American Tower Corporation (AMT) Earnings Call Transcript & Summary

Welcome to Citi's 2024 Global TMT Conference. For those of you I haven't met yet, I'm Mike Rollins with Citi Research, and we're pleased to welcome American Tower's President and CEO, Steve Vondran. Steve, thank you so much for joining us.

Well, thanks for the invite. It's good to see you.

Great to see you. This session is for Citi clients only, and disclosures are available at the back of the room next to the AV desk. And for everyone in the room, you can use the QR codes either up here on the screen or there's also some posters or documents around the room that has these QR codes to participate in our upcoming live survey questions. And your participation and submissions are completely anonymous, and we hope that you participate with us today.

So Steve, maybe just to get us started, if you could provide an update on American Tower's strategy to expand financial performance and improve the value for shareholders.

Sure. So been on the job about 7 months now. So what I really bring to the table in terms of kind of the long tenure I've had with the company over 24 years, being part of the leadership team for the last 5, is you'll see a degree of continuity with some of the things we've already been doing. So I'll reiterate kind of what our priorities are kind of for the near to midterm. And the first priority is maximizing organic growth. It's all about sales. And so we're looking across our portfolio. And the demand drivers that we're seeing in all of our markets are focused on organic growth, number one. And the second thing we're doing is [ we're coupling ] that with select investments in our internal CapEx program to develop new assets in different markets. And that CapEx program is a little bit more weighted toward developed markets today than it has been in the past, and we've talked about that in some of our earnings calls as we're prioritizing our investments there, just given some of the headwinds that we see in our emerging markets as well. And so we see some robust demand drivers that help us grow organically. We're seeing the inorganic opportunity to invest in our internal CapEx program. We're also focused on cost controls. And we've been able to bring down SG&A year-over-year at the midpoint of our guidance, we're bringing down SG&A about $35 million this year year-over-year. So trying to make sure that we're expanding our margins wherever we can, making sure that organic growth drops to the bottom line at a very high percentage. And then also actually making in some savings as well. We're also focused on our balance sheet, making sure that we have a fortress balance sheet. And that means trying to get down below our -- to our target leverage of 5.0 by the end of the year. We have taken a number of steps to do that, including reducing the CapEx in our internal program. We did hold the dividend flat this year as another method of doing that. And we're happy to say that we're on track. To do that, we did drop below 5 for a couple of quarters. There are some onetime items underpinning that. So you probably will see that pop up above 5. And then depending on the timing of the [ India ] closed, a couple of onetime things, [indiscernible] could be just [ above average ] or just below, but we're on track to get very close by the end of the year. So that's been a priority for us as well. And then you kind of couple that with making sure that we're implementing the best governance standards across the company. We are in the middle of some Board refreshment that we talked about a couple of times and just changed our committee chairs and a new Board member in Neville Ray, sort of excited about some of the changes there as well. So predominantly, it's focusing on that organic growth, cost control, incremental investments where we can, working on the balance sheet and then finally working on the organization.

Great. Well, it gives us a lot to dig into today. And as we're getting started, getting into each of these components, we'll throw up our first survey question. So the first one we're going to go with is -- I'm going to ask our audience to participate. Remember, you can use the QR codes, and this is all anonymous. So do you expect domestic leasing activity to improve over the next 12 to 24 months? And we're excluding the impact from the Sprint merger just to make it kind of simple to think about. And we'll come back to this question in a moment, but the answers are yes, with opportunities for annual organic domestic revenue growth to expand above 6%, yes, to sustain a 5%, 6% range. And no, expect annual organic revenue growth to fall below 5%. And by way of background, I think what the normalized number for this year is about 6, guidance at the midpoint?

At the midpoint of the guidance, it's around that, yes.

Great. So we're going to come back to this as we get the responses in and just encourage everyone to participate. So just one more question, sort of big picture. So the management team has been talking about focusing more on developed markets. And that this has been not just a recent decision, but something that's been maybe more deliberate over a longer period of time. Can you talk about what's driving the interest to focus more on the developed markets and what that should mean for shareholders?

