American Tower Corporation (AMT) Earnings Call Transcript & Summary

All right. Perfect. Good morning, everyone, and welcome to TD Cowen's 11th Annual Communications Infrastructure Summit. My name is Michael Elias, and I am the Comm Infra Analyst here at TD Cowen. For this session, we're joined by American Tower. And from American Tower, we have their EVP and President of the U.S. Tower division, Rich Rossi. This session is structured as a fireside chat. I've said this in other sessions. I promise you I will try and open it up for questions at the end. But like I said, I do get excited. So with that, Rich, thank you so much for being here. Really appreciate it.

Thanks, Mike. Great to be here.

Now I want to -- we're just talking about this before we got started. You started in 2001 at American Tower. That is a company veteran if I've heard one. From your perspective, like could you give us an overview of your time at American Tower and a bit of your path to your current seat? I think that would be helpful as we set up this conversation.

Yes, sure. So back in 2001, it was my first job out of law school. I started as a contractor at American Tower. Ironically enough, I'm tasked today with growing the U.S. business. At that time, I was working on tower divestitures. We had this brilliant idea that if you had a couple of towers in the same 1 or 2-mile radius, that was probably 1 or 2 too many. So at that time, we're focused on reducing operating expenses and property taxes, things like that. So we divested some towers over my first couple of years with AMT. And then I moved out into our U.S. operations, had a series of roles that were either operational or legal in nature and spent a lot of time working on our customer agreements. So the major customer MLAs probably the last 15 years. did some M&A work and became the General Counsel of the U.S. in 2018 and then took the President's role at the beginning of this year. So it's been a really interesting journey.

Congratulations to you. And now since you've stepped into that role, and we're about halfway through the year, I'm curious, can you talk about your key learnings since stepping into that President role? And as part of that, the strategic priorities and objectives for you in the U.S.

Yes. So the interesting dynamic we have right now is Steve, our CEO, stepped into the role early in '24, Bud Noel became our COO at the same time I took this role. Ruth Dowling is fairly fresh in the General Counsel role. So we've had a total leadership change at American Tower and that all internal folks moving into those roles, and that's created another layer of opportunity for folks. So our senior U.S. team is a lot of people who are just moving into their roles. I think the longest tenure is about 18 months. So we have a team of industry veterans all probably around 20 years on average of experience, but new to those roles. So one of the biggest learnings has been how do we keep this train moving at full speed, taking all the energy and excitement that these folks are bringing, but channeling it into driving the right results. In terms of the U.S. focus, what I'd say is our focus at all times is creating the greatest amount of durable long-term certainty for the business. So that's a key, but we're trying to do it in a couple of ways: one, maximizing the opportunities when we're working with our customers to make sure that we provide our investors with results that are going to make us choice that's the best one out of our sector. But you also have to make agreements with customers that create value for them. So while we're trying to make sure that we drive as much revenue as we can, we know customers have options. So making sure that we provide them with long-term value as well is really important. We're looking at opportunities to grow inorganically, so making sure that our underwriting is disciplined and that we are finding assets that meet our criteria and that help provide long-term growth. Those are all key. And then the last thing I would add is we're really taking a product management focus now more so than we have in the past. And so we're looking at everything, whether it's our services business, backup power program, the way we run our rooftops, trying to expand margin on all these different product lines to help drive those top line results.

And we'll talk about that in a little bit because that's been a topic that's come up on the earnings call. But I want to -- in the U.S. specifically, I want to focus on the commentary that we've heard about the big 3 in terms of where they stand in their upgrades, right? I think on the 2Q earnings call, it was that the -- their goal is to get to over 95%. One of them is at 85% today, another at 70% and the last one is around 50%. When you're having your conversations with the carriers, what are you hearing from them in terms of, let's say, timing of their upgrades? And how does that compare to the conversation and the narrative when you were sitting down last year?

Yes. So what I'd say is without getting into specifics with the individual customers, I think that what we're seeing with 5G, in particular, is it's playing out the way that we thought it was going to back in 2019, 2020 when things started to get underway. And that's because we had a good track record with both 4G and 3G watching those processes unfold. And so when we sort of take that vision and match it up to what we're hearing from customers, it's very consistent. The way that we view the generational technologies is they hit 3 different phases. First phase, think of as your coverage phase, and that's starting at the urban center and pushing the network out to the outer edges to rural areas. Then you have that phase that I've heard referred to as halftime pause. We call it quality phase.

