Ladies and gentlemen, thank you for standing by, and welcome to the third quarter results for SBA. At this time, all lines are in a listen-only mode. Later, we will have a question-and-answer session. . As a reminder, today's conference is being recorded. I'd now like to turn the conference over to Vice President of Finance, Mark DeRussy. Please go ahead.

Good evening, and thank you for joining us for SBA's third quarter 2021 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 2021 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, November 1, and we have no obligation to update any forward-looking statement we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics. 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 third quarter results.

Thank you, Mark. Good evening. SBA had another great quarter with financial and operating results ahead of our expectations and continued strong momentum into the end of the year. Total GAAP site leasing revenues for the third quarter were $535.5 million and cash site leasing revenues were $525.1 million. Foreign exchange rates were generally in line with our previously forecasted FX rate estimates for the quarter. They were a tailwind though on comparisons to the third quarter of 2020, positively impacting revenues by $3.2 million on a year-over-year basis. Same tower recurring cash leasing revenue growth for the third quarter, which is calculated on a constant currency basis was 3.6% over the third quarter of 2020 including the impact of 2.5% of churn. On a gross basis, same-tower growth was 6.1%. Domestic same-tower recurring cash leasing revenue growth over the third quarter of last year was 5.7% on a gross basis and 3.3% on a net basis, including 2.4% of churn. Domestic operational leasing activity or bookings representing new revenue placed under contract during the third quarter was at a similar level to the second quarter, which had represented the highest quarterly level since 2014. Even with this high level of execution, our domestic new lease and new amendment application backlog continued to grow during the quarter and finished the quarter higher and at a new multiyear high. These backlogs support our expectations for continued strong domestic operational leasing activity throughout the balance of this year and into 2022. During the third quarter, amendment activity represented 45% of our domestic bookings with 55% coming from new leases. The big 4 carriers of AT&T, T-Mobile, Verizon and DISH represented 96% of total incremental domestic leasing revenue signed up during the quarter. Internationally, on a constant currency basis, same-tower cash leasing revenue…

Thanks, Brendan. We ended the quarter with $11.9 billion of total debt and $11.7 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 7.2x. Our third quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 4.6x, the highest in the company's history. On July 7, the company amended its revolving credit facility. Among other things, the amendment increased the total commitment under the facility from $1.25 billion to $1.5 billion, extended the maturity date of the facility through July 7, 2026, lowered the applicable interest rate margins and commitment fees under the facility and incorporated sustainability link targets into the facility, allowing for interest rate and commitment fee adjustments based on how we perform against those targets. As of today, we have no amounts outstanding under our revolver. On October 14, the company repaid at par the entire aggregate principal amount of the 2013-2C Tower Securities, which had an anticipated repayment date of April 11, 2023. On October 27, the company through an existing trust issued 895 million of 1.84% secured tower revenue securities Series 2021-2C, which have an anticipated repayment date of April 9, 2027, and a final maturity date of October 10, 2051. And $895 million of 2.593% secured tower revenue securities Series 2021-3C, which have an anticipated repayment date of October 9, 2031, and a final maturity date of October 10, 2056. The aggregate $1.79 billion of these Tower Securities have a blended interest rate of 2.217% and a weighted average life through the anticipated repayment date of 7.8 years. Net proceeds from this offering were used to repay amounts outstanding under the revolving credit facility and remaining proceeds will be used to redeem the entire aggregate $1.1 billion principal amount of the 2016 4.875% senior…