Sure. So I'll just give you a couple of data points in terms of how that investment thesis has played over the past few years. We've invested about [ $25 billion ] over the last 4 years, and that's been in the U.S. and Europe. It's been the [ Telxius ] deal we did in Europe, the CoreSite acquisition in the U.S. plus InSite and a couple of smaller acquisitions in the U.S. as well. And then we haven't done an emerging market M&A transaction during that kind of same time frame. And at the same time, our internal CapEx investments in developing sites has gone down from -- roughly 70% of that in 2021 was in emerging markets. So that's down to roughly 40% this year. So when we talk about directing our investment to our developed markets, this isn't a new thing. I think we're just probably being a little more explicit about what we've been doing and what we plan to do going forward. And what's underlying that is just making sure that we're creating the most long-term shareholder value. And so if you think about our international investment thesis when we first decided to expand outside the U.S., we had a couple of components to that. The first component was that you can export our operating model and our operating capability across the globe, and you can get operational synergies because we consider ourselves to be a very good operator and able to tackle types of operational challenges you see when you go globally. And part of that component as well was that the demand drivers in those emerging markets would drive a lot of organic growth on the assets there because they're a little bit further [ behind ] the technology curve. And so there's a lot of opportunity for sales in those markets. The second major part of the thesis was that in doing so, we could elongate our growth curve and enhance our growth curve. And what I'm happy to say is the first [ 2 ] have held true, absolutely. We've got a lot of operational synergies. I will tell you, I believe that we're the best operator in every geography we're in, and that's because we're American Tower, and we know how to do this. And we've taken the know-how across the globe, and that gives us best-in-class margins. We continue to command a premium on pricing in some occasions, that's held true. The demand drivers have also held true. If you look at mobile data growth in the emerging markets, it's as high or higher than it is in the developed markets. And if you get to an economy like Africa, mobile banking, mobile health care, they're necessities for their way of life. So that demand is going to continue in those markets. The second big component that's going to elongate our growth curve has proven a little bit more challenging because the macroeconomic headwinds that you see in the global economy have affected those markets more than ours. And it's really the headwinds have come in two flavors. The first is care consolidation. And we certainly saw that play out in India. We had some pretty dramatic consolidation there. And we've also had some FX headwinds as we've seen some currencies devalue. So as we've looked at the performance in those emerging markets, we've looked at that and said, there are two things we need to do. The first is we need to increase our hurdle rates because while we underwrote a degree of FX headwinds in there, quite frankly, in the past couple of years, it's outpaced when we underwrote on that. And so we've raised the hurdle rates there. And we've also said that we want to decrease the overall company exposure to that type of risk. And so what we said on our last call is that pro forma for India, about 25% of our AFFO per share will come from emerging markets. And as we have continued to direct more capital toward developed markets, as we continue to do that, you should see that come down over time. And we think that's appropriate to bring that number lower over time. So that's really what's driven a little bit of the change in investment philosophy. Number one, we can't source as many deals because the returns have to be higher. And number two, we do want to decrease our investments relative to what we have in the past so that we have lower exposure to those economies, given some of that [indiscernible] we've seen.

Very helpful. And maybe we'll shift gears, talk about the domestic power business and the leasing opportunity, obviously, your biggest exposure in developed markets. Can you unpack the reasons that American Tower seems to be seeing better leasing activity than your competitors? And I realize it's a hard question because there's part of a comparison in there. But what are you seeing that is benefiting American Tower?

