SBA Communications Corporation (SBAC) Q1 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for holding. Welcome to the SBA First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later we conduct a question-and-answer session, instructions will be given at that time. (Operator instructions). As a reminder, the conference is being recorded. I will now turn the conference over to the Director of Finance, Mr. Mark DeRussy. Please go ahead, sir.

Thank you, Eddie, good morning everyone, and thank you for joining us for SBA’s first quarter 2012 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 in this call is forward-looking. This information includes, but is not limited to any guidance for 2012 and beyond, and other statements that are proceeded by or includes the words believe, expect, intend, estimates, anticipates, will, may, could, should, or similar expressions. These forward-looking statements may be affected by the risks and uncertainties in our business and actual results may differ materially from the forward-looking statements. Everything we say here today is qualified in its entirety by cautionary statements and risk factors set forth in last night’s press release and our SEC filings, including our annual report on Form 10-K, filed with the SEC on February 27, 2012, which documents are publicly available. These factors and others have effected historical results, may affect future results and may cause future results to differ materially from those expressed in any forward-looking statements we may make. Our statements are as of today, May 1, 2012, and we have no obligation to update any forward-looking statements we may make. Our comments will include non-GAAP financial measures as defined in Regulation G. The reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and other information required by Regulation G has been posted on our website, www.sbasite.com. With that, I will it over to Brendan to comment on our first quarter results.

Thanks Mark. Good morning. As you saw from our press release last night, our first quarter financial and operational results were very strong. We exceeded the high-end of our guidance for equity free cash flow and our telecast flow and adjusted EBITDA results were both near the high-end of guidance. Total revenues were $192.5 million, up 14.7% over the year earlier period. Site leasing revenues for the first quarter were $172.9 million, or an 18% increase over the first quarter of 2011. Our leasing revenue growth, driven by organic growth, portfolio and a straight line impact of our Sprint network agreement. The vast majority of our site leasing revenue comes from the U.S. and its territories, with approximately 6% of total leasing revenue coming from international operations. Site leasing segment operating profit was $137.5 million, or an increase of 20.1% over the first quarter of 2011. Site leasing contributed 98% of our total segment operating profit. Tower cash flow for the first quarter of 2012 was $132.4 million or a 14.5% increase over the year-earlier period. Tower cash flow margin was 80.4% compared to 80% in the year earlier period. We continue to experience strong leasing demand, both domestically and internationally. Amendments, which were predominantly from AT&T, Verizon, and Sprint continue to be numerous and contributed over half of our total incremental leasing revenue added in the quarter. The big four U.S. carriers contributed more than 75% of our total leasing activity in the quarter. We have a solid leasing backlog and expect that the second quarter will be another strong one in terms of customer activity. Our services revenues for the first quarter were $19.6 million, right at the mid-point of our guidance, which compares to $21.3 million in the year earlier period. Services segment operating profit was $2.8…

Thanks, Brendan. SBA ended the first quarter with $3.7 billion of total debt. We had cash, cash equivalence, short-term restrictive cash, and short-term investments of $549 million, resulting in net debt of $3.2 billion. Our net debt to annualized adjusted EBITDA leverage ratio was 6.5 times. Assuming the mobility acquisition had closed on January 1 of this year, our pro forma net-debt leverage at the end of the first quarter would have been 7.2 times, comfortably within our target range of 7 to 7.5 times. Our first quarter net-cash interest coverage ratio of adjusted EBITDA to net-cash interest expense was 2.9 times. As of the end of the quarter, our debt had a weighted average annual cash coupon of 4.6% and a weighted average remaining maturity of 4.1 years. 81% of our total debt was fixed rate. We were very active in the capital markets during and subsequent to the first quarter. In March, we issued 6 million, 5,000 shares of common stock through an underwritten public offering, which generated approximately 284 million in gross proceeds. In early April, we used the proceeds from the equity offering to redeem 131.25 million in principal of our 8% notes due 2016, and 131.25 million in principal of our 8.25% notes due 2019, and to pay the applicable premium. This transaction with result in annualized cash interest savings of $21.3 million, and was immediately accretive to AFFO per share. Simultaneous with the closing of the Mobilitie acquisition, we amended our credit facility to increase the committed availability under our resolver from $500 million to $600 million. We drew down a portion of our revolver to fund the Mobilitie transaction. Also simultaneously with the closing of the Mobilitie acquisition, we entered in to a separate credit agreement for a $400 million bridge loan, which will mature on April 1, 2013. The bridge loan currently bears interest at the euro dollar rate, plus 3.5% or approximately 3.75% today. The proceeds from the bridge loan and borrowings under the revolver were used to fund the cash portion of the Mobilitie transaction. The balance of the purchase was funded with the issuance of 5.25 million shares of common stock. In the first quarter, we did not purchase any shares of our common stock. We currently have 150 million remaining under our existing $300 million authorization. While stock purchases continue to be an important component within our overall capital allocation process, we continue to view them as opportunistic rather than systematic. We believe our balance sheet is strong, our credit profile attractive, and that current – and that the current capital market environment should provide us with diverse and attractive sources of growth capital. We are currently in the market to further increase our revolver and issue term debt, the proceeds of which would be used to reduce revolver balances. At this point, I’ll turn the call over to Jeff.

