Ladies and gentlemen, we thank you for standing by, and welcome to the SBA Second Quarter Results Conference Call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions). As a reminder, today's call is being recorded. Now I'd like to turn it over to your host, Mr. Mark DeRussy, Vice President of Finance. Please go ahead.

Thanks John. Good morning everyone. Thank you for joining us for SBA’s second quarter 2014 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer; and Brendan Cavanagh, our Chief Financial Officer. Some of the information we'll discuss on this call is forward-looking, including but not limited to, any guidance for 2014 and beyond. These forward-looking statements may be affected by the risks and uncertainties in our business. Everything we say here today is qualified in its entirety by cautionary statements and risk factors set forth in last night's press release and our SEC filings, which documents are publicly available. These factors and others have affected historical results, may affect future results, and may cause future results to differ materially from those expressed in any forward-looking statement we may make. Our statements are as of today, July 25, 2014, and we have no obligation to update any forward-looking statement we may make. Our comments will include non-GAAP financial measures as defined in Regulation G. The reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and the other information required by Regulation G has been posted to our web site, sbasite.com. With that out of the way, I'll turn it over to Brendan to comment on our second quarter results.

Thank you, Mark, good morning everyone. As you saw from our press release last night, we had another very strong quarter in all areas. We exceeded the high end of our guidance for leasing revenue, tower cash flow, adjusted EBITDA and AFFO. GAAP site leasing revenues for the second quarter were $340.5 million or a 21.8% increase over the second quarter of 2013. Domestic cash site leasing revenue increased 13% to $276.6 million and international cash site leasing revenue increased 171.2% to $48.6 million. Our leasing revenue growth was driven by organic growth and portfolio growth, including our two recent acquisitions in Brazil. iDEN-related churn during the quarter had a negative impact of $1.7 million. We continued to experience strong leasing demand both domestically and internationally. Amendment activity continues to be significant and represented the substantial majority of incremental leasing revenue in the second quarter, reflecting a combination of coverage and capacity related 4G spending by our customers. The big four U.S. carriers contributed 90% of our consolidated incremental leasing revenue in the quarter. We continue to maintain leasing backlogs record levels. Tower cash flow for the second quarter of 2014 was $259 million or a 27% increase over the year earlier period. Tower cash flow margin was 79.6% compared to 77.6% in the year earlier period. Our services revenues were $43 million compared to $44.8 million in the year earlier period. Services segment operating profit was $10.9 million in the second quarter, compared to $8.9 million in the second quarter of 2013. Services segment operating profit margin was 25.4%, compared to 19.8% in the year earlier period. SG&A expenses for the second quarter were $25.4 million, including non-cash compensation charges of $6.1 million. SG&A expenses were $21.5 million in the year earlier period, including non-cash compensation charges of $4.9…

Thanks Brendan. SBA ended the first quarter with $6.9 billion of total debt. We had cash and cash equivalents, short-term restricted cash and short-term investments of $149.9 million. Our net debt-to-annualized adjusted EBITDA leverage ratio was 6.7 times. Our second quarter net cash interest coverage ratio of adjusted EBITDA and net cash interest expense, was 3.5 times. During the quarter, we settled the early conversion of $121.5 million in principal of our 4% convertible notes for $121.5 million in cash, and 2.7 million shares of common stock. The settlement was mutual to our share count, as a stock portion of the transaction was hedged. We expect to settle an additional 11 million principle of the 4% convertible notes in the third quarter, with the remaining 367 million in principle, maturing on October 1 of this year. Also during the quarter, we paid $276.2 million to early settled, 30% of the outstanding warrants sold in connection with the issuance of the 4% notes, which are scheduled to mature in the first quarter of 2015. Subsequent to the quarter, we paid $66.7 million to early settle an additional 7.5% of the warrants. Pro forma for these two transactions and based on recent stock prices, our warrant liability consisted 10.3 million underlying shares with a value of approximately $605 million. We expect to settle this obligation in cash. On July 1, we issued $750 million principal of new senior notes. The notes have a cash coupon of 4.875% and will mature in 2022. The net proceeds from the offering will be used to settle the principal amount related to the early conversion of our 4% convertible notes, to call our outstanding 8.25% senior notes and for general corporate purposes. At the end of the second quarter, and pro forma for this financing, the weighted average coupon of our outstanding debt is 4.1% and our weighted average maturity is approximately five years. We currently have no outstanding balance under our $770 million revolver. Based on specified covenants, we have available to us today, $720 million under that revolver. We did not purchase any shares of our common stock during the quarter, and currently have $150 million remaining under our existing $300 million authorization. I will now turn the call over to Jeff.