Well, I can't talk about our competitors. I don't know what they're seeing. I'll tell you, I think I have the best assets and the best team in the industry. So I'd give me more business, too. But I think if you look at what we're seeing in the environment here, it's very consistent with what the carriers are saying. What we had -- what we said in Q1 is that our application volumes in Q1 were up 70% sequentially over Q4. That was a low base, but that's a pretty big ramp. And we had another sequential increase in Q2, and we're expecting to see similar levels of business in Q3 and Q4. And that allowed us to reaffirm our services guide. That service is hard to predict. So I will tell you, it's -- there's variability in it. But that guide is based on the conversations we have with boots on the ground at the care and what they're going to deploy. And if you look at what the carriers themselves are saying, Verizon specifically said they're going to take their mid-band 5G coverage up to about 70% by the end of the year. That implies a ramp-up in activity by them. Some of the other carriers have talked about other initiatives such as [ join to one OEM ]. There's a level of activity implied with that as well. So we don't think that what we're seeing and saying is different from what we're hearing from our carrier customers. And if you look at the kind of midpoint of CapEx guidance from the carriers, I think they're in the kind of the $34 billion to $36 billion range, and that's right in line with what we thought the average CapEx would be during the 5G cycle, about $35 billion a year. And that's about $5 billion a year more than we saw in the 4G cycle. So what we're seeing on the ground and what we're talking about in our results, we think, is very consistent with what the carrier is saying. We think that it's right in line with the guidance we gave at the beginning of the year in terms of our services. And it's also in line with what we thought was going to happen in this cycle.

Let's see our survey results and see what our audience expects. So 25% expand. The annual organic domestic revenue growth rate to expand above 6%, 50% sustain 5% to 6% range and 25% of the audience expects the annual organic domestic revenue growth to fall below 5%. Now based on the activity levels that you're seeing, how do you frame the future opportunities to grow organic leasing revenues?

That's a very clever way to try to get me to get '25 guidance early. It's a little too early to give guidance for 2025. And what I would remind everyone is that activity and property leasing revenue is a little bit disconnected with American Tower because of our comprehensive agreements. And what we've been very public about is that we have 2 of the big 3 plus [ DISH ] at our conference of agreements. And what those agreements do, they smooth out some of the variabilities in terms of leasing that come with the activity levels in that. So you can't read much across from the activity levels to that component of it. We do have one carrier that's not in a comprehensive agreement today. And so there is some variability in terms of the timing in which we'll see the [ rent ] from them. We feel very comfortable that we'll get kind of the same amount over a period of time. It just may be a little bit choppier. You may have a little bit more variability quarter-by-quarter than you normally would. But what we're seeing again is very consistent with what we thought would happen in the 5G cycle. And when we put out our long-term guide, we had a certain level of activity we expected to see. Some of it was locked in on the conference agreement, some of it was not. We knew that, that was going to be there. And it anticipates the type of activities that our customers need to do to meet the growing mobile demand. And that's a combination of amendments to roll out 5G mid-band ubiquitously and also to densify the networks to meet demand as uptake of the network requires it.

So for the customers that have these comprehensive deals, do you see times where they're going to spend more with you than what they commit to? And what should we be watching to see if that could be a possibility for you in the future?

So every agreement is a little bit different. So some of them just cover amendments, some cover new amendments and some level of incremental new sites. So they're all a little bit different. And the way to think about it is, if a carrier -- we never just give an all-you-can-do everything you want on our network. So there's an anticipated activity level that comes with those agreements. And if the carrier goes beyond what we anticipated, then there could be some upside from that. In terms of what to watch, when we see those upsides, we'll tell you, so we'll be very transparent about that. But in terms of what's underwriting those existing guides, I kind of give you some of the components of that, so you can see the demand drivers. So when we put that guide out, we were looking at this 5G cycle. And we've got some really smart folks on my team who -- you know what frequencies are going to be available during the relevant time frame, you know what equipment is going to be available to be deployed, you know that [ mobile ] demand is going to increase 20%, 30% per year in the U.S. And so you can take that and then look back at 3G and 4G and figure out where that activity is going to occur. And that's how we create our kind of demand model. And when we do that, we look over that multiyear period of time and say, on average, to meet the consumer demand, here's what they need to deploy. And that's how we constructed that. What's not in there is a 5G killer app that makes demand spike up more than 20% to 30%. We don't have independent fixed wireless network installations in there. And we're not seeing that today, the carriers are using existing network assets to do fixed wireless. But if that was a new use case, that could be incremental on that. We're not predicting a new carrier. So we're not predicting that the cable [indiscernible] or a cloud provider or someone else comes in. So that's not out there. And with DISH, we've underwritten only what's contractually committed in our comprehensive agreement. So if they've got a new customer and wanted to expand their network beyond what we anticipated or needed to provide more bandwidth than we thought, that can be upside as well.

