SBA Communications Corp at Deutsche Bank Media, Internet and Telecom Conference
Mar 07, 2017 AM EST
SBAC.OQ - SBA Communications Corp
SBA Communications Corp at Deutsche Bank Media, Internet and Telecom Conference
Mar 07, 2017 / 08:45PM GMT
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Corporate Participants
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* Jeffrey Stoops
SBA Communications Corporation - Director, President & CEO
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Conference Call Participants
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* Matthew Niknam
Deutsche Bank - Analyst
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Presentation
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Matthew Niknam, Deutsche Bank - Analyst [1]
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If everybody can please go ahead and take their seats. We are going to go ahead and get started. Alright, so, I'm Matt Niknam, I am telco and tower analyst here at DB. We are very pleased to be joined by SBA Communications CEO, Jeff Stoops. Jeff, welcome back.
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [2]
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Good afternoon.
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Matthew Niknam, Deutsche Bank - Analyst [3]
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So, lots going on in the tower industry, maybe just to start, Jeff, you guys recently reported fourth quarter results. Can you talk about some of the top priorities for the Company in 2017?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [4]
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Yes, we're going to continue to focus on maximizing all the organic growth that comes our way. This will be -- we are projecting a very stable year although there are certainly some green shoots out there that may cause some things to be even better than what we saw last year, but our guidance assumes that 2017 as a same level of organic growth. We're going to continue to focus on execution for many, many years now, we've had the highest EBITDA and TCF margins in the business. We execute extremely well. We certainly don't want to lose out on that. Capital allocation will continue to be a big focus. We expect to continue and want to stay levered and keep our balance sheet optimized at the 7 times to 7.5 times range that will throw off a lot of discretionary capital for investment. We'll continue to look for portfolio growth opportunities as our first choice for that capital, but failing that and if we are unable to do that, it'll likely be because of price, which is where we were in 2016 particularly, when you look at the relative attractiveness of buying back our stock, which we did in a big way in the fourth quarter. So those are the things that we're looking to do next year or this year, it is now, we would like to continue to expand in the western hemisphere, there are some places that we are -- I have got our eye on in South America where we're not yet that we would like to get to with the right opportunity, and we'll be spending fair amount of time pursuing that.
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Matthew Niknam, Deutsche Bank - Analyst [5]
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Okay, maybe we should think about expanding on some of that capital allocation discussion, you've got some peers who have looked beyond the core US macro site business, one has gone, built an international business, the other one is built a greater presence in small cells. How do you think about FX longer-term strategy and how the revenue mix evolves over time? Is it really just focusing on the US with some diversification in the western hemisphere more broadly or is there something else to consider?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [6]
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Right now, I think, it's the former. We believe and I've -- this actually is my 20th year at SBA, so I've been doing this for a while. We believe a critical part of our value creation has been the way we've optimized our balance sheet over the years. And we have focused on US sourced debt denominated obviously in US dollars. When you run the balance sheet, we do, when you source your capital the way that we do, you need to put some limits on your international expansion. We have talked historically and we are continuing to look at a mix not greater than 25% to 30% of our site leasing revenue to be denominated other [in] US dollars for as long as we continue to optimize the balance sheet the way that we do, and source all of our debt in US dollars.
So those are kind of the parameters that we have established, so we are more like an American tower in terms of where we want to go, although for as long as we continue to balance sheet strategy that we have today, we will not be as international in terms of the percentage of non-US dollar denominated revenue. And we actually like that business and buying our own stock back better than expanding into some other businesses, which we might be able to do in the United States.
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Matthew Niknam, Deutsche Bank - Analyst [7]
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We're going to get on those -- to those other businesses later on.
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [8]
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I knew you would.
