SBA Communications Corp at Goldman Sachs Communacopia Conference

Sep 13, 2017 AM CEST
SBAC.OQ - SBA Communications Corp
SBA Communications Corp at Goldman Sachs Communacopia Conference
Sep 13, 2017 / 12:50PM GMT 

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Corporate Participants
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   *  Jeffrey A. Stoops
      SBA Communications Corporation - CEO, President and Director

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Conference Call Participants
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   *  Brett Feldman
      Goldman Sachs Group Inc., Research Division - Equity Analyst

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Presentation
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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [1]
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 All right. Welcome, everybody. We're doing this one just a little bit differently, obviously. So Jeff Stoops, the President and CEO of SBA Communications is on the phone. The reason why he's on the phone is that they're based in Southern Florida, and they've been, obviously, very impacted by the hurricane, and he wasn't able to get up here. I'm going to double check. Jeff, you are on the line, right?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [2]
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 I am, Brett. How are you this morning?

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [3]
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 Thanks so much for doing this. And hopefully, you and the team down at SBA are recovering from Irma.

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [4]
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 We are. It's still pretty tough down here. About 40% to 50% of the population doesn't have power. A lot of traffic lights out. A lot of trees down but probably less structural damage than people thought could have occurred given what the forecast track was. But they've closed a lot of schools down for all week. And we're here running on generator power. And hopefully, we're able to complete this call. Sometimes the generator makes the phone go a little crazy, but we'll do the best we can.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [5]
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 Well, we really do appreciate that you are able to take time to do this in light of everything going on down there and certainly, we're hoping for the best for you and your employees to recover quickly. Let's jump into this. All right. So let's start with the domestic business which is obviously the vast majority of what you do, you've seen leasing activity improved through the first half of the year and you've maintained your outlook that this will be a pretty stable year overall for leasing. And I was hoping maybe you could just provide your thoughts on why you think you've seen a bit of an uptick so far. We have unlimited plans and a variety of other things happening in this sector and your perspective would be much appreciated.