Thanks Mark and good morning everyone. As you have heard, we had another excellent quarter, exceeding the high end of our guidance across all key financial metrics. Once again, we expect to lead our industry in many important growth and margin metrics. Our organic leasing activity was strong again in the second quarter, and a prime reason for our outperformance. Based on our year-to-date activity, current backlogs and pending portfolio growth, we are once again announcing meaningful increases to our 2014 outlook. In the U.S., we expect to benefit from elevated levels of customer activity for the next several years, as carriers build out their initial 4G coverage footprints, to be followed by capacity spending, as consumer adoption increases. Scheduled spectrum auctions in a number of our markets, will add additional spectrum resources to our customers, which in turn come with build out requirements and will necessitate additional infrastructure needs that we expect will be a source of additional customer demand for years to come. In the second quarter, we once again experienced strong leasing demand across our entire portfolio, both domestic and international. Same tower cash leasing revenue growth was 12.7% on a gross basis, and 10.2% on a net of churn basis, including iDEN related churn. This is higher than our expectations, and one reason for the increase to our outlook. We attribute our leasing success to a combination of quality assets, strong execution, good contracts, and excellent demand from our customers. Strong execution was particularly evident with tower cash flow margins up 200 basis points over the year earlier period. In the second quarter, in the U.S., we executed high numbers of both new tenant leases and amendments. Amendment revenue once again made up the substantial majority of incremental leasing revenue in the U.S. Amendments are for…

Thank you. (Operator Instructions). And our first question is going to come from the line of Ric Prentiss. Please go ahead.

Thanks. Good morning guys.

Good morning.

Couple of questions; first on organic growth. Obviously 10.2% net same tower revenue growth pretty strong. What's implied in your 2014 guidance midpoint, as far as what that organic, kind of same tower revenue growth rate would be?

Ric, it currently implies approximately a 10% growth rate, which is actually an increase from where we were previously. We have been a little bit higher than that in the first half of the year. We actually did take up our expectations around organic growth for the second half of the year, from where they were previously. Although, we do not have them at the same level that we actually experienced during the first half. So you can kind of think about it as close to 10.5% in the first half of the year-to-date, and closer to 9.5% for the second half of the year, blending to approximately 10%.

Yeah, we have been inching it up, Ric, as we move through the year, given the outperformance. But we are -- because we have outperformed really so much in the first half, we are just a little hesitant to go to that same level, although there is nothing that we see, and no reason why we couldn't potentially do that again.

Little bit of conservatism, just to be safe in the year?

Yeah. And I mean, I think the focus is we have been moving up the base assumption all year long.

Right. And then on the organic side also, I think both you guys mentioned that amendment activity in the revenue term was more significant than new co-los. Is there some kind of percent you can kind of throw to us there, as far as amendment leasing revenue, from amendment versus new co-los?

It's about 75-25 for us in the quarter.

Okay. And then on external growth, Jeff, I think you hit pretty strong about where you want to keep your non-U.S. dollar denominated to grow to. When you think about portfolio growth historically 5% to 10% kind of targets; at what point, does stock buyback become more interesting, or how do you guys kind of, everyday kind of look at that? Do I buy my own stock, do I keep buying assets?