Thanks, Mark, and good morning everyone. As you have heard, we are off to a great start to the year, exceeding our internal plan across key financial metrics. We expected 2012 to be an active year for our customers, and the first quarter has solidly met those expectations. AT&T and Verizon remain very active, and Sprint now seems to have fully engaged in the network vision project. Specific site level activity with Sprint increased materially in the first quarter. We also saw a good start in February, T-Mobile announced their plans to add LTE, which is anticipated to occur through a technology overlay in a manner similar to other nationwide carriers, and which we believe will be the focus of much of T-Mobile’s tower level CapEx this year. We are in the process of discussing the terms, economics and timing of the overlay with T-Mobile, and while we expect work to start on this overlay this year, it is unclear to us at this point whether or not we will recognize any revenue from the overlay in 2012. We are also seeing similar strong demand from our international customers. Carriers continue to enhance and upgrade their networks to next generation technology, to keep up with strong secular demand for high-speed wireless data. We expect to benefit from these factors for the next several years as carriers build out their initial coverage footprints to be followed by capacity spending as consumer adoption increases. In anticipation of continued strong demand for wireless infrastructure, we have been very busy growing our company. In the last six months, we have added over 3,000 towers to our portfolio, increasing the number of towers we own by over 30%. Towers were added in all seven countries in which we operate, with the biggest addition being the…

(Operator Instructions). We have our first question from the line of Jonathan Atkin with RBC Capital Markets,. Please go ahead. Jonathan Atkin – RBC Capital Markets: Good morning, a couple questions. With regard to DAS and ExteNet do you foresee any future capital calls or capital contributions to that entity? And then with respect to the S-band, I just wondered if you’re seeing any preparations for a build-out of those licenses?

Not yet on the S-band question, Jonathan. We haven’t see any real tangible signs of that, although those folks know we are in the business of leasing tower space. So it would not be – it would be unusual for us to be kind of the first folks in the loop there. In terms of DAS and ExteNet, you know, we don’t have any additional obligation to contribute capital to ExteNet. I think as ExteNet grows and they do desire to grow, there will be a need for additional capital there, and they will look to their existing investors to supply that capital. And we’ll be happy to look at that at that time, and all things being equal without really knowing what the terms are yet, we would have an interest increasing our investment in ExteNet, but we have no obligation to do so. Jonathan Atkin – RBC Capital Markets: And then on augmentation CapEx, how do you anticipate that trending in terms of dollar amounts compared to the most recent quarter? And if you could maybe remind us what portion of your recent amendment applications require you to contemplate deploying augmentation capital to the site?

I’ll let Brendan speak to the trends. But in terms of the percentage, about 10% of our leasing activity requires some type of augmentation. You know, most of which, historically and currently, gets reimbursed to us by the customer.

Yes, Jonathan, on the trends, we’re not seeing that much of a change from what we’ve seen over the past year, generally speaking, with some of the changes in the wind loading requirements. As the carriers amend their leases, we’re having to do some augmentations to bring them up to code. But that really isn’t that different now than it was a year ago because we’ve had a substantial amount of our leases upcoming from amendment activity for now the last two years. Jonathan Atkin – RBC Capital Markets: Thank you very much.