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [6]
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 Yes. I think the reasons are varied by customer. I think, in some cases, carriers could no longer kind of lay back off of the 2- to 3-year lower levels of CapEx spending that they had. In T-Mobile's case, they had new spectrum to deploy and a lot to do. So there were variety of things, I mean, unlimited data, I think, is an indirect driver of all that. But I think the big picture is, you've seen a steady and continued growth in minutes of mobile data. And as that continues to drive forward, there's only so much of a network development hiatus that our customers can take before they have to come back and kind of match up the equipment to the demand and I think that's what has happened.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [7]
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 And that sounds like it's fairly broad based as opposed to maybe just a carrier, for example, driving it. Is that fair?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [8]
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 Well, it's not all 4. But it's -- I would say 3 of the 4 have been relatively active.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [9]
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 So in light of everything you just said do you think that maybe over the course of the year, you will find that instead of an average stable environment it may, in fact, be an up year at the end of 2017?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [10]
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 Well, if we just finish out the year based on the guidance that we've given, which is for the second half of the year, consistent with our original guidance. Because our first half of the year was in fact up. It will, in fact, be an up year. But there are some things while we are not changing guidance at this time, I mean, there are some positive elements there that -- we'll see how the second half of the year goes. But we could continue to do what we did in the first half of the year, in which event, we will have a year in 2017 that is better than 2016. But I think the more important point is that we're seeing a very, very good set up here for what looks to be a materially better 2018.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [11]
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 All right. So then let's talk about that. Because this is where a lot of investors really are focused. How do we deconstruct what could be the principal drivers of a materially better 2018? And I guess the first one would be good to start with would be FirstNet, which is the contract AT&T has won to build a nationwide public safety network. Can you walk us through how we think about the way SBA is likely to benefit from that investment cycle?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [12]
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 Well, depending on how many of our sites AT&T touches. And AT&T, I believe, is on north of 7,000 of our towers in the United States. Every time that they touch that for a FirstNet installation, which will come mostly, I think, in the form of an amendment, there's going to be a negotiation of the opportunity. And that I would expect the reality of additional rent that goes along with the additional equipment that AT&T will be adding. We really haven't seen any real action yet in that area in terms of actual deployments. I think AT&T is still readying all of that. I think that's consistent with the comments that Randall Stephenson made yesterday. But the states continue to opt in. I believe we're up to about 20 now. And we are seeing a lot of activity around the FirstNet deployments in terms of inquiries and even some applications that lead us to believe that maybe late 2017 at the earliest. But certainly, as we move into 2018, there's going to be a lot of activity.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [13]
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 And obviously, it's still early we think about amendments. How do we think about the right way to estimate the value of those amendments to SBA? It seems like based on what Randall was saying and as you know noted you reiterated this week, it's a fairly big project in the sense that they're not just going up there to put up the FirstNet antenna, but they're going to be looking to deploy a total of 60 megahertz. So 40 that they already have plus the 20 on FirstNet, across a variety of bands. I mean, how do we think through the math or what would be the factors that will determine how well you do in that amendment cycle?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [14]
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 Well, depending on what they want to deploy. The AWS-3, the WCS, obviously, the FirstNet. What almost in every situation will be required is a remote radio head. The architecture that the carriers have gone to today is moving the radios off the ground and up to the tower and that's a new piece of equipment that adds load to the tower. That's something that traditionally commands additional rent. So if you start from that premise, almost in every case, there's going to be, where our new spectrum is deployed, there's going to be some additional rent factor because of the need for remote radio heads up on the tower. Then, the finer point and what will ultimately drive the final negotiation and the price is what the antenna configurations will look like. We'll they be swapped out and changed out for larger antennas, will there be wholesale editions and those, Brett, will be dictated on a site-by-site basis. But the 2 primary factors that -- it won't really be land because AT&T typically, in all of its sites around the country, they have shelters where they can store their equipment. So what you're really talking about is the changes that will occur on the tower. And that's mostly going to be in every case remote radio heads, and in many cases, probably a substantial majority, some changes to the antennas. And that ultimately will dictate the amount of the amendment.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [15]
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 A common question that we get from clients is what are the average amendment rates these days? And is this project an average amendment? Or is this an above average amendment and how much visibility do you think you have at this point to be able to answer that?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [16]
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 I don't really want to get into that because I don't think it's going to be an average amendment. I think that certainly it has the potential in most sites, most locations to be an above-average addition to the tower in terms of amendments. And we really don't know yet how many sites are going to basically have the full loading of the AWS-3, the WCS, the FirstNet and actually what the final configuration there will look like. So I'm going kind of hold back a little bit on that one. I do think they will be material amendments. And I do think they will substantially contribute to a good 2018, 2019, 2020 for our industry.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [17]
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 And it does sound like you are anticipating that you'll be handling this for your normal amendment negotiation process, meaning that you haven't gone ahead and signed a master lease agreement or done one of your holistic agreements that you occasionally used?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [18]
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 We have not. But that's not to say we would not. As you correctly state, we have done those types of agreements in the past. We've done one with T-Mobile. We've done one with Sprint. Both were project-specific. This is the type of project that could lend itself to that. And if we were able to agree on a specific load at a specific price, there's no reason why this could not be susceptible and subject to that. But as of today, we do not have that and things are being processed on a site-by-site basis.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [19]
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 What would make that attractive to SBA because in the past you generally shied away from giving volume discounts.

