American Tower Corporation (AMT) Earnings Call Transcript & Summary

All right. We're going to go ahead and get started with our next session. For those of you who don't know me, I am Matt Niknam, I'm the communications infrastructure analyst here at Deutsche Bank. We're very pleased to welcome back American Tower's CFO, Rod Smith. Rod, welcome back.

Yes. Thank you, Matt. Nice to see you. Everyone, thanks for coming.

Thank you. Thank you. You guys have been busy as always. You just reported fourth quarter results last week, gave an initial outlook for 2023. So maybe just to start, if you can talk about some of the key highlights from the outlook and your top priorities for AMT for this year.

Yes, sounds great. So we rolled out our outlook for 2023 just a week ago. We're really excited about 2023. I'll start by just reiterating the -- the level of confidence that we're seeing and that we have in the U.S. growth rates. So we outlined a 5% organic tenant billings growth for the U.S. business here for 2023. We have nearly 90% of that revenue and the underlying revenue growth fully contracted. So the level of confidence is really high there. And then we're seeing a similar level of growth around the globe through our international properties. And we're seeing some really compelling growth in Europe, 7% to 8% growth rates in Europe, which is really nice to see. And our core site business in the U.S. is also coming off of a very good 2022 where we set records, a record level of new business or new bookings in that business, which was really compelling and those new bookings now will be deployed in '23 and '24. So it gives us a multiple year view of kind of some good compelling growth rate. So we're looking at upper single-digit revenue growth for CoreSite as we head into 2023 -- for the 2023 year. So in addition to a really good backdrop where we're seeing demand for our assets in the U.S. and around the globe, both on the tower side as well as CoreSite, really underpinned by continued growth in mobile data consumption, as well as 5G deployment in the U.S. and in Europe and other select markets. In addition to all that we're continuing to build thousands of sites around the globe. We'll build over 4,000 sites. We typically have a really robust pipeline of new towers to build around the globe. We're coming off a year where we built nearly 7,000 last year. We built another 4,000 or so this year. And those -- that internally deployed capital towards those new builds generate a double-digit NOI yields kind of across the -- on average kind of throughout the properties that we own. So that's a really good source of capital deployment for us that we're really excited about. So and our priorities, really, it's driving organic growth. It's making sure that we do everything we can throughout the course of 2022 to achieve our outlook on organic kind of billings growth, revenue growth, EBITDA and AFFO, AFFO per share growth. That is mission #1. It's also positioning our portfolio for future growth. That's fine-tuning the portfolio as well as adding additional assets to it. You probably heard on the call from last week, we continue to be in a delevering mode, so we are looking to delever our business, reduce the amount of debt, reduce the amount of floating rate exposure debt that we have so that really will be a key priority as well. So those are some of the priorities that we have. We also are very focused on ESG around the globe, particularly reducing carbon footprint and improving power systems and reducing our reliance on diesel fuel throughout Africa. That's going very well. It's something that we're really excited about.

So in recent years, obviously, you've expanded scale. You've become now, I think, the largest digital infrastructure platform globally. So -- can you talk about the broader strategic vision for AMT and how the mix of your U.S. and international towers alongside the new data center assets from CoreSite enhance your strategic position over the next decade?