And in terms of one of the recent trends that we've noticed is that churn has fallen to below 1% in the domestic segment, if you take out Sprint merger-related churn. What's happening to push churn to kind of below the longer-term ranges that the company has previously indicated? And is this a sticky place that could also help that organic growth potential?

So if you look at our historical churn, percentage has been kind of 1% to 2%. And I think what we've been pretty public about is we expect that to trend to the lower end of that range as we get through some of the churn that we've had in the past in the spread churn. And I think one of the things driving that is you don't have the regional carriers that have consolidated the way we did in the past. So you don't have a [ cricket ] or a MetroPCS and those types of things. There are some things that we're watching. We have [ U.S.A ] mobility out there. And while our overall exposure to them is pretty modest, it's less than 1% of U.S. revenues, less than 0.5% of global, those agreements are set to renew over the next couple of years, our average remaining term is about 2 years on those. So to the extent that, that merger gets approved and depending on how they integrate the network, there could be some elevated churn from that. So that's one thing to watch. But overall, when you look at the rest of the ecosystem, there just aren't as many consolidations in the industry that are happening out there, and that's what was driving a lot of the years where you saw that churn ticking up closer to 2%.

Going to introduce our next survey question. So the next one here is -- and this is -- some of the investor feedback that we've received has kind of raised this question of -- for our audience. Do you view American Tower as, I guess, the terminology that I've heard from the buy side is a bond proxy, with share performance primarily influenced by the level of treasury rates in the market? So we're going to go to our audience and see what they think. Steve, look forward to getting your view on this as well in a moment. But maybe just finishing up the domestic conversation, so what's the potential for American Tower to get this last carrier, not on the comprehensive, on a new one, whereby then you have even greater visibility across all your customers? And can you give us an update on your exposure to DISH?

So we're always talking to all of our customers. Even way before something expires, the ink doesn't even dry on the contract before we start talking about new things with the customer. And we're very comfortable operating either in or outside of a [ conference of ] agreement. In fact, there've only been a couple of years in the last decade where we had all the carriers under our conference of agreement. And what happens when you're not in a conference of agreement is usually there's a mismatch between what we think they're going to do and what they [ do ]. I think all things being equal, the operational efficiencies we both get out of it, the visibility that we get into revenue, they are going to expense; I think it's safe to say, we all like those aspects of it. So typically, when we're not in the [ conference of ] agreement, it's just because we don't agree on what the future holds. And we're very confident. I've got a real team who's putting together that same type of forecast I talked about for the 5-year guide, we do the same thing on an individual customer basis. And so we know what we think we're going to do over a time period. And we don't sign these agreements to discount to get into those agreements. We sign them for the operational efficiency, the customer friendliness, et cetera. And so we're perfectly happy to be patient and wait. So in terms of the prospects of that, you've seen us go into periods with a customer where we didn't have one, then those expectations aligned and we got into one. You've seen that not happen sometimes, and I can't predict it. So we'll see how it plays out.

Let's go to our audience and see the results of our survey. So 40% yes, they view AMT as a bond proxy, and 60% no. What's your view on how American Tower views its own company in terms of the influence of rates?

