SBA Communications Q1 2022 Earnings Call Transcript

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Provided by Quartr
April 25, 2022

Key Takeaways

  • Strong Q1 performance: GAAP site-leasing revenues of $559.4 M and cash revenues of $551.4 M, with same-tower recurring cash leasing growth of 4.3% YoY (7.4% gross) and AFFO per share up 14.7% to $2.96.
  • International momentum: constant-currency same-tower cash leasing revenues rose 7% net (11.8% gross), led by Brazil’s 13.3% gross organic growth.
  • Record services results: services revenues hit $60.3 M with $14.6 M operating profit and backlogs at all-time highs, prompting an upward revision to the full-year services outlook.
  • Portfolio expansion: acquired 1,807 sites for $215.4 M and built 86 new towers in Q1, plus under agreement to buy 358 sites for $127.9 M and a $49 M São Paulo data center to support mobile edge computing.
  • Raised full-year guidance: increased revenue outlook by $65 M and AFFO per share by $0.24, driven by FX tailwinds, lower domestic churn timing and higher escalators, partly offset by a $6 M impact from Digicel Panama; balance sheet remains strong at 7.3× leverage with a 22.4% dividend increase to $0.71.
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Earnings Conference Call
SBA Communications Q1 2022
00:00 / 00:00

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Operator

Ladies and gentlemen, thank you very much for standing by, and welcome to the SBA First Quarter Results for 2022 conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. If you should require any assistance during the call, please press star then zero on your phone. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mark DeRussy, Vice President of Finance. Please go ahead, sir.

Mark DeRussy
Mark DeRussy
VP of Finance at SBA Communications

Good evening, everyone, and thank you for joining us for SBA's first quarter 2022 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer, and Brendan Cavanagh, our Chief Financial Officer. Some of the information we will discuss on this call is forward-looking, including, but not limited to, any guidance for 2022 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, April 25th, and we have no obligation to update any forward-looking statement that we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics.

Mark DeRussy
Mark DeRussy
VP of Finance at SBA Communications

The reconciliation of, and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our investor relations website. With that, I will now turn it over to Brendan to discuss our first quarter results.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Thanks, Mark. Good evening. SBA started the year off with a very strong quarter, with many of the results ahead of our internal expectations, and we continue to anticipate a solid performance throughout 2022. Total GAAP site leasing revenues for the first quarter were $559.4 million, and cash site leasing revenues were $551.4 million. Foreign exchange rates were slightly ahead of our previously forecasted FX rate estimates for the quarter, positively impacting revenues by approximately $2.3 million. They were also a tailwind on comparisons to the first quarter of 2021, positively impacting revenues by $2.3 million on a year-over-year basis.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Same tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis, was 4.3% over the first quarter of 2021, including the impact of 3.1% of churn. On a gross basis, same tower growth was 7.4%. Domestic same tower recurring cash leasing revenue growth over the first quarter of last year was 6.4% on a gross basis and 3.7% on a net basis, including 2.7% of churn. Domestic operational leasing activity or bookings representing new revenue placed under contract during the first quarter was very strong again and materially higher than the first quarter of last year. We continued to replenish our domestic new lease and new amendment application backlog, which remained very healthy at quarter end.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

These backlogs support our expectations for continued strong domestic operational leasing activity throughout the rest of 2022. During the first quarter, amendment activity represented 55% of our domestic booking, with 45% coming from new leases. The big four carriers of AT&T, T-Mobile, Verizon, and DISH represented 95% of total incremental domestic leasing revenue signed up during the quarter. Internationally, on a constant currency basis, same tower cash leasing revenue growth was 7% net, including 4.8% of churn or 11.8% on a gross basis. International leasing activity was very good again, and we continue to see increasing customer activity levels in many of our markets. International growth continued to climb higher, in part due to increased inflation-based escalators.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

In Brazil, our largest international market, we also had another solid quarter of leasing activity. Gross same tower organic growth in Brazil was 13.3% on a constant currency basis. During the first quarter, 82.1% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-U.S. dollar-denominated revenue was from Brazil, with Brazil representing 12% of consolidated cash site leasing revenues during the quarter and 8.8% of cash site leasing revenue excluding revenues from pass-through expenses. Tower cash flow for the first quarter was $445.3 million. Our tower cash flow margins remained very strong with a first quarter domestic tower cash flow margin of 84.6% and an international tower cash flow margin of 68% or 90.3% excluding the impact of pass-through reimbursable expenses.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

International tower margins were modestly impacted by our new, less mature Tanzania assets. Adjusted EBITDA in the first quarter was $423.8 million. The Adjusted EBITDA margin was 69.3% in the quarter. Excluding the impact of revenues from pass-through expenses, Adjusted EBITDA margin was 74.2%. Approximately 97% of our total Adjusted EBITDA was attributable to our tower leasing business in the first quarter. During the first quarter, our services business produced record results for the fourth quarter in a row with $60.3 million in revenue and $14.6 million of segment operating profit. We also continued to replenish and build even higher our services backlogs, finishing the quarter at the highest level in our company's history.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Based on this backlog and the continuing high activity levels by our customers, we have raised our outlook for increased contributions from our services business throughout the balance of 2022. AFFO in the first quarter was $324.3 million. AFFO per share was $2.96, an increase of 14.7% over the first quarter of 2021. During the first quarter, we continued to expand our portfolio, acquiring 1,807 communication sites for total cash consideration of $215.4 million, which includes 1,445 sites for $176.1 million closed on January 4th in our previously disclosed acquisition from Airtel Tanzania. We also built 86 new sites in the quarter.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Subsequent to quarter end, we have purchased or are under agreement to purchase 358 sites in our existing markets for an aggregate price of $127.9 million. We anticipate closing on these sites under contract by the end of the year. In addition, subsequent to quarter end, we closed on the acquisition of a standalone data center in São Paulo, Brazil, for cash consideration of approximately $49 million. The data center currently produces approximately $8.3 million in annual revenue and $3.5 million in annual Adjusted EBITDA. This acquisition was done in support of our continuing evaluation and efforts around the potential expansion of mobile edge computing to our tower sites. In addition to new tower and other assets, we also continue to invest in the land under our sites.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

