Crown Castle Inc. (CCI) Q2 2014 Earnings Report, Transcript and Summary

Good day, everyone and welcome to the Crown Castle International's Second Quarter 2014 Earnings Results Conference Call. Today's call is being recorded. And I'd now like to turn the conference over to Son Nguyen. Please go ahead, sir.

Thank you, Vicki, and good morning, everyone. Thank you for joining us today as we review our second quarter 2014 results. With me on the call this morning are Ben Moreland, Crown Castle's Chief Executive Officer; and Jay Brown, Crown Castle's Chief Financial Officer. To aid this discussion, we have posted supplemental materials in the Investors section of our website at crowncastle.com, which we will refer to throughout the call this morning. This conference call will contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions, and actual results may vary materially from those expected. Information about potential factors which could affect our results is available in the press release and the Risk Factors section of the company's SEC filings. Our statements are made as of today, July 24, 2014, and we assume no obligation to update any forward-looking statements. In addition, today's call includes discussions of certain non-GAAP financial measures. These reconciling -- such non-GAAP financial measures are available in the supplemental information package in the Investors section of the company's website at crowncastle.com. With that, I'll turn the call over to Jay.

Thanks, Son, and good morning, everyone. We had another great quarter in Q2 2014 exceeding the high end of our previously issued outlook for site rental revenue, adjusted EBITDA and AFFO. The excellent results achieved during the second quarter allow us to increase our outlook for full year 2014. During the quarter, we also made significant progress integrating the AT&T towers, and we expect to substantially complete integration by the fall of this year. Turning to Slide 3. In the second quarter, site rental revenue grew 21% year-over-year from $617 million to $746 million. Organic Site Rental Revenue before nonrenewals increased by $50 million, an increase of approximately 9% compared to the same period in 2013. The approximately 9% Organic Site Rental Revenue growth is comprised of approximately 4% growth from cash escalations in our customer lease contracts and approximately 5% growth from new leasing activity. As a part of the new leasing activity, we are continuing to see very strong demand for our small cell networks. At the end of the second quarter, we had nearly 13,000 small cell nodes on air or under construction and over 6,000 miles of fiber. In addition, we have executed contracts for over 3,500 new small cell nodes to build and we are at various stages of preconstruction work, including design and permitting. Site rental revenue from our cell -- small cell networks is up approximately 26% year-over-year, and small cells generated 6% of consolidated site rental revenues. For the quarter, nonrenewal of tenant leases reaching their contractual term end date, inclusive of Sprint's iDEN decommissioning, was in line with our expectations of approximately 2% of site rental revenue. As shown on Slide 4, site rental gross margin increased $72 million to $509 million, up 16% from the second quarter of 2013. In…

Thanks, Jay and thanks to all of you for joining us on the call this morning. As Jay just discussed, the second quarter was another excellent quarter, positioning us once again to raise our full year outlook. As shown on Slide 10, we are continuing our track record of consistent execution over a long period of time. Through strong execution and disciplined capital allocation, we have delivered strong AFFO per share growth, growing AFFO per share at a compound annual growth rate of 17% since 2007. Importantly, this growth transcended the financial crisis of 2008 and 2009, and continues today while we have taken decisive steps to position ourselves as the U.S. market leader with unmatched scale and capabilities. Today, we have new opportunities in small cells and tower leasing unforeseen just a few years ago. And we created this future runway of growth without materially altering the risk profile of the company. For the full year of 2014, our midpoint of our outlook suggests AFFO per share growth of 13% compared to 2013, plus the dividends we initiated this year. We are committed to extending this track record of growth over the long term, and we believe that the growth in AFFO per share and dividends will deliver attractive long-term total shareholder returns. Quite frankly, the degree to which we accomplish this goal over the long term is heavily dependent on our ability to increase tenants on the approximately $9 billion in investments we have made over the last few years with the T-Mobile tower and AT&T tower transactions and the NextG small cell acquisition. In many ways, our approach to capital allocation is a reflection of our corporate strategy; we think long term. We have invested deeply in the U.S. as we believe the U.S. market offers the…

[Operator Instructions] And we will first go to Simon Flannery with Morgan Stanley.

Ben, nice overview. I wonder if you can square some of the headlines we're hearing about spending freezes at the carriers and other issues out of the equipment providers. You've had strong services businesses. You've got a good outlook for the second half of the year. So what are you actually seeing in the field? Are you seeing any signs of this? Because clearly, there is a little bit of a disconnect that people are trying to get their heads around. And on the services, I think you talked about it being strong into Q3. Can you just give us a little bit of a longer-term outlook? Is this something as we go into '15, you see these levels being maintained as well?

