, Inc. - Analyst   [16]
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 Right. You get the cash all up front and then you just amortize it over the remaining life of the lease or the amendment term? Right?

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [17]
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 Correct.

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 Ric Prentiss,  Raymond James & Associates, Inc. - Analyst   [18]
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 Okay. And then second question is I think in the press release last night, you talked about the 4Q over 4Q growth being 9% gross, 7.5% net. And then you mentioned this morning domestic at 9% and international at 11% for gross.

 Is there some decimal points going on there? Because maybe domestic is more like -- yes.

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 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [19]
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 What you are getting at is basically right. The domestic is slightly less than 9%, the consolidated is a hair more than 9%. But domestic is such a large percentage and when you round the number, it's basically 9% for both. Obviously, they are pulled up by the Internet. (technical difficulty) more towards April. Those are the bigger dates.

 We have definitely seen it come up because of inflation during this year. The average impact for 2015, though, was about 7% versus a total organic growth rate in Brazil of about 13%. So we had about 6% outside of escalators. Next year, that number will probably be similar to maybe slightly higher, but there is an expectation that inflation rates decline in Brazil throughout the next 12 months. So it's really going to be a matter of timing.

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 Ric Prentiss,  Raymond James & Associates, Inc. - Analyst   [20]
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 So maybe a little slowing on the non-escalator growth in Brazil as you go through the macroeconomic, the political, the regulatory, the potential M&A. But then thinking longer term, it comes back up to a better organic versus escalator-driven?

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 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [21]
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 For that exact reason, we basically took 100 basis points off of what we did this year.

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 Ric Prentiss,  Raymond James & Associates, Inc. - Analyst   [22]
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 Okay. Thanks, guys.

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 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [23]
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 That's exactly right.

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Operator   [24]
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 Amir Rozwadowski, Barclays.

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 Amir Rozwadowski,  Barclays Capital - Analyst   [25]
------------------------------
 Thank you very much and good morning, folks. Thinking about sort of your outlook for 2016 -- and I know you've walked through some of the bridge with respect to the AFFO. But if I think about the top-line outlook here, it seems as though the expectation is building in improving activity with respect to your domestic business.

 I know, Jeff, that you had mentioned that you are feeling a little bit more confident when it comes to the leasing activity that you are seeing in the marketplace, particularly with respect to certain customers that have perhaps been a bit of a drag in 2015. I guess where we sit today, given that confidence, what potential levers do you have for additional upside to that outlook?

 I'm just trying to get a sense that typically what we've seen in the past with you folks is a bit more of a conservative stance when looking to 2016. At this juncture, you folks are giving an outlook that implies a bit more pickup in activity going into next year. And I'm just trying to understand where the potential opportunities are for you as we progress through 2016 when looking at that sort of top-line gross outlook?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [26]
------------------------------
 Let me answer the question this way, Amir. The particular -- pick a particular carrier that we know has done a tremendous amount of work several years ago. And if you put a number of 100 on that level of activity, 2015 is going to turn out to be something like 20 -- it's been that far of a difference between the peak.

 So our estimates for next year are higher, but they are not certainly anywhere close to where we were in the peak years. So I would first and foremost say if we get more activity out of that particular customer, as we've seen in years past, that could be a tremendous pickup. If we see anything out of Sprint, that will be a pickup. If we do more M&A or we do more stock repurchases -- now that won't help the AFFO or the top line, but stock repurchases clearly do help the AFFO per share line.

 So I think we have a tremendous number of levers to play. I can assure you we are committed to pull them all as appropriate because it's our goal, of course, to move through next year and get back to our tradition of beating and raising every quarter.

------------------------------
 Amir Rozwadowski,  Barclays Capital - Analyst   [27]
------------------------------
 And then if I may on a follow-up to David's prior question in terms of the activity and the timing of activity. It does seem as though the activity that you've experienced in the back half of 2015, which is really sort of the precursor for the 2016 outlook, was a bit softer than expected.

 As we progress through the course of 2016, how should we think about the [pay] from a seasonal perspective or from a trajectory perspective through the course of the year? If we start to see an improvement in activity in the first half of the year, does that translate really into how we should think about things for the back half to 2016? I'm just trying to assess how we should see the pace of activity sort of translate through the course of a year?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [28]
------------------------------
 Yes, I think it will come through anecdotal discussions about levels of activity applications. But watch the organic growth rate every quarter. When that moves up, then I think you will see that that is a very good indicator that things are progressing towards the 2016 that we've laid out.