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [20]
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 Basically, the economic terms. I mean, ultimately, it's always about what we believe would be the right long-term result for our company. It's nothing really more dramatic or complex than that. It's really the ultimate financial terms that we think the agreement provides us.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [21]
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 Got it. Okay. Well, moving on in terms of thinking about what else could set you up for a strong '18. We talk a lot about all the new spectrum bands that carriers are looking to deploy. Do you increasingly have line of sight on that? And is that the one of the factors you are thinking about when you noted that it looks like 2018 should be a pretty good year?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [22]
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 Yes. I mean, besides the FirstNet discussion that we just had, T-Mobile, of course, has got the 600 megahertz spectrum. They're still very active with all the spectrum that they've now amassed to deploy and expect it to be particularly so with the 600. And following up on some public comments that Sprint has made, we're expecting to see much more activity out of Sprint starting next year than we've seen in the last several. And we would expect Verizon to stay steady. When you add all that stuff up, it looks like that comes to a total, for 2018, that is going to be higher better, materially better perhaps than '17 and certainly '16 and '15.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [23]
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 When you think about that activity, FirstNet obviously is a major amendment project for AT&T. How about those other drivers that you're looking out to? Do you think those are going to mostly be putting sites on towers that carriers don't occupy? Or do you think they're mainly going to be increasing the capacity of the sites they are already on?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [24]
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 I think mostly amendments. But there'll be some new collo leases in there as well.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [25]
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 Okay. Last question on FirstNet. AT&T needs 100% geographic coverage in order to satisfy the projects, which means they are presumably going have to be working with vendors who construct towers that don't currently exist. Do you view that as an opportunity as well? And as an extension of that question. There's been some behavior in the build-to-suit market over the last few years that you guys really do not consider to be very appealing in terms of amendment rates. Have you reconsidered your willingness to do these types of projects?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [26]
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 Well, there will be some new towers required because of the requirement of everywhere coverage. There will be towers required in areas that have not previously been commercially developed. But I think that tells you something about the attractiveness for potential future commercial tenants. So depending on the economic terms of those towers, they're either going to be attractive or not attractive. I mean, we would certainly build towers where we found the economics to be attractive and meet our return requirements. But I would agree with you that the smaller build-to-suit market because it's essentially had not a lot to do over the last couple of years or certainly less to do, has become very, very hungry and has been willing to accept a lot of terms and conditions that we frankly have been unwilling to accept. So I'm not sure how many towers we will end up building brand new for FirstNet.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [27]
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 Is there anything else that you see as being a potential catalyst in '18 that we haven't touched on yet?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [28]
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 No. I think that's pretty good list.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [29]
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 Okay. And by the way, we are going to do some questions from the audience over the course of this. So I'm going to ask another question or two, but if you think you might want to ask a question for Jeff, please raise your hand and then please wait for the microphone to come over else we literally will not be able to hear you. I want to talk a bit about 5G. We're hearing carriers talk more and more about their 5G network strategies. Verizon is actually conducting some 5G trials now and so is AT&T. And I'm curious for your high-level thoughts on what you think this 5G investment cycle could do for SBA. And I know it's early on but do you look at this as being just another version of what LTE was? Or do you think it's going to potentially unfold differently?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [30]
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 Well, I think more the former. But I'm sure it will have its own unique twist and turns. The existing equipment today that is deployed out in the macro sites is not 5G-compatible. So as soon as the carriers are ready to move past the urban areas for their testing and the deployment of 5G, which I don't expect for several years, we will see our fair share of 5G work out in the macro suburban highway corridor markets. So I definitely see it as a positive for our company. It is very similar in many respects to historical roll outs that focused on the NFL cities first and then spread throughout the rest of the country. And I don't really think it's going to be any different. I do believe that the existing spectrums will be used for 5G. I don't believe that the millimeter-wave spectrum will prove to be economically and operationally feasible. And that's not really me talking, that's what I hear from folks who know a lot more about it than I do. It will be feasible outside of the urban markets. I think 5G, outside of the urban markets, will be based much on the macro networks that exist today, but with different equipment and perhaps some more dense siting.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [31]
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 This isn't so much a 5G question. But there are -- there seems to be some evidence that companies that don't currently operate cellular networks are showing increasing interest in network evolution and maybe deploying network infrastructure on their own. And perhaps that would be in a 5G environment, maybe it would be a LTE. To what extent have you had conversations with companies like that? Do you think if this is something we should be thinking about as maybe being a new source of business for SBA over time?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [32]
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 We have had a variety of conversations with a variety of players, Internet of Things companies and some of the bigger social media companies. But I believe, Brett, that the bread-and-butter of our business will continue to come from the holders, the owners of the large chunks of license spectrum. I mean, that's really what drives our industry and I think we'll continue to do that.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [33]
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 Got it. I think we're going to stop right now and see if we have questions. And we do have a question down in the front. We'll take that one first. Would you guys please bring the microphone?

