Ladies and gentlemen thank you for standing by. Welcome to the American Tower Corporation Third Quarter 2020 Earnings Conference Call. As a reminder, today's conference is being recorded. Following the prepared remarks, we will open the call for questions.

[Operator Instructions] I would now like to turn the conference over to your host, Igor Khislavsky, Vice President of Investor Relations. Please go ahead, sir..

our expectations regarding future growth, including our 2020 outlook, capital allocation and future operating performance; our expectations regarding the impacts of COVID-19; our expectations regarding the impacts of the AGR decision in India; and any other statements regarding matters that are not historical facts.

You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements.

Such factors include the risk factors set forth in this morning's earnings press release, those set forth in our Form 10-K for the year ended December 31, 2019, as updated in our Form 10-Q for the three months ended March 31, 2020, and in other filings we make with the SEC.

We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances. Now please turn to Slide 4 of our presentation, which highlights our financial results for the third quarter.

During the quarter, our property revenue increased 3.4% to nearly $2 billion. Our adjusted EBITDA grew by 5.6% to approximately $1.3 billion. And our consolidated AFFO and consolidated AFFO per share increased by 14.7% and 14.5%, respectively, to $1.02 billion and $2.29.

On an FX-neutral basis, growth rates for property revenue, adjusted EBITDA, and consolidated AFFO per share would have been 8.1%, 9.7%, and 19.5%, respectively. Finally, net income attributable to American Tower Corporation common stockholders decreased by roughly 7% to $464 million, or $1.04 per diluted common share.

The decrease included the impacts of an FX loss of about $49 million in the quarter and a loss on retirement of long-term obligations of roughly $37 million. And with that, I'll turn the call over to Tom..

distributed compute, and mobile edge compute. We believe that these two offerings will develop at different timelines and will allow us to provide differentiated value propositions for our customers.

On the distributed compute side, enterprise workloads continue to move to the public cloud and a growing near-term market segment is the use of on or off-prem private cloud computing is a hybrid solution.

Small and medium-sized businesses are often willing to move legacy workloads to more responsive, proximate, cost-effective data centers, and we believe that many data centers at some of our macro towers can represent optimal locations for these installations.

We have started to deploy micro data center facilities at select tower sites, and have seen early indications of solid demand in collaboration with partners like Flexential. In the near-term, this solution enables us to develop operational excellence around the technology and iron out the kinks on a small scale.

With that said, we don't necessarily think this use case alone will be the long-term driver of significant value for us. We expect true 5G mobile edge compute solutions to represent a much larger long-term opportunity.

The foundational concept of our mobile edge strategy is the expectation that localized neutral host, multi-operator, multi-cloud micro data centers can be the most cost and technology efficient means to which latency can be reduced to the edge.

And that these facilities can be optimally located at select macro tower sites that already have power, fiber, and multiple wireless tenants, rather than each cloud provider and carrier forging ahead with their own connectivity arrangements, our vision is to serve as the neutral host for these low latency relationships, which would drive cost efficiency, improve enter MNO application performance, and accelerate deployment of these facilities throughout the network.

We expect this to be a multi-year rearchitecture process, and we are in the early stages of leveraging the knowledge that we've developed through Colo Atl in the small scale deployments at the tower sites I mentioned earlier, to determine the specifics of our go-forward strategy.

They also mentioned these offerings in all likelihood will involve partnerships and joint ventures, as we continue to explore where in the value chain we can drive the most incremental upside.

At this point, we think a scaled solution is still at least a few years away, but there is tangible progress being made and we are excited about the possibilities. Underlying this excitement of the potential future 5G related use cases that we expect to drive rapid uptake of mobile edge compute functions.

Immersive AR and VR gaming applications are obvious examples. Autonomous Vehicle connectivity is another, including our involvement in C-V2X with partners like Qualcomm, and Audi.

Next-generation drone delivery networks, real-time sensor-based data collection and analytics, and a host of other enterprise-oriented solutions are also on the way and will require significant levels of compute power on the network edge.

Our objective today is to position American Tower to be ready to act decisively when the time is right to be a meaningful player in the space. Meanwhile on the international side, most of our markets are at least five years behind the U.S., in terms of deployed network technology.

As a result, the edge compute opportunity and other potential 5G enabled business models are further down the road.

The strategic advantage that we expect to have in these areas similar to what we did with our core tower business is the ability to prove out these models in the United States first, and then export them internationally when the time is right.

Over time, we believe that our global interconnected reach will be critical in the context of an ever more global, multinational customer base, and their need to support their customer's global needs.