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Matthew Niknam, Deutsche Bank - Analyst [9]
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So let's now take a step back, let's think about sort of the longer term, you've talked about a $10 per share FFO target by 2020, I think it implies about $1 a year in incremental AFFO, you just did six in 2016 and by 2020, so I think it applies about a 13% CAGR relative to last year. Can you help us unwrap the underlying assumptions here, both in terms of embedded growth expectations and assumed leverage targets?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [10]
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Yes, the leverage targets through 2019 would continue to be in the 7 turns to 7.5 turns range with a step down beginning in 2020. The model has this slightly below 7.0% at that time, the other assumptions are a mix of stock repurchases and portfolio growth and actually, the results were somewhat agnostic as to whether it's portfolio growth or stock repurchases as long as you keep the balance sheet optimized at 7 turns to 7.5 turns, investing in either one of those upon the assumptions we made are going to help propel us to that $10 or more of AFFO per share. Organic growth assumptions are fairly conservative and are basically what we did last year and what is embedded in this year's guidance. So, we have some opportunities there. FX, we're actually ahead, because when we started this, the Brazilian real was weaker than it is today and we use the forward curve for interest rate predictions as we move through some refinancings. So we've given up a little bit there more than made up for on reported results and FX, so we're well ahead of where we thought we might be about a year after introducing this goal.
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Matthew Niknam, Deutsche Bank - Analyst [11]
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It sounds like if those green shoots which we will get into, but if those actually begin to play out, that would actually be upside relative to what's embedded in your $10 target plan?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [12]
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That's correct.
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Matthew Niknam, Deutsche Bank - Analyst [13]
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Okay. You alluded to portfolio growth, 2016, the first year in recent history, you fell shy of the 5% to 10% portfolio growth target. You mentioned valuation, I guess two part question, number one, is that changed at all in terms of what you're seeing, number two is that still relevant, the 5% to 10% target if we think about portfolio growth in 2017?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [14]
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The pricing has come in somewhat, but it is still a fairly wide gap between where assets trade on a -- US assets trade on a tower cash flow multiple basis and [we're all in] stock trades, so you have a relative choice to make there. In terms of opportunities, there are a lot out there, the reason we did not hit the 5% was not because of lack of numbers, that is really all about price. So there's plenty of opportunities out there and as far as the relevance of it, while we don't need it to get to the $10 or more of AFFO per share because the default will be stock repurchases, it is something that we continue to focus on and price because we would rather get to AFFO per share number through portfolio growth and EBITDA growth than simply by reducing our share count.
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Matthew Niknam, Deutsche Bank - Analyst [15]
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And between US and international, I mean, I would assume there's just more out there internationally relative to the US, do you have a sort of preferred mix between US and international?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [16]
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Not a preferred mix as long as we stay within that overall non-US dollar denominated site leasing revenue percentage I mentioned earlier.
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Matthew Niknam, Deutsche Bank - Analyst [17]
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Okay, let's talk a little bit more about the US business, so you talked about the [$70 ] calling for stable trends in terms of new activity, obviously growing optimism around what could be in terms of the pickup in activity, I think one of your peers has actually embedded that in their outlook, can you talk about your expectations for the leasing environment in the US and whether you've seen or sensed the change in tone from your carrier customers as they think about spending priorities?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [18]
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I'll address the last first, it does feel better than it did a year ago. There are a number of things going on at our customers that give me reason to believe that the bias is more tilted towards the upside for 2017 than the downside. We didn't really want to get ahead of ourselves from a guidance perspective. As many of you know, we had a reason to believe that things were going to pick up a year and a half ago and we kind of work that into some of our commentary and then that did not actually happen and I think we put out some disappointing 2016 guidance, we didn't want to be anywhere close to that situation again. So we put out something that we thought was very, very fair that we're very confident with, basically, well not basically, exactly revenue per tower added at the same rate that we did last year, but I will admit that there are some reasons out there for me to be optimistic that that we'll do a little better than that.
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Matthew Niknam, Deutsche Bank - Analyst [19]
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And in terms of pacing of activity that's implied in your guidance over the course of the year, any difference this year relative to years past?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [20]
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Well, last year was very even, remarkably. So every single quarter within a very small range of difference came in at the same revenue added per tower. I do think this year because of things like FirstNet and maybe a potential pick up from Sprint that you will see more in the back half -- the year if it plays out and there is upside, that upside will be in the back half of the year.
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Matthew Niknam, Deutsche Bank - Analyst [21]
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Understood. Okay, and as you think about just mix of amendment versus co-lo activity, what's it been trending like and is there any change in expectation for 2017?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [22]
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It's been predominantly I think to the tune of 70% amendments and 30% leases, and I don't see that changing much. If Sprint takes up, it will be largely in the form of amendments adding 2.5G spectrum to the network. The AWS-3 and WCS and perhaps even the FirstNet business if that's awarded to AT&T will likely got -- not entirely sure but likely come in the form of amendments. So I think that mix is likely to stay the same.