During the quarter, we spent an aggregate of $8.7 million to buy land and easements and to extend ground lease terms. At the end of the quarter, we owned or controlled for more than 20 years the land underneath approximately 71% of our towers and the average remaining life under our ground leases, including renewal options under our control, is approximately 36 years. Looking ahead now, this afternoon's earnings press release includes our updated outlook for full year 2022. We have increased our outlook for most of our key metrics from the outlook we previously provided with our prior quarter earnings release. These increases are partially due to revised expectations for better foreign currency exchange rates than previously assumed. These FX changes have contributed an increase to our revenue outlook of approximately $21 million and our Adjusted EBITDA outlook of approximately $13 million.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

In addition, we have increased the midpoint of our outlook for site leasing revenue by $17 million on a constant currency basis. This increase is due to several factors, including lower domestic churn impact during 2022 as a result of longer decommissioning cycles as compared to SBA's initial estimates, higher international CPI-based escalators, higher reimbursable and miscellaneous one-time revenue items, and contributions from acquisitions completed during and after the quarter, all of which is partially offset by increased churn in Panama. On April 6th, Digicel Panama, one of our primary customers in Panama, announced that they intend to apply for voluntary liquidation and withdraw from the telecommunications market in Panama.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

While there are likely many developments and steps to take place over the coming months, we have increased our projected 2022 churn impact by approximately $6 million to account for the loss of all leasing revenue from Digicel Panama for the balance of the year. Notwithstanding this one churn issue, as noted, there were a number of very positive developments in our business over the last two months that have resulted in a significant increase in our full year revenue outlook. In addition to the leasing benefits I just mentioned, we also raised the midpoint of our services revenue outlook by $27 million, or over 13%, due to our very strong first quarter results and the continuing strength of our backlogs.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

The strength of both our leasing and services business has allowed us to raise the midpoint of our full year outlook for AFFO per share by $0.24. Our full year 2022 outlook does not assume any further acquisitions beyond those under contract today, and the outlook also does not assume any share repurchases other than those completed as of today. However, we are likely to invest in additional assets or share repurchases or both during the rest of the year. Our outlook for net cash interest expense and for AFFO do not contemplate any further financing activity in 2022. However, we will continue to look for opportunities to continue to optimize our balance sheet. With that, I will now turn things over to Mark, who will provide an update on our liquidity position and balance sheet.

Mark DeRussy
Mark DeRussy
VP of Finance at SBA Communications

Thanks, Brendan. We ended the quarter with $12.7 billion of total debt and $12.4 billion of net debt. Our Net Debt to Annualized Adjusted EBITDA leverage ratio was 7.3x, well within our target, notwithstanding a substantial amount of capital allocated in the first quarter. Our first quarter net cash interest coverage ratio of Adjusted EBITDA to Net Cash Interest Expense was 5.3x, the highest in the company's history. As of the end of the quarter, the weighted average interest rate of our outstanding debt was 2.6% with a weighted average maturity of approximately 4.6 years, and the interest rate on 92% of our outstanding debt is fixed.

Mark DeRussy
Mark DeRussy
VP of Finance at SBA Communications

As of today, we have $590 million outstanding under our $1.5 billion revolver. During the quarter, we repurchased approximately 1.3 million shares of our common stock for $431.6 million at an average price per share of $332. Included in these amounts, subsequent to our previous disclosure of share buybacks and our fourth quarter earnings release, is the repurchasing of 253,000 shares for $81.6 million at an average price per share of $322.10. All the shares repurchased were retired. We currently have $504.7 million of repurchase authorization remaining under our $1 billion stock repurchase plans.

Mark DeRussy
Mark DeRussy
VP of Finance at SBA Communications

The company shares outstanding at March 31st, 2022 were $107.8 million, compared to $109.3 million at March 31st, 2021, a reduction of 1.4%. In addition, during the first quarter, we declared and paid a cash dividend of $76.9 million or $0.71 per share. Today we announced that our Board of Directors declared a second quarter dividend of $0.71 per share, which is an increase of 22.4% over the second quarter of last year. It's payable on June 14th, 2022 to shareholders of record as of the close of business on May 19th, 2022. With that, I'll now turn the call over to Jeff.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Thanks, Mark. Good evening, everyone. As you have heard, we had a very strong start to the year, with strong operating and financial results, again generating double-digit % growth in AFFO per share. Our better than expected results, combined with continued elevated activity levels with our customers, have set us up well for the balance of this year. We have increased our outlook for full year revenues by $65 million and AFFO per share by $0.24. These upward revisions are indicative of the positive environment we are currently in. The U.S. market remains particularly strong. Each of our U.S. carrier customers remained busy during the quarter, signing up new leases and amendments, and generally investing in the build-out of their networks through the deployment of new spectrum bands. T-Mobile continued their nationwide deployment of 2.5 GHz and 600 MHz spectrum.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Verizon and AT&T increased their 5G related signings with us, with particular focus on C-band oriented deployments. Dish continued signing up new lease agreements actively in support of their nationwide 5G network build-out. These carrier activity levels also drove meaningful U.S. services results, where we produced record services revenue and margin results for the fourth quarter in a row. Our backlogs also continue to replenish and support our confidence in continued strong performance. Internationally, we had another strong quarter, finishing ahead of our internal expectations for organic tower leasing and new build activity in most of our markets. During the first quarter, we signed up 49% of new international revenue through new leases and 51% through amendments to existing leases.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Coupled with increased escalators due to higher consumer price indexes in many of our markets, this leasing activity drove some of our strongest organic international leasing revenue growth in years. We are also off to a good start integrating our new Tanzanian operations, and we continue to build new sites and tower backlogs in the Philippines. In addition, we recently acquired a new data center in São Paulo that we believe will allow us to more fully explore the potential for tower edge mobile computing in Brazil. We believe this data center can act as a hub for tower edge data centers and C-RAN deployments based on discussions with some of our carrier customers in Brazil. Overall, internationally, we have a lot of very exciting things happening, and we continue to believe that 2022 will be a very good year.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