Sure, Simon. First of all, on the capital spending side with the carriers, we're seeing a lot of activity. And I believe that AT&T addressed this on their call, any slowdown or deferment in the second half of the year that AT&T may be pursuing is completely immaterial to what we're seeing. And we have a tremendous amount of activity going on, frankly, with all 4 wireless carriers. And application volume, if you include new site installations, as well as amendments for us sort of year-to-date are up materially from last year. Now we do have a larger portfolio, I would acknowledge, but we got a lot going on, on that front. And as evidenced by 9% organic revenue growth in our outlook is -- that's moving, and that's a lot of work going on. So we are thrilled with what we see happening on -- by all 4 carriers as they're working on LTE. Your second question around services is one we continue to spend a lot of time on as a management team. Our group out there in the field, and many of them are listening, continue to amaze and are doing a fantastic job of capturing the opportunities and serving our customers in the field and assisting them on getting on our sites. And the scope of that work has increased over time. A lot of it has increased because the size of the portfolio has increased, but we are increasingly becoming confident that there is certainly a run rate of opportunity out there in this business. And we've gone back and looked at it since 2007, 2008 and '09 where we've come to add capability and there's always a lot of stuff going on, on our sites, which is a recurring opportunity for us. So you saw us raise guidance for the second half of the year such that it's going to look a lot like the first half of the year. And as we look out into '15, I'm not going to give you guidance yet on '15, but we're pretty confident that, that level of activity is going to be there for quite some time.

Next is David Barden with Bank of America.

I think that the confusion a little bit around the quarter and looking at the third quarter outlook, Jay, is just trying to square the 9% organic revenue growth with site rental gross margin guidance that suggests we might have another sequential downtick in the business. So -- and obviously, the implied full year guidance says we're going to tick back up in the fourth quarter. But if you could kind of help us waterfall the moving parts so we can see what's growing in the business and then where the headwinds are in more granular form down to the site rental gross margin level, that would be super helpful. And then, I guess, the second question I would have is relative to the full year 2014 AFFO of 13% growth outlook. How much of that year-over-year is coming from the AT&T portfolio acquisition?

Sure, on your first question. The movements quarter-to-quarter and the way we move the outlook, I think, for the balance of the year, we're certainly benefiting in terms of the outlook from FX and we raised -- slightly raised our expectation for FX based on actual levels that we saw during the second quarter. So that's the majority of the reason why we raised site rental revenue. The flow through of that, I made several comments, which are really driving that, too. One is that we had a purchased -- a noncash purchase adjustment related to our AT&T acquisition. That flows through those site rental gross margin numbers. Once we get down to EBITDA, we adjust that noncash item out, both at an adjusted EBITDA and AFFO. So that's a part of the consideration. And then the second part of the consideration, which wasn't -- was planned when we did the acquisition, is we're staffing up -- my comments around staffing and increase in people, those were anticipated both in our outlook, as well as in our underwriting model for the AT&T towers. And I think for the most part, we've gotten those costs in, or we'll have them in by the third quarter. So I think you correctly point out, the squeeze to the fourth quarter would suggest that there is movement upward in site rental gross margin. And so once we get all the costs into the run rate, which I think we'll have mostly done by the third quarter, you'll start to see those upward trends that we're used to. On the 13%, we bought the AT&T assets at basically a 5% yield going in. And when you consider our combination of use of debt, as well as stock, the transaction was slightly accretive by a couple of pennies in the calendar year 2014 or on a run-rate basis, if you want to think about it that way. So the contribution at the AFFO per share line would be relatively minimal from the acquisition, almost none. If you look at the nominal numbers in terms of site rental revenue growth and margin EBITDA and the absolute dollars of AFFO, obviously, it contributed meaningfully. But at the per-share line, there's very little impact from the acquisition and the way we financed it.

And we'll go to Kevin Smithen with Macquarie Capital.

This is Will [ph] for Kevin. If there are no more large deals in the U.S. to do, you're going to have significant excess free cash flow and borrowing capacity in '15. Can you discuss a little more how you think about that capital allocation? And are you now open to deals in Brazil or other emerging markets?