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Matthew Niknam, Deutsche Bank - Analyst [23]
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So we've alluded to sort of different spectrum build catalysts that are often discussed. As we think about what's embedded in the outlook for 2017, what's more sort of materially hitting your business this year, fair to assume AWS-3 and WCS are baked in, others are not, should we think about it differently?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [24]
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We're really using exactly the same revenue added per tower that we had last year without really attribution to where exactly it comes from. So, we had some AWS-3 last year not a lot, some WCS last year, not a lot, certainly nowhere be deployed. So it's likely that there will be more of that this year than last, and if nothing else drops off and I don't see any reason why that it should, that could be a source of upside for us.
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Matthew Niknam, Deutsche Bank - Analyst [25]
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And as we think about FirstNet and how big that could be, I guess, what are your expectations on timing and let's work under the assumption that AT&T goes ahead and wins this, how would that look like? You alluded to seeing more amendment activity but can you help us think about both the timing and the materiality, maybe any sort of parameters around what that may do for your revenue?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [26]
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Yes, I think we're going to need a resolution and an award by probably no later than June 1, in order to allow than the states opt-out opportunity to occur, which I believe is 60 days or 90 days after the award and it would only be then that you can really get about the business of deploying. So if we don't see something by June 1, in terms of the final award, you're probably looking at 2018, it's where you'll have the impact.
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Matthew Niknam, Deutsche Bank - Analyst [27]
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Okay. Broadcast spectrum, another one that sort of, you've got the auction ongoing, going to wrap up fairly soon. Some have said, later in the decade others have said, no, we can actually deploy it sooner, what's your take on when that actually may start to get built out?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [28]
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Well, T-Mobile has had the most aggressive comments around things that they have done to prepare themselves to roll that out as quickly as possible. We'll see others have been much less aggressive around their timing conversations.
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Matthew Niknam, Deutsche Bank - Analyst [29]
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Yes but do you get the sense that we've heard from some who mentioned well, in more rural markets where the licenses are effectively sitting [follow-on] unused at this point, those can actually get put into place sooner, there is no re-packing and moving of broadcasters that need to take place?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [30]
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Yes in certain of those areas, that's probably right.
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Matthew Niknam, Deutsche Bank - Analyst [31]
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Okay, just thinking bigger picture around the US business, we've typically seen gross organic growth, sort of in that 7-ish percent range give or take and I think that's what's baked into your guidance this year. As we sort of take a multiyear look, is that sustainable and I guess what I'm sort of getting at is the markets mature, there are these spectrum catalyst but A, you've got a maturing market; B, there's been some element of discussion of pushback on 3% escalators and the ability for tower companies continue passing those through. How do you think about sort of longer-term growth prospects in the US?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [32]
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Yes. I feel pretty good at our ability to continue to grow at those levels for a number of years to come. You've got additional spectrum, you've got unlimited data plans that are now the norm for all four carriers, you've got the DISH spectrum, you've got 5G that's going to require touching almost every tower and macro site out there. So I really do -- and I also believe that what we've gone through the last two years has been somewhat of a historic low in terms of wireless network spend.
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Matthew Niknam, Deutsche Bank - Analyst [33]
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Repurposing spectrum, that's another one I hear very often with carriers saying, well, we've got X percent deployed to LTE, there's 3G -- 2G, 3G that needs to get re-purpose. Does that trigger -- how do we think about whether that triggers a revenue event for you or not as this continues to play out?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [34]
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Sometimes it does and sometimes it doesn't. If there is a true swap, it doesn't take up any more physical load either weight or surface area, we may pass on that at no additional charge and actually 10% to 15% of the amendments we would otherwise have the right to charge for, we don't, given the fact that we're good partners to our customers and they're really not using up any additional capacity on the tower, but what's interesting is when the refarming is going on, never do we see the number of antennas or radios declining. So they are being switched out, they are staying and what's happening is just over time, particularly as you see the demand just continue to march forward and we're not even in really in the age of ubiquitous HD video, which I think is coming. You're going to need more network capacity and you're going to continue to see additional equipment needed.
