SBA Communications Corp at Citi Internet, Media & Telecommunications Conference
Jan 06, 2016 AM EST
SBAC.OQ - SBA Communications Corp
SBA Communications Corp at Citi Internet, Media & Telecommunications Conference
Jan 06, 2016 / 06:15PM GMT
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Corporate Participants
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* Brendan Cavanagh
SBA Communications Corporation - EVP and CFO
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Conference Call Participants
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* Mike Rollins
Citigroup - Analyst
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Presentation
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [1]
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Thanks for having me. It's nice to be here.
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Mike Rollins, Citigroup - Analyst [2]
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So as we like to do at the beginning of the year -- is just start off, and we'd like to learn a bit more about your strategic and operating priorities for 2016.
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [3]
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Okay, sure. Well, you know, our priorities really haven't changed that much over the years. Our goal as we head into 2016 includes, obviously, maximizing the organic leasing growth on our existing portfolios, both domestically and internationally; and looking for quality asset investment opportunities -- again, both domestically and internationally, but being disciplined enough to focus on those that are going to return to us quality returns that exceed, alternatively, what we could do by buying back our own stock.
So our focus will be in those two areas as well as continuing to expand our industry-leading operating margins through continued process efficiencies, automations, and cost control. We feel that we can create value by continuing to operate as the most efficient tower operator in the space.
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Mike Rollins, Citigroup - Analyst [4]
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So when you look at the asset portfolio, and this past year there was a lot of issue with currency translation. Is there an optimal mix for you of domestic versus international assets?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [5]
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Well, we've historically talked about setting a maximum threshold for non-US-dollar-denominated leasing revenue of about 30%. We're nowhere close to that today. And, in fact, we also will look at our interest coverage using only US-dollar-denominated EBITDA at being approximately 3 to 1 or better against our debt costs, so long as we continue to finance our investments solely off the US balance sheet.
But when we think about what's the right mix between the two, there really isn't necessarily one. We look at each individual investment opportunity on its own. It's really more of a financial analysis: what do we think is going to create the greatest growth in AFFO per share -- and ultimately we think, therefore, the greatest growth in our stock price? And if that entails greater mix of international, then that's fine. And if it doesn't, we are okay with that, too. We really are not specifically focused on what's the optimum level. It's really an individual investment opportunity analysis.
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Mike Rollins, Citigroup - Analyst [6]
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As we just sort of think back over the last few months, can you talk a little bit more about what contributed to some of the slower growth that's now embedded in the guidance? And then walk us through the stream of opportunity to accelerate that revenue, as you guided, I think, from a fourth-quarter to fourth-quarter perspective to be better by the fourth quarter of 2016 from where you are at the fourth quarter of 2015?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [7]
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Right. Yes, we actually are guiding to slightly higher organic growth on a pure currency neutral, cash revenue growth basis. When you look at where we expect to end the year -- this year, 2016, versus the end of 2015 -- as opposed to where we actually have come out for 2015 over 2014. And that's largely on the basis of expecting slightly higher activity levels from AT&T in particular, whose activity with SBA was down this year versus where we thought it would be kind of coming into the year, and really where it's been -- certainly when it was at peak levels in the previous years.
So if we continue to see them at levels that we exited the year with them, we feel confident that our growth numbers will be slightly better. You know, the absolute numbers that we put out for 2016 certainly showed some decline. But that was driven in large part by a couple of very specific things.
One is FX in Brazil. Unfortunately the currency exchange rate there has continued to fall and has weighed on our year-over-year growth comparisons. So that is one of the factors that affects this year's numbers.
And the other is our iDEN churn that we had. The vast majority of that happened in 2015, particularly in the fourth quarter of 2015. So when you do kind of a year-over-year comparison, that continues to weigh on you. But by the time we get to the fourth quarter of next year, all of that year-over-year comparison will be gone. And we think we will start to see an acceleration as a result of eliminating that churn that has been dragging on us for a while.
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Mike Rollins, Citigroup - Analyst [8]
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And you could remind us of what rate you should be exiting 4Q 2016 at?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [9]
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Well, we will see where it is. In the third quarter -- I'm sorry, fourth quarter of 2016?
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Mike Rollins, Citigroup - Analyst [10]
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Yes, exactly.