That's halftime pause.

Yes, exactly. There you go. That's 2-in-1. But we look at that as the phase where the operators take a look at where they are from a coverage perspective. They're also looking at where the demand is on the network, and that rolls into that third phase, which is capacity. and in capacity, you may see them go back and revisit some of the sites that were touched initially in the coverage phase. You may see some densification activity with new colocations to provide a full-on new cell site, whether it's colocation or a build-to-suit to fill in an area where demand -- there's more traffic on the site than upgrading with more equipment would be able to accommodate. So I think we're seeing it play out as we thought it would a year ago and as we thought it would 5 years ago, which is great because it is nice to see the trajectory of that story continue to go in the direction that we're imagining it would.

When I hear of -- so in data center land as an example, right, you have one buyer who's super active and then another one falls behind because of whatever situation it may be. But usually, what you see is you see like the spring effect where the person who's behind is like, oh, we need to catch up and they just go on a massive procurement spree. When I hear about the 50%, the one that's at 50%, obviously, without naming any names, my gut is to say, okay, well, they need to play catch up, right? And as a result, we could see an acceleration there. Does the same dynamic that applies in data center land with the hyperscalers apply to the carriers where you can see that, hey, we need to catch up to our peers.

Yes. I think there definitely is some similarity to what you just described. One of the great things about being an infrastructure for wireless is the carriers over the last 20 years have consistently shown that they're going to compete to differentiate on quality of service. So to the extent that somebody is behind in whatever metrics you may be looking at, at that time, they will tend to try to work really aggressively to try to catch up. So I think when you talk about somebody who is behind, we look at that as more of a when, not an if situation. And so timing can be variable in some of these relationships. The carriers are taking different paths to get to 5G. It's all sort of the same destination, but their journeys have been different through each of the technology generations. But in this case, yes, their pace may be different, but we think the result is going to be the same.

Okay. And then also, you've been highlighting the increase in the application volumes, right? And as part of that, you're highlighting the increases on the colocation side. I'm curious, like as you think of the relative mix between the two, kind of how has that evolved? I know colos have increased, but just kind of like trying to see the chart in my head, if you will. And then the second question becomes, as you think about the book-to-bill or the time line between when it's signed to ultimately when it commences, what is that -- how has that changed, if at all?

Yes. So the mix of sort of amendments or augmentations versus colocations still weighs heavily on our portfolio towards amendments. If you just think of the size, 43,000 U.S. assets and then the relationships with our customers, over 10,000 leases, sometimes over 20,000 leases with particular customers, there are a lot of sites for them to touch when they do these upgrades. So we're seeing a lot of amendment activity and have been for the last 5 years. You mentioned the increase, the 200% increase in colocations. So that's exciting. It's still a smallish number compared to the overall float of applications that we have coming through, but it's nice to see that pick up. I think it helps with some of the densification story that we have forecast and that we're seeing play out right now. From a sort of signing the book-to-bill type time line, I think with -- the carriers have done a great job over the last decade of getting much more into a mindset of just-in-time deployment. Back in my earlier days, 20 years ago, you would see new colocations being signed up that weren't going to be installed for 2 or 3 years. And that's changed a lot. So I think what you see now is with a new colocation lease, it may take 6 months from when the application is received to when it's actually signed, whether it's permitting, legal review, whatever it may be, engineering review, it takes a little bit of time. With amendments, it's a little bit shorter. It may be something more like 120 days. But those processes live within a larger process, which goes all the way from scoping of the site to construction. So one of the things that we do with our services program is we have AZP, which is the front-end permitting. We have construction on the back end, and then we have an end-to-end offering, which does the whole thing from scoping to construction. And we found that while it usually takes about 12 months to do that, as a stand-alone, when we do end-to-end, it's more like 9 months on a colocation. So we're able to shave off some valuable time. So we're seeing things move quickly with some customers. But then sort of to your prior question, with some others, we are seeing a bit of a lag in that time line. So it's not gospel per se, but those are more indicative in terms of what the time lines typically are.