Our next question comes from the line of Phil Cusick with JP Morgan. Please go ahead. Phil Cusick – JP Morgan: Hey guys, a couple of things. You know, first if I look at the guidance given the strength in the first quarter and the strong Q2 guidance, it seems like second half implies a little bit of a slowdown on the year-over-year basis. Is this a level of conservatism, or is there something you see coming that things ease off a little bit in the second half?

I don’t think we read it that way. I think we have guided to a relatively steady full-year level of activity. And, you know, maybe walk us through your analysis, Phil, offline, but we really don’t see it. There’s certainly nothing that we know of today that would cause us to think that organic leasing demand is going to be dropping over the course of the year. We do not believe that, we think it’s going to stay strong. Phil Cusick – JP Morgan: Is it fair to assume that Sprint and T-Mobile are pretty backend loaded and much more impactful on ’13 than ’12.

Certainly on the T-Mobile LTE overlay project, and as far as Sprint is concerned, yes we believe that SBA will have a bigger 2013 on this network Vision, CDMA overlays, then we will have in 2012. Phil Cusick – JP Morgan: Last thing, you know the revenue share of the mobility assets with T-Mobile, this seems to be an opportunity to capture some value if you could maybe by that revenue share from them. Has there been any discussion of that, or is that under consideration?

Well, I think your identification of that opportunity is absolutely correct, and it is something that, you know, could be a possibility. And rather than playing that out in public, why don’t I just say that it’s an idea that we are aware of. Phil Cusick – JP Morgan: Thank you guys.

Our next question is from the line of Ric Prentiss with Raymond James. Please go ahead. Ric Prentiss – Raymond James: Good morning. A couple of questions. First, we appreciate the AFFO that’s nice to have the industry all reporting that. Can you confirm, is your definition the same? I assume you guys kind of looked at all the details of what American and Crown are doing. I just wanted to confirm, is it the exact calculation same way?

We believe it to be. Ric Prentiss – Raymond James: The second question on the guidance that I assume - - Have you explicitly put in T-Mobile and/or Clearwire anterior guidance yet, or are you still waiting for it to show up in ’12.

We’re still waiting. Ric Prentiss – Raymond James: Then Jeff, when you mentioned that you thought T you’re looking at, would there be much revenue recognition in ’12. You would think with their announcement in February, hopefully they’re working on their plans now. You would think there would still be a little bit coming in ’12 with the majority coming in ’13 just for them to get active.

Yes, I think that’s very likely. But until we actually start getting, you know, amendments on our sites, and understand what the timing of the revenue recognition is, we’re going to be very conservative around that. I mean it’s all going to happen. It’s just a question of is it Q4 or Q1 or how much in each. I will say that the activity around T-Mobile seriousness and moving forward here is pretty high.

Wait for the whites of the eyes and the green of their cast to show up.

We’ve usually found that to be the better way to go. Ric Prentiss – Raymond James: Just on quick one on DAS. You mentioned you were looking at selling it by the end of 2Q. Would that be a sale that you would get cash, increased equity, (inaudible). How should we think about what the proceeds might look like?

The obligation is for cash. What we actually end up doing, you know, could be a mixture of things Ric. We’re looking for a win-win situation for both SBA and ExteNet here. So, we’re going to try to stay flexible as we see where this ships out. Ric Prentiss – Raymond James: Thanks Jeff.

Our next question is from the line of David Barden with Bank of America. Please go ahead. David Barden – Bank of America/Merrill Lynch: Thanks guys for taking the questions. A couple, just looking at the discretionary CapEx guidance, guys and then comparing that to your Mobility. You know, if I take last quarters discretionary CapEx number, subtract it from this quarter’s number, compare it to the 1.1 billion that you spent with Mobility and adjust for the $30 million in new tower sales, it suggests that you guys are putting in about a $237 million dollar fail value for the DAS business in there. I was just wondering if you could kind of confirm or alter that analysis as necessary? Then, second, Jeff if you could kind of talk us through not just the Sprint side of the transaction, but as we look ahead for the next two or three years, could you kind of refresh our memory about how you see the net of Sprint and the Nextel network shutdown, which Sprint recently announced they want to accelerate, is going to impact the business? Thanks.