Thanks, Mark, and good evening, everyone. We had another very good quarter in the third quarter, exceeding our own expectations. As you've heard, we continue to see very high levels of carrier activity in our U.S. business. Each of our major customers was busy in the quarter. Verizon beginning their C-band deployments; T-Mobile continuing their ubiquitous deployment of their 600 megahertz and 2.5 gigahertz spectrum; DISH continuing their torrid pace from the second quarter, signing up new agreements to facilitate the build-out of their brand-new nationwide 5G network; and AT&T remaining steady. Notwithstanding the high levels of new leasing revenue that we signed up during the third quarter, we still finished the quarter adding new multiyear high backlog of pending leases and amendment applications. Based on this backlog and conversations with our customers, we expect to continue seeing elevated domestic leasing activities through the balance of this year and well into 2022. In addition to high domestic leasing activity levels, we produced record services revenue in the third quarter, surpassing our second quarter record. Our customers are all focused on building out their 5G networks, particularly targeting upgrades to their macro networks. Similar to our domestic leasing backlogs, our services backlog continued to grow during the quarter and reached a new all-time time for the company at quarter end. The strong third quarter performance and growing backlogs have allowed us to increase our full year outlook for all revenue-related line items. Internationally, we began to see our markets starting to return to pre-pandemic levels of activity. We again produced quarter-over-quarter sequential increases in new lease and amendment executions and ended up with solid leasing results in the third quarter that were ahead of plan. During the quarter, we signed up 55% of new international revenue through new leases and 45%…

. Our first question will come from the line of Ric Prentiss with Raymond James.

A couple of questions. Obviously, you guys are pretty excited with the backlog, services business, leasing business. If I look specifically at the implied change to new lease amendment activity in the fourth quarter in the U.S., it looks like a pretty nice step up. How should we think about -- I know you're not giving guidance yet, but how should we think about how that plays into '22 as far as does it build throughout '22? Is it fairly level loaded, now that we're sitting here in November, you probably have some pretty good visibility to what the pacing of '22 looks like, not the actual number?

Well, I mean, given the fact that we report those things on a trailing 12 basis and knowing what we had in the fourth quarter a year ago and first quarter of this year, I think it's going to build, Ric, as we -- at least as we move into the middle of next year. And then we'll see what happens with lease-up then because that will start to have some year-over-year comps that we're going to be working off some pretty good numbers for the back half of this year.

Okay. And then on the escalator side, is there anything that varies the escalators quarter-to-quarter that causes any swings on the way you guys have your contracts set up. We've seen some bouncing around some of the other tower guys in the U.S., specifically where you have more fixed.

Not in the U.S.

Fairly consistent, obviously, maybe 3%, 3.3%, sound pretty consistent.

Yes. Again, in the U.S., I mean, a lot of our international stuff is CPI-based.

Last one for me. Can you update us on Sprint churn, what kind of magnitude you're looking at? Have you gotten any indication yet from T-Mobile? Is it mostly going to just be the co-located sites? Is it going to be nearby side? So just kind of maybe frame for us size and timing and kind of how you're having those discussions with T-Mobile and Sprint?

Ric, it's Brendan. So first of all, you may have noticed in our bridge that we made an adjustment to actually reduce our domestic churn impact for '21. That's basically all due to Sprint. It's a timing issue, though. It's taking them perhaps a little bit longer than we were anticipating because we're making some estimates, obviously, around that heading into it. That doesn't change our view on the total potential exposure for churn, but it shifts the timing back to slightly. So I would expect that to kind of move to next year. In terms of what we expect today, we've given some ranges in the past, and I'll kind of reiterate that. They move a little bit, obviously, as we learn more about it. But this year, in '21, we would expect the total impact to end up being somewhere around $7 million. Next year is a higher year for us based on the timing of when leases hit the end of their terms. We expect it to be probably at the higher end of our previously stated range of $30 million to $35 million. I'd say it's closer to $35 million, mostly because of the shift in timing I just mentioned. And then in 2023 and 2024, we would estimate somewhere in the $10 million to $20 million range for impact in each of those years. And our biggest years of exposure are 2025 and '26 where the range would be somewhere in that $45 million-ish range, $40 million to $50 million, say, to put brackets around it for each of those years. And then some de minimis amount after that. In terms of where it's coming from, a lot of it is on overlap sites, but some of it is certainly on sites that are proximity sites. And then in some cases, it's not always totally clear to us. I think they're still working through that. We don't have total vision on what they're doing with other neighboring sites. But I would say it's a mix of the two. But obviously, the greatest focus as it relates to our portfolio will be the sites where they have direct overlap.