In addition to our strong operational performance during the first quarter, we also continue to execute well with regard to our balance sheet and capital allocation. We meaningfully increased our dividend and invested in significant asset additions as well as significant stock repurchases. We were able to make these investments while maintaining our Net Debt to Adjusted EBITDA leverage at 7.3x, right in the middle of our target range of 7x-7.5x, and our weighted average cost of debt remains largely fixed and at our all-time low of 2.6%. We believe our ability to manage leverage while continuing to invest in our business is critical during this current time of more broadly increasing interest rates. We are well positioned to continue to grow our business, but also to weather any kind of challenging macro environment.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

We are very pleased with our start to 2022. I'm gonna keep my comments brief as I believe our results and increased outlook tell the story very well. I believe the rest of the year will be similar to the first quarter, excellent blocking and tackling on our part against a very strong demand environment. We are in a great industry during a time of increasing organic growth, and we are more financially healthy than at any time in our history. We have great confidence in the balance of the year and look forward to helping our customers achieve their ambitious network goals. I wanna finish by again thanking our team members for their commitment and contributions to our success. With that, Colin, we are now ready for questions.

Operator

Thank you, sir. And ladies and gentlemen, if you wish to ask a question, please press one then zero on your touch tone phone. You may remove yourself from queue at any time by pressing the one zero again, and if you are using a speakerphone, please pick up the handset before pressing the numbers.

Operator

Once again, if you have a question, please press one then zero at this time. One moment please for our first question. We'll go to the line of Phil Cusick with JPMorgan.

Amir Razban
Amir Razban
Equity Research Analyst at JPMorgan

Hi, this is Amir for Phil. Two if I may. You guys mentioned lower expectations for churn this year as you reconsider the timing of the Sprint and T-Mobile merger, revenues falling off. Can you give us an update on maybe how your expectations for long-term churn with them have changed? Secondly, is the data center acquisition within guidance? Does this kind of indicate SBA is leaning more into the mobile edge compute opportunity? Thank you.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Just Amir on the churn question. We don't have any real changes to our long-term expectations. What you're seeing is a slight shift in timing, so you know, a little bit less of an expectation in this year, but ultimately those incremental dollars would just move to next year. What we've given out in the past in terms of expectations each year is generally the same as it's been before.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah. On the data center question, I think it's really no change in our activity, trajectory, and direction around Mobile Edge that we've been talking about now for, I guess, at least a year. I would look at this as an extension of what we're doing in the U.S. to our largest international market, Brazil. We think it will continue our learning and interactions with our customers. You know, I would say so far that the results are encouraging, and we continue to believe that we will be benefited and that the Mobile Edge will in fact have value created or create value at our tower sites, and we think these data center investments, albeit modest, are gonna help us get there.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

It is in guidance too, the data center.

Amir Razban
Amir Razban
Equity Research Analyst at JPMorgan

Okay, great. One more if I could. You know, how prepared do you think you are versus like an AMT that has that core site asset for them? How do you kind of view that?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, prepared for what? [crosstalk]

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

It all remains to be seen, you know, how robust the edge at the tower site business get, and that's what we're focused on. From that perspective, I think our measured approach is the right one for us.

Amir Razban
Amir Razban
Equity Research Analyst at JPMorgan

Great. Thank you.

Operator

Next, we'll go to the line of Simon Flannery with Morgan Stanley.

Simon Flannery
Simon Flannery
Managing Director and Senior Analyst at Morgan Stanley

Great. Good afternoon. Jeff, thanks for all the comments. Great to hear the momentum in the business. I wonder if you could talk about the sustainability of this. We've heard from both Verizon and T-Mobile that CapEx peaks this year and then falls fairly sharply. How do you think about, you know, your medium-term outlook, given some of those commentary? Perhaps relatedly, we've seen very strong fixed wireless results. How do you think that might impact some of their builds, some of their densification over the coming years? Thanks.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah. I think it is gonna be a multi-year endeavor, Simon, particularly keeping in mind that the C-band clears in phases over years. So there's really gonna be multiple years still ahead where C-band deployments are going to have to take place. You know, I take our customers' comments at face value. I can tell you, though, that there's a lot of work to be done and at least on the C-band deployment side of things, they are just in their infancy. It can only be a multi-year endeavor. So I'm not sure how that will be impacted, if at all, by the fixed wireless initiative and the spend there.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

It's really obviously one is primarily a mobility product and the other is a location-driven product. We've not seen any signs that the success in the fixed wireless area is gonna impact the mobility spend.

Operator

Next, we'll go to the line of Ric Prentiss with Raymond James.

Ric Prentiss
Ric Prentiss
Managing Director and Head of Telecommunication Services and Media Equity Research at Raymond James

Thanks. Good afternoon, everybody.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Hi, Ric.

Ric Prentiss
Ric Prentiss
Managing Director and Head of Telecommunication Services and Media Equity Research at Raymond James

Hey. I wanna follow up on some of the comments about the international churn. You mentioned and called out the Digicel Panama. How much of that should roll into next year, though? If you're saying that's the impact for the rest of this year, how much should we think about that kinda tail hitting us, next year? Update us as far as what's going on with Oi. We've seen obviously a lot of press releases. It looks like some transactions are finally coming to pass in Brazil with Oi.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

The $6 million of incremental churn for Digicel represents about three-quarters, so there'd be another couple of million dollars into next year. There's probably also a little bit of additional, Rick, because we were already assuming some Digicel churn previously not associated with this liquidation, just as they were shutting down certain sites because they were obviously already having some issues. You know, there's probably an extra $1 million or so in addition that would flow into next year.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah, on the Oi situation, Ric, the sale has closed. Oi Móvel has been sold in parts to Claro, TIM, and Vivo. They've all got some cell sites, they've all got some subscribers. Only TIM and Vivo got spectrum, however, because Claro was already at their regulatorily prescribed limits. Where it all stands right now is that each of the recipients or winning bidders, or the three remaining, need to prepare and file with the regulators various plans and answers to some conditions and restrictions that were put on the approvals. That has not happened yet. You know, we'll be watching with great interest what those filings will be.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Also keep in mind, now we have the 5G auctions done in Brazil and the spectrum ready to be released, and with some, you know, time limits on deployment, at least around the major capital cities.