Got it. One of the things that I think through is like the conversion of pipeline, and I'm trying to find the right way to say it because I get trip up sometimes with the terminology. But as I think about it, you said when the application is received, then it goes through the legal review and so on and then an application is signed, right? What percentage of what you receive actually gets converted into something that's signed that ultimately does become revenue generating. Just trying to get a sense for that percentage.

Sure. It's tough to quantify the percentage in part because of some of the comprehensive or holistic arrangements that we have. So those arrangements, I should mention, they help on the speed question that we just had, the book-to-bill. Those contracts provide an expedited experience because you take out a lot of that middle stuff that happens in that 6 months when a contract is floating around. That's more like a 30-day process from application to what you would call a signed amendment. In some of those contracts, they contemplate a steady flow of revenue over multiple years. And so as a result of that, the applications that come in behind it don't have revenue specifically attached to them, but they track back to a bigger arrangement where the revenue has sort of been accounted for as part of an overarching relationship. So we have a mix of things that come in that a la carte that probably has a higher percentage of things that are going to have revenue attached to them. But the applications that coincide with one of those holistic contracts, they're less likely to have revenue because it's already been baked in.

It's been baked in, yes. No, that makes sense. One of the questions I would ask is we're talking about these holistic agreements. I think there is one customer who you've talked about on the call without naming specific names that they -- you're not on a holistic agreement with them. I'm curious, how would you just generally describe the opportunity to have holistic agreements with all of your big carriers in the U.S. in the near to medium term.

Yes. I mean if you -- we've only had a couple of years, it's probably '21 and '22 where we had all of the majors on those type of contracts. To your earlier question about the way that the timing coincides between the different customers build out, we never really were able to find in 4G and 3G the opportunities where the overlap was such that you would have those contracts in place because somebody was lagging behind or somebody was far out ahead. So we did have an early 5G, you had that pent-up demand for mid-band deployment where everyone was doing the same thing. So I think we had that brief window of time. It's something that we're open to, but also something we're comfortable having some customers in those structures, some being a la carte or all being a la carte because ultimately, those agreements, they provide that faster experience and some back-office efficiency for us. So quicker deployment for the customer, less manual touches for our business. But it really adds up to sort of the same opportunity. I think with the comprehensive contracts, you have a little more ability to forecast when things are going to hit versus the a la carte model where there might be more variability in timing. So we're comfortable with either, but always open to those big long-term committed contracts as well.

Perfect. I do want to ask about your U.S. new leasing guidance, which you gave an update for on the call. So you took it to roughly $160 million versus the $165 million to $170 million prior, and you gave the reasons in terms of commencements and all. Now that you're -- you've done $77 million through the first half of the year, I mean, clearly, in order to get there, like it needs to take a step up. But what I thought was interesting is that almost like similar to the beginning of the year or unlike the beginning of the year, you didn't provide like a organic growth range. Before it was greater than 4.3% or greater than or equal to 4.3%. Now it's roughly 4.3%, which makes me think like have you guys fully derisked the guidance, we feel comfortable that this is where we come in? Or is there still some execution risk around that?

I would sleep better if we had derisked that. still -- we still have to perform. So there's still -- right, it's the about 4.3%, could be a little less, could be a little more. It really depends on the conversions on some of that variable a la carte business. So that number derived from just looking at what's in our pipeline using our historical perspective to figure out what the opportunities to convert those into billing would be. So...

The commencing piece.

The actually commencing it, not just getting it signed up. So yes, that for us seems to be the right place that we think we're going to land for end of the year, but it really is subject to some of the things we talked about that when they land is going to dictate what the exact number is going to be.

I'm going to try and phrase this in the best way possible. So as we think about the business and we're moving towards our 4Q exit, let's say, this activity comes through in commencement [ setting ] right? What I'm curious about is, if you were taking a historical purview looking at the tower industry, what would you say is implied for 2026, if at all, based on the jump-off point at the end of the year? I'm just trying to calibrate and make sure that we're kind of like dialed in and we're not getting too far over our skis in terms of getting excited about the activity that's out there.