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [11]
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Oh. The fourth quarter of 2016 we would expect that we will be around 9% gross organic growth. And we will be somewhere around 7.5% on a net basis.
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Mike Rollins, Citigroup - Analyst [12]
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And how does that compare to what's embedded in the fourth-quarter guidance today?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [13]
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The fourth-quarter guidance would have us closer to 8% with a net of around 7%.
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Mike Rollins, Citigroup - Analyst [14]
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Okay. And so as you think, then, about customer spending, AT&T was just talking about deploying 40 megahertz of new spectrum in this 2016 to 2020 window. How do you rate the confidence to get amendment activity from both AWS-3 and WCS bands?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [15]
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Well, we are pretty confident that we will, in fact, see a benefit there. The actual magnitude of that, I think, remains to be seen. But historically, whenever carriers have deployed new spectrum bands, it has required some change, or modification, or addition of equipment at the tower sites. And because we have set up our lease agreements where they are very equipment-specific, anytime there is a change, even if it were loading neutral at a site, we have the opportunity to monetize that.
These deployments, we expect, will drive equipment changes at our towers. And as a result, we would expect we will see continued contributions to growth from that. It's really one of the big drivers, I would think, of our domestic growth opportunities going forward is certainly the deployment of new spectrum. And there's a lot of new spectrum that the carriers hold that has not yet been deployed. So that's one of the reasons we are very optimistic about the future potential.
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Mike Rollins, Citigroup - Analyst [16]
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And so when you're talking about loading neutral, so even if a carrier were to decommission its 2G equipment on your site -- which, you know, is an eventuality at some point -- is that even an opportunity to manage your revenue to neutral or up versus having it be cannibalized in some way because they are taking equipment down?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [17]
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Oh, well, definitely. There's really no risk that it goes down, because the lease agreements are basically one agreement. And even though there have been amendments done over the years that have added incremental pieces of equipment, those are not separate, stand-alone agreements, where one could be canceled and others kept in place. So what you have is a situation where, unless they were to leave the site entirely, the agreement remains in place, even if they take down particular components of the equipment.
So there's really no risk that we see kind of a backwards move in equipment or in rental rates. And even beyond that, even if they take down equipment and want to put up other equipment, as I said earlier -- even if it's equipment neutral or loading neutral at the site -- we have the opportunity to increase our revenue, because our leases are very equipment specific.
So anytime they want to make that change, there has to be a discussion with us as the real estate owner about what the appropriate rental rate will be. And, you know, depending on the circumstances, we would expect to maximize our opportunity in those cases.
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Mike Rollins, Citigroup - Analyst [18]
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Are you seeing any change in activity from Sprint? And what's your expectations for that in terms of what's embedded into your guidance?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [19]
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We haven't seen really much of a change from Sprint. Our guidance does not imply, really, any activity to speak of with Sprint at all for 2016. So as a potential upside to our numbers, obviously, if Sprint were to become more active in spending with not only SBA but the tower companies in general, we would expect that we'll see some positive upside. But depending on the timing of that, it may or may not affect 2016 numbers. But as of today, not a lot of activity with us.
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Mike Rollins, Citigroup - Analyst [20]
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If we switch over to the international markets, can you talk a little bit more about the organic growth that you are anticipating down there? Obviously, you mentioned and referenced Brazil. If you can -- if you talk a little bit about what you are seeing in that market in particular?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [21]
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Sure. Well, internationally in general, most of our assets are either in Central America or Brazil. In Central America it has been tremendous. We have seen great growth. Fortunately, we have no FX issues there, because our contracts are denominated in US dollars, and the activity levels have been very high while the costs have remained low. So we are very pleased with how that investment has gone.
In Brazil we had -- if you go back to the third quarter, our last public quarter, we had about 13% same-tower organic growth over the previous year in Brazil, which was a pretty decent number. We have implied within our 2016 guidance a little bit less, about 12%, for next year. A lot of that is driven off of our wariness when we look at sort of the macroeconomic environment down there. There's certainly some issues down there that are weighing on our customers and could potentially impact how they look at spending on their networks down there.
But from a long-term perspective, the wireless network quality is substantially behind where it is here in the US. There's certainly a tremendous need for additional investment in those networks. And I think over the next so many years, we will definitely be the beneficiaries of that growth.