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 Unidentified Analyst,    [34]
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 Jeff, 2 questions. The first is, you mentioned some new leasing activity that I think in your guidance, you assumed starts January 1, 2018. So I guess the question is what needs to be done before you can actually start recognizing revenue on those leases? And the second question is just as you look at potential M&A opportunities, specifically in LATAM, are there specific countries or reasons that you can (inaudible) opportunities for further M&A in that region?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [35]
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 Yes. And on the first question, are you talking about some comments that we made in our prior second quarter results about some activity was greater but the leases didn't commence until January 1?

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 Unidentified Analyst,    [36]
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 Yes, exactly.

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [37]
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 Yes. That was just a contract. I mean, that was basically an agreement between us and our customer that says, all right we want to sign this stuff up now and we'll lock it in. But we're not going to deploy and we don't want rent to commence until the earlier of deployment or January 1, 2018. That's something that we do not all the time. But it's not totally uncommon to have delayed commencement dates depending on our customers' needs. So really, there's nothing that needs to happen for those revenues to begin to accrue on January 1. On your M&A question. We've recently expanded into Argentina, Peru. We are pretty much in every country, almost every country now in South America and have planted a flag and have developed a presence and are building our back office and our infrastructure. We are very excited about our ability to grow -- continue to grow down there. There's a lot left to do. The networks are well behind where they are in the United States. They continue to develop much as they have in United States. So we see the development path pretty clearly based on our history here in this country. Population growth is good. It would be great if the carriers were making as much in ARPU down there as they are in the U.S, they're not. So their investment is a little bit more tempered. But just because of the need and the population, which is really gone directly to wireless as opposed to fixed or wireline. We see tremendous long-term growth down there. So we will continue to look in all of the markets that we're in, in South America. And I think you'll continue to see good growth from us down there, both buying and building towers.

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 Unidentified Analyst,    [38]
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 Jeff, is it fair to say that to the extent you are continuing to expand your international presence whether it's organically or through new builds that for the time being, it likely will be in Latin and Central America or you're actually more actively considering new regions, Europe, for example?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [39]
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 Well, we look at everything that is globally available. But outside of the Western hemisphere, we apply some fairly strong discounts for distance and other issues, currency. And in Africa, they have a unique power issue that goes along with the running of the towers, which is unique to that part of the world. Europe, a developed market. But it's not the same growth market that we see in South America. We continue to focus on being a leverage capital appreciation strategy and play for our investors. And right now, what we've seen in Europe, particularly, at the prices that those assets are trading for, doesn't really fit with that. So having said all that, right now, we continue to be focused on the Western hemisphere.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [40]
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 Got it. I think we had a question in the back. Wait one second.

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 Unidentified Analyst,    [41]
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 Jeff, on the new builds for FirstNet. Can you talk about how challenging it is to find locations? And then what is the ability or the capacity to add tenants to the new builds in -- for the FirstNet?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [42]
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 Well, a lot of the new builds that I was referring to that will be required by FirstNet will be out in the more remote areas that have not really attracted development previously because there's just not enough commercial traffic for the customers who wanted the investment. Now FirstNet, of course, changes that dynamic because it's about public safety. So I don't know how difficult it will be to find those places. I think a lot of them will occur on public lands. And I believe the FirstNet relationship there will help facilitate the siting there on public lands. The real question though from a capital allocation perspective is, are those towers that you would want to build if you don't really have a clear line of sight to any other tenant because they don't really serve any immediate commercially apparent purpose other than the public safety purpose that will be exclusively served by AT&T.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [43]
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 And we have another question right down here.