Yes, Will [ph], this is Ben. I'll take a crack at that. We've got a lot going on, as I talked about it in my comments. And I don't think it's a big stretch to see that we may find the ability to spend virtually all of our discretionary free cash flow right here at home around our core business. And in particular, as the pipeline around small cells grows, we're going to put a lot of money to work at very productive rates for carriers that we know and love. So that's really where our primary focus is today. We'll always look at something internationally, but my working assumption today is that we'll be priced out of anything out there. So I'm not assuming that we're going to do anything in Latin America or Brazil, specifically to your question. Just based almost solely on where I've seen assets trade, I don't think we're a player at those levels. So we've got a lot on our plate here going deeper in the U.S. market. As Jay mentioned, we've got 3,500 sites in terms of nodes on the pipeline to be built and that's growing. So we've got a lot to do with our capital right here at home.

And I have one follow-up. Is there any number that you give as kind of the addressable remaining sites that you would potentially purchase in the U.S.?

I wouldn't speculate on that. I mean, we sort of look at things as they come up. And I think one of my sort of threshold comments that I think it's important to repeat -- and we'll always look at acquisitions as we have, obviously, over time. But the real value creation for Crown Castle going forward is around organic growth. And it all goes back to that slide in this deck today where we need to turn 17,000 towers from a 5% yield to a 15% yield over time. And that's the value driver in this business. Acquisitions, obviously become the platform to do that. You have to have the assets to do that. But we have the assets today, and we have our work cut out for us. As so we've got a full plate of value creation opportunities right here.

And we'll go to Ric Prentiss with Raymond James. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: A couple of questions. Ben, you mentioned the 3,500 nodes that are in the pipeline. What kind of cost or CapEx should we be thinking about and timeline to kind of bring those online?

Ric, this is Jay. There's -- the 3,500, I would assume rough math, between $100,000, $120,000 per node to build those out. And typically the timeline from the time of executing the contracts -- and those 3,500, just to be clear in my comments, were all preconstruction phase. So we're in the design and permitting phase of that 3,500. That's probably an 18-month to 30-month timeline to get those on air. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: And then the 13,000 that you have, did you say some of those are under construction still?

Some of them are at the final stages of construction, correct. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: Okay. And then when you think about capital deployment, stock buyback is there. The stock has underperformed the other 2 public tower guys. So when you look at your multiple where you're trading at and your growth rate, how do you look at deploying small cell versus stock buyback? When does all of a sudden the acquisition of your own stock become more interesting possibly?

Ric, we always do this analysis on a relative basis. So where we see the opportunity and the returns in our share purchases are always compared at that point in time against other opportunities that we have. So in the case of -- specifically to your question, is we would evaluate small cell opportunities and our appetite to invest in small cells. They would be compared up against whatever the then multiple is on our equity and what we think the growth prospects are in our underlying business. And we're -- we constantly update that analysis. And the capital spend is discretionary. So at a point in time where we think the return is higher and -- for project A over project B, then we tend to move the capital around, aiming towards the investment that we think delivers the highest return on AFFO per share as a proxy for ultimately what our dividend capacity is going to be. So it's really a relative measure and we adjust it based on where we see the market opportunities. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: Small cell obviously is a very important part of your story, 6% of your business, growing 26% a year. Is there a time where that becomes a segment reported item also, as far as revenue, gross margins, contribution, et cetera?

There may be a day for that. I think as we operate the business today, it falls underneath our site rental leasing business. It all falls under our Chief Operating Officer and we operate the business very similar. It has very similar characteristics to the tower site in terms of the margin, the incremental margins that we see as we add additional tenants. So there may be a day for that. I won't preclude it from ever happening, but I think at the moment, it looks very similar to what towers does. Richard H. Prentiss - Raymond James & Associates, Inc., Research Division: And one more quick one if I could. A lot of people talking about Sprint Spark, the high-frequency buildouts, T-Mobile low band. Is there anything in your guidance yet for those? Have you seen anything in the services business as a leading indicator from Sprint going to that new phase and T-Mobile going into the new phase?

Specifically with T-Mobile, that's more likely a 2015 event, is what it's looking to us. We're going to get pretty late in the year before we see a lot of that. So the answer to that would be no, until we give you the '15 guidance. With respect to Sprint, we are seeing a tremendous amount of service opportunity from Sprint related to the network vision upgrades and the 2.5 upgrades that you talked about. And it is also coming through to some degree in site rental revenue growth that's implied without being able to be specific. It's certainly implied and contributing to this overall 9% growth for the year.

And we'll go to Phil Cusick with JPMorgan. Philip Cusick - JP Morgan Chase & Co, Research Division: So can you talk about services a little bit more? I mean, we've talked about services for a long time and usually you give guidance that, "Yes, this was a great quarter but we're pretty conservative going forward." Now it seems like you have a little bit better visibility. I mean, you talk about Sprint ramping up 2.5. But is there also -- are you moving to longer contracts that give you more real visibility when giving guidance? Is that how we should think about it? And then second, can you help us -- I'm sorry, go ahead, Jay.

