Welcome to the 3:00 P.M. session at Citi's 2023 Global Property CEO Conference. For those of you I haven't had an opportunity to meet, I'm Mike Rollins with Citi Research, and we're pleased to have with us American Tower and CEO Tom Bartlett. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast as well as at the AV desk. For those of you in the room or on the webcast, you could sign on to liveqa.com and enter code Citi 2023 to submit any questions if you don't wanna raise your hand. If you would like to participate, you could raise your hand or just push the button on your microphone. A red light will go on, and we'll, try to get you involved in the conversation as soon as possible. With all those details out of the way, Tom, it's great to see you. Welcome back. Thanks, Mike. I'm gonna turn this over to you to introduce American Tower to our audience today. You can introduce any members of the management team that are with you, provide opening remarks, and we'll get into our questions. No, thanks, Mike. I mean, Parva is here with me, and I know many of you know her from our investor relations group. It is a bit like church. There's nobody sitting up here. It's like empty pews here going on here. No, Mike, I'll get to your questions if, and I'm sure I can add some commentary along the way, but I wanted to make sure that we address the kinds of questions that are on your mind and are on the mind of your clients. Great. We'll jump in. A question that we're starting off with the companies during our conference today is, what are the top three reasons an investor should buy your stock today? Well, the three that come to mind is first one is I would say they're demand based, our business model, as well as our execution capability. When you think about the demand, particularly for real estate, investors who may not know us as well as others, I mean, our demand is really driven by increases in broadband wireless. And if you think about your own utilization of your own sets and your own broadband, you know it's significant, particularly if you got kids. That phenomenon is not just unique to the United States, but it is clearly a phenomenon that is around the world. And the way that our customers, who are large, wireless providers around the world meet that is they invest in their networks. The way they do that is they require more space on our sites. We are a landlord. There's huge demand in the market. Customers in our markets will probably spend upwards on their networks $60 billion-$70 billion this year. They spent over the last several years about $150 billion on spectrum. This is a lifeline for them, and it's an ongoing source of revenue and demand for us. The second piece is really the business model. It is absolutely the best business model that I did not invent it, but I think the tower model is probably one of the best business models on the planet. We enter into long-term agreements with our customers, with escalators, to take the space on our sites themselves. There is a huge passthrough of revenue that comes from revenue down to EBITDA. We probably have about, this year in our guide, I wanna say it's $0.85 or $0.90 of every dollar that's coming down to the into the margin. Internationally, we underwrite them with a significant amount of passthrough costs, so probably 80%-90% of our direct costs are actually passed through to our customers. Escalators are broadly a function of inflation in those particular markets, so we try to underwrite some of the risk that way. I do think it is in fact one of the best business models that exists out there. It's really cornered on our ownership of the sites themselves and control of the land. That really provides a significant barrier to entry in terms of anybody trying to compete with us. Lastly, it's execution. You know, I think our history kind of speaks for itself in terms of the kinds of financial metrics that we've been able to deliver. I think we really do lead in the whole area of ESG power and fuel, which is a critical component of decarbonization globally, is a critical competency that we've developed in Africa. And I see our ability to offer that kind of capability, particularly when they're talking about kind of Scope 3 greenhouse gases to our customers. We've created spots of competency and leadership, I think, in a number of different areas, that being one of them. We also acquired a significant, a large data center company in the United States a number of years ago, which was really underwritten just by the cash flows that the business generates. The opportunity, we think, from an interconnection perspective of mirroring their capability, their customer base with our tower capabilities, we think will really create a significant amount of value as the edge develops and as 5G becomes more ubiquitous throughout the world. We're already getting questions inbound. Keep them coming. We'll work them into the conversation. Tom, when you talked about demand, you referenced that your customers are spending this year on investment between $60 billion and $70 billion. One of the questions that we find investors continue to think about is how to estimate what that annual long-term growth opportunity is for American Tower. Is it related or highly related to that quantum of capital investment that you referenced? Is there