Asset growth has always been, Ric, our top priority, and I think it will continue to be our top priority, now with the few bands around it, based on the targets and the thinking that we outlined. We will always also consider stock repurchases, if the relative value appears attractive; because we are in the midst of cleaning up the converts, and settling the converts and the warrants this year -- people shouldn't really expect, it would kind of be counterproductive to that process to be in the market, buying our stock this year. But I do expect, we will be taking a strong look at allocating capital in that direction in years to come, and it will be a question of, do we find better acquisition opportunities. I mean, the one constant that I believe right now, and you kind of run your models off this is that, we do believe that the 7 to 7.5 times target leverage level is the right spot for us to operate in. That will throw off certain amounts of additional investment opportunity, which will either go towards growth or stock repurchases.

Makes great sense. Thanks guys.

Thank you. And our next question will come from the line of Amir Rozwadowski. Please go ahead.

Thank you very much and good morning folks.

Good morning.

We have gotten some great color in terms of some the carrier initiatives you folks have mentioned. I did want to ask, if we are looking at some of the larger carriers that we have seen already report results, it does seem as though, there is a bit of a front-end loaded element to their CapEx outlook for the year. Now I realize, that there is a bit of a nuance, when it comes to translating their CapEx outlook versus the visibility that you folks have in your business. But just trying to [indiscernible] here, I mean, how much should we think about the visibility that you folks have, in terms of overall capacity spending, for not just the duration of 2014, but also going into 2015?

Well, we have never had perfect visibility of course Amir, because only a fraction of what the carriers report as CapEx actually goes on the towers. So I don't know that we can -- you should not take what we say as a 100% correlated indicator of what our customers are going to be doing; but I will tell you that, obviously, we are familiar with the reports and the statements of our customers. We really don't see any material change in activity levels, and obviously we don't, because we guided I think so strongly going forward. If anything, there might be a slight pull back on some new leases versus amendment activity, but the amendment activity is really a race to finish certain levels of 4G networks, we don't see that slowing down at all. So I think people should look at our guidance and say, its really not going to affect SBA.

That's very helpful. And then if I may, you've mentioned that you've included a small amount of that Sprint's 2.5 GHZ go into your outlook, and nothing on the 700 MHZ [indiscernible] In terms of the discussions with carriers though, I mean, where do you think in terms of timing and potential scope of those types of investments? I mean, it just seems as though, both new spectrum pieces are strategically important to those carriers. So I am just wondering, how to think about sort of the opportunity set that could present itself, once you start including that into your outlook?

Well that will be primarily a good conversation for next quarter, when we roll out our 2015 outlook, which is where we would expect much more material contributions from those two items.

Great. Well thank you very much for the incremental color.

Sure.

Thank you. And our next question will come from the line of David Barden. Please go ahead.

Hey guys. Thanks for taking the questions. Good quarter. Maybe two if I could, maybe Brendan, I think you called out that December month, that you're planning on closing the Oi transaction being accretive to guidance, and you could kind of give us a little color as to how much that added and kind of your comfort level that December is a meetable target for closing that? And then second, maybe Jeff, there is some conversation out there about how important the AWS-3 auction is really going to be for the tower companies, because its more likely than not going to be able to be broadcast through existing antennas. But I know that you guys have had contract structures, that very specifically call out the spectrum bands as well, as opportunities to monetize the relationship with the carriers. So if you could elaborate a little bit of how you see the AWS-3 auction impact you guys or the business, it would be helpful color. Thanks.

David, first on the Oi deal; we have included the assumption that it will close December 1st for purposes of our guidance. We have excluded that, because we do think that that's the most likely closing date, so that's why we put it in there. So I think at this point as we sit here today, the odds are very good, that's when it will close. The impact to our guidance was approximately $4 million of incremental leasing revenue added, and closer to $2.5 million to $3 million on the TCF line.

On the AWS-3 auctions, David, we really do not have spectrum specific charges that we would ask our customers to pay in the absence of new or changed equipment, and that has been our operating philosophy for years, it’s the one that's appreciated and understood by our customers. So what will happen or what will need to happen, and I don't have the actual specs yet of what the deployments will look like, is if the AWS-3 spectrum deployments involve new or changed equipment, we will have an opportunity to increase our leasing revenue from that, and if they don't involve those things, we will not [ph].

Okay, that's clear. Thanks Jeff.

Thank you. Our next question then will come from the line of Jon Schildkraut. Please go ahead.