In the meantime, one of the main focus areas of our platform extension efforts today throughout Africa and India especially, is on developing power as a service, to drive operational efficiency and cost savings, while materially reducing the carbon footprint of the wireless industry.

Throughout much of Africa and India, the electric grid is inherently unreliable. It is part of our service offerings we are responsible for providing onsite power for our tenants. In the past, this was almost exclusively delivered through diesel generators with significant daily run times and diesel usage at considerable expense.

More recently, as solar and lithium-ion battery technologies improve or becoming more cost-effective, we have accelerated our adoption of these technologies to make power provision in our sites more efficient, and environmentally friendly.

In fact, as of the end of 2019, we had 12.3 megawatts of solar capacity already online with more than 4,500 sites utilizing lithium-ion batteries. To date, we've invested nearly $135 million on fuel and power optimization solutions, and expect to continue to make these investments as we improve site reliability levels for our tenants.

As we disclosed in our latest sustainability report, our long-term target is to reduce our scope on fossil fuel consumption in diesel related greenhouse gas emissions in Africa and India by more than 60%, or 140 million liters of diesel annually by 2027.

Already, we have made significant progress towards that objective having reduced annual diesel consumption by 65 million liters since 2017, after normalizing for site count growth.

To give you a sense for what that translates to, it's essentially the equivalent of taking more than 35,000 cars off the road for a full year or preserving more than 65,000 acres of forest. In addition, we are currently exploring the development of science-based emissions targets consistent with the Paris Agreement goals.

These initiatives are in their early stages. We are excited about the impact that we can make going forward.

Just like in the United States where we are seeking to leverage our expanding platform to augment the value of our communication sites, we believe that we can translate our expertise and industry leadership in fuel and power internationally into tremendous added value.

Reducing the total cost of ownership for our tenants further improving up times and developing more efficient, clean, renewable networks will benefit stakeholders across the value chain. We're committed to making substantial additional progress over the long-term.

Just like in the United States where we are working on a number of other initiatives, we're continuing to look at things like fiber to the tower, fiber to the home, and other transport models in many of our international markets as ways to further broaden our addressable market and add value.

These value propositions would all be predicated on long-term contractual commitments with multi-tenant and multi-service elements that mirror our existing tower model. In closing, on a global basis, we are in a time of tremendous technological digital transformation.

Access to ubiquitous broadband connectivity has never been more important, particularly, in the context of the ongoing pandemic. There are new use cases emerging every day with modern wireless networks becoming more and more dynamic, responsive and critical.

As providers of the underlying infrastructure that supports mobile connectivity for billions of people around the world, we have a unique advantage point from which to observe all of these developments.

And I think we also have an incredible opportunity to pair our advantages and scale, financial resources, and global reach with our platform expansion initiatives to drive tremendous incremental value for our stakeholders over time in a sustainable way.

With that, let me turn the call over to Rod, to go through our third quarter results, and updated full-year 2020 outlook. .

Thanks Tom and good morning everyone. Thank you all for joining our call, and I hope you're well and remain safe during these challenging times. As you saw in our press release, we had a very strong third quarter that outpaced our expectations, and as a result, are raising our full year outlook for key metrics.

Before we dive into the details of our results and updated expectations, I'd like to highlight the following. First, demand for our global tower assets was strong in the quarter, most notably and as Tom just discussed, we signed a comprehensive nearly 15-year long master lease agreement with T-Mobile in the U.S.

which brought our contracted base of committed future revenue across the company to over $58 billion. We believe that this MLA serves as another reaffirmation of macro towers serving as the baseline of modern wireless networks for the foreseeable future.

We also expanded our tower portfolio through select acquisitions and build to suit initiatives, acquiring more than 300 sites in building nearly 1,500, which was a quarterly record. We continue to effectively manage through the challenges posed by COVID with a continued focus on the safety of our employees, vendors, customers and communities.

Additionally, our focus on operational excellence, efficiency, and cost controls enabled us to drive expanding margins across the business, despite some of the challenges resulting from the global pandemic. Moving to the balance sheet, we issued around $2.8 billion in U.S.

dollar in euro-denominated senior notes across several tenders, including 30 years during the quarter. As a result of these refinancing initiatives, we were able to further extend our repayment schedule, and reduce our weighted average cost of borrowings.

We ended the quarter with nearly $6.7 billion in liquidity and increased our euro-denominated borrowings to represent over 10% of our total debt. Finally, we declared a common stock dividend of $1.14 per share, extending our long track record of solid dividend growth.