------------------------------
 Amir Rozwadowski,  Barclays Capital - Analyst   [29]
------------------------------
 And from the activity levels that you are seeing or at least some of the discussions you are seeing, do you expect that organic growth rate to sort of steadily pick up through the course of the year?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [30]
------------------------------
 Yes, I think it builds from the levels that we are at now, which are around 8%. And it's going to -- by the time we are a year from now, we are expecting that it will be at the 9% that we talked about.

------------------------------
 Amir Rozwadowski,  Barclays Capital - Analyst   [31]
------------------------------
 Thank you so much for taking the questions.

------------------------------
Operator   [32]
------------------------------
 Jonathan Schildkraut, Evercore.

------------------------------
 Jonathan Schildkraut,  Evercore ISI - Analyst   [33]
------------------------------
 Thanks for taking the questions. I guess two, if I may. First, just in terms of understanding the organic growth numbers and I guess we have a lot of different numbers to look at here. But when I look at the $117 million of incremental leasing that you are expecting next year and I back out the $25 million that's associated with the new builds and the acquisition, I get $92 million.

 And I put that against the cash leasing number. For this year, I'm coming up with a net leasing of 6.4%. Is the difference between that 6.4% and the 7.5% that you guys are talking to the reference to the fourth quarter over the fourth quarter? Is that the difference?

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [34]
------------------------------
 It's two things. That's one difference is the timing because you are looking at midyear -- full year to midyear full year earlier last year as opposed to Q4 to Q4. And we do expect it to be higher.

 But the other difference is that we're calculating that percentage as a percentage of revenue that excludes a few things that I mentioned in the prepared remarks: specifically, pass-through expenses that are included in revenue, the augmentation amortization stuff.

 So we take that out of the denominator, if you will. And those items represent about 10% at least in 2015; probably a little bit less as we get into next year. But at about 10% of our cash leasing revenue for 2015 was made up by that.

 So if you took that cash leasing revenue number of [1429] and you back out about 10% of that and you went to roughly 90% of it, then I think the $92 million divided by that would get you closer to a little over 7%, which is still lower than the 7.5%, but that's because you are measuring in the middle of the year. By the time you get to the end of the year, that number would be 7.5%.

------------------------------
 Jonathan Schildkraut,  Evercore ISI - Analyst   [35]
------------------------------
 Okay. That's actually super helpful. And then my second question is just again going through the guidance. The EBITDA guidance, for example, for next year -- $30 million up on a reported basis, so on average $3 million increase a quarter.

 And I'm having a hard time connecting the dots between what we're talking about from an organic site leasing number and then having that translate into such a minor increment on the reported numbers.

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [36]
------------------------------
 So when it comes to EBITDA, you've got the revenue that we just talked about. And basically the cash revenue items sum up to about $83 million. That's the $117 million less the augmentation reimbursements and the iDEN churn gets you about $83 million of positive impact there.

 We are losing $14 million [impacts]. And then there are increases in costs -- the direct costs of leasing are up approximately $20 million on a non-FX basis and our SG&A is up roughly $5 million on a non-FX basis. So when you add those items in and then you also take into account the fact that there's a decline in the services margin, you will come up at the change in the ranges that we've indicated in our guidance.

------------------------------
 Jonathan Schildkraut,  Evercore ISI - Analyst   [37]
------------------------------
 Okay. Great. Thanks so much for taking the questions.

------------------------------
Operator   [38]
------------------------------
 Phil Cusick, JPMorgan.

------------------------------
 Phil Cusick,  JPMorgan - Analyst   [39]
------------------------------
 I guess the first question is you've historically been fairly conservative on the out-year guide. And given the miss in 2015 and what looks like rebounding activity levels now, can we assume you gave yourself a little bit more room as you looked at 2016 guidance?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [40]
------------------------------
 We've put out a conservative view, Phil, that we think gives us a lot of options.

------------------------------
 Phil Cusick,  JPMorgan - Analyst   [41]
------------------------------
 And then second, you mentioned Sprint on taking -- with less service revenue this year. Is Sprint just doing less activity? I wouldn't have expected they did a lot of activity this year either. Or are they sort of doing the same level of activity and doing it in-house instead? Thanks.