Good morning and thank you for taking the questions. Couple if I may, first I was wondering if you could give us a perspective of how much investable capacity you have left? I think that it was about $1 billion you were highlighting out at PCIA, and then its really good color in terms of the organic growth rates that you provided. Could you give us a breakdown of what it looked like your U.S. assets and internationally, and then specifically on the U.S., any incremental color about how tower co and mobility assets are doing would be appreciated? Thanks.

On the capacity, we have announced Oi, so that's over $500 million, and we are going to direct probably the rest of our capacity this year, Jonathan, towards cleaning up the warrants for cash. So folks should not really look for a lot of material acquisition from us, there will be some mom and pop stuff as we move through the year. But we will look to have a clean start with our capital deployments and our capacity in 2015, and we will be able to give you some more color on that next quarter when we rollout full year guidance. In terms of the growth rates, we are not going to get too granular, go country-by-country, but I will tell you that Brazil and the U.S. were higher than the 12.7 company-wide and Central America and Canada were lower.

Thank you. That's helpful. And tower co, mobility?

Yeah, they continue to do well and perform ahead of plan. They continue to attract less amendments, but more than their disproportionate share of new leases.

Great. And I did notice that you took up your new builds slightly versus last quarter's expectation. Was that around deploying a little bit more new sites down in some of your international markets, or are you looking to do new builds in the U.S. as well?

That's really around Brazil and is the flow-through effect of some large build-to-suites that we have been awarded, that I think we talked about last quarter.

Great. Thanks so much for taking the questions.

Sure.

Thank you. Our next question will come from the line of Phil Cusick. Please go ahead.

Hey guys, can you hear me?

Sure Phil.

Thanks. So just a couple of things; one, can you help us think about how much of your AFFO is coming from the services business this year, based on the guidance? And then second, Jeff, can you expand on your sort of maximum 25% to 30% of revenue from international went into that? Thanks.

You can only take -- the services piece, Phil, it's approximately $38 million of AFFO is implied in our guidance, for full year AFFO. On the latter, Phil, it has been a culmination of a lot of intense analysis and modeling, and basically gets down to this, as long as there continues to be such a wide discrepancy in economics between borrowing in the U.S. and borrowing in the forward markets, we are going to stick to the U.S. funding sources.

So with that as your base, you have to manage then to repay that in U.S. dollars. So we kind of triangulate around leverage in U.S. dollars, we triangulate around cash interest coverage ratio in U.S. dollars. We use as kind of baseline, the fact that we want to stay in the 7 to 7.5 times leverage range, and then all of those things, we have certain goals and targets, that is what produced the 25% to 30% non-U.S. dollar denominated international target. We are very pleased with the kind of the thoughtful approach we have taken here, and I am pleased to be able to kind of enunciate it to our investors really, pretty clearly, and it has been something that we have been thinking a lot about all year long.

Good. Thanks Jeff.

Thank you. The next question comes from the line of Simon Flannery. Please go ahead.

Thanks a lot. Good morning. Jeff, you touched on public safety, saying that you were not including anything in 2014. But obviously, with AWS-3 coming up, the funding is starting to come in too, better relief. Have you had any more kind of color into when you might start to see some activity, and going to maybe get some benefit in 2015, or is it still out a little bit beyond that? And if you could just touch on small cells and ExteNet, what are you seeing in terms of demand from carriers, and how are you thinking about that opportunity? Thanks.

To be honest with you, Simon, I haven't really dug in to the degree that we will, by the time we give our 2015 guidance, as to what the timing will be, with public safety, I don't know. I can't say yet, how much activity, if any, we will see in 2015. But stay tuned to that. Remind me to answer that question next time around. On ExteNet, they are staying very busy; volumes of small cells clearly are up from where they have been over the last couple of years. We think they are doing a good job. We are happy to be a part of it, and we will see where the future takes that relationship. But we are pleased with the way things are going.

Thank you.

Thank you. Our next question comes from the line of Colby Synesael. Please go ahead.