Our next question will come from the line of Simon Flannery with Morgan Stanley.

So you talked about the strong leasing end that DISH had this torrid pace. Can you help us understand how the bookings to billings will go? And are we seeing much of DISH in the fourth quarter guide or then you revised full year guide? Or is that really going to flow through more in 2022? And then you talked about the benefits of recent spectrum auctions or ongoing spectrum auctions, I guess, here and in Brazil and elsewhere, maybe on the 3.45 specifically in the U.S. Do you think that's going to create much incremental leasing? Or do you think a lot of that can be encompassed by the carriers in their C-band deployments? And any sense of when you might start to see that 3.45 get deployed? Could it pull forward some of that second phase of C-band builds to put up this spectrum?

Our understanding, Simon, on your last question is that the 3.45 will require new radios. So there will be some incremental activity there that the industry should benefit from. What was your first question?

It's timing.

Yes. So I think we've explained this before. But we have a master deal with DISH, and there's commitments and a lot of benefits going back and forth between each parties. I mean one of the things, Simon, that was in there is DISH has a payments schedule such that after signing, they have until a date certain for installation of their equipment on that site before we begin to start collecting revenue. So the vast, vast, vast notwithstanding the tremendous amount of lease-ups that we've had, the vast majority of all that recognition doesn't start until 2022. So the answer as to is there much, if anything, ambition in the fourth quarter, notwithstanding the activity, the answer is no. I think you had a third question. Did I miss the...

It was on the 3.45, any sense on the timing of when that you might start to see that deployment relative to the C-band?

Well, I mean, my understanding is decisions get made. Final auction results are known and decisions get made in the first quarter of next year. I do not believe there's the same clearing requirements that you have with the C-band. So I don't see any reason why we wouldn't start to see some activity in the second half.

Our next question will come from the line of Jon Atkin with RBC.

Yes. So I had a question about international exposure and basically EMEA and maybe tackle Europe and Africa separately, thoughts on how those regions might be appealing to you going forward? And then domestically, wanted to find out about the timing of revenue. You talked about DISH, but more generally, as you think about the availability of workforce and people to actually construct sites. What's your thinking with respect to any pressures that the industry might see in 2022 that might affect leasing revenue recognition as opposed to just bookings?

Yes. In terms of the globe, Jonathan, I mean we look all over and we look to find areas that fit our criteria. And we found a lot of that, obviously, in the Western Hemisphere, some of that in Africa. And I believe we will continue to find those opportunities as we go forward on a country-by-country basis. Africa has a lot of growth, certainly has some risk. But if you get into the right price and you operate well as we believe we do, you will do well. Europe is a fine market. We just have not found opportunities that are at prices that we think makes sense for us given our other opportunities to deploy capital. But we keep looking. I mean, we look at everything. That's what people expect us to do. In terms of the labor market, we watch that carefully because obviously, a lot of other industries are suffering right now. We are not. We have a large internal workforce in cruise. We also use outsourced crews for some of the work. And right now, it's all working out okay. There's a number of training resources and opportunities that we think will increase the available workforce over the next several years. So I think generally, we feel okay, but I mean, that really is a quarter-by-quarter question that you asked. So the best I can tell you today is this quarter, next quarter, we feel okay.

Our next question comes from the line of Walter Piecyk with LightShed.

Jeff, can you -- to the extent you can provide us a little bit more color about the Sprint like the churn delay, I guess. I mean is there any indication that as they go through the portfolio, they're recognizing that maybe they're not going to turn off as many sites as originally. I know you talked about the next 2 years, and they were generally all in the same ballpark. But qualitatively, is there -- are they still, I think, targeting overall the same amount, maybe more, maybe less? Any thoughts on that?

Yes. Walt, this is Brendan. Yes, it seems like thus far, from what we've seen in our communications with them that it's generally still targeting the same thing that we thought originally more or less. I think the shift here is really just the timing on moving off of some of the sites. You may have even seen they talked about some delay in shutting down the CDMA network. I think that probably is a factor in it. So I don't think that the overall focus is shifting at all, but the timing might be slightly different. That's all.