another algorithm that investors should think about engaging the growth prospects for your business over time? No, it's a great question, Mike. I mean, there are two elements of it. First of all, our revenue is most highly correlated to the capital that our customers are spending. We have a very diverse market presence, we're in, you know, 25 different countries. The reason that diversity is really powerful is because each of the investors, each of our customers invest at different levels. It kind of in the form of a sine wave, heavy investment, heavy investment. To the extent that you can layer on 20-25 different sine curves, you get a relatively predictable line. We think, and I've always thought, that our investors like that level of predictability when you're looking for ongoing cash flow. On top of that, though, is a pricing structure that we actually have largely had success in the United States of putting in place, where we have a very predictable growth profile because of the way that we've constructed our pricing. As a result, Mike, that also gives a much longer layer of predictability, if you will, that you can layer in over the top of all of those underlying sine curves that we've got within the business. Remind us where we are? You've given some long-term guidance on the organic leasing opportunity, domestic, and then, you know, what's the right way to think about how international should compare to that domestic rate of growth? Sure. I mean, last year, we gave some projections that we'll be growing in the United States at least at 5%, and it would be 6% absent some of the churn that we're still experiencing from the Sprint T-Mobile merger. That's a good baseline, I think, of growth, and that represents, from a colo and amendments perspective, you know, probably a $70 million increase of in-year revenue that's being generated as a result of it. On top of that, the way we've really characterized our markets is to think about international as probably going a couple 100 basis points faster, and which is also one of the reasons that we're in our international markets. Many of the markets that we're in, particularly emerging, you know, don't have a wireline capability to invest in. The carriers in those markets are largely investing in their wireless businesses. Historically, we've been at a 200 basis points faster. This year, I wanna say it's maybe 100 basis points higher than it is in the U.S., which is also driving then our overall kinda core growth upwards in the 9% range. When you think about how you've constructed the U.S. business in terms of using comprehensive agreements vs maybe the alternative in a la carte. Right. How do you look at the, what you're giving up vs what you're getting? Do you think you can get better long-term growth with this, or do you give some of that up to get better visibility of growth? It's both, Mike. You know, the compromise to it is that are we leaving revenue on the table? Just so that people kind of understand what this construct looks like, in our agreements, we have roughly 3% escalators every year. In the pricing that we're talking about, on top of the escalator is what I call a right-to-use fee. For a certain fee, our customers pay us that at generally at the beginning of the year. As a result of having paid that, they can actually unilaterally come and do whatever they want to on the sites that they had at the time that we put the deal in place. It gives us that predictability. The question Mike's asking is that, you know, you're entering into these comprehensive agreements, and these terms, you know, could be for three to five years. How do you get comfortable that you're not leaving business on the, on the table? That's really where, you know, all of the kind of the war room analysis comes in. We think we know these sites pretty well. We do our own internal drive testing, so we understand where the pockets of growth and the pockets of investment are going to be. That's all we do. I think we do a very good job of managing that, is there some being left on the table? Could very well be. We do think that having that predictability in the base of business and having and generating that kind of revenue stream far outstrips the business that we might have otherwise lost. The other benefit is really kind of the quality of service that we're providing to our customers. If we were on kind of this a la carte method that Mike talked about, every site that our customers wanna be at, we've got to meet them out there and kinda start working on nickel and diming on, "Okay, you know, you're gonna pay this. No, you're gonna pay this." I think we're actually able to provide a higher level of service as a, as a result of having this kind of construct in place. Which also is, you know, provides a kind of a leadership role and provides a much stronger strategic relationships with our customers going forward. You discussed earlier the global portfolio that you have. How are American Towers views evolving in terms of which markets you want to invest in and which markets you're thinking about pulling back or divesting? Well, it all comes back to our, you know, sustainable ROI. When we, you know, underwrite the investments that we have. I'll just really think about our emerging markets. We made a significant investment in Europe, and