Returning capital to shareholders through the dividend remains an important part of our capital allocation strategy. Now, please turn to Slide 6, and I will review our property revenue and organic tenant billings growth. In addition to discussing growth rates on a reported basis, I'll also outline FX neutral metrics.

Our third quarter consolidated property revenue of nearly $2 billion grew on a reported basis by $66 million, or 3.4% over the prior-year period and on an FX neutral basis by $155 million, or 8.1%. Our U.S.

property revenue totaled more than $1.1 billion and grew by $27 million, or 2.4% over the prior year, including a roughly 2% negative impact from lower straight-line revenue. Approximately 55% of our consolidated property revenue was generated in the U.S.

Our international property revenue was approximately $865 million and grew on a reported basis by around $39 million, or 4.8%. This included FX headwinds of roughly $89 million as compared to Q3 of last year. And on an FX-neutral basis, International Property revenue grew by $129 million, or 15.6%.

FX trends have appeared to stabilize over the last several months, and FX was slightly better in Q3 than our prior expectations.

Our underlying revenue growth rates reflect solid demand for our tower space from our base of primarily large multinational tenants, who are expected to invest approximately $30 billion in their networks this year, as they continue to add coverage, increased network capacity and rollout more advanced network technology.

Moving to the right side of the slide, you can see that we achieved consolidated organic tenant billings growth of 4.4% for the quarter, right in line with our expectations. This included U.S. organic tenant billings growth of 4.2% comprised of new business activity, which contributed 2.9%.

Escalators, which contributed 3.1%, churn of 1.4%, and a roughly 0.3% negative impact from other items. As expected this growth rate reflects a sequential deceleration driven by modest levels of new business activity from T-Mobile over the last year, but continued strong contributions from other tenants.

On a gross basis, including the impacts of our new MLA with T-Mobile, we expect activity to increase beginning in early 2021. Although this will be accompanied by higher levels of churn over the next few years as T-Mobile decommissioned certain Sprint sites.

Our international organic tenant billings growth in the quarter was 4.7% led by Africa at over 8%, and Latin America at 7%. Europe was just over 2%, while India was negative 0.5% all of which were in line with our expectations. Gross new business commencements were solid once again as network expansion and densification initiatives continued.

The component parts of our international organic tenant billings growth were new business activity, which totaled over 6%. Our mostly local inflation based pricing escalators, which contributed 3.5%, and other items which contributed 20 basis points, partially offset by the churn of 5.2% concentrated in India.

Moving on to Slide 7, you can see that our third-quarter consolidated adjusted EBITDA of nearly $1.3 billion grew on a reported basis by about $69 million, or 5.6% over the prior year and on an FX neutral basis by $119 million, or 9.7%.

Adjusted EBITDA margins were 64.5%, up roughly 160 basis points over the prior year, and 120 basis points sequentially. This increase was attributable primarily to solid organic growth throughout the business, as well as diligent cost management and efficiency initiatives. Our U.S.

business again drove a substantial majority of our consolidated property segment operating profit accounting for roughly two thirds of the total.

Moving to the right side of the slide, you can see our consolidated AFFO of $1.020 billion grew on a reported basis by nearly $131 million or 14.7% over the prior year and on an FX neutral basis by around $175 million for nearly 20%.

Consolidated AFFO per share of $2.29 grew on a reported basis by about $0.29 or 14.5% over last year's levels and on an FX neutral basis grew by $0.39, or almost 20%.

This growth in AFFO and AFFO per share was driven by our previously discussed growth in cash adjusted EBITDA, as well as lower cash interest costs resulting from financing activity along with lower levels of cash taxes and maintenance capital spending.

Let's now move on to the high-level themes driving our updated 2020 expectations, which reflect increases across all key metrics. Our revised full-year outlook is based on underlying demand expectations that are broadly consistent with our prior view.

The large multinational carriers that account for the vast majority of our consolidated property revenue continue to deploy network capital as their customers consume more and more mobile data, irrespective of some of the disruptions caused by COVID-19.

In the U.S., we expect leasing demand to pick up as we head into 2021, as carriers ramp investments in 5G and continue 4G upgrades. Mobile data consumption grows at 30% or more per year, and mid-band spectrum deployments accelerate.

In the intermediate-term, we think that much of this acceleration is likely to revolve around the deployment of 2.5 gigahertz spectrum. Looking slightly further out, we expect that the C band DISH's spectrum assets and to some extent CBRS are likely to all be relevant drivers of network activity. As a result, we believe that the U.S.

wireless landscape remains constructive and is poised to drive solid tower leasing activity for many years to come. Our international businesses are performing well and continue to meet our expectations, highlighting the resiliency and critical nature of tower assets across the globe.