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [42]
------------------------------
 Well, they have not done much at all on the leasing side. On the services side, we did have work. A lot of that actually had to do with the decommissioning of the iDEN networks. So that has largely wrapped up, that's part of the decline. But yes, they are not doing much in terms of the new buildouts.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [43]
------------------------------
 And I would want to say, Phil, these comments are limited to their business with us. We can't really speak to the overall entity and what they are doing.

------------------------------
 Phil Cusick,  JPMorgan - Analyst   [44]
------------------------------
 That helps. And finally, if I can. Jeff, over the last few months, you've talked about your excitement in giving the 2016 guide. I think people are having a hard time seeing what's exciting here. Can you just sort of reiterate what you find exciting about 2016, whether that's new leasing activity or anything else going on in the business? Thanks.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [45]
------------------------------
 Yes, I think what we have here is a very stable and consistent business that right now on the 2016 guide reflects in large part less US domestic activity in the second half of 2015, all for reasons that I don't believe are in any way permanent or even long-lived. And I think we've got a lot of capital and opportunity to continue to invest and grow the business.

 I think the interest rate environment is going to continue to be very positive for SBA. And I think we're going to have a lot of opportunities to excel and exceed the things that we're talking about today.

------------------------------
 Phil Cusick,  JPMorgan - Analyst   [46]
------------------------------
 Got it. Thanks, guys.

------------------------------
Operator   [47]
------------------------------
 Jonathan Atkin, RBC Capital Markets.

------------------------------
 Jonathan Atkin,  RBC Capital Markets - Analyst   [48]
------------------------------
 I wonder if you can just go back on Brazil and clarify the escalators? I may have missed it, but is it entirely CPI based or how much of your business there is based on fixed escalators?

 And then I was also interested in just the drivers that you see next year. You talked a little bit about the US and what underlies your 2016 outlook. You mentioned the existing business you are seeing in Brazil. Is your 2016 outlook predicated on kind of a similar mix of business amongst those two carriers? Or do you see any shift going on?

 And then finally, the acquisitions that you talked about post the end of the quarter -- Ecuador is a chunk of it. But can you talk about the balance of the asset purchases and how they are broken out domestically versus internationally? And would that be all 4Q or 1Q in terms of when those close? Thanks.

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [49]
------------------------------
 Okay. So on the Brazil escalators, they are all CPI based, although on the lease backs that we got in the Oi acquisition that we did, there are minimum floors of 6.5% to the extent that the inflationary index would fall below that. But otherwise, all of the tenant leases escalate on a CPI basis.

 The second one -- I forget. Was it a makeup of the contributors?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [50]
------------------------------
 Yes. On Brazil, Jonathan, because we've bought a lot of our towers from Oi, we've seen and I would expect to continue to see most of our new incremental activity from Telefonica, Tim, and America Movil. So it's really a continuation of that sources of business that we've seen this year.

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [51]
------------------------------
 And then the last one was on M&A. The Ecuador assets were actually closed in the third quarter. They closed and were in our total numbers of sites that we bought during the quarter.

 As far as the stuff that's under contract, we are assuming that that's all closed by the end of the first quarter of 2016. There's some that we're thinking may close right at the end of the year. So no real contributions to 2015 guidance, but obviously we expect them to contribute almost entirely to 2016.

------------------------------
 Jonathan Atkin,  RBC Capital Markets - Analyst   [52]
------------------------------
 And what's the geographic mix of those?

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [53]
------------------------------
 Most are domestic.

------------------------------
 Jonathan Atkin,  RBC Capital Markets - Analyst   [54]
------------------------------
 Thank you.

------------------------------
Operator   [55]
------------------------------
 Matthew Heinz, Stifel.

------------------------------
 Matthew Heinz,  Stifel Nicolaus - Analyst   [56]
------------------------------
 Just a question on the balance sheet. Aside from the level of rates and cost of capital, what other considerations are being given to your leverage ratios? I guess specifically with respect to the buyback -- for example, if domestic acquisition opportunities were to remain somewhat limited and presumably drive a deceleration in the level of EBITDA growth, would you still be comfortable maintaining the leverage target while deploying that $1 billion or so of excess capital into the buyback?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [57]
------------------------------
 Yes, I think if all we were doing was buybacks, we would look to bring that leverage ratio down a little bit. Our single largest item, though, that we follow on that is our US cash interest coverage to our debt because it's all denominated in US dollars. That's well north of 3 times. So that really is -- I view as the single most important lever and item to be watching.