In the short-term period, though, it's hard to say how much the macro situation will weigh on our customers' spending. So we will kind of monitor that. And as I said, we did kind of imply a little bit less growth next year compared to what we had in 2015 from our customers.
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Mike Rollins, Citigroup - Analyst [22]
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One question that we get is how to think about the revenue durability from Oi Telecommunications down in Brazil. How should investors think about your exposure there and the durability of that revenue over time for the Company?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [23]
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Well, Oi is our largest customer in Brazil, because we did buy a large percentage of our towers from them. So they were a tenant leasing back space on those sites.
While they certainly have some capital structure issues, they are the largest telecommunications provider in Brazil. They have the largest employee base. They are a significant part of the larger Brazilian telecommunications environment. So we don't have a lot of concerns around the long-term viability of those revenue streams.
And if we were to take it to kind of an extreme level -- and I hate to kind of hypothesize about whether somebody needs to restructure or that sort of thing, but even if they needed to go to that point of restructuring, our contracts are situated such that they would not have the ability to cancel those agreements. And, frankly, I don't think they would want to.
In history the most valuable asset that the carriers have in that sort of situation is their network. And to lose a vital component of it -- we now are a huge piece of their network, because we did buy a lot of their towers -- it just would not be rational outcome.
But even legally, based on the way that the rules work in Brazil, it is actually different than in the US. They would not be able to go through and reject individual agreements. So we feel highly confident in the long-term sustainability of the revenue there.
And then to turn it towards growth, from a growth standpoint, we're not really reliant on Oi. Because they were on most of our towers when we bought those towers, the expectation is that the growth would come from the other large carriers down in Brazil, which is who we continue to count on for future growth on those sites. So we feel like we are very well positioned. We are very comfortable with that revenue stream. And there has been no indication that there's any concern with the quality of it.
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Mike Rollins, Citigroup - Analyst [24]
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Just to unpack that a little bit more, can you just share with us the specific revenue exposure, just as we're trying to think about that?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [25]
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Yes. Oi, I believe, represents approximately 6% of our total site leasing revenue.
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Mike Rollins, Citigroup - Analyst [26]
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And have you had good success in the market going to the other Brazilian telecom providers for colocation? Are there some performance updates that you can give us, since those were the largest acquisitions that you did down there? Maybe just a performance update of organically how they're doing?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [27]
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Yes. They've actually performed very well. I would say maybe the first deal that we did in Brazil, which was 800 towers that we bought from Vivo/Telefonica, have probably performed a little bit under our expectations. Our expectations, frankly, may have been a little bit high, being that it was our first investment down there. But every other deal that we have done is either on target or ahead of pace with what we underwrote our growth assumptions to be.
So on a currency-neutral basis, it has actually performed very, very well. Unfortunately, there is a currency issue. And that has definitely weighed on our reported results and has affected our ability to raise guidance. In 2015, for instance, we actually had to lower guidance solely because of currency issues.
But when you put that aside, and you look at the actual activity levels and the leasing that we have seen, it has been very healthy down there. So we are pleased with the investments. And I think over the long-term, as those currency issues eventually work themselves out, which they will -- they go through cycles -- we will see a very nice return on the investments that we made.
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Mike Rollins, Citigroup - Analyst [28]
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So as the currency underperformed, there's been some economic issues in Brazil in particular. The high-yield markets underperformed. Is this loosening up the assets that are available for sale at more reasonable prices? Because over the last few years -- until, call it, 2015, it seemed like multiples, based on what was announced, were going up for these types of transactions. And I'm curious if this is maybe creating more of an opportunity for you to opportunistically look at deals.
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [29]
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Well, we look at every deal, but unfortunately I don't think that's the case, particularly domestically. You mentioned that multiples had increased. They are still very, very high.
There's a definite disconnect today between where private tower multiples are and where the public tower companies are trading. In fact, it's 6 to 8 times higher in the private market over where the public tower companies trade on a TCF multiple basis domestically.
And so given that dynamic, we've had to be very selective and disciplined when we have looked at opportunities during the year. There actually were quite a few towers that came to market in the US during 2015, and we bought some, but we passed a lot more deals than we actually did because of some of these pricing differentials. What we've had to do is to compare the opportunities that we have in front of us against a base alternative of basically buying back our own stock, and what kind of growth we believe that will produce in AFFO per share.