Well, if rates are the only factor, I'm working too hard. I'll say that. I think that there's a lot to be gained in terms of running the business really well. But clearly, rates do have an impact on it. I would mention, in case anyone missed this, we did get an upgrade in our debt ratings recently. So we're happy about that. And we're a REIT. And REITs do have some correlation to the bond market. So I can understand why people think that way. But I will assure you, we work really hard to make sure that our performance commands a premium over what you're seeing in the bond market by making sure that we're, again, my team is [ half ] tired of me saying this, you might get tired, too; maximizing organic growth and minimizing costs. And that's going to be a focus as long as I'm in the chair.

And you mentioned the upgrades. So is there any evolution, in your view, we'll kind of skip ahead on just the capital allocation side since you mentioned it? Does that influence where you see target leverage for the company or how you would approach shareholder returns?

I think -- I don't think that it changes anything in terms of our view of what our priorities are and how we're planning the business. It's certainly nice to get the recognition that the work that we've been putting into the business, in particular focusing on quality of earnings. You've heard Rob talk about it. You've heard me mention it. And when we talk about decreasing our exposure to emerging markets, part of that is increasing the quality of earnings. And we do think that, that justifies a better debt rating and frankly, a higher multiple on the company as a whole. And so that -- we think that the upgrade that we got was a recognition that by divesting the market in India, by focusing on delevering, by focusing our CapEx in developed markets, but that improves the quality of earnings and makes us a more reliable partner and worthy of a premium. And I would argue it's both on the debt and the equity side.

Right. And that actually just brings us to our last survey question, and we get this question from investors, so I thought it would be helpful to ask our audience this question of should American Tower simplify its asset mix. And the choices we're offering are no, the current asset mix should generate the best long-term value for shareholders; yes, divest international assets, become a domestic-only tower and data center provider; yes, become a domestic-only tower provider, divest all other assets; or yes, divest data center assets and just become a global tower operator. So we'll see what our audience thinks of this, but maybe we can just start talking about discussing some of these segments. So what have you learned, maybe migrating over to data centers for a moment, of owning CoreSite? And how do you view this platform expanding over time?

Look, we're really excited about the performance of CoreSite. And again, I'll kind of remind everyone of the investment thesis there. So we believe that over time, there will be a convergence between wireless and wireline networks. And we didn't buy CoreSite to buy a data center company, we bought CoreSite for the interconnection ecosystem that they have there. Because as we start thinking about what that convergence looks like over time, it's critically important that if you do start putting compute towards the edge of the networks, it has to connect back to all the other users. And to do that, you have to land it in an interconnection ecosystem. And if you're just dropping a cabinet and running a fiber back to a data center, there's some value there. But the cross-connect environment is where the real value is created. And so what we saw the opportunity is that if we want to be a major player in the edge when it unfolds eventually, which it's not here today, but when it does, we need to control the interconnection ecosystem. That was the strategic thesis for why it made sense. But the business we bought was a fantastic business, and we knew that. So we didn't underwrite any of the edge revenue in the underwriting. We looked at CoreSite and said, we can create more value in the current asset operating it and changing a little bit of the investment thesis they have in terms of providing a little bit more capital. And we've also got the benefits of having a robust demand environment there that's really more than what we thought we originally bought it. So I look at that acquisition, it's performing extraordinarily well. We've had the opportunity to increase prices, which just helped us actually underwrite higher yields than what they were writing previously. And it let us invest capital in the U.S. in a way that's going to create mid-teens yields, stabilized yields once you kind of fully lease up the facility to a stabilization rate. We think it's a great use of capital. So we're excited about the way the business is performing itself today. And we also still believe that this long-term thesis will play out. But in the meantime, we have a great asset score really well.

It kind of brings us to another question that we're asking a lot of the companies here this week. How can the emergence of Gen AI help revenue as well as cost for American Tower? And which is the greater opportunity between these two for value creation for American Tower?