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Matthew Niknam, Deutsche Bank - Analyst [35]
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So we talked about lot of the good -- they can play one of the bigger risks obviously, topic on the marketplace is around carrier consolidation. Can you update us on your thoughts around the topic and I guess more specifically, what do you sort of see is the risks or maybe if you can help us quantify the risks from intra wireless consolidation?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [36]
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Well, I think there remains a very large regulatory hurdle to put Sprint and T-Mobile together, it would take quite a sea change in thinking to cause that to be allowed which becomes even more, somewhat befuddling to me given how the government can point to four carriers today as being hugely beneficial to consumers and now every once you know offered unlimited pricing and things like that, but if it were to occur, the best thinking that we have at this time would be, there would be some immediate additional equipment deployed to allow the subscriber basis to be co-mingled, that would be followed by some rationalization and decommissioning and then, that would be followed by some period probably a long period of increased investment where the combined company would invest more than either the two separately did, particularly given Sprint's very low CapEx over the last couple of years, such that over time the one company combined spends more than the two would have and the aggregate as separate entity.
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Matthew Niknam, Deutsche Bank - Analyst [37]
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Very near term, okay, long-term rationalization but very, very long term stronger entities mean?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [38]
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Yes, but there will be some ups and some downs.
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Matthew Niknam, Deutsche Bank - Analyst [39]
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Okay, one other item that has been talked about in the past, hasn't been the topic recently but the idea of shifting to VoLTE, the industry moving towards VoLTE, it seems like the industry is fairly behind. T-Mobile aside and they've got a bunch of their voice traffic on VoLTE, everyone is kind of playing catch up there, do you view that as a catalyst that will actually drive more self-splitting and activity for you guys?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [40]
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It could but I view it more as just one more element that gives me confidence that over a sustained period of time, we're going to have decent high single digit gross organic growth.
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Matthew Niknam, Deutsche Bank - Analyst [41]
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I'm going to pause just open it up for audience Q&A, if anyone has any questions just raise your hand.
Okay, couple more briefly on the US before we switch to international.
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [42]
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Sure.
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Matthew Niknam, Deutsche Bank - Analyst [43]
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5G, very topical coming out of Mobile World Congress last week, fairly topical at this conference as well, can you help us think about your positioning to take advantage of an eventual shift towards 5G? And then secondly, what's the sort of timing and use cases, you're expecting?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [44]
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Yes, 5G so far has been talked about mostly in terms of urban solutions involving millimeter wave spectrum and small cells and I think that conversation applies uniquely and only to the urban markets. As you know and I think most of the audience knows, is we're not an urban footprint company, we're primarily a suburban and rural company and I've not heard anyone talk about 5G outside of urban markets using millimeter wave technology and small cells. The folks that we've talked to and I think and thought this through as well as anyone believe that 5G in those markets will be an equipment upgrade, next generation equipment, but applied to existing spectrum because you just can't make the economic case outside of the urban markets for a fiber intensive small cell delivered wireless system. So for us, it's going to be exciting in the sense that to get to the 5G speeds and latency and using the different oscillations that are part and parcel of I think, what that standard will be, you are going to need new radios, and you are going to need likely new antennas, even using the existing spectrum. So we are going to have a fair number of new, either amendments, swaps or more likely flat out added equipment to the towers as they move 5G into our markets. I do think the urban markets will get it first. That's always how its worked in wireless, the NFL cities are the first areas where next generation technologies are deployed, but that's followed fairly quickly by moving out beyond into the rest of the country.
