Good morning. My name is Summer, and I'll be your conference operator today. At this time, I would like to welcome everyone to the American Tower Second Quarter 2012 Earnings Call. [Operator Instructions] I would now like to turn the call over to Leah Stearns, Director of Investor Relations. Please go ahead.

Thank you, Summer. Good morning, and thank you for joining American Tower's Second Quarter 2012 Earnings Conference Call. We have posted a presentation which we will refer to throughout our prepared remarks under the Investors tab on our website, www.americantower.com. Our agenda for this morning's call will be as follows: First, I will provide a brief overview of our second quarter and year-to-date results; then Tom Bartlett, our Executive Vice President, Chief Financial Officer and Treasurer, will review our financial and operating performance for the quarter, as well as our updated outlook for 2012; and finally, Jim Taiclet, our Chairman, President and CEO, will provide closing remarks. After these comments, we will open up the call for your questions. Before I begin, I would like to remind you that this call will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include those regarding our 2012 outlook and future operating performance, our pending acquisitions and any other statements regarding matters that are not historical facts. You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risk factors set forth in this morning's press release, those set forth in our Form 10-Q for the quarter ended March 31, 2012, and in our other filings with the SEC. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances. And with that, please turn to Slide 4 the presentation, which provides a summary of our second quarter and year-to-date 2012 results. During the quarter, our rental and management business accounted for approximately 98% of our total…

Thanks, Leah, and good morning, everyone. I'm pleased to report that we continue to build on our first quarter momentum and were able to deliver another solid quarter of results. Our strong performance during the quarter was driven by continued solid leasing trends throughout our served markets. In addition, we completed the construction or acquisition of over 2,400 communications sites globally. As a result, we have reaffirmed our outlook for total rental and management revenue, and increased our outlook for adjusted EBITDA and AFFO even as we face foreign currency headwinds. This morning, I'll begin with more detail on our second quarter financial and operational results, and conclude with a discussion of our updated expectations for the full year. If you'll please turn to Slide 5 of our presentation, you will see that for the second quarter, our total rental and management revenue increased by nearly 17% to $682 million. On a core basis, which we will reference throughout this presentation as reported results excluding the impacts of foreign currency exchange rate fluctuations, noncash straight-line lease accounting and significant onetime items, our consolidated rental and management revenue growth was almost 23%. Of this core growth, over 10.5% was driven by core growth from existing sites, which we refer to as core organic growth, with the balance attributable to growth from new sites. Included in this new site growth is the impact of the increase in pass-through revenues attributable to the 11,700 new sites we have constructed or acquired in our international segment since the beginning of the second quarter of 2011. During the quarter, revenue growth from our legacy properties across our global footprint reflected strong new leasing activity, with approximately 60% of consolidated signed new business attributable to new leases, and the balance coming from existing lease amendments. Our…

Thanks, Tom, and good morning to everyone on the call. With 23% tower revenue growth and over 24% core adjusted EBITDA growth during the second quarter, our dual strategy to maximize the performance of our U.S. asset base while expanding into high-growth international markets continues to deliver truly compelling growth for our company. Our top priority remains to deliver superior expansion in AFFO plus meaningful and growing yield, all of which is built on a strong foundation of continuous risk management and mitigation. Over the past few years here at American Tower, we've developed 2 primary core competencies. The first is effectively operating and growing revenue on multi-tenant communications assets based on our U.S. experience and expertise. The second is applying this skill set globally, taking advantage of both our U.S. knowledge base and our decade of experience in Mexico and Brazil. We pursued our international expansion in a disciplined fashion, assessing each potential market using a comprehensive 3-step analysis. The first step was a thorough review of a country's fundamental investment characteristics. We specifically evaluate a target market's macroeconomic conditions, such as expected GDP growth and inflation, political stability, a fair business environment, a rule of law-based legal system and favorable policies regarding foreign direct investment are also important factors we evaluate to determine whether American Tower can successfully implement our business model over the long term. Next, we evaluate the dynamics of the country's wireless industry. We specifically seek 3 or more independent and competitive wireless service providers in a market. We also look for additional attributes that can encourage ongoing network investment such as recent or future spectrum auctions. For example, our expansion into Colombia came on the heels of a 3G spectrum auction, where the 3 major incumbents pursued the spectrum necessary for their initial deployments…

[Operator Instructions] The first question comes from Batya Levi of UBS.