Yes. So I mean it's only August. So too early to really nail down what '26 is going to look like. We've given a long-term guide that was the '23 to '27 U.S. organic guide, right? We haven't changed that, right? So that can kind of give you an idea of what we're thinking. I think some of the larger contracts that we have that have been in place 2020, '21, '22, you have some contracted step-downs in terms of the commitments. on those. So what that means is the -- our budget is going to have a lot of the a la carte pay by the drink type business coming through. So again, it doesn't mean less. It's just a timing thing. So as you look at '26, what we're trying to figure out between now here in August and the end of the year before we do the guide in January or early February would be just what are we going to commit to on those commencements for that more variable pipeline. So it gives us a couple of months to look at that, nail it down. And then also, right, we just -- the ink is still wet on the T-Mobile U.S. Cellular deal. We have some renewals coming up on the U.S. Cellular side in '26. So better understanding what's going to happen, what their plans are for that network. We haven't had conversations about that. So some of the variable commencement and then thinking about whether there is any risk on churn on that side. And any risk we have there, we've given the 1% to 2% guidance on churn, and we've been very much in the low end of that. So the question is just it wouldn't be outside of that? Is it somewhere in the midpoint in there? So just trying to figure out the specificity on that before we give any real clarity on '26.

Okay. Would it be fair to say -- because I appreciate the step down in what we call the use fees, right? Is that right?

That's right.

So I appreciate that dynamic. But I would think that to the extent that you're seeing a step down there, well, there's going to have to be something else that's going to have to -- that will have to come and offset that. And what I'm just generally curious about is every quarter we get on the call and we hear more about, hey, activity is picking up, right? Do you just broadly think that the momentum is there for the overall right, that we could be offsetting any potential step downs that some tower companies could have as a result of changes in their -- in the use fees.

Sure.

And it's not an American Tower specific question, did you get that?

Yes. I know industry, yes. I think with those use fees, in some cases, they're comprehensive where it covers everything that you do together. In some cases, it's only limited to certain activities. So we always try to leave ourselves some opportunity outside of that. So a use fee step down doesn't mean that the opportunity steps down as well. It just means that what was committed from that particular customer rolls off and they may have options to spend in different ways. But from where we have visibility, we still think that there is a lot of opportunity coming through for '26, '27, right? So to keep consistent with that guide. And it may be a little different than the activity we've seen now when you go from that coverage phase that's more amendments to that capacity phase where you start seeing some more colocation. We mentioned the pickup in colocation activity. So we think that there are definitely some indicators out there that show that there's going to be a mix of sources from where it comes from. But yes, I wouldn't read into the step down. Those step-downs are set when the contracts first signed 5 years ago, 4 years ago. So that's kind of looking at a crystal ball and trying to figure out where the activity may be. And then what we look at today is where it actually is. So that informs our longer-term look.

One of the things that I've thought about is -- if we rewind the clock to -- I want to say it was when bonus depreciation started to come out for the carriers, this is with the Jobs Act and all that stuff, right? It had a negative impact on their financials. And then now you're seeing -- you obviously saw the one big beautiful bill. I would think that stands to benefit them. Though the question that we get from investors is, how has -- now with this incremental flexibility, how have their investment decisions changed? Or how have their capital allocation priorities changed? Now you initially think, okay, this is probably good for the towers. But I'm curious, in your conversations, let's say, are you getting any sense in terms of a shift in where their focus is going as a function of, hey, maybe we have some more capital to play with?

Yes. We still feel really good about where the spend is relative to towers. Our customers have always had diversified spend, right? When you went into 5G, I'd say around 2017, 2018 time frame, there was a big fiber aggregation initiative and some of the carriers were out there spending a ton on fiber, also buying a lot of high-band frequency licenses. I remember at that time, the question was, hey, what does this mean for towers, right? Is it going to -- is 5G going to look different than 4 and 3. And I think that as you saw it play out, we saw 5G across high, mid- and low-band spectrum. And we've seen it was $35 billion, I think, is the aggregate spend per year right now that we're seeing from the carriers compared to the $30 billion in 4G. So it's an increased spend. We're not seeing anything that would indicate that the activity levels are different on tower. So we always expect that our customers have their hands in a lot of different pools trying to figure out what's going to be best for their overall business but we don't see that as a detractor for how they're focused on tower.