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Matthew Niknam, Deutsche Bank - Analyst [45]
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Small cells come up very often. I waited to get to the topic, but I got to ask the question. Continued focus on densification, let's assume millimeter wave gets -- small cell sort of facilitate that build out. Has your thinking on that changed in anyway? And I guess, secondarily to that, what would you need to see to get more comfortable there?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [46]
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Yes, our thinking hasn't changed and actually its become more entrenched, as we've watched how things have played out. We had the opportunity to buy Extenet, we chose not to. We saw at that time that the outdoor small cell business was primarily going to be a fiber business. And you've seen some transactions for those reasons today, for a number of reasons including the lack of exclusivity around fiber, it's really protected only by economic rationality which is okay as long as everyone respects that, but we all know periods of time where that wasn't the case. I don't think that the investment is justified solely off of wireless customers, so you see increasing situations where people who started maybe adding fiber for wireless are now getting into the enterprise business and some other things, I mean that's a fine business, but it's not as fine a business as towers and it's not a business that I think will produce the same returns on invested capital. And for those reasons, we simply chosen, that's not where we want to invest. Do I think it's going to be a critical part of urban wireless architecture? Absolutely. Are there top line revenue opportunities there? Absolutely, but we're not going to, we've never chased topline opportunities at the expense of return on invested capital. And for me to get more excited about it, I do want to see a lot more evidence of true second tenant use, where you don't have to invest material amounts of additional capital to get there and we need to get through a renewal cycle, which really hasn't happened yet in this business.
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Matthew Niknam, Deutsche Bank - Analyst [47]
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MLAs, you recently mentioned I think on the last call, sounds like you'd be -- you get more open to signing master lease agreements in the future, I think in the past, the last wave of these bigger MLAs, you had stated more of a per tower pricing model, how is the view here evolved on your end?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [48]
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Yes, the view hasn't changed much, I mean, we have entered into MLAs with T-Mobile for certain project they wanted to do with Sprint on their network vision and in both of those cases, we agreed on a variety of terms but one term that we insisted on and that we agreed to was a certain dollar contribution for a specific equipment bucket, the provisions that I have had trouble with historically are the ones where the equipment entitlements are open-ended, where basically the customer can do whatever they want at a certain mounting height on the tower for some period of time and you basically have contracted that away. All we have to sell is our tower space, there's a lot that goes into that, there is a lot of investment, a lot of blood, sweat and tears that got into securing those locations. So we think, it's appropriate that we at least have a discussion every time that something is going on our towers but, short of, I mean, if we were to agree on that concept, we would have no trouble entering into fixed pricing or different areas of what you could accomplish in an MLA, but again, it has to have some specificity around the equipment entitlements because it's our tower. The concept will be kind of like entering into a lease agreement with the breakers here for certain amount of space but for some period of time, you could take whatever space you wanted. I mean, it's just not a typical real estate concept and I think we were well served by sticking to the site-by-site approach that we did in the past.
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Matthew Niknam, Deutsche Bank - Analyst [49]
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Let's switch gears to international. So we talked about I guess, reasons for optimism in the US business. Obviously, growth has been fairly strong internationally. Can you walk us through what you're seeing of late in Brazil and some of the other international markets, and then talk about the outlook for 2017?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [50]
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Brazil has actually done very well for a company or for a country that has gone through the -- some of the economic issues that it has recently. We are ahead of plan in Brazil on a constant currency basis, notwithstanding the economic environment there. We think there are some signs for optimism that the economy is improving. We think there are some good signs that the telecom regulatory environment will improve and that some of the universal service requirements are going to be eliminated, which will be very good for the customers down there. And we know that there is a tremendous physical and operational need for additional wireless infrastructure. If the country can just move along a little bit more positively and the consumer gets a little healthier down there, I think, you're going to see that come right back into our customers, which in turn will put that back into the network.
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Matthew Niknam, Deutsche Bank - Analyst [51]
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What sort of embedded, both from a macro as well as a carrier spending sort of, fundamental assumptions underlying your outlook in 2017.
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [52]
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It's, as in the US it's basically flat compared to last year.
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Matthew Niknam, Deutsche Bank - Analyst [53]
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Okay. And we talked about sort of a [70%-30%] split between amendments and co-lo in the US, what's been the mix internationally --
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [54]
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Probably the opposite of that maybe, [60%-40%] [60%], leases, [40%], amendments. There is still very much of coverage gain down there as opposed to a capacity gain.
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Matthew Niknam, Deutsche Bank - Analyst [55]
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Some other markets that you've recently entered I think Chile and Ecuador are two relatively newer ones. What sort of the -- what's the latest there, number one; number two, what attracted you specifically to those markets?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [56]
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We got in what we thought were very good deals in markets that are under-served and will have a long steady growth trajectory, very similar to the very good experiences that we've had in Central America.