First off, if I could ask about your level of discussions with T-Mobile, your peer announced a deal with them. How do you think about signing up a new master lease agreement with them? And if you would, if these discussions are based on the prior 2 MLAs that you signed with the 2 carriers or would you consider to do a deal as touch as you go? And second question I had was if you could delve a little bit into the organic growth in the U.S. I think you had mentioned that it was about 8.5% in the first quarter, and now it looks like it's about 7%. Do you expect that to accelerate going forward, given the strong demand, or how should we think about it going forward?

So this is Jim, and I'll turn over the second question to Tom. Regarding our commercial arrangements with T-Mobile or any other customer, I think we don't comment on potential ongoing negotiations with any specific customer. But our history has been that we've been able to find common ground with our major carrier customers that are entering large deployments, and we'll expect to be doing that with T-Mobile as well.

And Batya, on the U.S. side, on core growth, we would expect kind of for the full year in that 9% range. So pretty consistent with where we are in the -- from the first half and relative to core organic growth, which is that growth coming from existing sites, we are about 7% -- just over 7% in the second quarter, and I would expect that to be at the same level in the third and the fourth quarters.

Our next question comes from Simon Flannery of Morgan Stanley.

Tom, you talked about the dividend growth and the dividend payout ratio. Can you just update us on where we are with the NOLs and feathering that through? And how should we think about the next 2 or 3 years, your sort of dividend policy and how you use the NOLs? And then there's been a lot of headlines out of India about sort of regulatory issues licensed, re-auctioning and so forth, perhaps you could just update us on what's been going on there? Obviously, you've had some very strong leasing activity there, but just give us some sense of what the current status is as regards your business in India.

Yes. Sure, Simon, I'll take the first one, and then Jim can take the second one. With regards to our dividends, as you saw in my script and Jim referred to it as well, we're looking at in 2012 kind of a payout between $0.87 and $0.90 per share, about $350 million. We entered the year with just over $1 billion of NOLs, and I would expect that we won't use – we'll use than $200 million of NOLs in 2012. And keep in mind, I'll caveat that by saying there's still half of the year to go, and there's still a lot of things that can go on within the second half of the year, but kind of my current forecast is that we'll use less than a couple hundred million dollars. So you can kind of continue that forward and get a sense of what future years might bring. It may accelerate a bit, but our overall dividend payout remains the same that we would expect it to grow faster than AFFO growth, which we're targeting, it's our goal to have that continue at that mid-teen growth over time.

Yes, Simon, it's Jim. Specific to India, again, to put our international markets in context, we have a diversification, a global diversification strategy in place. So just to provide the baseline, India is about 10% of our tower, it's about 7% of our revenue and it's performing quite well this year, as Tom indicated. Based on that context, we are well aware of the developments going on in India from a regulatory perspective and actually planned for not exactly this but something like this to happen, meaning that the large incumbent carriers would drive the business over time in that country. And so we started out in India focusing on those large incumbent carriers. And today, they generate over 90% of our revenues. The licenses that are expected to be re-auctioned are almost exclusively with smaller new entrant carriers. Our exposure to the carriers that we don't think will rebid and re-stand up their license is less than 0.5% of American Tower's revenue base, and we already reserved for that in the first quarter, so we don't have exposure to the re-auction. In fact, when the spectrum gets recast to new bidders, we think it'll actually help our business going forward because those bidders will have the financial wherewithal to actually deploy it.

Your next question comes from James Ratcliffe of Barclays.

This is Sandeep Gupta in for James Ratcliffe. Just more a strategy question. One of the manufacturers of base station equipment recently said that they're now shipping more micro base stations than macro base stations. This is first time in the history of wireless. Could you kind of comment on what does that mean for the tower business and how do you view that?