Okay. And then one other thing, historically, I have looked at the services business as the leading indicator to activity on the leasing front essentially. I hear some nuance on the calls about the type of business that you're getting within services. Is it fair to say that based on what we're seeing within services, hey, this sets up well for the leasing picture? Or is there something that you would caution me on?

I would say to interpret the services revenues, the difference in the type of service matters. AZP, the acquisition zoning and permitting happens at the front end of the process, and that generally is a leasing indicator, right? So we take a look at our services setups, and we say that is going to be an indicator of what the application -- incoming application pipeline from those customers will look like. When you do construction, you're doing construction on the same sites that you've done AZP on. So it doesn't -- the construction is not necessarily a leader of future leasing activity. It really is just sort of the finality of that project. It's taking to the final stages. So there's a portion of the services business that, yes, is an indicator, and there's another portion that is sort of detached from the new business, and that would be the construction side. So there's a yes and a no in there. But I think on the construction side, it's accretive, right? So we think it's a very good business. It's a great ancillary offering, helps from a differentiation standpoint. And it just creates a little bit of stickiness as well.

That answer says to me more no than yes.

I think -- so let me back up then to be more specific. So where you saw our results this past quarter where we had the big bump, a lot of that was construction. So that -- the construction revenue that you see right now doesn't mean that the next quarter has a ton of new applications coming in. That's just the application data that we gave, which is the 6 months -- the past 6 right, month-over-month. So what I'd say is anything that's on the sort of the AZP side is going to drive more application activity. The construction side, less so.

Okay. And then I do want to talk -- you already brought it up in this conversation. You brought up U.S. Cellular, right? I think on the call, the commentary was that it's 0.5% of your global property revenue. And then I think it's greater than or less than or greater than 1%.

Right around 1%.

So around 1%. Is there an internal expectation of the size or any potential impact from U.S. Cellular? Because I think the commentary was that you hadn't had the conversations with them yet. But I'm sure you can take a look at the map and see maybe where there's some overlap. So curious if you have any thoughts there.

Yes. Well, we think that -- so a lot of that has to do with when the leases come up for renewal, right? That will drive a lot of decision-making around maybe what's kept or what's kept for the near term versus the long term. And I think I mentioned that in '26, we have a tranche of renewals that are coming up. So that's something that we'll take a look at and factor that in when we give our guide. I think I mentioned that we've been in that lower end of the 1% to 2% range on churn. So if it means that we tick up a little bit within that range, that's probably the most that we would worry about there. But as I mentioned, '26 was a tranche. There was a tranche in '25, and then there's a smattering of leases that we acquired over time. So I think the '25s are probably pretty locked in. Now we're really looking at '26.

Now as part of that, one of the things that when I think back to Sprint, T-Mobile with their merger the tail of that churn, it didn't all come out like immediately. It came out over time. Do you think that, that's something that we could reasonably see here in this situation to a point where we don't even feel that it just kind of like dribbles out or with smaller, let's say, smaller deals for a carrier that they would just take it and drive the cost efficiencies kind of as soon as they can. What does depend on really just the renewal schedule.

It's all of those things, right? And it depends on sort of what the model was for the acquiring carrier no matter what the circumstance is. So yes, I mean, it's a much smaller scale than the Sprint T-Mobile, right? So it's not as meaningful. So I'm not sure. But I mean, we have conversations with all our customers all the time. So if there's an opportunity to do something out there that drives value for a customer and drives it for us, then we're game to looking at structuring it that way.

Okay. I do want to talk a little bit about EchoStar. So we recently saw the kind of the dynamic with the FCC. I think on the call, you highlighted that's around 2% of global revenues.

4% for the U.S., yes.

And slightly over 4%, I think, was the commentary for the U.S. How do you think about the relationship there long term? Obviously, I appreciate I'm asking about someone specific, but just curious how you think about it given the headlines.

Yes. I mean our guide only contracted minimums from our transactions. So we're not building in upside into our estimates. As far as our relationship with Boost goes, they're a customer in good standing. We've enjoyed working with them and supporting them. So nothing but a positive experience so far. Obviously, there's a lot of external stuff happening with their business that we're on the sidelines like everybody else, just trying to assess what the impact may be for us. But for the moment, no concerns with our relationship with them in terms of where we are today.