Ric Prentiss
Ric Prentiss
Managing Director and Head of Telecommunication Services and Media Equity Research at Raymond James

You also obviously, CPI is benefiting escalators. How should we think about how often they get updated? Where are we at in the process? Or maybe also just updates on where you're seeing CPI in Brazil and South Africa, but just help us understand the timeline as far as where the benefit in escalator is at currently and where it might head. Is there anything on the cost side?

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah. The CPI in Brazil right now, for us, for our average for the year, went to about 9%. The actual rate is higher than that. It's closer to 11%, I believe, right now. The timing is really tied to when the leases individually escalate. There are some larger concentrations because of some of the acquisitions that we did. Those tend to be in the fourth quarter and the second quarter. Really, it's just a function of the time that's the anniversary date of each individual lease and what the CPI looks like on a year-over-year basis at that point in time.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Keep in mind, on the expense side, Ric, the ground leases, which are the single largest component in Brazil, are a pass-through item, so we have that protection. Where we are likely to see the impact is, of course, on the labor side. We will see that because of the way the Brazilian employment laws are written. You know, again, I would point out that given the operating leverage in the business, the percentage of employee costs against revenue is extremely small, so we have some great elasticity to be able to absorb any employee-related CPI increases.

Ric Prentiss
Ric Prentiss
Managing Director and Head of Telecommunication Services and Media Equity Research at Raymond James

Makes sense. Thanks for that. Everybody have a good day.

Operator

Next, we'll go to the line of David Barden with Bank of America.

David Barden
David Barden
Managing Director and Senior Telecommunications Equity Research Analyst at Bank of America

Hey, guys. Thanks so much for taking the questions. I guess first one maybe for you, Brendan or Mark. You know, with respect to the guidance expectations for rate movements for the rest of the year and the impact on the net change in the updated 2022 guide, could you kinda give us a sense as to kind of what you were originally baking in and what maybe is net incremental, probably a headwind, presumably on the 8% remaining variable rate debt? And then the second piece would be just on the service revenue kind of outlook. Obviously, pretty healthy activity across the board. We've talked in the past about the margin mix, you know, whether it's earlier stage, it's more human capital, higher margin, later stage, it's more labor related and lower margin.

David Barden
David Barden
Managing Director and Senior Telecommunications Equity Research Analyst at Bank of America

You know, where are we in that curve, and where do you see margins in that business going? Thank you.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah. On the rate impacts, the impact is primarily due to one, an assumed increase in CPI rates, and two, slightly more of our revolver being drawn during the course of the year associated with some of the incremental spend that we've just incurred or have under contract. If you look at our CapEx guidance, it's up a little bit. That requires that along with the share repurchases that we did that weren't assumed before, that we have a little bit more capital drawn. Because it's floating rate and the CPI is increasing, that's really driving the increase in our net cash interest expense guidance that we gave. Otherwise, there's really no changes to that.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah. On the services, Dave, the biggest issue is not so much the margin inside each of our two services segments, it's really the mix of the two. Site acquisition has historically been the higher margin business. Construction has been a lower margin business. I will tell you, though, that the margins that we're currently experiencing in both segments relative to our history are very good, maybe pushing, you know, all-time highs. But really the biggest driver of where margins come out is the mix between site acquisition and construction services, although we're very, very happy with where each of those segments are performing. One of the ramifications of a big services quarter, though, given the fact that it is a lower margin business, is its impact on our Adjusted EBITDA margin.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

For those of you who are wondering why that is where it is this quarter, it's really because of the large amount of services revenue that we booked this quarter.

David Barden
David Barden
Managing Director and Senior Telecommunications Equity Research Analyst at Bank of America

Okay, that's helpful. Thanks, Jeff.

Operator

Next, we'll go to the line of Nick Del Deo with MoffettNathanson. Your line is open.

Nick Del Deo
Nick Del Deo
Senior Analyst at MoffettNathanson

Hey, thanks for taking my questions. You know, first, kind of turning back to Brazil and the Oi situation, can you talk at all about the conversations you've had with customers and anything they've said about their plans to invest behind the assets they're acquiring? Are any of the initial goals that they've laid out for site decommissionings, I think at least TIM has talked about that, or have those been consistent with your expectations?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah. I think we're still of the same mind in terms of the aggregate exposure, which Mark, jump in here and make sure I say the right numbers.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

$20 million-$30 million over the life is what we think our exposure is.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah, nothing's really changed there, Nick. As we've seen in the U.S., to actually migrate customers and truly decommission sites, it's a little more complex. It takes a little more time than people think. Now that's really a timing comment. We think the ultimate numbers will be what Brendan just said. We really don't have any specific instructions from them as of this point. We do expect that as the year progresses, we will begin to get more clarity on the timing and final amount that we will be looking at. They are, on the other side, the three now nationwide carriers are all active to varying degrees with the new spectrum deployments.

Nick Del Deo
Nick Del Deo
Senior Analyst at MoffettNathanson

Okay. Okay, that's great. You know, maybe turning to you know, the data center topic. You know, I think to date, you've described what you're doing as you know, buying assets to learn about the business, learn about the edge opportunity. Do you feel like you currently own a sufficient number of data centers in the U.S. to fulfill that goal, or should we expect you to pick up you know, some more you know, in the future, maybe in different geographies or you know, different size or something like that?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah, I think as our experimentation and learning process continues to move in a positive direction, it would not be impossible to see us, you know, buy a couple more data centers. But I don't think we would ever get to the point where you would see. I mean, it won't ever get close to 1% of enterprise value, I don't believe.