No, I'd -- no, this is Ben. Phil, I'd say, not so much longer contracts but a longer track record of success. We're frankly -- our teams are teaching me, really, that this is a business that they are extremely good at and have the capacity to continue to grow. And so maybe it's on my plate to say I have become more confident in our ability to continue to attract and win this business and execute for carriers. And we also look at it -- I think it's helpful to parse through how much of the growth is because of the growth in portfolio versus actually growth in the sort of per-site metrics. And that -- we're up about -- I guess over the last 4 years, up about 50% at a per-site level in terms of penetration. Even though the business is up much larger than that, it's more than doubled over the -- that same period, but a lot of that is because of the growth in the portfolio. So maybe it's an education of the CEO that our guys are really good at this, and this is going to remain a very key component of our story and what we do with carrier customers to provide that high touch experience and control our assets at the end of the day. Philip Cusick - JP Morgan Chase & Co, Research Division: Okay. And can you give us an idea of how much of your AFFO is coming from the services side?

I think what I would probably suggest that you would do, Phil, if you were going to try to estimate that, is I would take about 40% of the G&A, roughly, probably between 35% and 45% of the G&A, say, 40% of the G&A, and allocate it to the services business. So take your gross -- take our gross margin, if you want to do historical or forward looking, take the gross margin from services and subtract out the G&A and just use that as a contribution. I mean, obviously, if we think about leveraging the business, we would typically think about leveraging the site rental portion of the business, so you may have -- you may want to apply some portion of the debt or maybe not. There would not be any sustaining capital expenditures of any significant amount associated with that. So that's probably the best way to go about it.

And next up is Amir Rozwadowski with Barclays.

I wanted to follow up on the questions around some of the trajectory of carrier spending here, if I may. Certainly, it looks like, if we look at the CapEx numbers for the carriers that have reported, on a year-over-year basis they look fairly healthy. But clearly, there seems to be a bit of front-end loading with respect to their spending. Wanted to just touch base there because I understand there's various nuances when it comes to the very specific buckets in terms of where they're spending. But it seems as though you folks feel very comfortable in raising your outlook for the year in terms of the spending trajectory that you're seeing. Is that largely coming from densification initiatives that they're spending on? And what gives you that comfort that, that carries forward into 2015?

Yes, Amir, this is Ben. That's a critical question and obviously, the driver -- the main driver in our business and confidence in the future. Without getting into specifically what each carrier is doing because we typically don't do that, we let you speak to them, as you can see from the Verizon call this week and AT&T that they're spending a whole lot of money: AT&T reconfirming their capital budget for the whole year at around $21 billion; Verizon being up significantly year-over-year through the first 6 months. And we're seeing a significant amount of activity from both of those carriers, as well as Sprint and T-Mobile, but they're in different phases. And so this is where we gain a lot of confidence in the runway of growth that we're going to see. So as with -- starting with Verizon and AT&T, we're seeing them complete their -- really, their first sort of initial phase of LTE build and really approaching 300 million covered POPs. And then immediately following on, and we're well into it this year with both of those carriers on adding additional installations, brand-new, macro-site installations, co-los, if you will, which adds densification to their networks. And that is happening in a very material way throughout the country. It is not a stretch, then, to walk down the lines of Sprint and T-Mobile, as they are also working very aggressively on completing their LTE rollout. And we are -- we would expect, then, that to follow on with densification on both of those networks over time as the capacity gets consumed on these LTE networks as is currently happening, and the need for additional sites becomes more and more acute. That is beginning to happen. We're seeing -- we're getting some search rings out of Sprint. We'd certainly expect to see that out of T-Mobile over time. And what we're seeing over -- many of us have been in this industry 15 years plus. We're seeing now a more continuous spend, not so much a cycle anymore, but just sort of a continuous spend level against ever-increasing ARPUs, really driven by data from us as consumers. And the pie is actually getting bigger. As we all find more uses for tablets and smartphones, the pie is getting bigger. And as we talked about in the prepared remarks, the incremental return on that incremental dollar of investment is alive and well. And so we sort of see it as sort of a continuous spend as opposed to these sort of fits and starts that we had sort of over the last decade.