To the extent that it's even, we prefer to buy assets. We would rather grow our EBITDA and add to our portfolio base. But if it's not as attractive of a return, we certainly are very comfortable to look at stock repurchases. So when you look at 2015, you saw us do a lot more stock buybacks during the year than we've done -- it's the first time, actually, we've done stock buybacks in four years. And that is driven solely off of the comparison between that opportunity versus the acquisition opportunities we saw in the US.
That doesn't mean that that won't change over time. We are still very active in looking at investment opportunities, both domestically and internationally. But I expect that we will be very disciplined in comparing that against our options to buy ourselves.
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Mike Rollins, Citigroup - Analyst [30]
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We have a question over to the right, please?
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Unidentified Audience Member [31]
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Brendan, can you help us understand: what concerns do you have when you are making that decision about the international volatility? Because it looks like the markets are putting a higher cost of capital on what you are doing in Brazil, given what you are saying about private market values. So said another way, the Brazilian -- it's costing you quite a bit in terms of cost of capital. I am curious how you think about that when making the buyback decision.
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [32]
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Yes, so when we're looking at the international deals -- early in 2015 we shifted a little bit the approach that we were taking in terms of setting our return thresholds. And the approach that we take is essentially to look for a certain spread -- an equivalent spread to what we expect in the US over our WACC against a calculated implied WACC that we created for that particular market that we are looking at.
So if it were Brazil, we say, all right, what's the cost of debt if we financed it solely down here? What do we think the cost of equity would be in this market if you didn't take into account some of the SBA influences from the US? And what does that produce in terms of a WACC here? And now let's make sure on a currency neutral basis that we get that same kind of spread over that WACC as to what we would get in the US -- with the theory being that that contemplates our potential currency exposures as well as just general country risk.
So when you do that, it does result in higher return -- much higher return expectations in end markets like Brazil or elsewhere. And maybe we are less competitive in some cases, but that's okay. We still have opportunities to do deals at the levels that we think produce a high enough return. So the key for us is knowing that we are going to get a return that's high enough to handle the potential loss as a result of -- [for] currency moves, that kind of thing.
Having said all that, if you go back in time, even if we had taken the exact same approach in some of the early deals we did, it wouldn't have worked out, because the currency moved much greater in a negative direction than we could've ever anticipated -- and, frankly, than anybody was anticipating at the time. That doesn't mean over time that that won't correct itself and improve, but it still is one of those factors that is out of our hands to some degree. So we are trying to be as disciplined in terms of just being slaves to a model as we can be in looking at those opportunities and take some of the emotion out of it of having to grow.
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Unidentified Audience Member [33]
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You were buying stock back at roughly $114 earlier in the year?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [34]
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Yes.
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Unidentified Audience Member [35]
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So how -- when you are making that decision, you are implicitly not accounting for the market's cost of capital that it's applying to you today. Because I think that's the -- your cost of capital has gone up because of Brazil and the volatility that it's created.
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [36]
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Yes, I think that's true to some degree, but I think the approach is a little bit more simplistic, frankly, than that in the sense that when we are buying -- you know, unfortunately we bought at $114, and today you could buy at $107. It would have been nicer to buy at $107 than $114, but the reality is over a five-year period, if you look at the impact on the AFFO per share, it's next to nothing. It's still going to return a very nice return at that level.
And that is really more about the core growth that we see in our business going forward without having to do anything heroic from an acquisition standpoint. So if we know that our organic growth and our EBITDA is at a certain level, even if we do nothing, and we put all the money into stock buybacks, we can produce -- on a currency-neutral basis, we can certainly produce north of 15% annual AFFO per share growth.
Well, it makes it very simple to continue to make those decisions, to make those investments and stay levered doing that. The alternative is really whether the acquisition will produce a higher result than using that money alternatively for the share buybacks.
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Mike Rollins, Citigroup - Analyst [37]
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Speaking of repurchases, is there an update you can give the market in terms of how you have thought about buybacks over the last few months, and maybe how much is left on the authorization that you currently have?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [38]
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Well, the authorization that we have -- we had a $1 billion plan that was authorized in May, I believe -- May or June. And through the third quarter we had spent $250 million of that. Through the third quarter we had spent $400 million total. $150 million of that was from the previous plan that was used up. I can't comment on since that time, but we have a lot of, obviously, availability under the existing plan as of the end of the third quarter. And the real issue will be just looking at, as we were just discussing, the alternative uses of capital, as well as our leverage and what we are comfortable with in terms of where we are levered, as we would layer in additional investments, both in assets and stock buybacks.