Hey David it’s Brendan. On the CapEx that guidance and our disclosure around discretionary CapEx, the discretionary cash CapEx, so the equity portion of the Mobility deal, is not reflected in those numbers. David Barden – Bank of America/Merrill Lynch: Got it.

When you’re looking at the increase from last quarters’ guidance to this quarters’ guidance, which includes Mobility, there’s $850 million dollars of cash CapEx associated with the purchase price on Mobility. So, I think when you take that into account that will help you. There is no assumption around proceeds from the DAS sale netted out of there. So, this is just a pure gross CapEx without any assumptions around what we’re going to get back there. David Barden – Bank of America/Merrill Lynch: So, you’ve taken it out of the numbers, but you put nothing in to reflect any possible sale or other adjustment.

We have slightly adjusted our net cash interest expense, which would be reduced due to the pay down with the use of some proceeds from that. But, the CapEx line would not change. David Barden – Bank of America/Merrill Lynch: Got it.

As far as looking forward David on the item, as we’ve described previously, the deal that we have with Sprint gives them the right to stage terminations of most, but not all of their item leases with us over a period from the middle of 2013 through the end of 2015. So, we expect to see continued growth, you know, while those terminations may cause our growth to be slightly less than it otherwise would have been, it’s still going to be in our expectation, you know, positive growth along all the major financial components moving forward. But the period of time in which those terminations are allowed to be facilitated by Sprint, is the middle of 2013 through the end of 2015. David Barden – Bank of America/Merrill Lynch: Got it. Could you just refresh our memory? So, if we assume that they are going to come off, 13,14,15 roughly equally, what percentage of revenue, potential headwind offset by the CDMA growth are we talking about?

We’re down to total item exposure is around, you know, 6%. And we believe that roughly the rest of the agreement we cut with Sprint, which is CDMA refresh across all sites and some changes in the cash escalators will approximately offset that loss. Assuming it all occurs as Sprint has the right to terminate. David Barden – Bank of America/Merrill Lynch: Got it. All right, thanks Jeff.

(Operator instructions). Your next question is from the line of Jonathan Chaplin with Credit Suisse. Please go ahead. Jonathan Chaplin – Credit Suisse: Thanks, good morning, guys. I’m wondering if you could comment a little bit on the organic? If you leave aside the impact revenues you’re seeing from the LTE upgrades and network vision, just what you’re seeing in just organic cell sight growth from the four major carriers to satisfy capacity requirements?

You’re talking about brand new macro-sites right? Jonathan Chaplin – Credit Suisse: Yes, exactly.

Opposed to overlays or equipment added to existing sites? Jonathan Chaplin – Credit Suisse: Exactly.

You know we’re seeing some of that but we’re not seeing as much as we have in years passed where carriers were not more fully focused on overlays. I don’t think that should come to a surprise as anyone. It certainly doesn’t come as a surprise to us. It’s very logical. It actually reminds us of how Verizon handled the EVDO Rev-A upgrade and a few others handled technology upgrades in the past. So with budgets now being directed towards getting these overlays done and getting 4G deployed on a nationwide basis, you would expect to see less brand new macro-sites, and we are. But we do think as that happens, again with history – as the overlay comes to a completion with history as our guide, we expect that’s when the macro-site capacity infill cell splitting will really pick up. Jonathan Chaplin – Credit Suisse: Got it, then one housekeeping question. On the mobility – on the sale of the DAS business, is there one quarter’s worth of DAS revenue and EBITDA in guidance or is there no DAS revenue or EBITDA in guidance at all?

There is no DAS revenue in any of the guidance. Jonathan Chaplin – Credit Suisse: But you’ll collect from April, assuming you sell it at the end of the quarter, you’ll collect one quarters worth of revenue in EBITDA right?