 But to your first point, if all we were doing is stock repurchases -- and I don't think that will be the case -- we probably would look to operate at lower leverage.

------------------------------
 Matthew Heinz,  Stifel Nicolaus - Analyst   [58]
------------------------------
 Okay. That's helpful. Thanks. And then if I could just get a little more color on kind of the assumptions behind the 11.5% organic growth internationally. If you could -- you gave a little bit of color around the escalators next year.

 But I'd like to just get a better sense of kind of the magnitude and the timing, sort of the cadence, of when we should expect the -- particularly in the Brazil escalations to kick in and sort of drive higher year-over-year growth rates over the course of -- over the quarters of next year?

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [59]
------------------------------
 A lot of the escalators take place either in the fourth quarter or the second quarter of the year in Brazil. So depending on where the inflationary rates are at those points in time, that impacts what the average rates are. But as Jeff mentioned earlier, we basically lowered our organic growth assumptions in Brazil by about 100 basis points compared to what we saw this year.

 So instead of 13% same-tower growth, we are assuming 12% at relatively similar escalation rates, which this year we're just around 7%. So that's that. The timing in terms of the lease up, it is assumed to happen evenly throughout the year, but the escalators will be a little more lumpy.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [60]
------------------------------
 The cadence on international is more evenly weighted, while the US is building throughout the year.

------------------------------
 Matthew Heinz,  Stifel Nicolaus - Analyst   [61]
------------------------------
 Okay. Thank you very much.

------------------------------
Operator   [62]
------------------------------
 Simon Flannery, Morgan Stanley.

------------------------------
 Simon Flannery,  Morgan Stanley - Analyst   [63]
------------------------------
 Thank you. Jeff, I wonder if you could just expand on your comments on the M&A market? I think you said there were a variety of things you weren't really enthusiastic about in some of the properties you've seen. Are you seeing a still good volume of opportunities? Do you think there are deals to be done there in size so that you go up to that closer to the 10% or even above in the coming year?

 You also touched on -- or maybe Brendan and his remarks on [FirstNat]. Is that going to be anything that you can start to think about as you exit 2016 into 2017? Thanks.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [64]
------------------------------
 It may be something to think about as we exit 2016. I'm encouraged by the organizational steps that are being taken, the RFP processes that are being initiated. That's all much progress compared to one and two years ago there.

 On the M&A side, there's actually an awful lot out there we could be looking at, particularly domestically. And when I say awful lot, I mean a lot of transactions in the $25 million, $50 million, to up to several hundred range. We've pursued and secured some of those; we've passed on even more.

 And it's really a question of price and it comes down to kind of a very simple approach. If we can buy back our own stock versus an asset that is essentially similar to our domestic portfolio and looks like it will lease-up the same, but we can buy it 6 turns-plus cheaper on a tower cash flow level, we think more value will be created that way.

 But having said that, as we said earlier in our prepared remarks, for the right deals, we think portfolio growth is a very good way and one that we've demonstrated over the years has created a lot of shareholder value. So we are constantly looking.

------------------------------
 Simon Flannery,  Morgan Stanley - Analyst   [65]
------------------------------
 And are those deals getting done somewhere else or are they just not trading?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [66]
------------------------------
 No, they are getting done somewhere else.

------------------------------
 Simon Flannery,  Morgan Stanley - Analyst   [67]
------------------------------
 Okay. Thank you.

------------------------------
Operator   [68]
------------------------------
 Colby Synesael, Cowen and Company.

------------------------------
 Colby Synesael,  Cowen and Company - Analyst   [69]
------------------------------
 Great. Just a point of clarification. I just wanted to make sure, did you say you do anticipate growing the portfolio at that typical 5% to 10% range in 2016?

 And then my other question. Sprint obviously on its most recent call called out $1 billion to $1.2 billion in transformational -- or transformative (technical difficulty) large number that there could be some lease cancellations -- not necessarily from towers, but from other parts of the business as well.

 Are you concerned at all that there could be another drop-down, I guess, in terms of towers that they might want to churn beyond those that they had already called out for iDEN? Thanks.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [70]
------------------------------
 You heard the answer on the 5% to 10%, right? Which is yes, we do expect that for next year.

 You know, on the Sprint issue, the bigger concern is the level of incremental activity that we can expect in the near term. Given the structure of the leases that we have, Colby, and the mission-critical nature of all the sites that remain post-iDEN churn, I really don't worry a lot about the specifics of your question and further terminations.