Sure, Sandeep. This is Jim. That's not a surprising statistic at all given the very small radii and lower -- much lower cost for these types of base stations. At some point, they're going to be more prolific just because of the low cost and again small radii. But that doesn't necessarily affect the macro network at all. As I pointed out in my remarks, 95% of our towers are outside of urban and near-urban environments, which really the only ones that makes sense technically and economically for a carrier to deploy such small micro sites. So we see this as something that's actually helpful, so that the carriers can handle the cost requirement of serving really, really dense urban markets, but were just simply not providing towers at this point. That'll enable the carriers to be able to care for the whole network, both inside and outside of cities more efficiently. So we actually applaud these kind of products coming on the market.

The next question comes from Jason Armstrong of Goldman Sachs.

Maybe a couple questions now, I guess I'll take a crack at the T-Mo question, maybe from a different angle around the MLA. Just maybe stepping back generally when you're negotiating an MLA with a carrier that has been an M&A target before, I guess my question is, are you more focused on getting paid for the upside as it relates to amendment activity, or are you more focused on protecting your downside risk from decommissioning? Just maybe help us with what the framework is. And then second question just as it relates to sort of global macro volatility. We've obviously seen some pretty big FX fluctuations, some pretty large country volatility. Does this change your appetite from here for international expansion, or should we assume that the majority of your expansion really continues to be international?

Jason, it's Jim. On negotiations again with any individual customer, we don't necessarily get into the details of that. But what I can say is that a carrier that has been or may in the future be a merger acquisition target as part of a theoretical industry consolidation, we would actually try to optimize between the upside on growth and preventing all or close to all of the potential downside of any kind of merger or other type of churn events. So I mean, I think that's one of our core competencies, frankly, is we have had a track record of finding a pretty good place to balance between achieving upside and essentially eliminating downside, and that's both inside and outside the U.S., and that's what we're going to continue to do.

And on the second question, we remain incredibly excited about what we're seeing in the international markets. I mean, what we saw in terms of foreign currency impacts in the second quarter again largely translation impacts coming through on intercompany balances, that's how we principally fund our international investments, and we were even able to offset the impacts of the strengthening of the dollar in the second quarter and we continue to believe we'll do that for the balance of the year. And so if you take a look for the last couple years in terms of where the dollar and local currency was, I mean it kind of goes the other way. So we believe that we continually invest the money that we're generating in international markets back into the international markets. The revenue and expenses are in local currencies, and we're really excited about a lot of the trends that we're seeing in terms of new growth, in terms of new market entrants, continued deployment of new technologies and the rapid demand by which our counterparties are building out their networks.

Yes. And as a final reminder, Jason, we risk adjust up from the U.S. baselines, all of our hurdle rates outside the U.S. base on things like historical foreign currency volatility, and so those inputs will be adjusted appropriately and we'll have to hit those hurdle rates to make further investments.

Okay. That's helpful. And then are there any structural considerations as it relates to REITs and sort of the TRS structure that these assets sit in there with slow international growth, or are we a long ways from that?

No, I mean, as Jim mentioned, I mean, the construct for the whole REIT environment gives us flexibility in terms of what we have in the REIT and what we keep in the taxable REIT structure. And as we've mentioned in the past, what we have in taxable REIT structure is real estate. So to the extent that we ever did start to trigger some of the asset test that we have within the REIT structure, we would be able to move the TRSs or the assets internationally into the REIT, and we would then be looking to distribute out the taxable income, 90% of the taxable income, in those that's generated from that asset that we brought into the REIT out to our shareholders, but it would continually give us headroom to continue growth in our international markets. And that's how many REITs actually manage their international structure. Most of the REITs that have international assets actually have those assets in the REIT itself, and so that's definitely a part of the strategy for us to the extent that, as I said, we trigger some of those tests.

The next question comes from Jonathan Atkin of RBC Capital Markets.

A couple of questions. I wondered in your international markets in which regions would your M&A pipelines most likely be weighted, as well as your new tower construction. I think you indicated earlier on some of the new construction that might be more kind of Latin America. And then with regard to India, I wondered if there's any kind of color you can provide on the power issues of just this week, and then how that might be affecting the business if at all on the cost side.