Okay. And then on the inorganic stuff, this year was a pretty big year although it seems like with the guidance, Q4 is whatever, you're still obviously up versus last year. But when you think about '22 in terms of new sites, M&A, that type of stuff, any sense on kind of what that market will look like for you?

I think it will continue to look challenging from an acquisition perspective really based on price wall. Prices continue to remain high, and in our opinion, without much differentiation for quality, which is where we end up being very selective and picking our spots carefully. I do think there's enough out there for us to certainly hit the low end of our historical targeted range of 5% portfolio growth. I imagine with Tanzania and some increased activity that we expected some of our existing markets that we will build more towers next year as well. So all in all, that will be -- the 5% to 10% portfolio growth will be the goal again next year.

Our next question comes from the line of Batya Levi with UBS.

Just a couple of follow-ups. First, on the international side, you mentioned that churn should remain elevated for some time. Can you provide more color on that? And capital allocation priorities, can you help us think about maybe discretionary CapEx, excluding M&A, does that stay elevated as you ramp maybe augmentation CapEx to support higher growth? Yes. That's it.

So on the international churn, we've been -- as you probably seen and we talked about, I think, on previous calls that we expected some elevated international churn this year. We haven't experienced most of that yet through the year. But in the fourth quarter, we expect to see that jump. Largely due -- the primary reason is due to consolidation-related churn, particularly with Claro and Telefónica combining in Guatemala, a lot of the impacts of that are starting to be felt here in the fourth quarter, which is what's going to drive the full year number that we provided. And obviously, with it being so late in the year, it has an impact on what we would expect to report not just in the fourth quarter but in the next -- into next year. In addition, there are -- we are dealing with a number of our customers in Central America. We have some that are working through network changes due to various issues that they face. And others where the terms of the agreements are starting to come to an end, and we're working through what their future plans might look like. So we expect there might be some incremental churn associated with that, but we also would expect longer-term commitments and other business commitments as well as part of that. So it really was an indication mostly though, about the consolidation churn that we're going to experience in Q4.

So Batya, on your other question about discretionary CapEx, the way you asked that question, you implied that our non-M&A discretionary CapEx was going up. I don't really think it is in terms of augmentations per tower. We don't really see anything material there. And keep in mind, there's a historical practice, which continues that our customers tend to pay most, if not all, of those augmentation dollars. Would there be something else besides the tower side, Brendan, in the discretionary CapEx?

There's been some CapEx spent on the data centers that we acquired. So that might be the incremental piece that we obviously hadn't had in the past.

Yes. And that -- just to be clear, that's in response to demand for increased megawattage and capacity at these data centers. So that is CapEx that we're extremely pleased to be able to invest.

Next, we'll go to the line of Nick Del Deo, MoffettNathanson.

The first, if my math is right, it looks like your implied site leasing revenue and tower cash flow guidance for Q4 are about equal to what you generated in Q3, at least at the midpoint. But was there anything that helped Q3 results that won't carry through into Q4, like back billings or anything similar?

Well, FX.

Okay. All right. Simple enough. And then I guess in terms of U.S. activity, are you seeing the incumbents deploy their mid-band spectrum and DISH with its de novo build? You're kind of engaging with you even -- relatively evenly across your portfolio. Or is there a noticeable skew towards more urban or the denser suburban markets that you serve?

I don't think it's noticeably skewed. I think we're seeing activity pretty much everywhere.

Okay. Okay. That's good to hear. If I can squeeze in one last one. If I look at other revenue for international, that was up by about $6 million versus your prior guidance. Is that mostly fuel, pass-through fuel or is something else going on there?