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 Unidentified Analyst,    [44]
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 Sticking on capital allocation. Can you just run through the latest thinking on sort of risk-adjusted returns on capital for U.S. macro towers, which is really just a reinvestment in yourself, buying back stock, small cell buildout and then international Tower buildout?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [45]
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 Yes. On the macros, we're looking at -- well, first of all, we would want quality assets, which is what we have in ourselves when we buy our own stock back. And then assuming that we find those, we would be looking at certainly a mid-8% to 9% minimum return on our WAC. Small cells, we would want at least that. And frankly, we haven't been able to find that and feel good about that compared to other uses of capital. And then international, we have a varied approach depending on the country where we stress the currency. But ultimately, that's going to be 300 to 500 basis points higher than the U.S. desired returns. So what would that be, 11.5%-ish to 13% and that's an unlevered return. And that's after adjusting -- appropriate adjustments for FX.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [46]
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 Great. I'm going to ask a follow-up question here. Because you made note of small cells. And so we continue to have this debate in the sector around the merits of tower operators being in the small cell business, and now that discussion has expanded to asking whether tower operators should broadly be in the fiber infrastructure business because one of your peers has moved into both of these businesses. And so I was hoping you could spend a little bit more time talking through what you've learned, particularly about small cells because you were invested in ExteNet for a while. What would it take for you to get to the point where you thought it made sense to start investing risk capital in that business. And then just as an extension of that, whether you've started to reconsider whether being more broadly in telecom infrastructure such as fiber, could be appealing?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [47]
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 Well, I'm -- our decisions around ExteNet have ultimately been really reaffirmed through what has transpired here over the last couple of years. We thought at the time that the investments necessary in fiber were going to be large, but even at that time, we did not contemplate how large some of these investments were going to be. We just don't -- and I don't want to denigrate -- obviously, it's a business that people do and can make money at and do make money at. And there will be a premise for investors, particularly on a yield-based stock that is very attractive. But we continue to be a company that is focused on and producing double-digit long-term capital appreciation in the form of compounded growth and AFFO per share. And we're really just don't see that, that business is consistent with that. And that's really all it is. It's not a bad business. It's not a good business in that sense. It's just a business that we have decided we don't need to be in to accomplish the maximization of value for our shareholders. Nor is it a business that we need to offer to our customers to do the things that we otherwise do for them. And until I see those kinds of things changing, I don't think we're going to get into that business the way it's being pursued by others, which is extremely large investments in fiber, which have to be opened up to the enterprise business to be justified. It's a different kind of business. You're opening up -- you go well beyond the traditional wireless customer to make those investments work. It's just a different business. It may ultimately prove to be a good business. But I just don't think it is the right business for us to maximize the things that we're trying to do.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [48]
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 You are doing indoor small cells though. Do you still feel confident that there's an opportunity to get an attractive return on that model?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [49]
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 We do. And the primary difference -- and the reason why we're doing that and not doing the large-scale competitively bid outdoor small cell business is not the assets that we're pursuing and securing on the indoor side, we have exclusive rights to. And very much like towers where you can control the real estate and you have something of exclusiveness that gives you some ability to negotiate economically-favorable terms. Those are going to be the assets that we are interested in, and we'll continue to pursue.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [50]
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 Okay. Let's switch gears here. You said you expect to achieve your annual portfolio growth target of at least 5% to 10%, again, this year. Could you help us think through what the M&A pipeline looks like and maybe start in the U.S. Are there actually sizable opportunities that you could pursue in order to add assets. And I know that for a period, valuations in a private space had increased meaningfully. What is your view and what valuations are looking like these days?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [51]
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 Valuations have come down a tad but not much more than a tad. They continue to be high. And frankly, much higher on a tower cash flow basis than where we trade for access that aren't nearly as good. So we continue to be very selective. We are continuing to buy towers in the United States where we can find quality assets at good prices or reasonable prices. There are few opportunities -- there are probably only 3 opportunities left in the U.S. And none of which I don't believe are currently for sale. But only 3 opportunities north of a 1,000 towers in the United States. Then you have -- it drops off quite a bit and there's a lot of 25, 50 maybe 100 (inaudible) portfolios but it's a lot of mom-and-pops still out there. Internationally, the opportunities are much greater. We see a good number of opportunities in South America where -- we're pursuing a variety of them as we speak. And we think that there is better value in the international market. Certainly, there's better opportunities in number and that probably also contributes to the fact that there is better economic opportunities there as well.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [52]