Jonathan, it's Jim. The M&A pipeline is active in all of our markets. The timing and probability of each potential deal, of course, varies. But we've got the same level of emphasis internally on each region. Now having said that, Latin America, we do have sites with Millicom/Tigo in that market that we expect to close over the course of this year, that's in the presentation that Tom mentioned earlier. And we've got irons in the fire in every other region as well. So there's really not much specific to say because we don't comment on any speculation regarding specific transactions that might be in progress, whether that's the U.S. or overseas. But the emphasis is there, the liquidity is definitely there that Tom pointed out and we're active and interested. On the construction side, India has provided a lot of opportunity for what we think will be lucrative construction opportunities. The big carriers like Vodafone or Reliance are pushing most of that, and we're building towers for them and others as well. Latin America, pretty active and less so in Africa, but we're ramping up our Build-to-Suit program there. So I would put those a batting order at the moment of being India; secondly, Latin America; third, EMEA, outside the U.S., and we also are going to be building a few hundred towers inside the U.S. On the power issue, we are focused and actually have centers of excellence in South Africa and India on power management, which is, again, I think becoming one of our core competencies in the company. We don't have any reports from our team of issues with our power system because we have backup power at every site in India. Those tend to run at least part of the day, and we're positioned to make sure that, that continues. So while from a cost perspective, that is essentially passed through to the customer in India, so it won't affect us directly.

Great. And then can you remind us the bad debt expense this quarter and how that typically has ranged in prior quarters? And there is the exposure that you currently have that you're recognizing for bad debt. In which regions is that most attributable?

There's no significant changes in this quarter versus prior in terms of bad debt. I did mention that we did have the reversal of that one bad debt item down in Mexico relative to a reserve that we had created a number of years ago when that particular customer was going through a restructuring. It was both an expense and a revenue impact. Other than that, nothing. Jim had mentioned in India that we've actually cared for the 4 carriers there that we don't believe we'll be continuing to operate in that particular market. And that overall had a revenue impact in the year probably between $3 million and $4 million, which as Jim mentioned, we've largely cared for already in the first half and is obviously part of our ongoing forecast.

And then finally, if you could maybe just update us on your Distributor Antenna System initiatives for both indoor and outdoor?

Sure, Jon. Quickly, the indoor program continues the pace. I think we're up to 250 locations now in United States. We've got half a dozen or so up and running in Latin America, and we're starting to implement a few in both India and Africa. So that's maintaining our industry leadership. And then on the outdoor side, we've got about 400 nodes in the U.S, and we've added about 20% of the portfolio this year. We'll keep pacing that as well. We maintain our disciplined view of again, any asset investment and outdoor DAS fits squarely into that disciplined view, which is we'll build them when we think we can hit the return or exceed it, but we are also careful about overbuilding and we avoid that.

Next question comes from George Auerbach of ISI.

Tom, you mentioned on the call that -- in your prepared remarks that the adjusted EBITDA margins could decline a bit to about 65% for the full year. Can you just give us your thoughts on how that rebounds going into 2013 and beyond?

Yes, a couple thoughts. I think it's also a function overall of kind of the conversion rates. We're, George, in kind of a major area of expansion at this point in time. And I think the conversion rates going forward at the gross margin level, particularly when you take out pass-through will be in that kind of 80% to 85% range of increasing. And EBITDA margin rates continually at the rate that we are expanding, I would say, in the mid to upper 60s. I believe that SG&A expense, as I've mentioned in the past, kind of peaked at around that 10% level, the cash SG&A cost last year. And we'll see a decline in that this year. And as a percentage of revenue and as we continue to add to the revenue stream, I think we've built the foundation to be able to see and enjoy continued declines in SG&A, cash SG&A as a percentage of revenue. So I think that will help drive up the margins longer term to kind of north of the 65% range.

Okay. And are you talking about the dollar amount of the Brazilian acquisition that I guess closed at the end of the second quarter? And how should we think about your -- how you're going to fund that acquisition?

It's already been funded. As a result of the structure that we've had in place, we have a pretty significant amount of liquidity in a form of revolvers in place, as well as a term loan that we just put in place. So that deal has been funded really from cash on hand. And as I mentioned before, we closed in the second quarter. And as you identified, we actually paid for it in July.

And what was the total size of that acquisition?

Around the $150-million range, slightly less.

Next question comes from Kevin Smithen of Macquarie.