Okay. So to that point, you've embedded just the minimums. But I also think about -- what I think about is there's a shot clock, right? And yes, part of that, you need to make investments in network. Would it -- to the extent that we saw them increase their activity, right? And this is not a question about them. This is more of an American Tower specific question. To the extent that you saw upside to the minimums, could it be a needle mover for growth like is it a small incremental? Is it something that could be meaningful? I'm just curious how you frame up that relative upside case for -- with them.

So for upside, I mean, it really is dependent upon with any customer, the scale of the build, right? So based on our portfolio, the location of our assets and the relationship, I think we've built with some of these customers who are building up more aggressively, then we would hope that we'd be at the table and an active participant in that. But I mean, it really just depends on how big is the next phase.

Okay. I want to talk to you -- I want to shift gears a little bit. I want to talk about AI because we've been talking about AI a lot today. So of course, let's do the same with towers. For me, I think about how I interact with it in my personal life, and it drives bits and bites, mostly text, right? I'm curious how you think about -- given your time in the industry, how you think about AI impacting demand for mobile infrastructure. One of the -- I think Mark [indiscernible] on the earnings call said, don't sleep on mobile infrastructure, right, making the point that yes, there will be a benefit. I'm curious how you see that translating into demand for American Tower.

I think we view it as demand that is to come, right? It's not upon us just yet. And so looking in the crystal ball and figuring out exactly when that is, is tricky. But if you go back to 2019 time frame going into 5G, there was a lot of talk about low latency applications, and the need to machine-to-machine communication, autonomous vehicles, all those things. And I think where we sit today, the biggest successes in 5G have been the quality and speed of network, right, and then fixed wireless. And so I think that some of those cases, the low latency applications have remained elusive, and I think AI brings a lot of that to the forefront. So I think that you are starting to see the ripening of some of those use cases, whether it's things like autonomous vehicles or industrial machine learning, things like that. So I know minimally hearing a bit from some of our customers, the AI searches that are run on your phone now that we all take for granted, that drives more consumption than a traditional search, right? So when you take those things and you multiply the impact from multiple users searching of a site, it puts more demand on that particular installation. So we look at that as something that can drive activity for us. How much of it, not sure at this point, but it really can only be a positive for us.

Would you think -- because this is one of the things I've been struggling with is I heard a stat that was ChatGPT will output more text in this year than all of humanity created in going back to the Bloomberg press. Now what I think through is like, okay, if we iterate this as a function of time, it is more text just moving through, and we know text is low bit intensity or relative to video. I'm curious, do we really need to see a world in which there's video, like video that's created using AI that's moving across the network that really is what would drive incremental bits and bites that require it? Or do you think we could -- there's a world in which we can just see more text moving through the system and that would drive enough upside to traffic to really be a catalyst for mobile investment?

I think it's a little bit of both, right? I think we always envision the video uplink piece as being something that drives a lot of data consumption. So to the extent that you are using AI to drive more video applications, that is something that would -- yes, that would definitely require more infrastructure to support.

Okay. As I'm curious, when I'm at -- I think you're at ConnectX, if I'm not mistaken, you go to the panels and we talk about 6G. And we're not quite through 5G yet. I'm curious, how do you think about then -- I know it's a ways out, but how do you think about the next upgrade cycle? And kind of based on the workloads and applications that you're seeing out there, what that would need to be oriented towards?

Yes. Well, so one of the big variables, I think, for 6G is the spectrum that's going to be used for it, right? We know big beautiful bill, 800 megahertz of spectrum, 100 is going to be contiguous mid-band. So we kind of know how that looks from a deployment and equipment standpoint. But to the extent that you have higher band frequencies, right, the physics on that would indicate that you would need sites clustered more closely together. So it could be a densification opportunity, could be different types of equipment. So I think the identification of those frequency bands will dictate a lot of what those deployments look like. So still yet to be seen exactly what it will be. But we think from a cyclicality standpoint, the coverage, quality, capacity is going to continue to play out in that way.