Okay, thank you. Two questions, one modeling, as it relates to the converts. So the converts on the balance sheet as of the second quarter were still $370 million. Can you just walk us through, what the anticipated cash premium that you expect to pay for what remains on the balance sheet, so we'd start thinking about our models in terms of reducing the cash portion, obviously taking out the 370, but then what other remaining cash portions should we be subtracting out of our cash balance? And then also, what the implied total share count should be, exiting the year? Obviously, it has bounced around a little bit, in terms of how it's reported on a GAAP basis. Just wanted to make sure I had the right total share count assumed, based on what's happening with the converts, as we exit the year. And then, my other question just has to deal with network services segment of the business; can you just remind us what the historical correlation has been to the site rental business, and whether that's historically proving to be a leading indicator of any type of demand going forward? Thanks.

Sure. Colby, this is Brendan. On the converts, as of the end of the second quarter, you're right, it was about $379 million of principal that was left, and that will mature on October 1st, and we will settle that, at that time. There is a -- when you talk about the premium associated with it, we are fully hedged against the premium, so the actual timing of sort of experiencing that premium and paying off the principal, are not necessarily in-sync, because the premium for us is basically satisfied through settling the warrants that were sold at the time that we issued the convert. We have begun unwinding some of those warrants already, and as was mentioned in the release, we through -- into the third quarter here, have already unwound 37.5% of the warrants. So basically what this means is that, at October 1st, we will settle the remainder of the principal, $379 million, there will be no impact on the share count. We have guided to doing additional financing to clean up the rest of the warrants, so throughout the rest of the year, by the end of the year, our guidance contemplates settling all of the remaining warrants for cash, and excluding what we have already settled and announced that, based on yesterday's stock price, would be valued at approximately $605 million.

On your network services question Colby, if you were able, not sure it's possible, but if you were able to gather all the networks services business revenue and then look at it, it would be a good indicator of future leasing activity. In our case however, while you should expect from our guidance that we do expect strong leasing activity. Our network services business actually has a much different mix, than where we happen to be enjoying most of our incremental leasing revenue. For example, the Sprint 2.5G project is a big contributor to our services business, but not nearly to the same degree to our incremental leasing revenue. So in general as a whole, it is a correlator, but if you actually get very granular and look at our business, where it's coming from versus our leasing business, it's actually pretty different, which I think is a good sign, it shows that everybody is busy doing something.

Great, thank you.

Then Colby, on the share count, you asked I think an assumption of approximately 130 million, maybe slightly less than that at year end is reasonable. Shouldn't be really any different, materially different than where we are today, because the converts are not anticipated to have any impact on that.

The only other incremental increase this year, that is typical comp etcetera?

Yeah, there would be minor things like that, exercise of stock options or something.

Yeah, our plan and our expectation and goal all along here has been to cash settle these warrants, so our share count would not increase, which is why we are devoting a lot of our otherwise investable capital for the back half of the year, into settling the warrants.

Okay. Thanks for the color.

Thank you. Our next question then will come from the line of Jonathan Atkin. Please go ahead.

Good morning. I was wondering if you could give us a review on how the tower industry in Mexico might evolve, given some of the divestitures that may happen in that market? And then domestically, you've given the stats for land ownership or under control, 74%. What would be the pure ownership stats for your U.S. towers?

That's probably about 30% Jonathan. On Mexico, we are watching it with lot of interest. We have chosen historically to not enter Mexico up until this time, in part, based on the concentration of carriers there. So this could change all that. But just this week, some statements were made by America Movil, that we are looking to spin out and operate independently, the towers. So that would be very interesting, because if that happens, all of the sudden, you will have a very big dominant player down there, that will be -- I am sure, a strong competitor going forward. So we have to take all that into consideration.

Great. And then one last question on the guidance; you are excluding T-Mobile 700, but I think you said in your script, that you are actually seeing some activity there. So is it just conservatism, that explains why it wouldn't be in the guidance, or it does not have any --

The amendment activity in the business that we are seeing from T-Mobile is not 700 yet. Its metro change-outs, its some other things, but its not 700 megahertz.

Understood. Thank you.

Thank you. Our next question will come from the line of Joe Scavone [ph]. Please go ahead.