Can you discuss for a moment your capital allocation strategy? Your leverage has fallen to about 3.7x, and obviously, the Journal article last night suggested that Crown was the front runner for the T-Mo assets. If they do acquire these properties, should we expect you to resume the buyback or would you rather continue to delever the balance sheet, or should we expect other large deals in the pipeline?

I think I just kind of refer back to the comments that I made in my remarks, Kevin. I mean, our capital allocation strategy has been consistent since the day I arrived here and was in place prior to that. And it is first looking back to reinvest back into our business. We have a required dividend. That is our principal way of returning capital to our shareholders. We will continue to look at acquisitions wherever they may be globally in the U.S., as well as international. And we have our buyback program. We're doing everything within the construct of our risk-adjusted hurdle rates, as well as our capital structure, and we're very committed to our 3x to 5x net debt to EBITDA. We have a tremendous amount of liquidity that we have available to us. And to the extent that there are opportunities to invest in the form of acquisitions going forward that meet our risk-adjusted hurdle rates, then we will look to returning cash back to shareholders using the share repurchase program. It's pretty simple.

But just as a quick follow-up, obviously, your cost of funding in the debt markets continues to fall to record levels, and your competitors have seemed to take up leverage toward the high end of their targeted range. You're going to be -- you're below the midpoint of it and could be toward the low end within a couple quarters. How do you feel about taking on more leverage given how robust the credit markets are for you both secured and unsecured right now?

Kevin, this is Jim Taiclet. We don't vary our leverage target based on financing costs. We work within our range, and we consistently do that and we've got a 5- to 10-year time horizon for that range. And the reason the range is set where it is, is so that we can implement our growth strategy at the appropriate time with the appropriate transaction. And that may be in a tight period of credit markets as we talked about. So driving leverage to the high end of our range when we don't necessarily need to doesn't really fit within our strategy simply because the rates are cheap. But what I will say is the global opportunity set that we can offer by having capabilities to transact really anywhere in the world allows us to pick and choose when we invest. We don't have to stretch in any market, for example, the U.S. for a big or a small deal because we've got global aperture, and we can look at opportunities anywhere and we've executed on those in 4 continents now. At the end of the day, if we are coming through a period of time where the opportunities aren't that robust, at least the ones that meet our hurdle rates, we will buy back stock. And Tom already mentioned that. I want to reiterate it. But it's based on, again, an -- essentially an ongoing optimization of the opportunity set, our leverage, and we do take financing cost into consideration as part of that. It's really an integrated capital allocation strategy, and it doesn't hinge on one thing like interest rates.

Next question comes from Lukas Hartwich of Green Street Advisors.

Jim, can you talk about how you think about the risk that network sharing becomes a bigger deal here in the U.S.?

Well, network sharing is part of our risk assessment of every market. And based on regulatory requirements for auctions and allocated spectrum, based on the competitiveness of the major carriers and based on the short and unsuccessful history of attempts to do this in the past in the U.S., we don't see it as a high-level risk for our company. In fact, I would put it in the not material area given what we know today.

Can you maybe comment on why it seems to be different in Europe?

Europe's a different situation than the United States, probably one that we don't have time to cover today, Lukas, so why don't we take that offline and we can do a comparison for you. But the headlines are that Europe is an over-built network situation versus the U.S., which is an under-built network situation, but we can offer more color if you want to get back to us after the call.

Our next question comes from Michael Rollins of Citi.

If I look at the slide on the total rental and management revenue guidance, and I compare it to the last quarter, what I found really interesting was the internal existing site revenue growth guidance improved roughly 25%. And I was wondering if you could talk a little bit about what drove that incrementally relative to what you would have thought 3 months ago? Because I think of this business as a very visible business based on your history over the years. And then curious if you can just break that down between what you saw incrementally in the domestic segment versus the international segment.