Nick Del Deo
Nick Del Deo
Senior Analyst at MoffettNathanson

Okay. That's helpful. Thank you, Jeff.

Operator

Next, we'll go to the line of Michael Rollins with Citi.

Michael Rollins
Michael Rollins
Managing Director and Senior Analyst at Citi

Thanks, good afternoon. First question for me was curious if you could unpack the merger churn in the U.S. from Sprint and T-Mobile that was within the first quarter results, as well as what's in the guidance for 2022.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah. What's in the guidance for 2022 is now approximately $27 million. I think we had previously told you $30 million. Obviously, we lowered our full year number by $3 million. The first quarter piece to that, I don't know. Let me check that and get back to you, and I'll mention on the call if we are done with you before then.

Michael Rollins
Michael Rollins
Managing Director and Senior Analyst at Citi

Sure. You know, just as you're thinking about the year domestically, just curious how you're thinking about that 3.7% net growth that you did in Q1, you know, relative to the full year guide, if I'm calculating the numbers right on slide four, I think it is. It also looks like for the full year organically, you're looking for about that amount. You know, with churn possibly ramping higher, you know, as a contribution. Just kinda curious how you're thinking about the growth moving through the year and the net and what the contributions that may be layered in for DISH and AT&T as you're just thinking about that full year growth expectation for 2022.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, I know, Brendan, you could get to the net, but I know that the gross number, Mike, we expect to grow sequentially as we move through the year.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah. We do expect the gross to move up sequentially. We also expect the churn, though, to move up sequentially during the year. Obviously, as indicated by the first quarter shift here, there's some potential that our expectations around timing are off on the churn, but our expectation and what's in our guidance shows that it's increasing. The net will be a modest increase, maybe flat to modest increase quarter over quarter, going through the year. In terms of the mix, you know, I don't think we wanna get into the individual carriers that make up the mix. I think we've been pretty clear in the past that on a lot of the last few quarters, a lot of the lease up, one of the significant contributors there was DISH in terms of their new agreements.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Obviously they would be a nice component of that growth. All the carriers have contributed to the lease-up activity, so they're all in the mix.

Michael Rollins
Michael Rollins
Managing Director and Senior Analyst at Citi

When you think about the longer term, you know, leverage targets for the business, do you have a rule of thumb in terms of if rates are a certain level, then leverage should be a certain level? Or is your view of leverage less dependent on the rate environment to, you know, within, I imagine, degrees of freedom?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, clearly there would be a rate level, and I can't, I don't really wanna get pinned down on what that is. Clearly there would be a rate at which we would look at different leverage levels. If beyond that, Mike, what we're looking at is, you know, our dividend payout ratio, how much, you know, our EBITDA growth looks to be. I mean, we really do try and be very thoughtful and take into account everything that should be taken into account.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

I mean, on an absolute basis, of course it would be some interest rate that, if we thought it was going to be maintained and sustained for long periods of time, if it were materially higher than where we are today, will cause us to revisit our leverage targets.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Mike, before you go, let me follow back up on your question about how much Sprint in the first quarter. It was approximately $4 million of impact in the quarter, so a little over 1% of the roughly 2.7%.

Michael Rollins
Michael Rollins
Managing Director and Senior Analyst at Citi

Thanks very much.

Operator

Next, we'll go to the line of Sami Badri with Credit, excuse me, Credit Suisse.

Sami Badri
Sami Badri
Managing Director and Senior Equity Analyst at Credit Suisse

Great, thank you. I just wanted to get a little bit of an update on the MLAs. I think what we'd all kinda, you know, could really use is maybe a little bit more color on how much activity is falling into those MLAs versus out of those MLAs with the same customers that actually sign them. Can you just, you know, give us a little bit of color or more color than normal on what the mix of in versus out of MLA looks like?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, I think it's 100% for every customer that we have an MLA with is somehow touched by the MLA, so that's DISH, Verizon, and T-Mobile. We don't have one with AT&T. It's not really a situation where some of it's covered and some of it's not per carrier.

Sami Badri
Sami Badri
Managing Director and Senior Equity Analyst at Credit Suisse

Got it.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah, just to be clear, Sami, our MLAs though are still based on specific activity from those customers, you know, and equipment specificity. They're not just a broad, open-ended thing.

Sami Badri
Sami Badri
Managing Director and Senior Equity Analyst at Credit Suisse

Got it. The other thing is, last quarter you stated that the 3.45 GHz spectrum would require incremental radios to C-band. Do you still hold that view?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

We do, although I know that they're working on an integrated one as well, which will come out at some point.

Sami Badri
Sami Badri
Managing Director and Senior Equity Analyst at Credit Suisse

Got it. Just to be clear, right, if they do work on an integrated radio, that does still have scope for amendment because they're riding on two separate, on different spectrum bands, or is there a different type of negotiation that would take place if they came out with that?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, it will be primarily driven by what the equipment looks like and, you know, how it stacks up compared to if anything's coming off, that's a swap. If it's not, then we would look at the equipment and, you know, price it accordingly based on height, weight, and wind load.

Sami Badri
Sami Badri
Managing Director and Senior Equity Analyst at Credit Suisse

Got it. Thank you for the color.

Operator

Next, we'll go to the line of Greg Williams with Cowen.

Greg Williams
Greg Williams
Senior Analyst at Cowen

You know what multiples look like given the rising rate environment, you know, private multiples, and the geopolitical landscape by region generally. Second question, just on the record service revenues, are you seeing any labor or logistical bottlenecks in the current environment in keeping up with this record activity? Thanks.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Greg, I think we missed your first question. The first part of it got cut off.