We also continue to augment our international portfolio through both accretive M&A, and high return new build programs. For the full year, we are raising our expectations for new builds to 5,500 at the midpoint on the back of a record third-quarter where we constructed nearly 1,500 sites.

And on the M&A front, we added nearly 300 sites across our international footprint in Q3, bringing our year-to-date total to about 800, including more than 300 in Europe.

Broadband connectivity across our international footprint has never been more critical, particularly, in markets with limited fixed-line access and we are working closely with our tenants to help them drive it.

As part of these efforts, we have augmented several customer relationships recently, which we believe positioned us well to drive attractive growth while delivering high levels of service.

We are already seeing benefits of these enhanced partnerships through accelerating organic growth in markets like Nigeria, and higher levels of new build activity in many of our other markets and expect these positive trends to continue over the long-term.

Meanwhile, in India, the Supreme Court has ruled on a 10-year AGR repayment timeline for the carriers. We view this as a positive as it provides incremental clarity in the marketplace in near-term breathing room for the carriers in terms of their liquidity.

While we believe it is too early for these positive developments to translate into significant improvements in our near-term operating results, they do provide a base for optimism for the longer term.

As it relates to our 2020 outlook, outside of some more favorable projections for a bad debt due to better collections over the last few months, our operational expectations in India are essentially unchanged from our prior view. Now, please turn to Slide 8, and we will review our raised outlook midpoints.

Our updated guidance for property revenue is $7.89 billion, which is an increase of $165 million, compared to our prior outlook and reflects a growth rate on a reported basis of 5.6%. On an FX neutral basis, the growth rate would be right around 10%. For the U.S.

property segment, we now expect revenues of nearly $4.5 billion, which is $115 million above our prior projection. This is primarily being driven by about $105 million in incremental straight-line revenue attributable to our new T-Mobile MLA, as well as some other non-run rate outperformance in the business.

For our International property segment, we now anticipate property revenue of $3.390 billion, which is $50 million higher than our prior projections.

This is being driven by approximately $15 million in favorable FX impacts along with around $13 million in additional currency neutral pastures, and roughly $7 million in incremental straight-line revenue as well as $15 million or so in other outperformance throughout the business.

Moving to the right side of the slide, we are reiterating our expectations for 4.5% to 5% consolidated organic tenant billings growth. This includes a projection of 4.5% for the U.S. and roughly 5% for international. As I mentioned earlier, we do expect an acceleration in gross new business activity in the U.S.

beginning in early 2021, in part driven by our new agreement with T-Mobile. Turning to Slide 9, you can see that we now expect our full-year adjusted EBITDA to be $5.1 billion, which is $170 million above the midpoint of our prior outlook and over11% greater than the prior year on an FX neutral basis.

The primary drivers of this increase are approximately $105 million in an incremental net straight line, about $27 million and better than expected non-pass through, primarily non-run rate cash revenues around $28 million, and lower than expected non-pass through direct operating costs in cash SG&A, including $20 million and lower bad debt expectations in India in favorable FX impacts of roughly $5 million.

For the year, we now expect cash SG&A as a percent of consolidated property revenue to be 8.2%, or around 7.2%, excluding bad debt reflecting continued scale benefits across the business. Lastly, we expect consolidated AFFO for the full year to be $3.75 billion at the midpoint, which is $75 million, or 2% above our prior outlook.

On an FX-neutral basis, this reflects the growth of nearly 11% even including the $63 million one-time cash interest expense impact from our purchase of MTNs joint venture stakes in Africa earlier this year.

The primary drivers of the increase as compared to our prior expectations include the cash adjusted EBITDA outperformance I just mentioned, $20 million in lower net cash interest, and about $5 million in favorable FX impacts, partially offset by $10 million in additional expected maintenance capital spending.

On a per share basis, we now expect to generate consolidated AFFO of $8.40, an increase of $0.17 as compared to the prior outlook. On an FX neutral basis, the year-on-year per share growth rate would be nearly 11%. Moving on to Slide 10, let's review our capital deployment expectations for the full year.

Let me start by stating that we remain committed to our existing disciplined approach to capital allocation, which for many years has proven to be successful. This deep-rooted philosophy guides our decisions regarding dividends, capital expenditures, M&A and stock repurchases.

For 2020, we expect our full-year dividend subject to board approval to be approximately $2 billion resulting in an annual common stock dividend growth rate of right around 20%.