And then if I may, I'll follow up. You folks are sort of uniquely positioned, particularly when it comes to the exposure on the small cell side. We've had a lot of discussions with the carriers in talking about the value between the macro and the small cell. But I think the general tone at least right now from what we're hearing is that from a macro site perspective, it still provides sort of the best bang for the buck, and continued investment on the macro site is necessary to deliver the types of speeds that they're promising over the next couple of years. Is that something that you folks agree with or -- would love to hear your thoughts on that front.

Absolutely. I agree with that. We own 40,000 towers. It's 94% of our revenue stream, and you’ve got to believe we agree with that. So the macro site is still the most efficient way to add capacity and the most expeditious way to add capacity in a market. What we're seeing on the small cell business, though, is an augmentation or a compliment to that where there's areas where the density of the urban footprint is such that a macro site really won't suffice, and they're needing to reuse that spectrum in a much smaller cell environment. And therefore, we're seeing an additional architecture emerge, as we've talked about for years, and it's emerging in a very big way now around distributed antenna systems or small cell euphemistically. Again, we use those sort of interchangeably. But essentially, small antenna's driven by fiber-fed electronics on light poles and street lamps and other things like that to augment where a macro cell is not sufficient or otherwise they need to reuse the spectrum in a much smaller environment in terms of a much smaller cell. But we absolutely endorse your first view, which is macro sites are the first solution, and that's why we own 40,000 of them.

And if I may, just one last quick question. When we go back to the PCIA trade show last fall and also this past spring, I think one of the themes that emerged was that we're seeing a resurgence in actually new tower builds in the U.S. Clearly off of a base of very minimal incremental tower build, are you folks still experiencing that? Is it -- are you still seeing that in the marketplace?

We're seeing a few opportunities. I will tell you, it goes back to Jay's capital allocation discussion. We'll do them where we think we can make money. It's usually the place where new entrants enter the market at initial yields on the asset that, frankly, we've been uninterested in pursuing. So we may let others build some of those if those economics are not enticing to us. We're going to do some this year. Probably over the next 12 months, I would guess 100 or maybe 150, but not material to really -- to our results.

Next, we'll go to Jonathan Schildkraut with Evercore.

Two questions please. The first is, Ben, I'd love to get a breakdown of sort of the drivers of growth in the quarter. Historically, you've kind of given us some perspective of amendments versus new cell sites, and then what percent of that is falling under the MLA umbrellas that you have? And then my second question has to do with sort of the dividend growth story that Jay laid out, which I think is very compelling. And I was wondering if we might get a little perspective because you talked about the NOL roll off, but maybe we get a little perspective on what's happening with the DNA. By my records, you guys bought 7,000 towers or, I don't know, 17%, 18% of your portfolio in 1998, 1999. And I'm wondering how we might think about the DNA associated with that original sort of portfolio as we look at our projections and also try to understand some of the dividend distribution capabilities.

Sure, on the first question around where we are with leasing, it's very similar to what we expected for the full year. There was about 10% of the activity that we're seeing that's following under the presold MLAs that we negotiated several years ago. So there's very little of the activity that's falling under that -- those presold agreements. In terms of the activity that we're seeing across all of the assets, we're seeing in the neighborhood of about 3/4 to 80% of the activity coming from new tenant installations, and the balance of it coming from amendments to existing sites. We've seen that activity, I would point out, across all of the carriers and all of the portfolios, including the 2 most recent purchases that we've had, where we're already seeing some amendment activity that's driving site rental revenue growth across the portfolio. So I know we've talked about that some in the past, and that's -- it's coming about in about the same magnitude as we had expected going into the balance of the year. Your question about the net operating losses and the depreciation that we see from a tax standpoint, the tax depreciation is faster on an asset purchase than what it is for the GAAP statement. And so as we have gone through the process and you rolled back all the way to our original acquisitions, and then as you think about the impact to us from the more recent acquisitions, the 2 recent acquisitions that we've done were in the form of prepaid leases. So our payments out from a tax standpoint, those are reflected against the cost to the asset or if you want to think about it as DNA costs. Those are reflected across the term of those leases over 20-plus years.…

And we'll now go to Imari Love with Morningstar.

Just quickly back on small nodes, you said it was a 6% of site rental rev. Can we get a gauge of how the returns on invested capital compare relative to returns you're seeing on the macro sites? So you mentioned that the macro sites over 10 years, it's around 15%; around 5% on the early end of that. Can you give us a gauge of where small nodes fit on that spectrum?