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Mike Rollins, Citigroup - Analyst [39]
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Where's the peak that you would take leverage to for the right repurchase or for the right acquisition?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [40]
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Well, you know, our target range has been 7 to 7.5 turns of debt to LQA EBITDA. That's where we would like to continue to maintain our leverage. We could see it go a little bit higher, certainly for the right investment opportunity. But generally it would be in situations where we would expect to delever fairly quickly organically.
We have the good -- luxury of delevering organically 1 to 1.5 turns every year. So in the past we have, for certain acquisitions, for instance, levered up above our target range, as long as we were comfortable that within a year we would be back within our target range. And I think that would apply to most investment decisions that we are making now, too. But the goal was to try to stay within that range, but to take advantage of opportunities if they come along, even if we had to go slightly above it to do that.
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Mike Rollins, Citigroup - Analyst [41]
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And as you think about the REIT structure for this industry group and the NOLs that you have, how should investors think about the timing of, you know, where it makes sense at the minimum cost to your investors to then migrate into that new world?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [42]
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Well, purely from a tax standpoint, we have a substantial amount of NOLs. We are around $1.3 billion or so of federal NOLs. We would anticipate that on our current trajectory that those would last us till 2020.
There are other considerations from a tax and a purging dividend standpoint; when you look at our E&P calculation, we would probably be in an E&P positive position in about two years, I would say -- thereabouts. So depending on our view, which is not set in stone as to whether we would want to avoid that dividend or be content to pay one -- but that may weigh on our decision around timing.
From a practical standpoint, we have done all the necessary work and taken all the necessary steps to convert whenever we would like. If we wanted to convert tomorrow, we could do that. Structurally we are set up to do all that.
We at this stage do not anticipate changing the way that we run our business, changing our leverage, changing our investment strategy -- all the things we've been discussing here. We expect to continue to operate the same way, whether we converted or not. So that being the case, I'm not sure that it makes a big difference whether we were to convert now or not. But it's an option that's out there. And the bottom line is that we will eventually convert to a REIT. The timing is a little bit uncertain still, though.
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Mike Rollins, Citigroup - Analyst [43]
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So within that context, when you say two years, does that mean 2018 would be the first year that you have an E&P surplus to manage through?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [44]
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Well, you know, it's an estimate, obviously.
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Mike Rollins, Citigroup - Analyst [45]
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Roughly, yes.
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [46]
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Because there are things that affect that. But probably late 2017, maybe early 2018, thereabouts.
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Mike Rollins, Citigroup - Analyst [47]
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Okay. And then as you look at some of the other companies that converted into the REIT structure, the disclosure package has changed significantly. Have you given consideration even ahead of converting to a REIT to augmenting that disclosure package and just providing a bit more of the factoids on paper on a regular basis for investors?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [48]
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Yes. I mean, I think last quarter we did give a little bit more detail than we have given in the past, and we're always open to providing data that's helpful to people. I think some of the things that were disclosed by others -- I'm not sure necessarily that they provide a lot of value -- there's -- but we're certainly open to discussing it and providing whatever would be useful for people to make informed decisions.
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Mike Rollins, Citigroup - Analyst [49]
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So there's a number of different categories and opportunities of spend that are thrown around for the tower colocation model right now: new spectrum overlays, VoLTE, small cells, the possibility of FirstNet deploying a network. As you look at the next two to three years, is there a rank order of things that you are most excited about in terms of what could benefit your business?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [50]
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Well, the things that could have the greatest impact -- I don't know if I would phrase it as things I'm most excited about -- the things that could have the greatest impact, though, would certainly be if Sprint were to actually come back to the market and spending materially is probably one of the larger ones that could have a meaningful impact. New spectrum overlays is certainly very positive. It's one of the things that we mentioned earlier that we take great encouragement from in terms of driving future growth.
The biggest drivers haven't really changed that much. It's still the huge increase in mobile data consumption and new spectrum deployments. Those are the biggest drivers of our potential organic growth. So we would expect that that will continue and be the largest drivers.