Well, clearly, the revenue side, I think, is going to be the biggest opportunity, and I'll tackle it from both the data center perspective and also the Tower perspective. . It's creating opportunities today in the data center world. And that's coming in a couple of flavors, that we're not the right environment for large learning models, that's going to be a hyperscale campus somewhere else. That's not our business. We're an interconnection hub. But the way we all interact with that large learning model is through what they call the inferencing layer. If you need a distribution channel for that, and of course, that's a perfect place for that. So we do see interest in that. We are writing some business for the inferencing layer. We're being very selective on that because there's a lot of AI companies springing up, and we're not going to take counterparty risk where we don't have to. So we're not doing that. But we are seeing demand there, and it's driving up prices in the ecosystem in the markets as well. But the other area of demand that we're seeing from generative AI is -- it's kind tied with our bread-and-butter business, which is hybrid, cloud deployments for enterprises. Because as enterprises want to take advantage of these large learning models, they don't want to put their data out in a kind of a public environment. So they're creating their own large learning models connected to the cloud on-ramp. And again, we're the perfect place to do that. So we are seeing the enterprise customers that have been our bread and butter for a long time, expanding some of their installations to take advantage of AI as well. And also for the Tower side, you're starting to hear talk about putting AI in the phones and using the networks for it. I think it's too early to tell exactly how that's going to play out. The way -- at least the way I use my phone today, if I'm using ChatGPT, it's either text or a photo, probably just playing out the photo thing make me look like on a [ shorts maker ] or something. But in the future, I think you'll see video applications that are being done mobile. And that's where the real demand is going to come on the wireless network. And just like when social media, when it was just text or a still photograph, it wasn't -- it was some uptake, but it wasn't a huge demand on the networks. But when you went to video, things like Facebook Live and TikTok, things like that, that's the hockey stick of demand that we've seen for a decade now. And when you look at AI, when you start seeing things like video applications, that's when you're going to see a lot more demand on the wireless networks. There's some other stuff like facial recognition that requires low latency kind of high-bandwidth streaming, things like that. Those types of applications is -- are going to put demand on the network. So I think it's too early to tell exactly when that happens. I think you'll clearly see the video applications coming out.

And can you give us an update on what's happening with India right now in terms of timing to potentially close the transaction? As well as do you have a view now of where the monetization is ultimately going to end up when you tally up all the parts to it?

Sure. So we received approval from the Competition Commission of India, and that was the regulatory hurdle that we needed to achieve to close it. So now it's just working through customary closing conditions. Like any deal, the lawyers have to spin through that. And so we're very confident in our ability to close it by the end of the year, as we stated previously. And we probably won't get any more specific than that until it actually closes, and we'll give you guys a disclosure than what happens. It also includes some financials that will give you a little bit more visibility and kind of some performance on that. So in terms of the proceeds for it, I'll just kind of remind everyone that the total value that we expected to [ get ] was about $2.5 billion. That comes in a couple of flavors. There is an enterprise value of about $2.1 billion. Then there was the obsolete convertible debentures OCD that we had, which we have now converted and sold. And there are some receivables that we retain the rights to. And then there's also a taking fee in the agreement. And at this point, we have exercised and sold the OCDs, and we've repatriated about $325 million of cash out of that. There's another $20 million here there that we should repatriate this quarter. And so then when you think about that, then the proceeds at closing should be another, call it, $2.1 billion to get us to the $2.5 billion.

Very helpful. And maybe taking a step back across the broader international arena, FX has been something you've been dealing with since you broadened outside of the U.S. And I think, in a recent discussion, you were describing how you're moving towards CPI escalators in a number of markets. Where are you on that front in terms of in the international arena, trying to reduce the FX risk? And if you look back historically, is that a very effective way to manage that currency risk?