You will but the reason we did not include is it when you sell that business it will get discontinued line of business sale treatment under GAAP and we probably would’ve backed that out of results anyway. I mean we’ll get the cash but it probably would not show up in our GAAP numbers because of the accounting treatment. Jonathan Chaplin – Credit Suisse: Got it, yes.

Yes. Those assets would be considered assets held for sale and the financial operating results would go through discontinued operation. But potentially, I mean, if it doesn’t end up getting sold it’ll come back in and we’ll have to adjust for that. Jonathan Chaplin – Credit Suisse: Okay thank you very much

Your next question is from the line of Jonathan Schildkraut with Evercore Partners. Please go ahead. Jonathan Schildkraut – Evercore Partners: Great, thanks for taking the questions, a few here if I may. First in terms of some of the M&A activity that’s gone on, there’ve been three large ground lease portfolios which exchange hands in the last 12 months or so. That’s been something where you’ve guys have been a little bit more incremental work and I was wondering about your perspective on that. And then secondly, I was wondering if you could give us some color on Verizon’s 700 megahertz rural build out program, whether you’re seeing any participation there, have an impact on your business? And then finally, the international business really scaled as a percent of revenue in the quarter and I was wondering if that was due to particular markets coming online or something else behind the numbers? Thanks.

On the M&A, Jonathan, you know we looked at everything including those ground lease portfolios and while they’re good assets and will produce long term growth, we didn’t really see any strategic point in those portfolios. Just like we looked at everything else, it really comes down to a financial analysts and we just decided we saw better opportunities elsewhere and mobility is, you know, perhaps the best example of that. In terms of Verizon 700 rural build out, we are seeing some activity there, you know, with some of the partners that Verizon has chosen. It’s certainly incrementally positive, but it’s not necessarily material to our results. And international is ramping up nicely, the first quarter reflects the first full quarter of our 580 tower acquisitions that we completed in Central America in the fourth quarter. So I would say most of the increase, you know, stems from that but we’re thrilled with how International’s going in general. It’s up to 6% of revenue now, that may actually scale back a little bit as mobility enters the picture, but we expect it will continue to grow quickly and we’re excited about it and looking forward to continuing our activities. Jonathan Schildkraut – Evercore Partners: Thanks, just one more if I may. In terms of the equity callback feature in the two – the 8 and the 8 ¼ notes. Have you guys fully exhausted that at this point?

Yes we have. Jonathan Schildkraut – Evercore Partners: Thank you.

Our next question is from the line of Simon Flannery with Morgan Stanley. Please go ahead. Simon Flannery – Morgan Stanley: Thank you very much, good morning. On the International portfolio, you talked about looking for opportunities there. Are you considering expanding outside of that Central America and Canada? If you could give a little bit more color there. And then if you could just talk after finally closing the mobility transaction, could you talk just a little bit more about the opportunities you see there around things like lease-up opportunities and efficiency gains and so forth, any updated thoughts? Thank you.

Thanks Simon. You know International expansion we continue to look for more opportunities. Our focus continues to be in the Western hemisphere, so you know, you should assume that that really leaves South America as a point of interest for us. You know, we will look outside the Western hemisphere, there are a lot of benefits for us to stay in the Western hemisphere; language, a proximity to South Florida, travel, same time zones, things like that. So I would rank that first but not necessarily the only place we’ll be looking, you know, as we move forward. In term of mobility, while it’s early yet, you know, we’re very pleased with how things are going so far; the lease up, pipeline continues to move through, the assimilation is going well, we’ve think the assets are very good quality. And as we you know stated from the beginning with respected it’s transaction, we think these towers will be ideally situated when we get to the cell splitting capacity infill stage that we believe will follow the basic 4G overlay roll outs. Simon Flannery – Morgan Stanley: When do you see that? If they’re all set in general to complete in ’13. So do we some cell splitting late ’13 or is it really ’14 and ’15?

I think you may see some in ‘13 – I mean, they’re going to start identify areas before that and we’ll realize – I think they’ll know where some of the needs are. The question will be where are the budget dollars? But I think that’s right, you start see it in ‘13 and then in earnest in ’14 and beyond. Simon Flannery – Morgan Stanley: Thank you.

Any other questions, Eddie?