Of the things that you mentioned, though, I would say new spectrum deployments you mentioned -- that would certainly probably be near the top of the list; VoLTE, maybe second; and then FirstNet. FirstNet is something that we are excited about, the fact that there's another possible contributor to our organic growth. We don't internally really model much for that, because there's still a lot uncertainty about what form that takes and what it actually produces for our industry.
But there's no question it will be positive. It will be incrementally more than what exists today. It could be substantially more, but then again, it may not be. There's still enough uncertainty that we really don't go out on a limb thinking about what that's going to do for us. But we are encouraged by the fact that there is this other possible source of additional growth.
And then I think you mentioned small cells. Like I said, put that last. But we're not meaningfully in the small cell space, but I think it will be a component of the wireless ecosystem for years to come.
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Mike Rollins, Citigroup - Analyst [51]
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Could you give us an update on your land program -- where you are and how fast you would like to move that forward?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [52]
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Yes. Well, today, we own or control for at least 20 years the land under 75% of our towers. We have been deploying capital towards that -- roughly of $50 million to $60 million, probably, every year -- and doing either buyouts of land or long-term extensions to the land under our towers. And we do that for both economic benefits but also for strategic benefits, to protect the land under our sites and protect the assets that we already own. And we are in very good shape as it relates to that.
So the goal would be to continue to invest there. I think possibly we can get to maybe an 80% number. It's going to be hard to get much more than that from a percentage standpoint, because there's a certain percentage of our sites that are either on government property, where you simply can't do anything about that in terms of the longer-term rights to it, but they are very secure; as well as certain international markets that we are in -- your ability to get things that go out beyond 20 years is limited as well.
But in all those cases, those are places where we are quite comfortable that no one's going to get between us and the landowner. So the goal would just be: continue to pick away at it the way that we have been. And I think we've had pretty good success there.
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Mike Rollins, Citigroup - Analyst [53]
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Are there other initiatives that the Company is evaluating to boost revenue from existing sites, whether it's share back of solutions, taking another look at fiber and trying to do some creative things on that front, or maybe other areas that you have explored either domestically or internationally to add on to the portfolio of revenue that you have?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [54]
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Yes. You know, the fiber hasn't really been a place where we have seen an opportunity for us to benefit. The carriers have brought fiber to a lot of our towers, which I think inherently makes them maybe more valuable. But we don't really monetize that, because they usually do that through a utility right-of-way that they've got.
We have explored different things related to the sites -- nothing that we have felt has really been as meaningful an opportunity as the base business of what we do. I think we'll continue to look at taking advantage of the towers and the managed properties that we already have rights to. We manage over 5,000 properties across the US for small cell opportunities.
We do have a very small, nascent small cell group that is focused more on the in-building type of solution. And where we already have assets that we have rights to, it's a logical fit for us, where we can actually see a nice return in certain quality spots. So we will continue to do that. I don't know that that can materially move the needle, but all these things are nice little add-ons to what we do today.
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Mike Rollins, Citigroup - Analyst [55]
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Based on where you trade today, roughly what multiple of tower cash flow does the business trade at publicly?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [56]
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I'd say our current TCF multiple is probably about 19-ish, a little over 19 times based on today's stock price. You have to check with them each day. You know, it moves.
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Mike Rollins, Citigroup - Analyst [57]
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So if you take that roughly 19 times -- and you mentioned earlier that private transactions are going for 6 to 8 times more -- have you considered selling part of the portfolio or looking to consider other strategic alternatives for the Company, given the gap between the public markets and the private markets, as a way of creating value for shareholders?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [58]
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We haven't really considered that, because I'm not sure that it's a true, viable alternative, to be honest with you. While private transactions are going for that, I'm not sure that SBA as a seller of towers would necessarily garner that, given where we do trade publicly.
And most of the folks that are paying that and buying those expect to one day sell those towers. They are not in it, probably, for the long-term. So I'm not sure that they would see that as probably a wise decision. But, you know, we always look at the best way to maximize value for our shareholders. That's kind of the core tenet that we operate under.
And to be clear, that's not about maximizing it in 30-day or one-quarter increments. That's about a longer-term view. So sometimes the decisions that we have to make are more about looking out a few years. So we watch everything, and if there's an opportunity to maximize value through some alternative opportunity, then we will do that.