No, it is mostly pass-through expenses. It's actually -- a lot of it is actually related to ground leases, in particular, in Brazil, where we pass those through to the carriers. And that -- part of that is CPI that we didn't -- while we projected CPI increases across our tenant leases, we didn't necessarily include that on the ground leases because it's a pass-through. But as that's starting to come along with the increased inflation down there, it's pushing ground rents higher, which obviously pushes the pass-through rents higher as well, plus there is some power costs, as you mentioned as well. That's the main driver.

Next, we're going to the line of Phil Cusick with JPMorgan.

I wanted to follow up. You said, I think, in the prepared remarks that you assume that AT&T is steady from here. Do you think AT&T is at a full run rate? Or are you just assuming that they haven't ramped up by the fourth quarter guidance period?

No. I think to be clear, Phil, we said that they were steady relative to kind of last quarter. I believe that they will ramp up in the times to come.

Okay. And is the conversation is building toward that already?

Let me -- I'll just leave it the way I said it. I believe that their activity levels will ramp as we move into next year.

That's more than I expected. Thanks, Jeff.

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

I don't know I can follow up on that belly laugh, Jeff. So I guess I had 2 questions. One was in the prepared remarks, Brendan, you called out the Big 4, which we haven't heard in a while, and maybe wonder if the magnitude to which DISH is spending is roughly on par with what the actual Big 3 are spending in terms of your business. And then the second question I had was you also referenced some spectrum auctions that are happening in the coming months in not just domestically, but international markets. Specifically, I'm interested in South Africa. That's been a problem market from a spectrum perspective, a little messy over the last little while. I was wondering if you could kind of give us some picture as to what you thought the outlook would be for South African spectrum auctions in 2022?

Yes. And I mean when you really parse out our comments, David, and you look at the domestic split between leasing and amendments, and you think about historically how networks get upgraded mostly through amendments. So where are all those new leases coming from? Well, they're mostly coming from DISH. So yes, for this quarter and last quarter, they're right up there in terms of quarterly contributions with the other Big 3. So that's why we said what we said. In terms of South Africa, those spectrum auctions have been pushed back a little bit. There's a lot of interplay between the wireless carriers and the government. The best that we can tell is that the auctions will be not this year, but in 2022, now are scheduled for the first half but they will be the full suite of 5G spectrum. I think it's 600 or 700 rather, 2.5 and 3.5. So you're going to have all the tools necessary for the carriers in that country to pick up what they need to move into 5G. So obviously, we're excited about that. It will mean similar to what it means in the U.S. when customers move from 4G to 5G.

Perfect. That was exactly what I thought you would say, Jeff. So, just exactly. Thanks.

Our next question will come from the line of Michael Rollins with Citi.

Since you seem to be in such a generous mood to share some new information, I'll take a crack at this. So you mentioned multiyear highs for services and leasing backlog. And I was thinking back to your 10-Ks where in '19, you had a leasing backlog of about $22 million; in 2018, you had about $16 million. And on the services side, it was about over those 2 years, $55 million and $76 million. Can you share some context on how the current backlog compares to these couple of years? And then just secondly, curious if you could delve further into what you're learning from your data centers and how you're thinking about the edge and the role SBA is going to play in that in the future?

Yes. The 10-K disclosures, Mike, are -- it's apples and oranges to what we were talking about in our earnings script and the press release. That disclosure is signed leases that have not yet commenced revenue. And when we talk about backlog, it’s applications. So those 2 things really are not correlating. But I'll give you a little more color on the backlogs. It's not multiyear high for services, it's all-time high ever. For leasing, it is a multiyear high, going back probably to the heady 4G days. But it's good. And it took a big jump up in the quarter, notwithstanding a very high degree of signings. So that's why we say what we said and why we feel good about next year. What was your second question?

What you're learning from the data centers and the edge?

What we're learning is that -- it's generally a good business, data centers in general, not that anybody needs me to tell them that. But one that we like and we see synergies with the micro edge facilities where we have now -- we've got 4 or 5 of these things more being built. And in many cases, the sale was made because we were able to provide data center space in addition to the micro edge space. So there's a big demand for redundancy, for disaster recovery, for backup. So the hub-and-spoke model that we talked about earlier as to where we think this makes the most sense from our perspective is playing out, albeit a little bit slowly because I'm not sure the edge has really quite moved yet to the tower site, but it is headed in that direction.