Yes, absolutely. I mean, we certainly -- we love our tower portfolio, and I would start off by just making the statement that we are a tower company. We're a global tower company. We have over 220,000 towers across -- more than a couple of dozen markets around the globe on 5 different continents. And within that our U.S. business is clearly the center point of that portfolio, and it's got really good growth characteristics underpinned by really strong counterparties in terms of our contracts, the contract structures, everything is right where we want it to be, and we feel really confident, not only about the 5% organic growth in our U.S. business this year, but maintaining that level of growth on average up to 2027, which is really important for us in terms of driving that stability in our earnings, and earnings growth over time. And then we have properties in Europe and Africa and Latin America and in India that all complement our U.S. business. We've added to our portfolio in recent years, the healthiest portfolio of towers in Europe, which is performing extremely well. We're guiding towards a 7% to 8% organic growth rate for our tower business in Europe for 2023, which is a very compelling growth rate, and it's because of the quality of the assets and the contracts and the contract terms that we have within the Telxius portfolio. We also added the CoreSite business, which is a really very well high-quality differentiated set of cloud-centric data centers across the U.S., which again, that portfolio is of a unique quality and is driving really good growth for us. And the reason it's unique quality in our eyes is that it is cloud-centric. We've got 23 cloud on-ramps kind of spread throughout the buildings that we have. We also have nearly 500 network companies within these facilities. We've got about 28 buildings spread really well throughout the U.S. in terms of how they -- those centers relate to our tower portfolio in the U.S. And then we have a really good accumulation of enterprise customers that are in these facilities as well. So that really is the key is this interconnection-richness of these facilities, cloud on-ramps, network companies as well as enterprise customers. That's what makes this business so differentiated in our view. And it's what drives and maintains a high single-digit growth rate on the revenue side for us over the last couple of years is because the customers that are in these facilities want to stay within the facility, so they can continue to enjoy the interconnection, and they grow their interconnections and the model works really well. And then there is the optionality upside of taking those cloud on-ramps, those interconnection-rich centers and pushing them out closer to our tower sites to develop the mobile edge. That's really the upside opportunity, which could be pretty significant, albeit in a very nascent stage at the moment, but that's a pretty interesting upside potential. And then we love our international properties with towers across Africa, Latin America and in Asia. We're building a lot of assets throughout that region that drives additional growth. We're seeing high levels of growth in different markets at different times, over time, that's really compelling. And the one thing that we see in all of our market is growing data consumption at the tower level, and that's what really underpins and drives our long-term value creation.

On India, so what are the interesting data points I think that came out of last week's call as you noted you're looking at potentially bringing in an equity partner into that business. So can you talk a little bit about the strategic rationale here where the process sits today and maybe how sizable of a stake you may be looking to sell?

Sure. Yes. The first thing I would say is it's not different than other things that we've done around the globe. We've got a pretty diverse pool of capital that we can tap into. We use product capital in our core site transaction. We've also used private capital in our Telxius transaction over in Europe, we originally had a joint venture in India with the Tata Group. Macquarie was actually an investor with us in India in the past. So the idea of having joint venture partners is nothing new. It's nothing unfamiliar to us. We also had a joint venture partner in our Africa business when we first launched the Africa business. So that is something that we've done before. It's part of our toolkit in terms of being able to access capital and have creative ways to finance our properties around the globe. With that said, we did announce on the earnings call last week that we are investigating the possibility of bringing in private capital to join us in our India business and go back to a joint venture like India was in the past. In terms of the size stake, we're really not sure what that would be. We talk about this process of looking into private capital as being opportunistic. And what that really means is, we don't have to do it. We may do it, we may not do it. It really depends on how the process unfolds. The things that we want to achieve and the reason we would be looking at this really is because it fits into our model of the way we finance things around the globe. The other thing that it does is that we want to be exposed to the India market. We think the Indian market is really a very interesting market, high-population, democratic country. We see the bandwidth consumption of the India consumers is sort of off the charts. It's got an environment in the wireless segment that's becoming more stable over time in terms of getting through the consolidation that has happened over the last several years. And now it's down to R Jio, Airtel, VIL, with BSNL as a fourth place. So it's got a good construct for wireless carriers. So the long-term opportunity is there, and we want to be exposed to that. But -- to be quite frank, there's also been a heightened level of volatility in the last several years and certainly even before that with the consolidation. And we think that, that volatility could continue or persist for another couple of years. So balancing creative financing of our assets like we've done around the world, also reducing our exposure to that near-term volatility, while remaining exposed to India for the long-term potential value creation, that's kind of what we're thinking, balancing the volatility and the long-term opportunity.

And if I maybe frame how sizable this could be. If I think about Europe and if I think about the data center business, I think they're roughly at about 30% piece or 1/3. Is it something similar you're looking to do in India?

I wouldn't necessarily draw that comparison. We've got an open mind when we think about India. It's really trying to achieve a balance between protecting ourselves and our investors from the near-term potential volatility within India, while preserving the long-term potential value creation and exactly the best way to do that to accomplish those goals, the best way to structure a joint venture, we'll be working through the details of that. And certainly, if we decide to do anything, we'll let our investors know. But I would also reiterate that this is an opportunistic exercise. We may or may not bring a private capital partner into India. But we want to be upfront and transparent with investors. We are working through a process. So we want to let people know.