Hi guys. Thanks for taking the question. Jeff, last quarter, you had mentioned that you had stepped up the work on the reconversion. Can you just give us a sense of how quickly you could convert, if you felt the timing was better to do it sooner rather than later, and then with the work that you have done, do you have an updated timeline that you could share with us?

I am going to let Brendan handle that.

We have been doing some work around it, just to make sure that we have all of our facts ready, so that we would have the flexibility to go, whenever we feel its appropriate. We could conceivably, if we wanted to, we think we could conceivably convert effective next year, January 1. But at this point, we don't necessarily see the need to do it at that time, but we will continue to evaluate it, and remain flexible and available to do it, when the time seems right.

Yeah, we are doing work Joe around our E&P position. We have concluded, we are still years away from positivity which would be one catalyst to convert. So really our focus will remain watching the political landscape, and seeing if there is any real chance that the laws get changed. Our current thinking and the advice from a lot of folks is that, that is not going to happen. But that's something we monitor very closely.

Got it. Thanks.

Thank you. Our next question then will come from the line of Michael Bowen. Please go ahead.

Okay. Good morning. Thank you very much. Couple of questions. I think last quarter, you had mentioned that the international growth rates, the core growth was a little bit less. I am sorry if I missed it, but I wanted to see if you could give us an update on that this quarter. And then secondly, can you help us think a little bit through the reasons why your amendment driven revenue will be a higher percentage of your revenue growth, than say, your other two competitors, and how we should think about that going forward? Thanks.

We picked up a quarter, this quarter, and dropped off a quarter that we had last quarter in Brazil. The only towers that we have owned down there, that go into the calculation, are our Vivo 800 towers, because those are the only ones we have owned for a full year. And the timing is such, that we just picked up a lot of business, which turned that -- those towers and that metric from a lagger to a leader, and that's why it happened. And in terms of the -- I really don't want to get in comparisons with our peers. We are seeing a tremendous amount of activity. For us its 75% amendments that we are enjoying and our revenue recognition. It’s a busy time out there, and as you could see from our guidance, we expect to continue the strength through the rest of the year.

Just to follow-up on that, do you think that as we move into 2015, that that 75% comes down more to maybe a 50-50 level, or how should we think about it?

Well we will see how the AWS turns out, and what that means. That could be a whole new flurry of amendments. We think that the 2.5G in the 700 megahertz business will all come, mostly in the form initially of amendments. We think that there is still a lot left to do by AT&T and Verizon. So while I'd be hesitant to say, it will be the same high rate, all through 2015, and looks like it will be in 2014. I think its going to be pretty strong.

All right. Thank you very much guys.

Thank you. Our next question then comes from the line of Mike McCormack. Please go ahead.

Yeah, hi guys, thanks. Maybe just a quick comment on what you're seeing out there with respect to Wi-Fi adoption on your carriers. How many carriers are actually embracing it, and then thinking about some of the stuff that people are talking about with Comcast. Is cable at some point -- maybe excited to deploy the macro network, with some sort of Wi-Fi technology? Thanks.

I guess its possible Mike. I have not seen or heard of any concrete plans for cable companies to deploy macro sites. I think of seeing the same thing you are, which is a lot of talk around Wi-Fi in the home or in the -- around the urban markets. Wi-Fi, whether its deployed by the cable companies or by anyone, wi-fi has been around for a while. It is a fixed location solution. It is not a mobility solution. So we continue to see it as part of the growing infrastructure of wireless, helps people kind of continue to get hooked on video and things like that. But its not something, that has in any way, impacted our business and I don't think it will.

Jeff, just made another clarification on your M&A strategy, you mentioned western hemisphere obviously, but what is it about the eastern hemisphere that you don't think is appropriate for SBA?

I will speak generically by region. Europe, we are not sure that the growth for the price to be paid there, based on the deals that we have looked at, is our cup of tea. Africa is an interesting market, but its still very much in development, we are watching it. But Africa adds that whole new element of operational challenge, that is not present in the western hemisphere, which is power. Lot of the African tower business is about the provision of power. So we find that different. And in, you can't really go to China, because of the way the laws work there for real estate owned companies. And in India, we have looked and we have been there, and we just -- again that is not our cup of tea. We do -- we have clearly experienced the strategic value of staying in the western hemisphere, because of where we are located in South Florida. We have a huge pool of resources that we can pull on, to deal with the Latin cultures, and the various countries. We have people now employed at SBA, that come from every single country in Central and South America, and our travel ability from here is also -- makes it much easier to operate. So that's our current thinking.