Sure, happy to do that. And that's really part of the enthusiasm that we share for that business. As I mentioned, if you think about the original acquisition of size where we spent $1 billion on the NextG acquisition at about a 4% yield, we have borrowed through that to the point today where the entire sort of run rate of business is about a 6% yield on invested capital. So you can then infer that the incremental business we've gotten past the acquisition is substantially above that. As we go forward, our expectation and what we're seeing is that the returns on this business we expect will exceed over 10 years what we've seen in the tower business. And we are obviously very pleased with the results we've posted on the legacy assets, as we talked about in the earlier part of this call. But we're on a trajectory today with small cells and the anticipated co-location that'll happen in these very dense and attractive markets where we're building these systems, that we think we'll frankly exceed by a significant margin what we've accomplished on the tower sites.

We'll now go to Batya Levi with UBS.

A couple of follow-ups. Looking out to your estimates for revenue from existing customers, it looks like you increased your projections for the next 4 years of about 2.5% to 2%. Can you help us reconcile why we didn't see a similar increase in the site rental outlook for 2014, and how we can think about that versus the nonpercent organic growth that you're seeing today? Does that suggest that we should be expecting a similar organic growth for 2015? And the second question I had is, as you go through the expected churn from iDEN, what's your experience with Sprint's renewal activity for these towers? I also noticed that you slightly lowered your expectations for rental revenue from Sprint at time of renewals for future periods. Can you talk about what drove that?

Sure. On the first question, you will see those tables over the long period of time, the increases we have leasing. So those tables reflect actual leases under contract, and we're not going to forecast that table for the forecasted growth during the calendar year. So as quarters pass, we would assume that the next 12-month forward or 2 years forward, the revenue numbers in that table will increase commensurate with the growth that we actually achieved during the previous quarter. So that table is not -- it's intended to be forward looking in terms of the contracts that we have on the books today, but we don't adjust those contracts based on our expectation for growth over the subsequent period or multiple periods. With regards to Sprint, some of that is going to be the impact of the leasing they did in the quarter, as well as the decommissionings that actually happened in the quarter, as well as any extensions that we saw on those leases. And those can come from simple things like if they amend a site, and this would be true for all of the carriers. There may be an amendment on a site and they may take out a lease over a longer period of time and it may adjust that table. So in all likelihood, as you're poring into kind of that detail, it's a combination of the leases that happened in the quarter, any nonrenewals that happened in the quarter, as well as there could be extensions most likely related to things like an amendment on an individual site.

And we'll now go to Michael Bowen with Pacific Crest.

I wanted to touch on -- back on Slide 11, I noticed that the yield increase for the T-Mobile and AT&T assets, it looks like you're basically targeting tenant additions, but I also wanted to know if there's anything assumed in there with regard to amendment or escalation activity. And then with regard to that, can you also -- I apologize if I missed this, but can you give us any idea of how long you may think it will take from a time standpoint to possibly move from that 5% to the 15% levels?

As soon as we possibly can would be about all I can answer to the second one. But in terms of -- if you look at the historical legacy sites, that $90,000 of revenue per tower obviously includes amendments over time, as well as escalations over time, which all goes into that roll-up of that number. We've elected to give you a simple metric, not the only metric, but a simple metric around tenancy because that seems to be helpful for people to be able to quantify to kind of get it around their -- in their head about how many tenants per tower and then what the opportunity is. But over time, obviously, existing tenants and new tenants amend, as well as escalate, and that all contributes into that overall 15% yield on invested capital on those legacy sites. And again, to your timing question, as soon as we possibly can. That's about all I can tell you.

Well, yes. And with regard to that, I noticed that the left-hand column, obviously, you owned and operated for greater than 10 years. Getting the 15%, has that been somewhat linear or more parabolic?

It's over -- the average term that we've owned those assets is about 14 years. It's been fairly linear over that period of time. And I think one of the dynamics, Michael, when we talk about the business and there was an earlier question about do we see activity flowing in the first half or the second half of the year. I think our observation would be that while it is common for people to look at our business and try to find inflection points where maybe the carriers are going to spend a lot more capital or spend a lot less capital, as we look at our business over a long period of time, the capital spend on our sites has been relatively consistent within a relatively small band of up or down. And so as we look at our business, we are left prone to try to find the inflection point and look more for themes. And the theme to us is that the carriers are seeing tremendous growth from data, and that is a long-term runway that we think is going to continue to drive site rental revenue and, ultimately, AFFO per share, and that's how we've made the bulk of these investments over the last couple of years.

The only thing I'd add to that is, while it may be tempting to think that those legacy assets are "full and done." As we continue to parse through our portfolio and look at it every quarter, those legacy assets continue to lease at a very attractive rate and add additional revenue and, obviously, escalation off of a bigger number. So they continue to grow and more than pay for their -- pay their way around here, and that continues.