so I'll leave our developed markets kind of out of it and just look at our emerging markets. When we underwrite the investments in those markets, which we've done for the last decade, you know, there are certain levels of risks that we built into the model, and they're then driving the ROI on top of that. When we start to get outside of our skis, if you will, and are looking at volatility that perhaps in a market that we underestimated, you know, those are markets that we might look at from a portfolio perspective and see at the end of the day, whether they make sense for us to long term to be in. Our international strategy was always hinged on the fact that we wanted to be in the major democratic markets around the world, and we are. We have presence and scale in each of those critical markets. There were a lot of other countries, if you will, markets that came along with our entry, if you will, into those large, democratic, driven, countries. Those are some of the markets where we might not be able to create the right level of scale. It might be just cost prohibitive from doing that, maybe it makes sense to move out of them. Now, having said all that, I can think of on one hand how many markets we actually moved out of, you know, over the last decade or so. Given where the world is and how the world is changing from so many different perspectives, it definitely is a top priority of ours to look at those markets and see whether they all make sense to be a part of. How does India fit into this picture with some of the comments that you and the team provided in the last earnings call and possibly selling a stake? Can you just walk us through, you know, how you're looking at that market today? Yeah. I mean, India fits right squarely in the middle of the conversation that we just had. You know, we've been in India for close to 15 years now, and have generated some significant growth in the marketplace. India in and of itself has been through a few different obstacles from a telecom perspective over the last five years in terms of consolidation, in terms of tax levies that the government's impacted our customers on. As a result of some of those challenges and a particular challenge that one of our large customers there is having right now, you know, I look at some of that outsized volatility that's going on in the marketplace. The government itself is very committed to a three and a half-- what they call a three and a half player market, the half being a small government-owned wireless company that they own, but really largely a three-player market. They've also stepped up in terms of taking ownership of the customer that we have there who is struggling from an equity perspective. They own a third of the equity. They own 90% of the debt. I think they are very much committed to that three-player market. It was important to us, and I think it is important to us, to look at that portfolio in and of itself and determine, okay, what are the options for us, just as anyone would look at any part of their portfolio, you know, whether we stay, whether we exit, or whether we do something in the middle. On our last earnings call, we wanted to be very transparent with our investors in terms of what we're doing. You know, we introduced the fact that, you know, we have a process in place, and we're looking at what the options might be and where we can create the most value going forward. There's no decisions that have been made at this point in time. It's gonna come down to valuation partner, and what that might look like operationally moving forward and what the impact is on our bottom line. It's, it's just, you know, kinda double-clicking, if you will, you know, Mike, on kinda the portfolio analysis that we do in the business. Can you give us an update of how you're looking at, on the other side, net investing on the acquisition side? Do you see any change in the environment where there could be opportunities for American Tower to, you know, make some significant acquisitions or investments at this time? Yeah. You know, from our perspective, I don't see anything. By the way, we're invited to every party in all of the markets that we're in. I don't see anything that's compelling. First of all, strategically, you know, what was very important for us was to create the presence in Europe that we did and the relationship and the assets that we bought from Telefónica, which have really proven to be very successful. What was, I think, very important was our asset acquisition of CoreSite in terms of now having additional forms of digital infrastructure and ultimately creating a very interesting, I think, value proposition with our U.S. Tower business. It's not like we're looking for and need additional scale or competencies in any of the markets that we're serving. I don't see anything compelling out there for us. Second, I don't see, you know, I still see wide deltas between the bid and the ask. Even if we did see something that might be strategic for us, the increases in cost of capital notion hasn't become very obvious to the sellers. From that perspective, I don't see anything of interest at all. We said that on our year-end call as well, because there are a lot of rumors in the marketplace in terms of, okay, American Tower is part of this, is part of that, is part of this. I