------------------------------
 Colby Synesael,  Cowen and Company - Analyst   [71]
------------------------------
 Okay. Great. Thank you.

------------------------------
Operator   [72]
------------------------------
 Brett Feldman, Goldman Sachs.

------------------------------
 Brett Feldman,  Goldman Sachs - Analyst   [73]
------------------------------
 Thanks for taking the question. And it's actually to go to a small data point you put in the release. You said you took an impairment charge on fiber related to Mobilitie. So I was hoping you maybe could explain that a little bit. Did you sell it or did you take it out of service?

 And then just extending on the fiber topic, can we revisit why you decided to monetize your investment in ExteNet as opposed to maybe making a much more sizable investment in the small cell business?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [74]
------------------------------
 The fiber write-off was occasioned by a customer informing us that they intended to exit the system. We are in discussions around that now. We have not yet found another user for that fiber, Brett. It's still on our books; we still own it. But that's why we took the write-down.

 And in terms of the ExteNet question is really hasn't changed at all. I think there's -- small cells is a very interesting business that we're actually taking steps to develop internally with the focus on our own assets and a more indoor and managed rooftop approach. And we just thought that the money that it would have taken to acquire ExteNet -- not only immediately, but the amount that would have been necessary to put into it over the next couple years -- we are better served and our shareholders are better served by directing that elsewhere.

 But I think you should -- and it's not going to be material early. And it is not going to happen overnight, but we are definitely going to be pursuing things in that area.

------------------------------
 Brett Feldman,  Goldman Sachs - Analyst   [75]
------------------------------
 Just because you did have that experience seeing ExteNet's business, what is it about the rooftop and the indoor business that you find appealing relative to what they were doing outdoors?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [76]
------------------------------
 I think when you overlay that question on our assets, I think there's an element of exclusivity there that makes it in our view more like towers.

------------------------------
 Brett Feldman,  Goldman Sachs - Analyst   [77]
------------------------------
 Okay. Thank you for taking the questions.

------------------------------
Operator   [78]
------------------------------
 Walter Piecyk, BTIG.

------------------------------
 Walter Piecyk,  BTIG - Analyst   [79]
------------------------------
 Thanks. I just wanted to go back to, I guess, a couple of your comments on share repurchase. I think during the call, you talked about the intrinsic value being low. And then I guess a couple of questions ago, you talked about it relative to capital investments.

 So given the stock is even lower than what you purchased it at, and unless these sale prices are coming down, shouldn't we just expect you to continue to buy the stock until it kind of recovers here?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [80]
------------------------------
 I think there will be -- there's a good opportunity for more stock repurchases in our future. And that's probably all I should say to that topic.

------------------------------
 Walter Piecyk,  BTIG - Analyst   [81]
------------------------------
 Okay. And then I get that buying assets might be more expensive than your own stock, but then there's the other kind of flipside of that is that we can all as investors buy your stock, but we can't get the same value out of the asset that you buy in the market.

 So can you help us rationalize that kind of thought process? Because even though it might be more expensive, it's something that's still additive to the growth of your business, even though the valuation may be higher, which we just don't have access to as investors.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [82]
------------------------------
 No, you are right. And I think that's a very astute comment. And that's why our balance this year was 60/40 -- or no. It was actually 66% towards new asset and portfolio growth and one-third stock repurchases.

------------------------------
 Walter Piecyk,  BTIG - Analyst   [83]
------------------------------
 Got it. And then just one on the operational front. Some of the issue as far as how the revenue is going to ramp and accelerate over the course of the year is based on -- I think you said that AT&T's activity or lack thereof in 2015 and how it kind of carries through into 2016 and just the timeline of activity versus when revenue hits.

 So when we're thinking about Sprint -- and obviously, you guys have been very clear about not expecting much out of Sprint. Can you help us understand when do you actually see activity? Because I would have thought that if Sprint has been signed off on a plan and the only issue in moving forward is getting financing for that plan that they would have had preliminary discussions with you guys about their activity.

 In other words, they've communicated to people that within a few weeks, they will put in place this infrastructure leasing -- enhanced their leasing things. And if it's just a matter of money and a few weeks, I would've thought that they would have given you clear indications of their activity in the upcoming quarters.