And one other thing, I think you mentioned today, as far as back at PCIA in the spring that there were some portfolios, I believe you said, at that time in Europe where some infrastructure funds had been outbidding yourself and perhaps some of the others. When you look at these portfolios of assets, can you help us understand where the disconnect or, maybe not the disconnect, but where the sticking point is, where the difference in methodology when you value those portfolios versus some of the others who are obviously paying more?

Yes. Obviously, I don't know what's behind other's view. We can only speak for ourselves. We come at it and look at what is the co-location opportunity in those markets. How much capital will the carriers actually spend in those market. That was our attempt in that one page today to talk about the relative scale opportunity in the U.S. versus emerging markets or either -- even some other developed countries. The U.S. continues to just be enormous by comparison. And so we look at the opportunity around lease up. We also -- we look at the sort of inherent cost of capital and risk-adjusted return that you need to apply to an asset when you send a wire transfer into a different currency on that one day. That's not dollar cost averaging in, you're long that day but with very little variable input into the cost structure of our business. So it's -- I liken it sometimes to find power plants in foreign countries, you're sort of long that day. So you have to put up a cost of capital differential into the currency at just sheerly from difference in currency risk, and local borrowing rates in local countries are pretty good proxy to start. So we put all that in the pot and walk through it. And our result at the end of the day is we have found that either buying your own stock or buying assets in the U.S. market tend to, we think, provide a higher risk-adjusted return on invested capital. Others differ and disagree, but that's our view. And from time to time, that causes us the pass on what would initially be a very accretive acquisition, but we don't think that's the right sort of barometer for whether the acquisition is a long-term value creating for the company.

Our next question will come from Colby Synesael with Cowen and Company.

Two questions if I may. The first one, as you ramp up integrating the AT&T portfolio and then obviously you've had the T-Mobile portfolio for now just over 1.5 years, is it fair for us to assume as we go into the back of this year and then increasingly into 2015 -- and I'm not asking for explicit guidance by any means. But is it fair to assume that we should start to see new leasing activity accelerate from this aspect alone? Just curious with that. And then the second question is just on MLAs. It seems like the logic for setting up those MLAs a few years ago seems to have now kind of run its course, at least for some of the carriers. What's the likelihood of renewing MLAs perhaps with different terms both on your end, as well as on the carriers' end, and when could we potentially see that happen?

Okay, on the first question, Colby, when you say -- when you ask a question about accelerating new leasing activity, certainly, on a consolidated basis, we would expect that as a result of integrating these assets, we will have more nominal dollars of new leasing activity coming in. As you look at our supplement and the comments that I made around Organic Site Rental Revenue growth, we have a base that is consistent. So maybe a common term might be something like same-tower sales would be the closest thing to have our Organic Site Rental Revenue number. As the AT&T towers get into a 1-year vintage, if you will, they will go into that math. And I'm not sure I would suggest to you that our organic growth rates will be higher as a result of that because you'll have a then larger base upon which we'll be growing. But I think, certainly, on a nominal basis, we would expect that the leasing activity will pick up at a consolidated level as we have those assets online and we're performing off the full suite of Crown services and leasing activities across the larger portfolio.

On the MLAs?

I mean, just to punctuate that, the 9% organic growth, if that opportunity exists in the market as we certainly believe it does and that continues from -- on a multiyear track, we'll be just fine. In terms of your second question on MLAs, Colby, we'll look at it as facts and circumstances dictate as things come up, as we always do. And we try to be economically rational and make the right decision on what's going to result in the best outcome for us and the most expedient way to handle the amendment activity or desire of the carrier to get on the site. So that goes together but it's -- we'll look at it facts dependent and I really wouldn't have any prediction today as to where that will take us in the future.

I think we would look at the ones that we've done today and feel like we cut very good deals and think we did better than the we otherwise would have in most cases, so...

We do back check that, and so far so good. We're very pleased with the outcome there.

We're all living with, today, the flip side of the arrangement that we made with Sprint years ago related to the iDEN decommissioning that they indicated was coming to us. And we saw benefit on the upside from the early days of network vision, and today we look at that run rate and its about 6% roughly above where we were going into the process. So we're feeling in the results today and will next year, the downside of it, the decommissioning side. But on a net basis, the result of that agreement was up about 6% from where it would have been otherwise. So we do backward look at each of these that we've made and feel like in each case, we've done really well. And I think also from a carrier perspective, their goal in doing those was to accelerate and speed up the process in which they've gotten on our towers and I think if you were to ask them, I think they would indicate to you it certainly accomplished their goal as well.