just wanted people to know the lenses that we're looking at is that I don't see anything compelling strategically, and I don't see anything competitive or compelling financially. You mentioned CoreSite. We have a question from our audience on that. If you can give us an update on CoreSite, what has gone well, any hiccups, and have there been any cross-selling opportunities that you could point to? Yeah. I mean, they had a terrific year, as we said on our year-end call. They set records in terms of sales. It's a very balanced approach that they're taking from a value proposition perspective, which really drives those interconnection hubs, as I think of them, within the four walls of their data center, whether it's on the cloud, whether it's on the service provider, or whether it's on the enterprise. They've added a number of logos, but where they get most of their business is just extending the amount of business that they're doing with their existing customer base. They've got a great model in place. They've been able to take advantage of being able to increase pricing, particularly across CoreSite and interconnection within their sites. We're very pleased with what they've done. We've got a good pipeline of assets in front of us that they're developing and looking to develop. To be able to meet the demand. The demand is strong. It's very consistent, that what we see going on in the marketplace. Really excited about the prospects to 2023 going forward, into the future. In terms of cross-selling, not yet, so much. There are some things that we've been able to do, certain customers that we have, that, you know, we're trying to point them in the direction of CoreSite. Certain partners that we have and vendors that we use also that we're, you know, trying to at least get us a seat at the table to be able to demonstrate what our capabilities are. There hasn't been a significant amount of cross-selling. I think that model we will see more of as the edge develops and we see more compute capability out at our sites, which is really just an extension of their presence in the data centers themselves. That's still probably, you know, three, four years out. Another question we're asking the companies at our conference is what is your number one ESG priority in 2023? You know, we have a number of ESG priorities, whether it's on the people side, on the diversity side. The cultural side is an ongoing opportunity and one that I'm personally very committed to. I would say everything that's going on in our power and fuel. You know, in many of the markets that we do business in, particularly a market like Africa, we are the biggest source of our own power. So we've invested over the last several years, you know, probably $300 million-$400 million on power and fuel competencies in the marketplace, whether it be bringing in solar, bringing in lithium-ion batteries. We've had a significant impact in, you know, in taking 5%-10% of the overall diesel requirement out of the marketplace. Personally, what's good for the environment is good for business, but this really fits squarely in the, in the, in the middle of that. I think as our customers are consumed, pardon the pun, with, you know, dealing with, Scope 1, Scope 2 types of gases. Scope 3 is probably the greenhouse gas area that concerns them the most. I'm really hopeful that the capabilities that we are building in a market like Africa can really be a benefit to our customers going forward. We just signed a deal with Airtel, a large global telecommunications company, to just build green sites in Africa. These sites will never see diesel. You know, they're all solar, they're all lithium-ion. I'm hopeful that that's a model going forward. That's a significant ESG initiative for us, Mike. As I said, it's good for the environment, it's good for our customers, and it's good for our business. On the international front, one of the issues that American Tower has been dealing with is just some of the merger churn, some of the consolidation. What inning are you in at this point of getting to more mature structures in your larger international markets? I would say probably the later innings. You know, it's very difficult to predict. Clearly, the United States, it was Sprint and T-Mobile was a significant merge and impact on our business, and we're still working through, you know, the challenges associated with that kind of a merger. You know, generally, we enter into long-term contracts. As a result, we're able to monetize those assets even if, in fact, we're going through a consolidation of some sort. In Latin America, we see consolidation going on in two markets, two of our larger markets, Mexico with Telefónica and Brazil with Oi. We're hopeful, you know, that we'll get down again to kind of that two to three carrier market there, which will, you know, be the foundation of what that market looks like going forward. In Africa, in South Africa, there has been some consolidation in some of our smaller markets, like Ghana. There's been some. Hopefully, that's behind us as well. You know, in India, while we're very hopeful that Vodafone will be VIL will be a strong third-party player, there have always been rumors about, you know, them being merged into either Airtel or Jio. I think as I said, the government is committed to having a third