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 Just thinking about the way you're investing in your discretionary liquidity. You have stepped up your share repurchase programs over the course of the year. And that looks like is a good idea. Your stocks up about 50% this year. But of course, that means your stock is trading at a much higher level than it was when you first sort of reengaged that program and so the valuation is different. When you look at the opportunities you have in your M&A funnel, particularly outside the U.S. and you look at the opportunity to continue buying back your stock. You think it's likely that we'll see maybe a bit more of an investment in portfolio growth as we think about the next few quarters?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [53]
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 Yes, assuming the opportunities are there. I mean, we can't just go spend the money because we want to spend it. And I will start though with the premise the key to our thinking and what I think has been a key portion of our success is that we have kept the balance sheet fully optimized. And I think we're going to continue to do that. And as we look forward, we think while interest rates may move up and down a little bit, we don't think they're going to move all that dramatically. And we think we're going to have a continued environment where we can create a lot of value by continuing to be a leveraged capital appreciation story. But if you think about our ability to access debt at 3%, 4%-ish, maybe even 5%, and we can grow our AFFO per share in the compounded in the mid-teens range going forward, you're going to create value by buying your stock today every day of the week unless -- and if you can buy, if you can find acquisitions that are going to be better than that, absolutely. That is where you want to put your money. But it doesn't mean that you want to let your balance sheet become unoptimized and not continue to invest where you can to create ongoing value and I know we're going to be able to continue to do that in both acquisitions and stock repurchases. The question is just are we going to find the right acquisitions. And that ultimately will dictate the balance between how much we spend in the acquisition market versus the stock repurchase market.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [54]
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 And you mentioned earlier that one of the key drivers you had ultimately is compounding growth and AFFO per share. And you do have this objective of generating more than $10 per share of AFFO by 2020. And I think the part of that investors are most focused on is, more than. And so can you maybe walk us through the factors that if they played out properly would clear you well through that "more than" objective?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [55]
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 Yes. I think the primary variables there that could lead to upside would of course be organic lease up that leads to levels materially beyond where we have been the last couple of years, off of which we based our $10 by 2020 goal. Interest rates stay where they are rather than climb, which is baked into our model. And then FX stays flat or declines. That would of course be upside. And if we find some good, cheap, relatively cheap but still quality asset acquisitions to do, that, of course, could materially add to the outcome as well.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [56]
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 And in terms of using your balance sheet. I actually think that your target there assumes that you might have a little less leverage than you have today. As business fundamentals continue to unfold in a nice way, do you actually think there's room to maybe edge that up a little bit?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [57]
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 Well, we certainly could edge it up for an acquisition and we could go at least to turn probably a little more than that higher for an acquisition where we had a good plan to delever in 12 to 18 months. So we know we could do that. On a steady-state basis, I don't know that we will want to do that, Brett, because as you know, after 2020, whether it's 2021 or 2022, we're going to start paying a dividend. And that'll be a factor in terms of where we want to lever the balance sheet. And certainly, I wouldn't sit here today and tell you that with the dividend looming in the out years that we would probably be looking to take steady-state leverage up. I don't think we're going to do that.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [58]
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 All right. Let me ask you a question about churn. You've seen elevated churn recently because of wireless carrier mergers that happened previously and you've guided to all that, so there's nothing surprising. What's interesting is that we kind of back out that carrier-related churn. Your inherent churn is actually below 1%, which is even below the historical levels that we've talked about as being steady-state in the business. And so I was hoping maybe you could just give us some context of what still causes churn in the business and then if we get through all this M&A churn and we don't see any more consolidation in the sector, should we be modeling you at sub 1% over the long-term?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [59]
------------------------------