Great. Thanks Jeff.

Thank you. (Operator Instructions). We have a question from the line of Kevin Smithen. Please go ahead.

Thanks. Jeff, you have had some very nice improvements in tower cash flow margins. Can you give some more details on operational achievements in Brazil, and your confidence level in that business? I know you have kind of felt that you had a sort of a learning process there, where are you in that learning process, and are some of the PCS leverage we saw this quarter, how much of that came from Brazil?

Yeah, a fair amount came from Brazil, Kevin. We continue to move up our progress curve, quite rapidly, I am pleased to say. And that is an area, where we are bringing a lot of U.S. learned experience in terms of operating efficiencies, to a market that didn't really think or pursue that before. So that has been, and I think, will continue to be a good source of margin expansion for us. The other thing about margins, and we have some of this in the U.S. with our mobility assets, but for the most part, all of our Brazil assets, the margins are actually even higher. But the way GAAP makes you account for ground leases, when they are reimbursed to you by the carrier, is you have to expense them yourself, and the you gross-up the revenue, which is obviously because its required by GAAP, how we do it. But our true economic margins are actually much higher.

As you look to 2015, do you feel that you have the right portfolio of assets in Brazil? Or there are potentially more deals you could do there? And obviously, given your comments about regional expansion, it seems like if there is no more deals in Brazil and the U.S. that share repurchase might be more -- might be higher up on your capital allocation list, relative to the last few years?

If in fact that's the way the portfolio opportunities play out, that would be true, because we do intend to stay capitalized at 7 to 7.5 times range. I do think there will be additional growth opportunities in Brazil. I think there will be some opportunities in other countries in South America that we are not currently in. So I think, folks should expect a mix of those capital allocations in the future, but our bias will be continued portfolio of growth, in markets we want to be in, but we are not going to just grow the portfolio, obviously for the sake of growing the portfolio, to the exclusion of stock repurchases, which we think, if well executed against our high quality assets, will be a good source of shareholder value creation for years to come.

Thank you.

Thank you. Our next question comes from the line of Spencer Kurn. Please go ahead.

Okay Shawn. This will need to be our last question.

Thanks guys. Just to circle back to the tower cash flow margins. It looks like in the U.S., your domestic costs actually declined year-over-year? I was wondering what drove that decline, and is this the trend that you think, you can manage going forward?

I am sorry Spencer, can you repeat what declined year-over-year?

Your cash leasing costs, in the U.S.?

I think there is a couple of things where we had some benefits during this quarter. We had significant outperformance in the area of property taxes for one, and as well as maintenance costs. Some of them were just good timing, but we've also had an active program of challenging property taxes and trying to reduce those costs, so some of it would be associated with that --

And buying our land.

And of course, that's a good -- we are also obviously active in buying our own land, or doing long term pre-paid easement. So that's reducing the [indiscernible] expense.

I doubt, Spencer, and this is a preview of the 2015 guidance. I doubt we are going to project that we are able to continue to reduce that cost line in absolute dollars. I think, we certainly would expect to continue to project margin expansion. But not sure, we will be able to actually reduce absolute dollars going forward.

Got it. Thanks so much.

Sure. Okay, well that is all for this quarter. We appreciate everyone's attention, and we look forward to our next results.

Thank you. Ladies and gentlemen, this conference will be available for replay after 12:30 PM today, through August 9 at midnight. You may access the AT&T teleconference replay system at any time by dialing, 1-800-475-6701, and entering the access code of 330338. International participants please dial 320-365-3844. Those numbers again are 1-800-475-6701 and 320-365-3844, with an access code of 330338. That does conclude our conference for today. Thank you for your participation and for using AT&T Executive teleconference. You may now disconnect.