Your next question comes from the line of James Ratcliffe with Barclays. Please go ahead. James Ratcliffe – Barclays Capital: Morning, thanks for taking the question, just two if I could? Just first of all, if you could talk a little bit about your willingness to raise exposure to T-Mobile. I mean at this point, you’re clearly with mobility above the industry and how you think about customer concentration. And secondly, if you just give us an update on the build-to-suit market in the U.S. if there’s been a change in that at all, but still the economics are kind of challenging. Thanks.

Yes, on the customer concentration, James, T-Mobile now pro forma for mobility is about 18% of our site leasing revenue. So that would be third behind AT&T and Sprint and slightly ahead of Verizon. You know, we look at customer concentration, we think T-Mobile is in excellent credit. I think the real issue there is not credit worthiness but, you know, potential consolidation down the road, which, you know, we would certainly take into consideration as we looked at future opportunities. But as they credit, I’m not sure how you couldn’t be comfortable with T-Mobile. In terms of BCS, you know, this ties in a little with what I said earlier about where the carriers are sending their dollars, brand new cell sites versus amendments and overlays. You know, the BCS market, particularly where it’s an RFP or competitively bid process, we do find competitive. We don’t really get most, if any, of our new builds from that type of process. Our new builds are more relationship driven, strategically driven by our own intelligence out in the market where good spots are. I don’t know that the economics are changing so much out there, there is, you know, again because all four carriers are now focused on amendments and overlays versus necessarily new builds, and I don’t want to overstate that because there’s still plenty of new builds going on, but to the same degree that perhaps there were a couple three years ago and we think that all comes back as, you know, you get into the cell splitting and the overlay process. So we don’t really see that as affecting us that much, again because we don’t really play in the build to suit RFP competitive bid processes. James Ratcliffe – Barclays Capital: Thank you.

Our next question comes from the line of Jason Armstrong with Goldman Sachs, please go ahead. Jason Armstrong – Goldman Sachs: Thanks good morning, couple of questions. Just maybe on the guidance hike, if you can offer up a little bit more granularity on what dollar amount you assume for mobility over the course of the year, what dollar amount is associated with other tower additions you had in the quarter, and then what you left out from the sale of the DAS assets? And then second question, it seems like the variability in the range of outcomes attached to lead the Metro certainly has increased. Can you just remind us of revenue exposure to those two companies? Thanks.

Hi Jason, this is Brendan, I’ll take the guidance question. So for the full year, we've assumed mobility contribution for tower cash flow is around 44 million and adjusted EBITDA contribution of around 42 million. And our revenue contribution is approximately 77 million. The balance is primarily made of up of the new M&A that we signed up, which is relatively small. You’re looking at EBITDA, you’re talking basically about $1 million from the M&A that we’ve signed up since the last time that we gave guidance. The rest of the increases a combination of the beat in the first quarter and some other small things around organic growth. But generally it’s made up of mobility and those other two small things. The DAS component it’s basically $16 million annually of TCF and EBITDA, and we’ve left out, you know, three quarters of that at this point, give that we close mobility at the beginning of this quarter.

In terms of lease and Metro, Jason, Metro is I believe around 3% of site leasing revenue and I think lease is around 2. Jason Armstrong – Goldman Sachs: Great that’s helpful thanks guys.

Okay, our next question is from the line of Suhail Chandy from Wedbush. Please go ahead.

Thank you for taking the question. Two questions if I may. One, how has – given that your leverage ratio is now back in the target range and given your exposure to T-Mobile in performer up to 18%, how does that change your [Inaudible] for potential qualification in T-Mobile stock portfolio?

Well it's kind of like the prior question, we would take credit concentrations and customer concentrations into consideration and things that we do. You know, our leverage is back to where it was pre-Mobilitie and we did the Mobilitie transactions through a combination of debt and equity financing. And we would be looking at similarly sized opportunities the same way. We're very much focused on being around our target leverage range and not exceeding it for long periods of time, so all of that gets taken into consideration as we look at future opportunities.

Last question, in your presentation you mentioned that you agreed to pursue an additional 116 towers, could you give us location of those towers? In the U.S. or overseas?