 I don't know about that. I mean, we have historically modeled at 1% to 1.5%, where we've been staying 1-ish or less than that on a non-consolidation basis. But a lot of the churn over the years has been comprised of non-broadband, non-big 4 customers. But you're always also going to see some network rationalization by the big 4. So I think 1% is what people ought to think about. I don't think we're going to change the way we view the world. It may be better than that. But I would never suggest that folks do that for modeling purposes. There's always -- I mean, our main customers are always tuning up their networks and you're always going to have some movement of cell sites around the edges that are going to be very small contributors to that amount. So that's why I would caution you against taking those numbers closer to 0.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [60]
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 The incremental churn event everyone likes to think about -- or they like thinking about is the possibility that Sprint and T-Mobile could combine. They're openly talking about that as a potential. You've put out some disclosures around what the theoretical risk could be if they took down sites that were overlapping against each other. And it's just one number. Could you just remind as you think about the large carrier consolidation that you've gone through over the last 15 years or so. How does that usually end up playing out in terms of the extent to which the churn aligns with what you had estimated? And then the extent to what you think this deal will actually create some incremental investment as they take advantage of the synergies that they're creating?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [61]
------------------------------
 Yes. I mean, the 2 ones that come most immediately to mind are AT&T, Cingular. And what while had fair amount of churn there, certainly, over the years, the amount of additional equipment that was added and revenue generated far surpassed anything that we lost there. The other one that I think it's little early to tell yet but T-Mobile, Metro, while there was a lot of decommissioning and we're still in the midst of it for Metro. I mean, that has made T-Mobile a stronger, more competitive company. It has allowed them to go buy a bunch of spectrum that at the end of the day, I'm pretty sure is going to be -- we're going to have a much greater customer in terms of strength and revenue generation than we would've had without that combination. So actually, over time, these things tend to work themselves out. Now clearly as we all know, having been in the business for a while that when there is an announcement of a major consolidation transaction amongst the wireless carriers, it's not a good day for tower stocks. And if that ever happened with T-Mobile Sprint, I'm sure that they would be the same. But my understanding of what would happen there is there would be an initial period after the deal closes, which will be fairly far in advance after announcement given the regulatory issues. Nothing much happens in that interim period of time that there would actually be a period of increased investment, which would be necessary to migrate the subs over to the surviving company. And it would only be after that, that you would have the ability to actually decommission cell sites. And then after that, you would have the growth that would come about from a much stronger company and the growth that would be particularly necessary and the infrastructure side to fully deploy the 2.5 G spectrum, which of course, would be, and I guess is thought to be, one of the main drivers behind a potential combination. So while this may still happen and every month that goes by makes it less likely that this could have any impact on our goal of $10 or greater of AFFO per share by 2020 because given the long lead time and just closing a transaction like that and then the initial needs to add equipment to migrate subscribers before you can really get to any decommissioning, I think, you're looking at something fairly far down the road if it happens at all.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [62]
------------------------------
 All right. I got time for one last question. We spent a good amount of time talking about all the different ways you believe you're positioned to create shareholder value on your own. It's been a while since we've seen public tower companies consolidate. Is that something the board has given consideration to? And ultimately, if you decided that was the path to go, what would cause you to believe that was more attractive than pursuing all the opportunities we just discussed?

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [63]
------------------------------
 Well, we've always run the company to stay independent forever. And I think you have the do that because otherwise, you could down paths that may lead you nowhere and you've done things that you shouldn't have done. But having said that, every public company has a fiduciary duty to consider a strategic transaction. If something reasonable and credible is put forward, I mean, obviously, who knows what that would be, could be, or if it ever comes down the pipe, we put forth a very credible plan that we totally believe in, which is the $10 or greater of AFFO per share by 2020. So that's kind of the value creation that we see on our own. And of course, to take us off that path, it will have to be something much greater than that.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [64]
------------------------------
 Great. We're out of time. Jeff, thanks so much for calling in. I know that you have a lot you are dealing with down there. We really do appreciate it.

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [65]
------------------------------
 Happy to do it. Sorry, I couldn't be with you in person.

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 Brett Feldman,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [66]
------------------------------
 Looking forward to next year.

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 Jeffrey A. Stoops,  SBA Communications Corporation - CEO, President and Director   [67]
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 You bet. Bye-bye.




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