tenant or a third carrier in the marketplace, but time will tell. Maybe just a quick couple of follow-ups, on India, since you just mentioned that. Are you getting the collections to date that you've been expecting to get? We're getting them what we expected to date. It's not at 100%, but it's consistent with what we expect and what we were told. Since your earnings call, there was a filing from Oi. Is there any incremental churn risk that investors should be mindful of? No, there shouldn't be. I mean, first of all, it's a very small piece of our business from a consolidated perspective. There's a piece of our services that we're providing with them that are gonna stay with their wireline business. The article that you're referring to and the status of that does not impact us. One of the things that you mentioned earlier when you're talking about, I believe it was on the business model front, you're talking about the flow through of incremental revenue to EBITDA. There, there was an emphasis in, I believe it was the slides for the earnings call and on the earnings call itself around a strong level of incremental flow through that you were also just describing. Is that something different than in prior years for American Tower? Are there any sources of these incremental margins that are different than maybe in the past? Not really, Michael. I mean, it varies from year to year. When you think about it, if you can visualize a tower with one customer on it, when something else gets added to that tower, there's very little expense that needs to be incurred to support that revenue stream. That's really the flow through of that revenue that I was referring to. That's always been in kind of that 80%-90%. There are some things on the edges that might impact it a bit here and there, but that's always been the kind of the beauty of the business model that we're talking about. As you look at the growth opportunity that you've guided for 2023, how much of that is coming from the benefit of inflation-based escalators? From the incremental margin discussion, does it seem like you're getting some positive flow through from that? No, there is, particularly in international markets. You know, we have a basic general escalator of 3% in the United States. Our escalator has always been a critical component of our Organic Tenant Billings or our same tower growth in the marketplace. There are some markets that are outsized, you know, from a growth perspective this year. I mean, Europe is one, you know, where there's been some significant inflation. We've got CPI-based escalators and are now enjoying the growth. Latin America has historically been a high-growth market, and a good piece of that is coming from the escalator. From a margin perspective, you know, and the way we've really underwritten a lot of those CPI-based escalators is to offset the impacts of foreign exchange. From a margin perspective, you know, we're able to pass through so many of our costs to our, to our customers. We don't really see the brunt of the cost side of the equation. From a revenue perspective, it's largely mitigated a lot of the FX exposure. There's a, there's a method to the, to the escalator and the, and the kind of the triple net nature that we have going on out in the market. As you look at the opportunity for American Tower to generate and grow AFFO per share, how should investors think about when American Tower gets back on serve, where that AFFO per share growth can exceed the revenue growth? Well, it starts, first of all, with the revenue growth. It starts with the demand and the organic growth. If you're looking at the slides, you would've seen that our guide for the year is kind of a 9% kind of core growth, if you will, when you look at the amount of revenue that's coming from our build-to-suit, kind of Organic Tenant Billings, and some of the other elements of our revenue stream. Really solid growth from a core perspective. What's eating into that growth this year is really the increase in the cost of borrowing. You know, we have a sizable portfolio of floating rate debt. With the LIBOR going to where it is, coupled with some of the refinancing costs that we have going on in the business, you know, that's roughly 8% in total headwind vs our core 9%. That obviously keeps me up at night. What's important from our standpoint is a couple things. First of all, I do believe that's kind of a one-time event in terms of where LIBOR was and where it's gone. It's obviously impossible to predict what that looks like. For our own purposes, it's important for us to, term out a lot of that of that floating rate, as well as to de-lever. Those are two high priorities for us in 2023 and 2024, is to continually look at ways of de-levering in the business and terming out that floating rate debt so that we actually minimize some of that volatility that we experienced in 2023. Are you thinking about where you want your leverage ratio to sit from a target perspective differently than in the past? No. We wanna get there. You know, right now we ended the year at 5.4x net debt to EBITDA. Our guide is to get us down to 5.3x net to EBITDA. You know, getting there to a certain extent, but, you know, my objective for my team is to get back down to that 5x. It's no easy task. It might come from some of the monetization that