Got it. And just last question on this. In terms of like potential uses of proceeds in the event something does happen, how do you think about that?

Yes. My sense is the use of proceeds there might be to delever. When it comes to capital sources, I think everyone knows, first and foremost, where a REIT, we provide a dividend, we have a growing dividend, that's important to us. We also invest in internally deployed capital for build-to-suits. This year, in '23, we're going to deploy about $1.7 billion of capital. That's down slightly from where we were in '22. We deployed about $1.9 billion. And the reason we pared that back a little bit is because of the fluctuation in the cost of capital and looking at making sure we're getting the right returns everywhere where we deploy capital and also to prioritize delevering and making sure that we're reducing our exposure to fixed or floating rate debt and also reducing our overall exposure on the debt side. Because of the uncertainty that remains around interest rates, we're very aware of that and look to delever. So to the extent that we have proceeds coming out of India, delevering may very well be the highest priority that we have in the near term. And then we always balance that after we get through internally deployed capital, paying the dividend, making sure that we're treating our balance sheet and the leverage the way that we want them, we could look at M&A or share buybacks and those sorts of things. And as we've said on the call, and I think we've been pretty consistent in saying this for a few months. We don't see anything in our pipeline today that would say that there was a large-scale M&A opportunity in our near future. We just don't see it. We were by -- we bought back a few shares in Q4 of 2022. You may see us do that again as we go forward. But something that's very opportunistic, and we'll do it if it makes sense, and we'll delever if that's our best path.

Got it. Got it. Okay. If we think about sort of AFFO per share growth, obviously, there's some moving parts with '23. But the question premised more around just the multiyear sort of aspirational target you've laid out in the past talk, aspiring for double-digit AFFO per share growth on a multiyear basis. I'm just wondering if you can maybe update us on your comfort level visibility around these targets from a high level and maybe walk through the very basic assumptions tied in with organic growth, margin expansion and leverage?

Yes, absolutely. So we did a couple of years ago, we laid out some longer-term guidance. That really came into distinct pieces. One was the 5% organic growth rate around organic tenant billings growth in the U.S. We've got really high visibility into that. We're very confident in our ability to achieve that out through the year of 2027. So that part of the long-term guidance we feel very good about. And -- and again, of the 5% growth in the U.S., 90% of that is already fully contracted for this year. And almost 75% of that is fully contracted out through 2027. That's the underlying revenue as well as the revenue growth in that target. So -- that's a really important long-term metric for us that we focus on quite a bit. The other piece of the longer-term guidance was an aspirational goal of achieving 10% AFFO per share growth. There's been a few headwinds that have come up since we rolled out that guidance. Most notably, it comes in really 3 sections. Number 1 is, we've seen a sharp persistent rise in interest rates over the last couple of years. That was not something that was in our original underwriting of that longer-term goal. We've also seen inflation rise and spike around the globe, which is primarily why interest rates have been rising in the U.S. and Europe and other places to combat that inflation. One of the consequences of that higher inflation and different monetary policies of administrations around the world is FX and devaluation of emerging market currencies to the U.S. So we've had kind of a couple of years of persistent headwinds on the FX front. You're seeing that again in 2023, you saw it in 2021. So that's a noticeable headwind for us in terms of achieving that double-digit AFFO per share growth. And then the third headwind that I would point to is really the volatility with our customers in India, notably Voda Idea over in India. We've announced a $75 million revenue reserve for the year 2023. We took nearly $100 million revenue reserve in 2022 for the same customer. So of course, that wasn't necessarily in our underwriting when we first put that goal out there. If you look at the earnings presentation that we released a week ago, you'll see the pieces of these headwinds kind of laid out in an AFFO chart. And we announced a negative 2% growth rate on AFFO per share, 2 percentage points of that -- almost 2 percentage points of that is the VIL revenue reserve. You take that off or normalize for that would be around 0%. 8% headwind is coming directly from rising interest rates. And then the 1% is roughly coming through the FX line. So with all that said, if you normalize for interest rates, FX and the VIL volatility, our core tower business, the portfolio of towers we have around the globe is driving an upper single-digit core kind of a growth rate. We feel really good about that for '23 and beyond. So that's what I would say about the longer-term target is. Our tower portfolio is performing exceptionally well around the globe with a couple of noticeable exceptions in these headwinds around interest rates, FX and VIL volatility. All of which we don't think persist into the long term. Certainly, when it comes to the interest rate environment, which is the biggest headwind of 8%, headwind in this year, we don't expect that to reoccur in 2024. We do believe, and we think and we expect interest rates to peak and flatten through the year. And to the extent they're not rising into next year or maybe even taper down a little bit like a lot of people think that headwind from interest rates won't be there in 2024. That could add 8 percentage points to our AFFO growth rate. And then we'll see what happens with the volatility with VIL and what happens with FX. But certainly you strip out some of these things and interest rates being a very noticeable piece. Our core portfolio can certainly be expected to grow in the upper single-digit kind of range over the next several years on a core AFFO growth rate.