They are mostly in the US. There are some in Canada, but most of them are in the US.

Some in Canada, most in U.S.

Thanks.

Okay, our next question is from the line Brett Feldman with Deutsche Bank. Please go ahead.

Thanks for taking the question. Just two quick ones. Now that we are several quarters into the LTE build of both Verizon and AT&T, I'm just wondering what are you seeing on some of the original sites that they hit with those upgrades. Are you finding that they're already coming back to add additional capacity or going to new levels, or is that an opportunity you still see mostly in front of you? And then secondly, a lot of the 700 license holders have build-out requirement, geographic build-out requirement they need to meet by the middle of next year, I was wondering if you're already starting to have some sort of license preservation build out discussions with those license holders? Thanks.

Yes, on the later one, it's not really license preservation, I think they're really going fast actually to get the stuff deployed, particularly at AT&T and Verizon. And on the equipment, I'm sure, Brett, that we are seeing repeated touches to the tower where new equipment gets added even after the first 3G or 4G installations occur. There is some fine tuning and additional equipment being added. So there really is a continuous process.

Just on that first question about the build-out requirements, the licenses are concentrated to AT&T and Verizon, but there's a fairly wide number of holders, are you starting to see people you usually haven't done business with, whether it's Cox, World Providers, or even just spectrum speculators who are coming to you, or maybe that's just something they'd have to deal with later in the year or early next year?

Yes, I haven't seen much of that yet.

Okay, thank you.

The next question is from the line of Michael Rollins with Citi Investment Research. Please go ahead.

Hi, good morning, thanks for taking my question. I was wondering if you could talk a little bit more about internal growth with respect to what you saw in the 1st Quarter and what the internal growth in dollars anticipated to be within the guidance you laid out for 2012. Thanks.

Yes, I'll let Brendan speak to the numbers, but the point that I think is worth discussing on that topic Mike is we talk from the start of our guidance first put out in November pretty robust view of growth in 2012, and we are actually pleased to say that that continues and we continue to have a robust view for the rest of the year. So we've been really expecting this for quite some time and we actually are pretty proud of the precision by which we can guide to our expectations and actually meet those. But in terms of the organic component Brendan can you give Mike some…

Yes. I mean, Mike we're looking, it's changed a little bit with the Mobilitie aspect and their makeup, but we're looking at approximately 8% of organic growth and that's a combination of obviously new lease amendments as well as escalators net of turn. So we’ve historically been in the 8 to 9% range and now we're still holding in there but probably a little bit less simply because of the size.

Yes, and to be clear there is no change around our pre-Mobilitie view of lease. We view very strongly, we continue to view it strongly, and when you factor in the Mobilitie assets with the revenue share component that's where you end up.

Thank you very much.

Your next question is from the line of Colby Synesael with Cowen and Company Please go ahead. Colby Synesael – Cowen & Co.: Great, just two questions if I may. Number one, as it relates to the AFMO guidance there's about a $33 million range between the low end and the high end, just curious if you could talk to us about what would actually have to happen to put you towards the low end or towards the high end? What's the biggest impact that could get us toward the bottom or the high end? The other question I have is do you have to do a T Mobile, as relates to their 4G LTE build out is it your expectations that these guys will go and find an MLA and if so, is it your expectation it'll probably be fairly similar to the one that you signed with Sprint? Thanks.

Colby, on the ASFO guidance, the range of ASFO is really a function of several components, one being, the main one being adjusted EBITDA and the other large ones being net cash interest expense, as well as our nondiscretionary CapEx. So basically the range is set based on the size of the ranges of each of those things, and if we were at the worst end of each of those other items, we’d be at the low end of the ASFO guidance. And vice versa, if we were at the high end of all those items we'd be at the high end of the ASFO guidance. [Inaudible] is a function of those components, but we tend to focus on the midpoint as being the likely outcome and that's where we focus, and it's very unlikely that we would be $15, $16 million, which I believe is the swing to the low end from the midpoint.