Okay. So I do want to switch gears a little bit, and I do want to talk about kind of the cost initiatives that you've been working on. I hear 80 basis points, I believe, is one of the targets for the year in terms of savings. As you look at the opportunity set, I mean, where do you see the most latent opportunity on the cost savings side?

Yes. I think the global operations platform is going to be a major contributor to the cost savings. I think Steve and Rod have been very upfront with that. And so we've run our businesses locally throughout the globe in a way that we think that they're all very high-quality businesses, but the synergies haven't always been there. So now to hear from some of the folks who I've worked with in the U.S. for years who are now doing global operational roles, they come back and say, there's such an opportunity to do something with this platform or this process, and we can cut it across 3 different continents, right? So I think that we're going to see synergy in the way that we have the system infrastructure, some of our field practices, things like flying drones, developing the digital twin, like these are processes that we can migrate from one region to another, and we can do so at a better cost than we would be doing on a stand-alone basis.

One of the things that I also think about is -- and this is going to shift a little gears a little bit, but I'll tie back into the tower is as I think of the original idea for doing the CoreSite right? You own the metro edge or you own the interconnection facility at the metro edge, you have a distributed footprint. You can put modular data centers kind of at the base station of these tower sites and you could own out to the far edge, right? Now one of the themes we're talking about today is further proliferation of AI and pushing out to the edge. But I'm curious, from your perspective, how has that opportunity set played out, particularly around the far edge? And to the extent that we see a meaningful increase in demand at the far edge, could that actually be something that's margin accretive to your tower business?

We think so. And the way that we've seen it play out so far, you may have seen we launched our first facility in Raleigh, North Carolina for Edge. And what we're seeing right now, we were just talking about this earlier today, is we're seeing right now a lot of people who are in Tier 2 who need data center space, and they're showing up at the Edge location saying, "Hey, let me in, right " And so there's an opportunity there to fill the space, which is great, but we're also looking for people who are going to be strategic mobile Edge type operators who are going to attract that ecosystem of other customers that help sort of fulfill that vision. So I think there's -- it's still going to take time. And if you listen to the operators, they're talking about Edge and some of it's happening now, but they're also talking about as a multiyear plan. So I think we're still a couple of years away from when we're going to see the proliferation where you see a lot of it. But we're positioning ourselves between Raleigh and some of the other locations that we're developing right now to be ready for it, right, to help create that ecosystem and not just wait for it to come knocking on our door. You know from data centers, they're not short lead time projects, right? So you have to be planning and shovel-ready if you want to be competitive. And so we do think that some of that -- the large learning models and the inferencing moving out to the edge and those second-tier markets. It's a great match up for our portfolio with the 40,000-plus sites in the U.S. So we're really interested in maximizing the locations, not just for tower, but for whatever other uses there can be.

You know what's interesting is I'm going to rewind a bit, maybe date myself a little bit. In June 2021, we're having a conversation with the American Tower team, and the idea was presented at being the one-stop shop, right? You have a globally distributed footprint. You can be the easy button for a hyperscaler to deploy at the Edge, right? Then you went and acquired CoreSite. But from my perspective, like if you were truly going to be the one-stop shop, CoreSite is step one along a journey of acquiring interconnection facilities in a bunch of markets around the globe. So as we think about the original proposition that was presented before the CoreSite acquisition, I'm curious, how has that evolved? And if you still want to play in that space, wouldn't that suggest that there is much more that needs to be done in scaling up the data center footprint in order for you to drive that interplay?

What I will say that the pre-CoreSite versus the post CoreSite is the legitimacy of our capabilities to operate these, right? And it's -- we had good smart people who had data center backgrounds who are developing these sites. But with CoreSite, you bring the data center fabric and you bring the know-how that -- it's that plus the 40,000 sites when you combine that, you have a really nice combination. So if we're trying to build it organically out of tower only, the learnings would take far longer, right? And so it is really CoreSite has helped to speed everything up and the teams work really well together in terms of trying to define how Edge fits into this larger ecosystem. So I think we're leveraging it very well right now.

Okay. All right. Well, I will leave it there. Thank you so much for joining us. Really appreciate it.

I appreciate the time. Thank you.