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Matthew Niknam, Deutsche Bank - Analyst [57]
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That means you think about sort of scaling up in the western hemisphere, is there a preference in scaling up in countries you already have a presence or is there an ability to scale up in other regions and leverage that same sort of international SG&A cost base?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [58]
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Yes, the latter, particularly given our location here in South Florida, our ability to source resources, human resources that are native to either those countries or certainly to the languages and given the similarity and overlap in most of those markets of the carriers, we can share a lot of synergies, experiences, processes that we don't have to reinvent which would certainly be the case, if we cross the ocean.
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Matthew Niknam, Deutsche Bank - Analyst [59]
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Okay, and we talked about in the US where multiples of sort of exceeded I guess where you are, what are you seeing in terms of both supply and valuations for international portfolios?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [60]
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I think the supply is very good, there will be plenty of opportunities there but not to the same degree as the US but to some degree prices are high. And we have to, unlike other folks who don't have this option, we do have the option of always buying our stock back when we find that that's the superior relative value, which we did certainly in last year.
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Matthew Niknam, Deutsche Bank - Analyst [61]
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Got a couple more on capital allocation. I am just going to pause one more time to open up if anybody has any questions, please raise your hand.
Okay, land purchases, this is another topic that comes up in terms of capital allocation, how are you thinking about this in 2017? I think, you've been fairly consistent in terms of the amount you spent annually, what's the outlook for 2017 and I guess more broadly, where are you in terms of ownership or control of under your site?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [62]
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We love the land purchase and ground lease extension activity. Our results there are not limited by capital, we would spend two or three times as much if we could, the results are limited by the operational difficulty of one side at a time. So for example, the money we spent last year came from touching and renegotiating or buying as the case may be, 1,200 separate sites, so there's a lot that goes into that, that's really the limitation more than the capital is. We are about 73%, 74% owned or controlled for at least 20 years, that number is higher in the United States less internationally and we've recently increased our international resources to push that activity even further and in those markets, we're successfully buying assets at single digits.
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Matthew Niknam, Deutsche Bank - Analyst [63]
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Okay, reconversion, think sort of milestone, can you talk about the process and I guess it didn't sound like much has changed, we're already operating reporting as a REIT, I guess since that's happened, are you seeing greater engagement with the REIT community since that and I guess, has anything actually changed since the announcement?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [64]
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It really hasn't changed materially. We have had some increased interactions. I think, couple of things will need to happen to more fully penetrate the existing REIT investor base, we probably need to pay dividend, which is in the long-term cards, but not necessarily in the short term cards. And I think from just a money management perspective and some of you in the audience will know this better than I, but we need to get some of the tower companies included in the RMZ in the index.
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Matthew Niknam, Deutsche Bank - Analyst [65]
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Yes, and I had a question of dividends, I was actually going to kind of follow up on that. Is it still sort of later this decade once the NOLs have been effectively used?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [66]
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Yes, we think that as long as we can buy our stock back at -- we're buying an instrument back that's compounding AFFO per share in the mid-teens that, that is a better use of cash than paying out a dividend.
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Matthew Niknam, Deutsche Bank - Analyst [67]
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Okay but is maybe, we're looking out way too far, but if we think about the company starting to pay dividend beyond that time frame, is the company traditionally sort of been a -- I'd call it sort of a levered capital return [planes] in terms of little to expand the portfolio. Does that change at all beyond 2020?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [68]
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Well, we will modify our capital structure if and as necessary to make sure that obviously all of our legal cash distribution requirements are met comfortably, but beyond that, I'm not so sure that will change the way we look at operating the business.
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Matthew Niknam, Deutsche Bank - Analyst [69]
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Just last question on leverage that sort of tied us all together, talk about sort of staying at the [7% to 7.5%] range, but once we sort of hit that $10 target business matures, is there a longer-term target you have in mind for this business?
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Jeffrey Stoops, SBA Communications Corporation - Director, President & CEO [70]
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It will be less because we will be a dividend payer. After that but I'm going to hold exactly how much less impact. As we get closer to that point in time, we'll have much greater conversations about that.
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Matthew Niknam, Deutsche Bank - Analyst [71]
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Alright, I think, we are just about out of time. Jeff, thank you again. Thank you.
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