Yes, I mean, interest is a big component of that, but most of our interest costs are fixed, so we don't really think of that as being a huge variable. It would really be in the tower case flow and EBITDA lines. We don't really see low end as being a realistic worry. Colby Synesael – Cowen & Co.: Yes, I guess what I was getting at was fundamentally what's the biggest impact that could swing that number?

Given the fact that Mobilitie is new, we're taking a bit of liberty with the range that we put out there, but you should not really take that to mean that our business is any less precisely predictable than it has been over the years. And in terms of your second question, refresh my memory, what was that one again? Colby Synesael – Cowen & Co.: Just asking about TML and likelihood of signing an MLA…

You know, a master agreement could be possible. If we can reach an agreement on all the specific terms and conditions including the specificity with which the equipment would be listed and identified, there's a lot of different moving parts in the Sprint agreement. So other than calling it a master agreement that would probably be the only similarity between the two. If we do something TML in that area it should be much more straightforward and almost single issue specific. Colby Synesael – Cowen & Co.: Great, thank you.

Your next question is from the line of Kevin Smithen with Macquarie. Please go ahead Kevin Smithen – Macquarie Securities : Thank you. I wonder if you could talk about a little bit about your relationship with ExteNet? It appears from industry data that DAS would grow at two to three times the rate of Microsites in the U.S. and I guess, you know, wouldn’t it make sense to either kind of bring this in, in-house, or if you’re not interested in running a DAS business, you know, why not IPO it while the growth rates are still really strong? Either way it seems like you’d be creating value.

Yes, we have high hopes and expectations from that, and our ExteNet investment. I don’t think, Kevin, you know, we …

I don’t want to speak to what ExteNet is a separate and independently run company. You know, remember we’re just a minority investor that has a say but not the say on how things go. And we’re, you know, continuing to work and help ExteNet grow. And as I mentioned earlier, we do have an interest on the right terms and conditions to increase our investment. I mean you should read that as a positive relationship and a positive interest in the business segment in ExteNet going forward. You know, where and when and how that actually plays out is yet to be determined. Kevin Smithen – Macquarie Securities : Thanks it’s helpful.

The next question is from the line of Chris Larsen with Piper Jaffray. Please go ahead. Chris Larsen – Piper Jaffray: Hi, thanks for taking my questions. Just a couple of them. First, to clarify on your Sprint comments, you talked about the contract going through 2013 to 2015. With that, you said something about, inferring growth throughout that contract. Does that infer that Sprint’s contract with you will be sequentially increasing through that entire period? Secondly, are you seeing any activity out of DISH, given that they’re hoping to get their licenses in the not-too-distant future? Third question if I may, Metro PCS is talking about deploying [inaudible]. Can you quantify any sort of impact that might have if [inaudible] begins to take off with either them or anyone else for that matter?

I’ll do the DISH activity first. We haven’t seen any of that yet. You know, we’re watching all the reports that you’re watching. And again, as I mentioned earlier, you know, they know we’re here to lease space. I don’t know that they necessarily need to seek us out first, but we have not seen any activity yet. The Sprint [inaudible] comments were specifically limited to just the [inaudible] component of the agreement that we have with Sprint. There’s a staged ability for Sprint to terminate, you know, most but not all of the [inaudible] sites that they have with us. And that again is middle of 2013 to the end of 2015, and it will have an impact on, you know, growth rates during that period of time if they choose to exercise those, but not anything that we think is overly material. Particularly when, you know, you have to offset from the CDMA site as well. And on the final question, microwave obviously that is a plus for our industry. Microwave, installations can run anywhere from, you know $250 to $300 dollars a month for a small single microwave dish, to over $1000 dollars if it’s a 2-way microwave, a send and receive installation. So, we’re always hopeful that microwave as a form of backhaul continues to increase in this country the way that it is in Europe and other places. Chris Larsen – Piper Jaffray: Great, thank you very much.

Our next question is from the line of (Zach Corbett) with Macquarie. Please go ahead. (Zach Corbett) – Macquarie Securities: Actually I think Kevin took care of our questions, thank you.

Eddie, I think we have time for one more.

(Operator Instructions). There are no questions in queue, sir.

Great, well, I want to thank everybody for joining us today, and we look forward to next time when we report our second quarter results. Thank you.

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