Sure, Mike. I mean, you're exactly right. I mean, our -- looking from outlook to outlook, we're probably up by $25 million or $30 million in existing sites, and up to $10 million to $15 million in new sites. So that's principally driving what my remarks that I had made before in terms of the outperformance driving the FX impacts and the delay, if you will, Uganda late closing. The international piece – or let me start with the U.S. piece. The U.S. piece probably makes up about 1/3 of that or about $10 million. And that's a function of a couple things. One is the pipeline of activity that we see and the leasing activity that we see in the second quarter as a result in addition to some churn that we actually expected early in the year, which we're now -- is pushed out later in the year. So that's going to drive $10-plus million of it. On the international side, we do have the 700 additional sites that we picked up in the acquisition in Brazil. We do have outperformance in Asia, as well as in Africa, both in South Africa and Ghana, that are helping to drive that. We also have the reserve in that company in Mexico that we reflected in the second quarter that's now part of our overall guidance. So overall, we have about $45 million, $46 million of incremental new business that's offsetting the FX impacts in that Uganda late closing. And as I said before, it's kind of 25% is in the United States with the balance happening outside of the United States. Hopefully that helps.

And if you look at this over a multiyear period, are we seeing a new level of internal growth for you, or do you think that there's some onetime or sort of timing benefits that this year might be receiving?

Well, I think longer term, as we've said in the past, we would expect our international core organic growth to increase. One of the ways that we show it is showing organic core growth, a function of sites that we acquired more than 12 months ago. Well, many of those sites now are starting to come into the existing site organic growth. So where the U.S. is in, as we talked about before in a question kind of in that 7%, 8%, 6% to 8% kind of range, I would expect the international to be up in the 10% to 13% just because of the newness of the markets, new technology being deployed, and the fact that they're either 1 or 2 generations of technology behind the United States. That's what makes them so exciting for us. So perhaps, the ongoing core organic growth should increase a bit. And then the new sites is a function of acquisitions that we have in the pipeline, and that's very difficult to project.

Your final question comes from Rick Prentiss of Raymond James. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: Two quick ones, if I could. First, Tom, I think you said on the EBITDA guidance update that about $20 million from the international side, it was like, I guess, $9 million from the Mexican reserve reversal and then were the 11 -- were the other $11 million from the Brazil, 700 sites?

Let me just go through that again, Rick. I mean, what we're saying is we're raising the overall EBITDA guidance by about $10 million, and we're eating through $24 million of additional FX headwinds and about $3 million as a result of the delayed closing Uganda, so about $27 million. So overall, we're increasing our kind of core EBITDA by about $37 million, if you will. About $13 million of that is coming from our domestic rental and management segment. We have about $5 million coming from our services business, and the balance is coming kind of across the board from our international segments. The piece that you mentioned in terms of the reserve on the company in Mexico is a piece of that, but we're also seeing incremental activity from our other markets as a result of outperformance, in addition to the activity in Brazil as a result of that recent acquisition. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: Okay. And then the second question, the land CapEx guidance was down, I think, about $20 million from the prior view. Is it getting tougher to get the land? Just kind of what would cause the land program to kind of diminish a little bit? And remind us, do you have any of those land deals out there, or not land deals, but do you have any of your tower deals out there that have tails at the end of them as far as having to take out the sale-leaseback component with a future payment?

Yes, Rick, it's Jim. On the land CapEx, the best way to characterize it is a mix variation, right? So some quarters, our teams are going to have more success on the extension side of things, which is not going to show up in CapEx. Other quarters, they're going to have more success based on the landlords they happen to talk to that quarter on actual sale of the land to us, which we'll show in CapEx. So as Tom was saying, I mean, we've done all together 5,000 extensions or purchases or easements over the past couple of years, and that mix can change quarter-to-quarter, and that's why you see the variation there. As far as sale-leasebacks that we have done as a corporation, we have one with SBC, now AT&T, that we brought on with the SpectraSite acquisition. We've also got Alltel that's now, of course, owned by Verizon, and we have AirTouch, also owned by Verizon. So there are 3 of those. I think the total tower count is about 4,200 across those, out of the 22,000 or so we have in the United States total. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: Is there an NPV kind of, of what the current payment is? I mean it's probably like 20, 30 years out?

It is. I mean, on the Alltel sites, it's about $100 million, and on the AT&T sites, it's about $500 million. Okay, with that, I think we are finished and conclude for the day. I really appreciate your attention this morning. To the extent that anybody has any further questions, please give Leah or myself a call. We'll be here. And again, really appreciate your attention. Thanks very much.

Thanks, everybody.

This concludes today's conference call. You may now disconnect.