you asked in the first question, some of that available cash flow that we can use to de-lever. That's a critical priority for us in 2023. You were describing a moment ago core growth rates, including the build-to-suits. Can you share a little bit more details about what investors should expect from the build-to-suit program this year and going forward? Yeah. I mean, this year our plan is to build about 4,000 new sites. We don't build them on spec. We build them for our existing customers underneath a master lease agreement, with the expectation then of obviously getting that second tenant. We're actually been very successful in terms of the yields that we're getting on our build-to-suits historically. We get generally double-digit kind of NOI yields out of the gate, and that's because they come with an anchored tenant, right out of the gate. The demand is very global. I mean, it's a pretty mixed bag of build-to-suits on a global basis, whether it's in Europe, whether it's in Africa, India, we're still building a number of sites. That is still a very good source of revenue for us, a very predictable rate of revenue. Last year, we built about 6,000. The demand is there. I know if we wanted to ratchet up that build-to-suit program, we could do that. It still is a really significant piece of our overall growth. There's a lot of development CapEx that, you know, that we continue to commit to it. It's a very good use of our capital. When you think about the global exposure that you have, how does the macro fit into demand from your customers, whether it's organic or build-to-suit? Are there certain markets where the macro may matter more and investors should be sensitive to that? There's certain small markets where, you know, we have had outsized inflation in those markets. They perhaps didn't have kind of the monetary capability to really be able to control that kind of outsized inflation. Now, again, we're able to realize that outsized inflation with our escalators. You know, if you have a market where they have 20% inflation, that sometimes can be a difficult conversation to have with a customer, where all of a sudden their rates are going up by 20%. We're legally able to, and we are. That's, you know, that's not a warming kind of conversation that we have. There, there are very few of those types of markets. In the broader markets that we have, the bigger markets that we have, whether it's in Europe or Africa, even India, Brazil, Mexico, you know, there is really strong monetary policy in place. They really are very much trying to control and mitigate a lot of those inflationary impacts. Ahead of the rapid fires, one other question. Another area of investment for American Tower was Telxius and getting bigger in Europe. Well, can you share how that's going? Are there certain components of that part of the portfolio that may be underappreciated by investors? Well, I mean, the first thing, it's a long-term contract. A good escalator base in place with that contract. It's with a world-class competitor, with Telefónica. 90% of our revenue is really coming from Telefónica, so it's largely that based. The market itself, the continent itself has seen a significant amount of new 5G spectrum put into the market, relatively recent over the last kind of 18 months. There are new entrants coming into the marketplace. It's a challenging market to do business, which we've known. We've had presence in Europe for probably the balance of, you know, six to eight years from a regulatory perspective, from a permitting perspective. There are challenges. We're hopeful that given some of the operational capabilities that we've developed in other parts of the world, that that will give us kind of a leg up in the market and create that kind of leadership role in the marketplace. We're really excited about the opportunities there. We have great customers, again, great leadership team in the market. We should expect some outsized growth, I think, in the market in the years to come. We'll get to our rapid fire. What will same-store NOI growth or tower gross profit be for your Property sector overall, not your company, in 2024? I'll tell you in February. What was that? I'll tell you in February. February. No, we're really scarred. I don't wanna get into it. I think what's important to note is that, you know, we've given long-term guidance on the OTBG, Organic Tenant Billings Growth same-store metric in the United States. We've said that, hey, we expect that growth to be at least 5%. It would be 6% without some of the Sprint remnants. That provides a great foundation for what we would expect our overall growth to be. I mean, it's still, you know, our, U.S. presence, you know, still represents, you know, over 60%-65% of our, of our business. The other piece being Europe from a developed market perspective. Between the two of them, which I would expect to be very strong coming in 2024, that will provide a good foundation to support solid levels of growth in 2024 and forward. We'll squeeze in the last two real quick. Best real estate decision today, buy, sell, build, redevelop, or hold? You're asking me? It's buy. Will your Property sector have more, fewer, or the same number of public companies a year from now? I think the same. Tom, thanks. Great to see you. All right. Good to see you. Thank you.