We'll get to India a little bit later in the discussion, but I want to maybe dig in a little bit more into the U.S. From a high level, if you could just talk about what you're seeing across the 3 nationals in DISH. What's baked into the outlook for '23? Because I did see -- I thought it was pretty impressive, 50% increase in new colo and amendment activity this year. So maybe we could just touch on that from a high level.

Yes. We see a lot of good things happening in the U.S. marketplace. It's a really strong market, really strong wireless carriers kind of across the board. We are seeing a significant increase in the contribution to our organic tenant billings growth from colocations and amendments. In 2022, we posted about $150 million of new colocation and amendment revenue in our organic growth. In 2023, we expect that number to be more like $220 million. So a pretty significant acceleration in that level of new business. And of course, I think everyone in this room appreciates that new business stays on our tower for a long time, and it creates a lot of value. So that's important. And that step-up in revenue really is underpinned by the activity levels of the carriers kind of across the board. We are seeing the 3 main carriers all being active, deploying C-band spectrum, higher band spectrum and putting additional radio heads and antennas up in the towers. That activity is happening, and 5G is being rolled out, and we're seeing the big band spectrum on an awful lot of our sites, and we also have DISH in the assumption there, and they're deploying a greenfield, 5G-only network. The other one comment I would make there is, in our guidance, we have the minimum contracted revenue from DISH. That's what makes up our numbers. So we're not taking any risk there in terms of deployment, speed or cadence or anything like that. It's minimum contracted revenue, and that's what's in our guidance. The other thing I would say with the 3 large wireless carriers, they're all active. We see them all being active. But our revenue on a short-term basis is more closely correlated with basically the contracts that we have, the way our holistic deals work. You may see some acceleration in activity or a slight pullback in activity. It doesn't mean that our revenue changes. We have been able to enter into holistic agreements with all 3 of the primary carriers in the U.S., which basically takes a certain level of activity, grants the carriers, the right to perform that activity on our sites. It prices it up, values it and then it spreads that out over a number of years. That's what gives us the high level of visibility into the revenue. That's why we have confidence of 90% of our revenue and revenue growth for '23 is fully contracted. That really means if the carriers stopped their activity in the U.S., we would still generate roughly 5% organic growth because it's all contracted. So that -- and that goes out over a multiyear period. But even without the benefits, the clear benefits of our holistic structures, which help a lot, I think, in our business. We are seeing the carriers. They're all active. They're all deploying higher-band spectrum. They're all deploying new antennas and radios on our sites in the U.S.

You just gave '23 a guidance. You alluded a little bit to the visibility into '24. So I don't mean to be -- like every analyst take the data point and ask for more, but I will nonetheless because I'm sure it's on a lot of investors' minds. If I think about -- Verizon yesterday talked about a decrease in CapEx this year and next year. T-Mobile has talked about a pretty sizable decline this year. AT&T has talked about a pretty sizable decline next year, all of which to say -- your outlook calls for 5% growth through 2027. The 3 big customers are talking about sizable declines publicly. I know the visibility you've got into '23 and maybe into '24, but from a multiyear basis, can you talk about the confidence level in light of what they're talking about in terms of more meaningful declines in spend?