Greg Williams
Greg Williams
Senior Analyst at Cowen

Sorry. The M&A landscape, what multiples are looking like, through the regions?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah. They're not increasing. We're thankful for that. You know, there are some signs that the current interest rate environment is going to have a depressive effect on prices. As you know, Greg, it takes a while for current market conditions to factor through to private market sellers. However, it is headed in that direction where obviously rates should and I think will impact price over time. On the supply side of equipment and labor, you know, I don't wanna jinx things, but as of today, we are not seeing any material impact on either the supply chain side or the labor side for our business.

Greg Williams
Greg Williams
Senior Analyst at Cowen

Got it. Thank you.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Mm-hmm.

Operator

Next, we'll go to the line of Brett Feldman with Goldman Sachs.

Brett Feldman
Brett Feldman
Managing Director Senior Equity Research Analyst at Goldman Sachs

Great. Thanks for taking the question. You know, Jeff, for the vast majority of SBA's history as a U.S. tower operator, your fixed escalators, which are generally, I think, in the low 3% range, have exceeded inflation. That's obviously not the circumstances we're in today, and who knows, you know, what the long term view is gonna be. I'm wondering if we've been in an inflationary environment long enough for you to see any impact on your business or maybe to change how you think about it.

Brett Feldman
Brett Feldman
Managing Director Senior Equity Research Analyst at Goldman Sachs

I'm wondering, is there any increased mutual interest between you and your carrier customers maybe finally moving to a CPI-based escalator model, in your leases, you know, if you are doing build to suits in this environment, are you actually still doing them at the historical escalator or is that changing? Maybe just bigger picture, if we're not likely to see a change in the escalation model and we do remain in an inflationary environment, could that suggest that you may have a preference for continuing to invest increasingly outside the U.S. where you can actually develop and acquire towers that can escalate in line with CPI? Thanks.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah. I think I'd characterize the state of the escalator issue with our customers, Brett, as one where I think certainty and a fixed number benefits both sides. Even though clearly in a year like this, you know, if with a fixed escalator, one party wins, the other loses, but that's a very temporary kind of condition. You know, over time, the Fed has a mandate to reduce inflation back to 2% or less. So I really don't know that there's a lot of appetite on either side to change that around. Really because, if you have a very big inflation year, the person on the CPI end of that, whether it's us on ground leases or our customers on the tenant leases, you know, they're not gonna be happy.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

I think we're pretty satisfied with the state of the world as it currently exists. I don't think we consciously are making international decisions relative to U.S. decisions with any kind of belief that this is better because, you know, we get CPI escalators. You know, the traditional economic theory is if there's higher inflation in those markets, the currency is going to trade off. We don't really think that is a reason why to favor international over the U.S. The reason we go internationally is because we have a capital allocation and a target leverage, which we think is one of our principal creators of shareholder value, and we have been able to find enough to do in the U.S.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

We found some very good things to do internationally, and I think that will continue to be the primary motivation.

Brett Feldman
Brett Feldman
Managing Director Senior Equity Research Analyst at Goldman Sachs

If I can ask this one quick follow-up question. I believe in the U.S., or what we've typically believed in the U.S., is that the escalation clauses on your ground rent was reasonably similar to what you see on the tower side, so kind of a fixed low 3% escalator. Is that the right understanding, or could we see a mismatch at any point over the coming quarters?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

No. No. We've generally offset. I say generally, I mean we've substantially every single U.S. tower that is ground leased has a fixed escalator, and they typically average less than our average tenant escalator. We feel protected there. Of course, you know that's our single largest source of expense in getting to the tower cash flow line, is the ground leases. We feel pretty well protected there, Brett.

Brett Feldman
Brett Feldman
Managing Director Senior Equity Research Analyst at Goldman Sachs

Great. Thank you.

Operator

Next, we'll go to the line of Walter Piecyk with LightShed.

Walter Piecyk
Partner and Analyst at LightShed Partners

Hey, Jeff. This first question I'm gonna send over to Brandon. You said to a prior question that Sprint churn was $4 million. Even if you were rounding up there, that implies, I think, a churn rate for the rest of your domestic business that I couldn't find that low unless I went back, I guess, for a quarter or two in 2018, when it was like 1.7%, 1.5%, first, second quarter. Is this a sustainable number? Because that's just much lower than we've seen for several years.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

No, I don't. I mean, I think it's so that what's left is about 1.5%, maybe 1.6%, if you exclude the Sprint piece.

Walter Piecyk
Partner and Analyst at LightShed Partners

Yeah.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

I don't think that's lower. I mean, we've actually been much lower than that, if you go back a couple of years ago, where we were below 1%. We've historically been somewhere in that, usually between 1%-2%, sometimes lower. I don't think it's abnormally low.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Hey, Walter, it's the absolute dollars, the numerator in that calculation, has been flat for a couple of quarters now.

Walter Piecyk
Partner and Analyst at LightShed Partners

Uh-huh.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Which is why as a percentage is going down?

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah.

Walter Piecyk
Partner and Analyst at LightShed Partners

Got it.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, I think there's a different reason. I think, Walt, what you're looking at is kind of the gross churn that historically has always included some kind of consolidation churn.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah, maybe that's it.

Walter Piecyk
Partner and Analyst at LightShed Partners

Yep.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Obviously, we've had MetroPCS, Leap, and Clearwire. We had iDEN-related churn. There's been things.

Walter Piecyk
Partner and Analyst at LightShed Partners

No, that's what I'm saying. Like, if you look at all these years past, there's, you've always had something salting in there.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah.

Walter Piecyk
Partner and Analyst at LightShed Partners

Maybe your, like, actual core stuff, which you don't really report [crosstalk] was that low. As far as reportable churn numbers, it's never been that low, that I can say.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, yeah.

Walter Piecyk
Partner and Analyst at LightShed Partners

Because you don't break it. You haven't broken out Sprint.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Apples to apples, you have to include the Sprint.

Walter Piecyk
Partner and Analyst at LightShed Partners

Sure. Yeah.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

I mean, that's comparable to.

Walter Piecyk
Partner and Analyst at LightShed Partners

Sure. No, no, I know.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yeah.