And so where do you think this goes over time? Are towers partners to data centers are towers owners of a lot more data centers? Where does this evolve into?

It could evolve in either of those directions. But it does evolve into a more converged universe. And I think ultimately, the degree of that convergence, Mike, will be how much computing power is truly needed right at the cell site. And I don't think we know yet.

Our next question will come from the line of Brett Feldman with Goldman Sachs.

I guess I'll have a follow-up on that one. I mean, we know your historical views on investing in fiber in the U.S. But if you were to start to see real synergy between the connectivity, between your data center assets and the edge facilities you can offer at sites. Would you maybe reconsider deploying the fiber between those locations? And then just a second question. I would imagine the big uptick in the backlog is from what we're going to start calling the Big 4 again. But I'm curious whether you're seeing anything in there from nontraditional tenants, maybe enterprises looking to deploy CBRS-based systems using your infrastructure? And if it's not in the backlog, is there anything going on from a conversation standpoint to suggest that could be percolating?

On your first question, it could make sense where we control both ends of the destination to have fiber running between that we actually own. We do think, over time, Brett, that a full suite of product offerings and solutions to the customer will be good. I mean it's hard to sell someone -- it's not as easy rather, to sell someone micro edge space when at the same time you said, well, you've got to go funding a fiber. So we'll see and never say never. But we -- I don't think the way fiber has been traditionally bought, developed and deployed -- that's a business I don't know that we would enter. It's going to be more when it joins 2 ends of things that we control.

And then in terms of the nontraditional tenants in the backlog, there are some certainly, Brett, but as a percentage of the total backlog it's pretty small, partially because the big carriers are so active right now that we have huge backlogs with them. And so it's pretty immaterial in terms of its overall impact.

Yes. But there's some in there, but it in the lion's share is clearly from Big 4.

Our next question comes from the line of Colby Synesael with Cowen.

Great. One quick follow-up and then another one. As it relates to the international churn you've highlighted you expect it to be elevated in the fourth quarter. Is that just a 1 quarter thing? Or would you anticipate churn being elevated in 2022 versus what we’ll ultimately see in 2021? And then secondly, in the press release, you guys mentioned, I think this was quoted to Jeff. We expect elevated domestic leasing activities to continue through 2022 and perhaps beyond. I was wondering if you could just expand on that. Is that really just tied to some of the comments you've already made as it relates to DISH? Or is there really more than that? And maybe even how does AT&T in particular factor into that?

Jeff, I'll start on the international churn side. I do expect it to be elevated not only in the fourth quarter but into next year, in part because the fourth quarter -- especially when we report our same-tower churn numbers, it's obviously on a trailing 12 months basis. So what happens in Q4 will be carried with us throughout the balance of the year. So next year will certainly be higher in terms of its full year impact than this year because of the concentration late in the year.

Yes. And on the length of the activity, Colby, comments really reflect just the historical norms of the life cycle of the G upgrade going from 1G to the next. Mean when you think about where Verizon is and where AT&T is on C-band, the 3.45 stuff that's not even out yet, and where DISH is, I mean it's pretty easy to see that activity is going to move into 2023.

Do you think then that we could actually be in a situation where we just continue to see that acceleration? I mean I think one of the big debates that investors are having now is, do we start to flat line in '22? Or is there an opportunity for another step-up?

I mean at some point, that has to flat line. I don't know I don't know specifically how to answer that question for next year until we see more about the 3.45 auction and understand some more of the timing. But I think flat line or not, I understand the importance of that from an investor perspective. But I mean we see years of elevated activity.

Our next question will come from the line of Eric Luebchow with Wells Fargo.

Just curious on Brazil, if you could maybe provide us some color, you mentioned that same tower growth stepped up there in the quarter, and there's a spectrum auction coming up later this week. Do you think that could drive another wave of amendment activity across the Brazilian market?