Yes. I think some of the rhetoric you hear from the wireless carriers doesn't necessarily affect our near-term revenue guidance or even the revenue guidance going out to 2027. I'll reiterate one point. We just talked about the fact that '23, we have 90% of that guide for '23 is fully contracted. 75% of the guide from '23 out to '27 is fully contracted. So still a really high percentage, not as high as 90%. But the way the holistic agreements work is the carriers, they can ebb and flow a little bit in terms of their activity level, and we still have really good level of confidence and visibility into our revenue. The further you get out on this path between now and 2027, the less visibility we have, but we still have an awful lot of visibility. I would just say that we are very confident in 5% organic tenant billings growth in the U.S. on average from now out till 2027. The carriers may ebb and flow in terms of how they deploy capital, where they deploy capital. But one thing that I think we can all agree on is the data consumption on the networks that go through tower sites is going to continue to increase throughout that time. That means they will continue to be radios deployed, antennas deployed out of the cell sites over time. We're very confident in that. So we have a really strong conviction in terms of our U.S. growth rates being around 5% between now and out through 2027.

While we're on the U.S., I'm going to just jump to the data center business because we're a little over a year now. I think that's the acquisition of CoreSite. It sounds like you had some very strong results in '22. If you can maybe just talk a little bit about your outlook for that business in '23? And then I guess maybe more broadly, the vision for that CoreSite platform and how you may be looking to maybe develop or cultivate that under your ownership?

Yes, absolutely. We've owned the CoreSite assets for a little over a year, I guess. And it's performed exceptionally well for us. We love the asset, the quality of the asset is on or above the expectation that we had when we first acquired the asset. So we're really pleased with the asset. I'll reiterate the fact that in '22, CoreSite set a record in terms of new bookings, new business activity. Kind of a clear, undisputed record. So the activity level couldn't have been greater, certainly surpassed our expectation. Much of that new business and booking won't be deployed until '23, '24, maybe even a little into '25. So that gives a pathway and visibility into growth in the next couple of years as we kind of take that backlog and actually deploy it throughout these facilities we have in the U.S. In 2022, we saw upper single-digit revenue growth rate. Economic growth was really solid, '23, we're projecting that to be, again, upper single-digit growth rates for that business because of the high bookings we saw in 2022, we think that, that upper single-digit growth rate can persist for the next couple of years. As we continue to deploy the things that the activity that we've already got booked. And we're in line for maybe not a record year again this year, but a really solid, strong level of new bookings for that business. That's what's driving the capital investments in that business, too. We've announced that we'll deploy about $360 million in new capital investments into the CoreSite set of assets, that's primarily to replace the capacity that we sold in '22 that we'll be deploying over the next couple of years. And we always want to make sure that we stay ahead of the curve in terms of having capacity available to sell to meet the demand. And the way we look at it is we want to have at least 2 years of net absorption or net demand for these buildings, so that when the customer wants a need space or interconnection, you have it available to sell it to them, that's how you get to smooth this kind of growth rate over a multiyear period. So we're doing that. We see really good growth. The other thing that I would say are all the metrics in this business are really lining up well for us. We're seeing positive growth when it comes to renewals. So when a customer contract expires, they're renewing those contracts and we're seeing a 3% to 4% escalation. Many data center businesses see a decline in that rent when the customer renews. But because of the interconnection richness of our facility. The fact that our customers are enjoying a lot more than just power and space, they're enjoying connecting into networks and cloud on-ramps and other customers, they need to be in those locations, and they're willing to pay that escalation of between 2% and 4%. We're going to be in the 3% to 4% again in 2023. We're also seeing churn at the lower end of kind of the range that we see for this business, we have a target range of about 6% to 8%. We're going to be in the 6.5% range or so. We're seeing upper single-digit growth rate on the interconnection. That's the amount and pricing that people -- customers pay to interconnect with other customers. A lot of that upper single-digit interconnection growth as existing customers wanting to interconnect with more people within the facilities or just a natural price increase on the interconnections that they have. So we're seeing really strong growth from that perspective. So the business couldn't be performing better in our expectations. There's limited downside, really high-quality assets with really good growth. And then we have the optionality around bringing those cloud on-ramps out close to our tower sites, connecting our tower sites into these cloud on-ramps to build a new ecosystem that could be at the base of the tower, which we refer to as edge compute or an edge connection there where you actually have cloud access point, networking companies and enterprises all accessing networks and clouds right out of tower site.