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Mike Rollins, Citigroup - Analyst [59]
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When you look at the scale that you'd like to achieve in any market that you operate within, do you aspire just to hit a certain minimum efficient level of scale? Or do you feel that you have to be a number one, number two, number three player in the markets that you are in to really get better economics and margins for the business?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [60]
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Well, I think that there are some benefits to, certainly, being one of the larger players. There certainly are some scale benefits to where you want to make sure that you're producing positive EBITDA, because the amount of cash flow you are producing exceeds your overhead costs in that market. Those kinds of things. Obviously, this is a very scalable business, so there are benefits to scale in any market.
But we don't feel that we have to be the biggest anywhere. I mean, look at the US. We are not the biggest here; and for a very long time, we have been the most highly valued and created the greatest returns.
So you can do that without being the largest. There probably is some point -- you don't want to be in a market where you have 12 towers. I think forever that's probably not that efficient as a whole. But there are certain minimum thresholds you may want to get to, but otherwise, you know, we don't feel that you have to be the largest. You just need to be the most profitable.
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Mike Rollins, Citigroup - Analyst [61]
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Are there some learnings over the last few months that you may want to share with the buy side in terms of how you're approaching the business and your confidence in the outlook that you are now aspiring to achieve?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [62]
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Yes. I mean, we are not -- we gave guidance for 2016 a couple of months ago. They really haven't been any meaningful changes, with the exception of the one obvious public thing that you can see, which is that the currency in Brazil has continued to move away from us. Unfortunately, that's a little bit of a headwind against the guidance that we gave.
But operationally things are the same as they were a couple months ago when we talked about 2016. So I don't expect any meaningful changes necessarily there.
But we -- I think maybe I'll just address the reaction to our 2016 guidance that we gave before, which was obviously not very well received. And I think a part of that was, you know, perhaps we could have done a little bit better job in terms of the communication leading up to the release on some of the contributing factors that might weigh on our absolute numbers that we would guide to.
We're still very encouraged about the underlying business. It's still as strong as it's ever been; as I mentioned earlier, we are expecting to see higher organic growth next year than we saw in 2015. So certainly moving in the right direction, and very positive.
Unfortunately, we had a couple of issues that weighed on our overall results, not the least of which was currency and iDEN churn -- two of the biggest items. And we could have probably been a little bit clearer for folks so that they were fully taking into account those items.
But as a whole, people should not walk away feeling like there's anything wrong with the tower business. It's still the great business that it always was. And we are very encouraged about our opportunities for the coming years to see meaningful, continued growth.
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Mike Rollins, Citigroup - Analyst [63]
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Great. Are there any last questions?
So one final one for me, then. You know, as you look at your outlook for growth and some of the assumptions that you made, how much activity and visibility do you have today into what's in the numbers? The tower business historically has had good visibility. So how would you rate that visibility, those assumptions, today versus visibility in past years?
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [64]
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I think it's still pretty much the same when you're talking about organic growth activity levels. We look at our backlogs; we look at indications of interest that we receive from carriers, and we do some translation.
I think that perhaps the lifecycle from when we initially get interest from carriers to when it ultimately starts producing revenue on our income statement is a little bit wider, a little bit longer than it had been during the peak periods of leasing activity, where there was so much going on that the carriers couldn't move fast enough. But generally speaking, our visibility is the same as it's always been. It's really kind of these other oddball issues that have affected us.
And, you know, as you get to the latter half of the year, obviously our visibility is not as clear as it is on the first half of the year -- as evidenced by last year, when we gave our 2015 guidance. Even if you put the currency aside and you just look at the organic growth rates, it's a little bit lower than what we thought when we went into the year. So there is some level of estimation that you have to make, particularly about the latter half of the year.
But for the most part, the vast majority of our revenues are already baked in and locked in under contract. So the differences are not particularly material.
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Mike Rollins, Citigroup - Analyst [65]
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Thanks for sharing your thoughts and insights with us today.
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Brendan Cavanagh, SBA Communications Corporation - EVP and CFO [66]
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Absolutely. Thanks for having me, Mike.
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Mike Rollins, Citigroup - Analyst [67]
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Thank you.
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