Sure. So imagine it a couple of ways. So CPI escalators have been something that we've done in every market except for India, and then in France. We have a fixed escalators in France. But even in our [ Telxius ] deal, it's a [ CPI-linked ] escalator, no ceilings, no force. That's important for us in all those markets. But that's not the only way we manage it. We also have a large portion of our cost base, is pass-through in those markets/So if you think about Africa, power is really the major piece, and we pass that through. And that's, call it, 75% of our cost base in Africa. In Latin America, land is our biggest cost base. And that's again in the kind of 70%-ish range of expenses. We pass that through as well. So you get a little bit of a natural hedge on that because you're passing through your cost base on it. We've also used some dollar pegging mechanisms, a market like Nigeria, where we have a component of the rent that's pegged to the dollar. So we have used a number of different mechanisms there. And in terms of kind of going forward, we view CPI-linked escalators as table stakes in the emerging market or any international market, [ just ] emerging markets in terms of how we would look at that. And we haven't historically used derivatives, the hedge. It's something we look at. We've talked about it. It's just -- it's complicated. It doesn't always make sense to do that. But we've also used some local borrowing in a place like Europe, where we borrowed -- we've got some borrowings in euros that helps hedge any currency risks there as well.

And just thinking about this international arena, maybe you could just take us around the world briefly and give us a fundamental update. So the regions and markets that are performing well and you're seeing maybe accelerating trends and maybe those where things may not be where you want it for whatever reason you can share with us?

Sure. So I'll start in Europe. So Europe is doing very well. We're seeing an uptick in new business there as well. And so if you look at kind of our guidance, we've been ramping that up a bit. That's a combination of two things. One is that our customers continue to build so we're seeing some [ amendment ] activity there. But it's also an increase in our operational capabilities in a place like Germany, where quite frankly, it was pretty hard to deploy sites first. And we've gotten better at that. We parachuted our teams across the globe, and it kind of fixed some of the challenges there. And we're also building more sites in Europe. So we're expecting to build about 500 this year, that up from about 400 last year. So Europe is performing very well. In Africa, on the demand side, we're seeing a lot of lease-up. So from a sales perspective, it's very healthy. We're seeing a lot of activity by our customers there, a lot of new leases and a lot of amendments. We did modify that agreement. You might have seen an announcement by MTN, where we had an agreement before that was going to support about 2,500 sites. That's down to about 2,100, but it's -- 100 percentage of those are going to be colocations now versus new sites. So that's very much in line with our goal of going a little bit capital light in those markets and focusing on the organic growth. So that's a good opportunity for us. But on the demand side, Africa is doing really well. The challenge in Africa has really been FX and some of the devaluation in Nigeria and other markets there. And that's been the challenge. Latin America, growth is a little bit more muted, and that's predominantly because of a couple of factors. The first is they build a bit slower to rollout 5G. In Mexico, 5G spectrum has not gotten to the hands of the carriers as quickly as we'd like to have seen it. In Brazil, there's some 5G rollouts going on. But the major carriers in Brazil are busy integrating [ Oi ]. And the 3 main carriers there bought [ Oi's ] assets. And as they're integrating those assets, they're not as focused on building because they're still trying to optimize their network. And then we are seeing churn in Latin America because of the [ Oi ] transaction as well. And that comes in a couple of flavors. [ Oi ] was about the wireline and a wireless company. On the wireless side, we're seeing some churn this year. We expect some additional churn that will bleed over the next couple of years. On the wireline side, there's a traditional process similar to the bankruptcy. And we did see some churn this year, and we modified our agreement with them, and it expires in 2027. So when you look at Latin America, we're expecting our growth in Latin America to be pretty muted and being in the low single digits for the next several years because of that. Having said that, the dynamics in that market are still the same as they are anywhere else. Mobile data usage is going up 20% to 30% a year. The networks are getting strained. They need to invest in their networks. And so what we're expecting to see is when we get through this period of consolidation churn,that you'll have fewer carriers, but they're going to be more financially stable. You're going to have increasing demand by the consumer. So we think we're going to see that return to a healthy level of growth once we get through that. But today, it is more muted in Latin America. And then we already talked about the U.S. and how well things are going here.