Is that the 2023 event? Or is that more -- beyond?

It's really beyond. We're in very nascent stages there. You guys know that the industry talks quite a bit about this. It's still a very early stage. You may see us deploy a little capital, build a few facilities, but it will really gain traction over the next couple of years. But we think the combination of our -- in the U.S., 43,000 sites in really good locations with the carriers that we have as customers on the towers, the amount of base radios that are at our tower locations and with our commercial relationships that we have now with the cloud players within our CoreSite facilities, and the enterprise customers, the tech companies as well as the networking companies that is a perfect marriage to help drive the edge compute facilities onto our properties and marry in our customer base that both ends in a unique smaller facility we refer to as edge.

I want to pivot to international and maybe we can start with India. And if you can maybe update us on the latest you're seeing in that market? And then also just talk about what's embedded in terms of your assumptions from Vodafone Idea for 2023?

Yes, absolutely. I mean India is a place we've been in India for a long time. We think it holds great promise. I think everyone knows it's one of the largest democracies on the planet, over 1.3 billion people. The carriers invest $5 billion, $6 billion a year into their wireless network, so it's got a compelling amount of investment happening. The construct in the backdrop in India looks pretty healthy. It's got 3 commercial carriers, plus a government-backed carrier in BSNL. So the carrier consolidation has ended and the market is likely in its sort of final format going forward with that number of carriers. We're seeing good growth in the 5%, 6% range. We have a 2% escalator in the market there. So inflation in India is running a little bit higher than that, but that is one of the markets where we've got a fixed escalator, India and the U.S., a little bit in France. That's where we have fixed escalators. Other than that everywhere else around the globe, by and large, we're protected from inflation through escalators that are linked to local inflation throughout Germany, Spain, Africa, Latin America is the way that -- the way that it works. So you get the 5% to 6% growth in India, which is really the carriers deploying amendments and new colocations on our assets. We get revenue from all the carriers. The 3 commercial carriers, as well as BSNL, we have a 2% escalator. And we have churn that runs in the 3%, 4%; 4% to 5% range kind of year-to-year. And that -- you put all that together, we're in and around 4% growth expectation for 2023. That is the highest level of growth that we've seen in that market in a long time, many years. Last year, we were about 2.5% and before that, it was negative because of the higher level of churn. So we've seen churn subside quite a bit in getting down into that mid-single digit range. So from that perspective, it's a pretty healthy market. There is volatility when it comes to VIL. We did announce last week that we have a $75 million revenue reserve. It is important to point out that, that revenue reserve is accounted for outside of the organic tenant billings growth. So that 4% organic tenant billings growth is not negatively impacted by the $75 million revenue reserve. We have a $75 million revenue reserve within our outlook for 2023. Last year, we took $100 million roughly revenue reserve for VIL. So VIL payment is somewhat volatile -- has been the last couple of years. We were encouraged to see the government announce their conversion of the nearly $2 billion of near-term AGR interest into equity into IO. And I think, as a return, they're going to be a 33% a holder of equity in VIL. So I think that they become the largest shareholder there. So that's what's in our outlook for 2023. When it comes to VIL, there is more work that they need to do. They know that the government knows that, but we were very encouraged with the conversion that happened. We think that, that is the first step towards getting their payments with us more stabilized. We look forward to them raising additional equity, raising additional debt within their business, addressing their capital structure needs. And we've been supportive for the last couple of years, and we do look forward to VIL regaining its footing and being a good, solid participant in the wireless segment, being a good solid customer of ours. And that's really our near-term focus is, supporting them to get to a place where the value creation over the long term through the partnership of us in Voda becomes very healthy. But they've got some more work to do before the volatility completely subsides.

What percent -- if you could just remind, what percent of your annual property revenue comes from VIL today?

For VIL, if you look at India, we're in the upper single digits comes from India. And within India, about 40% of our revenue in India comes from VIL. So VIL remains our largest customer within India, but India in its totality is 6% to 7%, 7% of our overall revenue, I think, upper single digits.

Got it. Got it. Okay. I want to bounce maybe to Europe, and we can try to hit some of the regions in the time we have left. It's an area that's seen actually a pretty meaningful improvement in growth. Europe has in recent years. It's an area, obviously, you've scaled up in with the Telxius acquisition. Maybe we can touch a little bit on the outlook for that region in '23?