Walter Piecyk
Partner and Analyst at LightShed Partners

That was my second question, which is $4 million is fine, but you know, if you look at $30 million for the year, you still have to step that Sprint component up pretty at some point. Like, is it? Was part of this just the delay in turning off CDMA? Like, which quarter do you think you're really gonna see? I mean, obviously, it. I think last year you were doing, like, $2 million a quarter or somewhere in that ballpark. Four is not like it's no step up, but are you expecting a larger step up in Q2 or Q3, do you think?

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

We're expecting a larger step up as we move throughout the year. I mean, just incrementally, I think stepping up because it just builds over time. It's really dependent on when those leases turn down, you know, termination dates and everything else.

Walter Piecyk
Partner and Analyst at LightShed Partners

Okay.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

You know.

Walter Piecyk
Partner and Analyst at LightShed Partners

It's quite possible that you see it increase each succeeding quarter. Okay. Then just same basic question for amendments in colo. You know, you're, I think the target is whatever, 60-something for the year, 65, I think. That would imply a much bigger step up sequentially than maybe what we saw in first quarter. Any sense on kind of when you're gonna see a more material step up from quarter to quarter? Or do you think [crosstalk] It's gonna be somewhat linear from here?

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah, no, it's gonna step up, but I think mostly in the second half of the year. There'll be a modest step up is our expectation next quarter, and then more material into the third and then even further into the fourth quarter.

Walter Piecyk
Partner and Analyst at LightShed Partners

Got it. Thank you.

Operator

Next, we'll go to the line of David Guarino with Green Street. Your line is open.

David Guarino
David Guarino
Equity Research Analyst at Green Street

Thanks. Hey, Jeff. Going back to the M&A conversation. You mentioned multiples aren't increasing, but I think it's fair to say that they're rich today. We've seen some deal terms on a few recent transactions that really appear to benefit the MNO sellers. I was just wondering if you could help us understand how are you guys competing for deals now that your peers are bidding more aggressively? Does that cause you to adjust your underwriting at all?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

No, we don't adjust our underwriting. We may do fewer deals, David, but if you look at the history of what we've done, you know, we like what we've done, and we'll continue to exercise the same discipline. I think if you really understand what we're about, it's about creating value for our shareholders. There aren't particularly great, as we see them, strategic benefits of just being big in a bunch of different countries. We are much more interested in the financial characteristics and investment goals of each and every transaction. You know, we lose a lot, but we get enough to generally satisfy our 5%-10% portfolio growth goals, and we're gonna continue to operate that way.

David Guarino
David Guarino
Equity Research Analyst at Green Street

Okay. That's helpful. Maybe switching gears on the 2022 guide. I was wondering, is there any conservatism in your exchange rate forecasting for the Brazilian real? It looks like your full year guidance is below where the current exchange rate is, and we've got, what? Eight months left in the year. I just wanted to know, how do you guys think about forecasting exchange rates?

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Yeah, we typically will use whatever the forwards are that you would generally pull from Bloomberg or some sort of average of a number of institutions that publish projections. The one thing I can assure you of, David, is that we will be wrong on what we assume. I don't know whether we'll be wrong to the positive or the negative, but it's very hard to nail down. We use what the experts are saying at any given time. You know, even since we kind of put our numbers together, which is at the end of last week, just in the last two days, we've seen the currency weaken relative to the dollar. You know, it's a little bit closer.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Basically, if you look at Brazil, our average for the balance of the year that we've assumed is essentially five to one, and I think today it ended up $488 million or something like that. It's fairly close to what the spot rate is.

David Guarino
David Guarino
Equity Research Analyst at Green Street

Okay. I appreciate the humility. Thanks for that.

Operator

Next, we'll go to the line of Eric Luebchow with Wells Fargo.

Eric Luebchow
Eric Luebchow
Director and Senior Analyst at Wells Fargo

Hi. Thanks for squeezing me in. I'm wondering if you could talk about what you're seeing from DISH. I mean, they've publicly said they think they're about six months behind where they originally expected to be. I'm just wondering if either the actual site construction when they hang equipment or the date certain under your contract with them would have much of an impact on your assumed leasing outlook for the year. Then just more broadly, are you seeing their leasing concentrated in just a few markets, or is it pretty broadly distributed across your portfolio today? Thanks.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

I could tell you that the activity level is pretty broadly distributed, and we do have a construct with DISH where once the lease is signed, revenue recognition for us begins at either a construction milestone or a date certain. It's really to actually look at all that and synthesize that and turn it into guidance is a bit of an art. There'll be some possibilities that things move around there. For the most part, you know, as we move through the year, things are known with a greater degree of certainty. There's some opportunities for some movement. For the most part, you know, we feel pretty good about DISH's contribution.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

In terms of your comment about them being behind by six. I mean, that maybe that's their own internal goals and projections. I would repeat what we've said now for, I think, the better part of a year, which is they're very active, actually busier with us than we thought they would be for a rolling 12-month period. They continue to be very, very busy and driving hard towards, you know, satisfying their June 2023 regulatory obligations.

Eric Luebchow
Eric Luebchow
Director and Senior Analyst at Wells Fargo

Okay. Appreciate the color.

Operator

Next, we'll go to the line of Brandon Nispel with KeyBanc Capital Markets.

Brandon Nispel
Brandon Nispel
Director and Equity Research Analyst at KeyBanc Capital Markets

Okay, great. Thank you for taking the questions. Maybe two, one follow-up, though. Could you share what the backlog of lease applications was? What was that up this quarter? If we just held that flat, looking at the comparables in sort of the second and third quarter, what would that growth rate look like? Secondly, following up on Walt's question, it looks like you're at about, you know, $12.6 million in U.S. organic growth this quarter. It's like six on that 6.4%. Do you still think you can get to a low $20 million number exiting this year? Is that a reasonable number to run rate into 2023? Thanks.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

Okay. On the backlog question, you know, just to be clear on how we evaluate backlog for our leasing business, we're looking at the number of applications for new leases and amendments. Obviously, the pricing may vary depending on exactly what they do, and sometimes that pricing has to be negotiated. It's not necessarily dollar-based. You know, the number of applications is up, so when we say it's up, that's what we're referring to. I can't really give you what the lease up would be if it were the same for the last few quarters. On the leasing dollars question in the fourth quarter, we do think we can get to the low 20s by the end of the year.