 So are you indicating that that hasn't even occurred? And then also just give us a sense of when those discussions first start happening with an operator, how quickly do the cell sites themselves get activated and you start collecting revenue on those sites? Thank you.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [84]
------------------------------
 There's definitely, Walter, a lag of 3 to 6 months from the time that you really get started. You have to go and you have to re-basically-permit and re-audit the site; make sure whatever they want to do there can be done.

 I would just say that we haven't had a degree of interaction yet that would give us the confidence to put something in our 2016 guidance and leave it at that.

------------------------------
 Walter Piecyk,  BTIG - Analyst   [85]
------------------------------
 I just find it hard to reconcile for a company that's claiming that they are going to have this very strong network by the end of 2016, it takes 6 months for that to happen that nothing's -- it's November and that nothing has occurred yet. There just seems to be a massive disconnect in the market.

 And as you may know, Crown Castle said that one of the operators told them that they couldn't comment on this. Is there anything you can help us to understand exactly what is going on there?

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [86]
------------------------------
 No. I think those questions are best directed to our customers.

------------------------------
 Walter Piecyk,  BTIG - Analyst   [87]
------------------------------
 Great. Thank you.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [88]
------------------------------
 Operator, we have time for one more question.

------------------------------
Operator   [89]
------------------------------
 Spencer Kurn, New Street Research.

------------------------------
 Spencer Kurn,  New Street Research - Analyst   [90]
------------------------------
 Thanks for taking the question. Actually two questions -- sorry. The first is just to clarify in your guidance, that $117 million. Is that net of just normal churn? It seems that actually, normal churn picked up about to 1.4%. So on an apples-to-apples basis, we should be adding that back to full-year organic growth guidance.

 So anyway, I was coming out with sort of a little bit higher than 8%, sort of in the 0.5% for the full year 2016 over full year 2015, if you are looking at just growth for all churn. I just think --

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [91]
------------------------------
 Growth is 9%, Spencer. 9%. If you are looking at Q4 2016 to Q4 2015, we are assuming 9% gross, 7.5% net. And yes, on a full year to full year, that $117 million does include the net impact of churn.

------------------------------
 Spencer Kurn,  New Street Research - Analyst   [92]
------------------------------
 Got it. And we should assume that is around 1%?

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [93]
------------------------------
 I'd say a little bit more than 1%.

------------------------------
 Spencer Kurn,  New Street Research - Analyst   [94]
------------------------------
 Got it. Thanks. And then secondly, one thing that I've been struggling with is it seems that you've talked about the first quarter of 2015 as being the lowest quarter of revenue from one particular carrier and things have picked up since then. But first-quarter domestic growth was almost -- it was 10.8% almost before all churn. And it seems like that's dropping to 8% from -- for most of next year.

 How do we reconcile that difference? We'd expected that if the first quarter of 2015 was the weakest quarter, then growth should be an easy comp in the first quarter of 2016.

------------------------------
 Brendan Cavanagh,  SBA Communications Corporation - EVP and CFO   [95]
------------------------------
 Those calculations are done doing it compared to the prior-year same quarter, so you are basically picking up the activity over the previous 12 months. So the rate that was talked about in the first quarter had very little to do with the activity levels during the first quarter.

 We now carry that quarter with us and have for the last couple of quarters. That's why you've seen a decline in the reported same-tower growth rates each quarter during this year. And we expect it to be similarly low next quarter.

 And this year as a whole -- while the first quarter was the lowest, this year as a whole, the leasing has been down relative to last year. So we will carry that with us as we move into next year as well and until we get to the end of the year, which is why we give Q4 to Q4 guidance. Only at that time will you really be reflective of activity that takes place during the full-year 2016, which, again, we expect to be higher than 2015.

------------------------------
 Spencer Kurn,  New Street Research - Analyst   [96]
------------------------------
 Thanks very much.

------------------------------
Operator   [97]
------------------------------
 Thank you. At this time, we will turn the conference back over to our presenters for any closing comments.

------------------------------
 Jeff Stoops,  SBA Communications Corporation - President, CEO, and Director   [98]
------------------------------
 I'd like to thank everyone for joining us this morning and we look forward to our next report with our final 2015 results. Thank you.

------------------------------
Operator   [99]
------------------------------
 Thank you. And ladies and gentlemen, that does conclude our conference call for today. We do thank you for your participation and for using AT&T's Executive Teleconference. You may now disconnect.




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