Yes. I clearly do because the spectrum that they're being -- that's being put forth is what's really necessary for the carriers to offer a 5G solution, which they have not yet really embarked up. So much like what's going on here in the U.S. when that spectrum is auctioned and put into use, you're going to have similar activity levels. In terms of the -- you want to speak, Brendan to the increase lease-up?

Yes. I mean, so the growth rate stepped up, it's really a combination of 2 things. One is the escalators are higher because of the CPI-based increases. And as inflation has increased in Brazil, that's caused our escalators to be increasing. And then we have in addition, seeing increased actual leasing activity over the last 2 quarters where it's sequentially increased over what it had been at the beginning of the year. I think really, as we come out of some of the more serious COVID-related periods in Brazil, we're starting to see the carriers moving back more towards traditional spending levels. And so that's encouraging as well.

And just one follow-up for me. You mentioned building more towers next year. Just could you remind us which markets you're seeing build-to-suit opportunities and then perhaps like what you're kind of underwriting today for return or yield requirements for building new sites in terms of NOI or development yield?

We will build sites next year in every market in which we are currently active. So -- and in most of those markets, more sites than we build today. And we're looking at generally 10%-ish tower cash flow yield on day 1.

Got it. So that includes the U.S. where newbuilds have been fairly slow the last few years?

Yes. That does.

Our next question will come from the line of David Guarino with Green Street.

I was wondering if you could provide any updates on Oi. And specifically, I was wondering if you have any updates on the land underlying I think it was around 2,000 sites in Brazil that are up for renewal in ‘25, feel like there's a lot of moving pieces. So just trying to understand if there's any risk of loss revenue from those sites?

Yes. There's -- now you're talking about the concession sites, I think, from the acquisition that we did. Yes. No, there's really not, and we expect that we'll -- those will actually be continued on. And actually, those leases extend out, I believe, longer than that with us as a commitment from Hawaii that goes out beyond the...

Two-thirds to 2035, I believe.

Yes.

Yes. That transaction is supposed -- now the latest thinking is that, that doesn't get consummated until sometime next year. And then with the network rationalization aspects that come out of that not starting until sometime in 2023.

Okay. Maybe switching gears then, going back to an earlier question about you guys talking about DISH as part of the Big 4 carriers. Does that mean that you're going to update your customer concentration table to reflect DISH once the revenue starts commencing on the tower sites?

Sure. Yes, of course.

Yes. I mean, once they reach a level, I mean that -- we're giving the concentrations above 10% of revenue. Obviously, they'd have to achieve that. Their contributions to leasing activity are significant and on par with the other carriers now. But obviously, the total sum of revenue, considering they're starting at zero, is at a much lower percentage. So we ultimately will do that if they achieve that level of contribution.

And our final question in queue at this time comes from the line of Brandon Nispel with KeyBanc Capital Markets.

Great. Two questions. One, could you comment just on leasing PG&E assets. Any additional comments you could provide there? I don't think anybody asked. And then on the balance sheet, I think you guys called out blended interest costs of 2.25% or so and then some incremental run rate savings. Could you -- what else is to be done there going forward? Do you guys see interest expense coming down?

PG&E is ahead of plan, benefiting from all of the U.S. activity from all the contributors that we earlier discussed in general. So we're extremely pleased with that. And...

On the balance sheet, the -- just to correct what you said, the average interest rate is now on a pro forma basis, 2.6%. There are potentially some other possibilities. We obviously have maturity dates that come up over the next several years. Really, we'll have to see where interest rates are as we hit those dates. There's probably some opportunity to refinance and have some additional improvement, but I think we've done the vast majority of that now with the last deal that we just completed this past month.

Ryan, is that it? Or is there another question?

We have no further questions in queue.

Great. Well, thank you, everyone, for joining us this evening, and we look forward to reporting our fourth quarter sometime in February. Have a great day.

Okay, ladies and gentlemen, that does conclude today's conference. I'd like to thank you for your participation. You may now disconnect.