Good. Are you ready to see the results to our survey?

Sure.

Okay. So question is, should American Tower further simplify its asset mix? 14%, no, the current asset mix should generate the best long-term value for shareholders; 57%, divest International and become a domestic-only tower and data center provider; 0 for yes, become a domestic-only tower provider and divest all other assets; and 29% divest data center assets and become a global tower provider. So a range of perspectives. You've been at the company a long time, the key part of the strategy, leading the company now, how do you look at the asset mix? And what can create the most value for shareholders?

Look, I'll just reiterate what I said on our last earnings call, and that is that we are looking at our global portfolio where we sit today. And we're trying to figure out what creates the most long-term shareholder value with each segment of it. And so as we look at those various segments, we're looking at the performance we see today, the types of improvements we can make, things like margin expansion, cost control, things like that, what the alternatives would be. What I would tell everyone is that the Board and our management team are always looking at all the alternatives. And those strategic options that are out there and something we talk about regularly, and so the decisions that we make are geared toward that long-term shareholder value creation, and we'll continue to do that. So as I look at the portfolio today, I think there's a lot of opportunity for us to continue to improve the things that aren't performing as well as we'd like to see and that we can maximize the ones that are performing well. So that's kind of what we're focused on today. But we'll continue to evaluate the portfolio. And if we ever think it's going to create more value to do something different, we will.

When you take your 2024 guidance at the midpoint, is there a way to unpack that to just -- if you kind of look past the Sprint churn, look past some of the rates that you've had to absorb and then the divestitures, the deleveraging, is there a way to unpack what that underlying AFFO per share growth is? And then a follow-up to that would be, does that -- should that inform us the type of growth American Tower can achieve in the future?

We haven't been explicit about putting a number out on that. But what we have tried to do is in our supplemental provide enough information that you guys can put kind of your own your own calculations on that. So we think we kind of give you the piece parts, but we haven't really put a number out there yet that gives you a specific number on that.

Do you still believe that international should grow faster on average than domestic?

Once we sell -- let me [ show you ] the growth algorithm, then I will answer is part of that. So if you think about our long-term growth algorithm. So what we believe is our developed markets should grow mid-single digits, so that's the U.S. and Canada and Europe, that once we get through the care consolidation churn in the emerging markets that we're seeing today, they should grow a couple of hundred basis points faster. So yes, the answer is yes. Over time, they should grow faster. Today, given the care consolidation churn we're seeing, it may not grow faster, at least consistently as we get through that churn. And then CoreSite, we expect to grow upper single or lower double digits as well. And then you add into that the additional revenue we can generate from our CapEx program by investing in new assets, again, predominantly in developed markets. And you couple that with cost controls and an expanding gross margin, and we think that's a recipe to see mid- to upper single-digit growth, even absorbing some of the headwinds that you have to factor in, like refinancing costs. There will be some headwinds there. We've put in our supplemental, we put our debt stack out. You can see the maturities and the rates and make your own decisions about what the refinancing costs would be, lower, since we got an upgrade, but there'll still be some refinancing costs and then make some FX assumptions on that as well.

And within that context, talking about capital allocation earlier, as you look at getting to this debt leverage target of 5x or below, is there a significant opportunity to ramp that development program as you look out over the next couple of years?

There is. And the way we'll look at it when we get to the [ 5.0 ] is that opens up the [ round ] of possibilities where that next dollar of capital goes. And the way we'll evaluate that is we'll look at share buybacks, incremental development CapEx in our current programs, M&A, further delevering or raising the dividend. And the way we're going to make that decision, it's going to be a math-based approach, and we're going to figure out what gives us the greatest long-term shareholder return based a lot of the variables that goes into that. And that's really how we think about capital allocation, going forward, is that long term -- I'm a big shareholder, I care what happens long term on the stock price. So that's how we're going to make those decisions is what creates the most value for all of you guys over time.

Steve, thank you so much.

Thanks.

Thanks.