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

As to whether that would be a run rate going forward is partially dependent on the activity levels for the balance of this year, which we think will remain fairly strong. As of today, I can't comment on what next year's number will be yet.

Brandon Nispel
Brandon Nispel
Director and Equity Research Analyst at KeyBanc Capital Markets

Okay. Thank you for taking the questions.

Operator

Next, we'll go to the line of Matt Niknam, excuse me, with Deutsche Bank. Your line is open.

Matt Nikman
Matt Nikman
Director and Equity Research Analyst at Deutsche Bank

Just two quick ones if I could. First, on M&A, I know you mentioned, I think, 358 sites acquired or under contract as of the end of the quarter. Any color you can share in terms of where they're located and when they're expected to close? Secondly, on the dividend payout ratio, I know you mentioned in the release that you're still under 25%, and I know you've talked about 20% annual growth the next several years. Any sort of update in terms of where you'd like to get that payout ratio to over time? Thanks.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Well, we like it low because it gives us plenty of opportunities, including stock repurchases, which we think, I think the execution and the allocation that we have, including setting the dividend, really has served our shareholders well. But at the same time, Matt, we want to continue to be an industry leader in terms of our dividend growth rates, which is why we set things to start at a low level. Really, it's kind of the balance of those two which will ultimately drive, you know, where we set the dividend going forward. But I think you would agree at a less than a 25% payout ratio, we have a lot of room to increase the dividend materially in the years ahead. What was your first question?

Brendan Cavanagh
Brendan Cavanagh
EVP and CFO at SBA Communications

M&A contract under contract mix. Is it largely international? There is some domestic and some international. Was there more to the question?

Matt Nikman
Matt Nikman
Director and Equity Research Analyst at Deutsche Bank

Yeah, any color you can share in terms of country or region, if possible?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

They're all existing markets.

Matt Nikman
Matt Nikman
Director and Equity Research Analyst at Deutsche Bank

Okay. All right. Thank you, guys.

Operator

Ladies and gentlemen, if there are any additional questions at this time, it is one followed by zero on your phone. We do have a question from the line of Jon Atkin with RBC.

Jon Atkin
Jon Atkin
Managing Director and Senior Analyst at RBC

I was interested in talking a little bit about other types of infrastructure. You did the PG&E deal. You know, there's rooftops, but thoughts on kind of non-conventional macro towers and opportunities you see within that segment. Thanks.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

You know, we continue to pursue a variety of different things, Jon. We have a growing indoor DAS business. We have a growing connected venues business, where we get in and actually kinda build out the telecommunications infrastructure in new developments. We have added some rooftop sites, for sure. You know, we have picked up now three data centers. None of that stuff comes close to being anywhere near material compared to the basic macro tower business. While we are seeing good return on invested capital in all these areas, and we will continue to look at them and believe that we're picking areas that, you know, will scale over time. I mean, we are, for all intents and purposes, for the foreseeable future, we are a macro tower company.

Jon Atkin
Jon Atkin
Managing Director and Senior Analyst at RBC

Alternative rights of way, like rooftops, transmission lines, utilities.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

We're buying rooftops. We are developing rooftops. We're playing in pretty much all the areas other than, you know, fiber, outdoor small cells on a big basis and undersea cable. But none of it gets to the point where it's going to, you know, occupy a material portion of our financial results in the foreseeable future. The question then, I guess, should be, well, why are you doing it?

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

The answer is, well, because of where we are, who we are, and what we've done over the years, we do get a lot of ancillary opportunities, and these are good assets, exclusive assets that are going to produce for us a good return on invested capital and are generally pursued and occupied by folks who are otherwise engaged in the macro tower business.

Jon Atkin
Jon Atkin
Managing Director and Senior Analyst at RBC

Thanks very much.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Yep.

Operator

We have no further lines in queue at this time.

Jeff Stoops
Jeff Stoops
President and CEO at SBA Communications

Great. Well, I wanna thank everyone for joining us for, you know, what you heard was a great first quarter, and we look forward to reporting continued success as we move through this year. Thank you.

Operator

Ladies and gentlemen, that does conclude our teleconference call for today. Again, thank you very much for your participation and for using AT&T Teleconference Service. You may now disconnect.

Executives
    • Brendan Cavanagh
      Brendan Cavanagh
      EVP and CFO
    • Jeff Stoops
      Jeff Stoops
      President and CEO
    • Mark DeRussy
      Mark DeRussy
      VP of Finance
Analysts
    • Amir Razban
      Equity Research Analyst at JPMorgan
    • Brandon Nispel
      Director and Equity Research Analyst at KeyBanc Capital Markets
    • Brett Feldman
      Managing Director Senior Equity Research Analyst at Goldman Sachs
    • David Barden
      Managing Director and Senior Telecommunications Equity Research Analyst at Bank of America
    • David Guarino
      Equity Research Analyst at Green Street
    • Eric Luebchow
      Director and Senior Analyst at Wells Fargo
    • Greg Williams
      Senior Analyst at Cowen
    • Jon Atkin
      Managing Director and Senior Analyst at RBC
    • Matt Nikman
      Director and Equity Research Analyst at Deutsche Bank
    • Michael Rollins
      Managing Director and Senior Analyst at Citi
    • Nick Del Deo
      Senior Analyst at MoffettNathanson
    • Ric Prentiss
      Managing Director and Head of Telecommunication Services and Media Equity Research at Raymond James
    • Sami Badri
      Managing Director and Senior Equity Analyst at Credit Suisse
    • Simon Flannery
      Managing Director and Senior Analyst at Morgan Stanley
    • Walter Piecyk
      Partner and Analyst at LightShed Partners
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