And we'll take the next question from Jonathan Chaplin with New Street.

So it seems like the cash -- tower cash flow margins have been declining sort of steadily over the course for last year or so. Is the pressure all been a function of the investments you're making for the T-Mobile and AT&T towers or are there other factors, depressing margins there as well? And can you give us a sense for how quickly you expect margins to reinflate now that you're sort of at the end of the integration process with AT&T?

Yes, Jonathan. Yes, the decrease that you've seen in our tower cash flow margins have all been a result of the acquisitions that we've made. We've acquired 2 portfolios that had respectively 1.6 and 1.7 tenants per tower with T-Mobile and AT&T, so the margins on those assets were significantly lower than the legacy towers that we had that had margins in the high 70% range and 3 tenants per tower. So as we put those lower-leased assets into the portfolio, it lowered our overall margins. I think most of that is basically in the run rate, as I mentioned in my comments, both on the expense side and the revenue side at this point. And so absent any other acquisitions, I think we'll go back on a pace where you see expanding margins on the go forward, all driven by the amount of top line revenue growth that we have.

And that question will come from Tim Horan with Oppenheimer. Timothy K. Horan - Oppenheimer & Co. Inc., Research Division: Ben, do you think the networks are keeping up with the demand or is utilization increasing or decreasing? And is there much variability between the different carriers at this point? And then secondly, maybe can you talk about it, is there much shift in CapEx going on at this point? Like are we basically done with the fiber buildouts and a lot of the incremental CapEx is going to be more success-based antennas or lawn carts? Any thoughts there would be great.

Sure, in terms of keeping up with demand, just as a casual observer and listening to carriers' calls, I would say no. And from watching their behavior, where they're going very, very aggressively towards adding capacity, you have to conclude no, they're not keeping up. And that's a good thing for us. It's a good thing for them, as a matter of fact, because there's more ARPU out there to -- as the pie grows to argue over. And so that's a good dynamic as the entire industry grows but just given the behavior and the speed and the pace in activity that we see, I honestly don't remember it being any busier than it is right now for us. So -- and that goes to really everything that we see, whether it be services activity, leasing activity. Obviously, we have this little integration going on, which adds a little level of complexity for what we see. And then the growing and building small cell side of the house, we are as busy as we've ever been. So I would have to conclude that, that's going to continue for some time and is fundamentally a result of all of us, as consumers, continuing to eat a lot of bandwidth. In terms of it being level smooth between all the different carriers, I talked about that a little earlier. It is a little bit different depending upon where the carrier is in their LTE deployment cycle, and with Verizon and AT&T being further ahead than Sprint and T-Mobile. But that doesn't give us really any pause because I think the dynamic of the spend to capture that incremental dollar is true with all of the carriers, and we fully expect them to come back and add density to their networks over time. We're already seeing that, just very beginnings with Sprint; we expect to see that with T-Mobile. We're seeing some of those early conversations. And then as I mentioned earlier in my comments, that's very aggressively happening with Verizon and AT&T right now. Timothy K. Horan - Oppenheimer & Co. Inc., Research Division: And then on -- any shifts in CapEx spending?

No. I mean, I think we see this as sort of a continuous program from -- for the foreseeable future; less sort of cycles and swings up and down, and more of a steady pursuit of more and more bandwidth and capacity in these networks as -- whether you're talking machine-to-machine or tablet growth. All these things that are expanding the usage of the network and expanding the revenue opportunity is a very good dynamic for our business and for the carriers, and that's what's happening right now. Timothy K. Horan - Oppenheimer & Co. Inc., Research Division: And I guess lastly, you've been doing 17% AFFO growth per year. This year's a little bit below, too many acquisitions. Do you think you can get back to the 17% level on a sustainable basis?

Well, I don't know about that. But you'd have to at least give me credit for the dividend this year. So the 13% would really be 15% if you added the dividend. So we think that's pretty good given the acquisitions we've done and everything we're working on and the Sprint churn headwind that we had this year. So if you were to adjust for the sort of the odd nature of the iDEN churn, that number would be actually be 16% this year, plus the dividend of 2%. So look, you can tell from the gross activity that we're pretty excited about what we see, and we got a lot going on. With that, I think we'll wrap up the call. I know there's a -- it's a very busy earnings week for everybody. I appreciate you jumping on the call with us now for 70 minutes, and look forward to seeing you at some conferences in the fall and on the third quarter call. Thank you.

And thank you very much. That does conclude our conference for today. I'd like to thank everyone for your participation, and have a great day.