Yes, the outlook is -- I mean, we are very encouraged with what we see in Europe. We are looking at another year of high single digit organic tenant billings growth. We guided to 7% to 8% organic tenant billings growth number in Europe. And that really is a function of the acquisition that we've done a couple of years ago with the Telxius assets. It's the quality of those assets, the quality of the counterparty and specifically the terms and conditions within the contract itself. We are able to monetize inflation in Europe through that contract. We are able to monetize amendments through the anchor tenant in the Telefonica case, and we've also been able to minimize the churn and the churn potential in that market through contractual terms. And you put all that together, and that's what has changed that market for us from a low single-digit growth rate to a high single-digit growth rate.

If we think about Lat Am and Africa, I know both regions have had a little bit more elevated churn tied to some M&A consolidation, maybe market exit impact from some players. So maybe we can just step through the outlook for both of those regions and how we're thinking about churn, how long maybe that persists in the interim?

Yes. Yes. I'll start with Latin America. In Latin America, we do have an elevated level of churn this year. We do think that it could be the peak year of churn for that region. Our guidance was around a little greater than 2% organic tenant billings growth in Latin America. And that comes with a churn headwind that's up in the 8% range or so. So not an immaterial amount of churn. The churn is coming really from 2 primary places. One is with a customer up in Mexico, Telefonica, who I think most people know announced a couple of years ago, they were going to become an MVNO and run on the AT&T network. So they're churning off of a lot of the wireless towers that they're on and the keeping their core, but they're joining AT&T on the front end of the tower side. So we're working through that churn. We do think this could be the last year of that elevated churn from Telefonica up in Mexico. And then we also have churn from Oi centered down in Brazil. That is beginning in 2023. So there is a contribution to that 8% churn for Latin America coming from Oi. And just to make a couple of comments on Oi in terms of sizing it and how long we think it may end up taking. Oi is about $100 million of revenue to us down in Brazil. That's broken up into 2 of their companies, 1/3 of it is with their wireline company, which remains a customer of ours, and we think that revenue is secured. So 1/3 of the $100 million is secure, we believe over the long term because it's with the wireless parent -- not the wireless, the landline parent. On the wireless side, that's 2/3 of the $100 million in revenue. That was carved up between the 3 incumbents in Brazil. And we believe that they're going to keep probably 40% of that revenue and maybe churn off of 60%. So it's $100 million in total, 2/3 is with the wireless side that was carved up between the 3 incumbents. Of that 2/3, 40% is likely to remain, which means 60% is likely to churn. That churn is beginning this year in 2023 and probably happens over the next couple of years. So you put all that together, the 8% churn is probably a peak churn this year and it comes down, but it probably stays elevated compared to normal years because of the Oi churn that will last another couple of years. We get through another couple of years, and we think churn in Latin America could really moderate, come back to normal, and we'll see much more normalized organic tenant billings growth in Latin America. And so that's what we see in Latin America and Africa. I'll just hit that quickly. We do have some churn events in Africa as well. We've got Cell C down in South Africa, that's churning off. We also have Airtel, Tigo in Ghana that's churning off. So this year, I think we've got about 6% churn in our -- in our organic growth rate. So that's an elevated level of churn. And we do think that, that will begin to trend down over the next couple of years as well, get more into normalized churn and be able to keep our growth rates in Africa, where we've enjoyed them, which is in upper single-digit growth rates in Africa on an organic tenant billings growth basis.

We covered a lot of bases. I know we're coming up on time. Just last question to sort of tie this all together. If we're sitting here next year and you're looking back what are maybe 1 or 2 big milestones you would have liked to achieve over the next 12 months?

Yes. Number one, absolutely is organic growth, hitting all the targets that we laid out in our guidance that covers organic growth, revenue growth, EBITDA growth, AFFO per share growth, certainly. We're going to continue to delever the business and make progress on our CoreSite business and developing the edge to further prepare for what might be significant revenue growth in the future from the edge. And it's also around preparing our tower portfolio globally for continued gross growth over time.

A great place to end it. Rod, thank you very much.

Thank you.

Appreciate it.