As we discussed on last quarter's call, we expect the dividend growth rates in future years will likely be below 20% in line with our expected re-taxable income growth rates, again subject to the discretion of our board.

Regarding our capital expenditures, we expect to deploy about $1.15 billion with more than 85% allocated towards discretionary projects. This is up to $75 million from our prior outlook, driven primarily by higher expected new build activity, as well as some acceleration in start-up capital spending and a small increase in maintenance CapEx.

On the M&A front, we have spent roughly $860 million so far this year, including our previously mentioned purchase of the JV stake in Africa in the first quarter, and we are actively evaluating additional opportunities. Our previously announced purchase of the Tata's remaining stake in our India business is still pending regulatory approval in India.

At quarter-end and exchange rates, this represents a purchase price of approximately $336 million, and for the purposes of outlook, we have assumed that this transaction will be finalized by the end of the year.

And lastly, our year-to-date dividend declarations plus the $56 million we have deployed for stock repurchases, we have now returned about $1.5 billion to common stockholders so far in 2020.

Turning now to Slide 11, I will briefly touch on our strong investment-grade balance sheet, which we believe will be a critical component of our continued growth.

Since becoming an investment grade in late 2009, our balance sheet strength has allowed us to grow revenue, adjusted EBITDA, consolidated AFFO, and consolidated AFFO per share, while maintaining prudent levels of liquidity and ensuring unobstructed access to capital at attractive rates. During the quarter, we accessed capital markets in the U.S.

and Europe to issue roughly $2.8 billion across multiple tenures, including 30-years in both the U.S. dollar and euros. As of the end of the quarter, our average cost of debt stood at 2.9% more than 200 basis points below 2010 levels and average debt tenor was more than seven years, nearly two years in excess of where we were back in 2010.

Our available liquidity totaled $6.7 billion, and our net leverage was 4.5 times, solidly within the three to five times target range. Taking all this balance sheet momentum into account, we believe that we are in a tremendous position of financial strength.

Looking forward, we remain committed to our existing financial policies as we continue to believe that a strong balance sheet, low cost of debt appropriate and consistent levels of leverage along with disciplined capital allocation decisions are essential to our ability to deliver attractive total shareholder returns over an extended period of time.

On Slide 12 and in summary, we are positioned to finish the year strong with improving margins, enhanced strategic relationships with our tenants and continued opportunities to deploy capital towards accretive growth. Looking ahead, 5G deployment activity in the U.S.

is poised to accelerate beginning in 2021, and we believe this will include material deployments of the mid-band spectrum, primarily in suburban and rural areas of the country where our towers are located. In addition, DISH is expected to begin building a nationwide network towards the back half of next year, driving potential future upside.

Given our comprehensive portfolio of U.S. assets and mutually beneficial relationships with our tenants, we believe that we are well-positioned to drive a prolonged period of attractive contractually guaranteed U.S. growth.

Meanwhile, we expect our diverse International Property segment to continue to perform well as global mobile network operator's deployed significant capital to deliver capable high-quality networks for their customers who are consuming more and more mobile data than ever before.

Our international footprint of more than 140,000 sites is an excellent complement to our foundational U.S. asset base, and we expect that over the long term it will help us elongate and augment our growth trajectory.

Finally, we believe that as a result of our strong balance sheet, our disciplined and steady approach to capital allocation, and most importantly because of our 5,500 experienced and talented employees across the globe, we are well-positioned to continue our long track record of driving consistent reoccurring consolidated AFFO per share growth, and growing dividend and attractive total shareholder returns.

With that, operator, will you please open the line for questions..

Thank you. And we have a first question from Michael Rollins with Citi. Please, go ahead. Wait. One moment here. My apologies Mr. Rollins. Please, go ahead..

Well, thanks, and good morning. Two questions if I could. The first is, you were describing that gross new activity in the U.S. business should improve in early 2021.

Is there a risk that carriers slow activity, while they await the results of the C-Band auction? Can you provide us with a framework or historical perspective on how to think about how much leasing activity can improve from the current run rate? And then just secondly, if you could help unpack the timing of churn related to the comprehensive deal that you signed with T-Mobile? Thank you..

Hey Michael, maybe I'll start and then, Rod can come in. What we'll come out with specific guidance, obviously in February of next year when we release earnings. But what we are seeing is, as we said on the last call, we expect that a pickup in activity from T-Mobile.

So there is going to be one of the principal drivers of the pickup particularly early on in 2021. As we see the level of activity picking up in the latter half of 2020. So there are going to be one of the principal, I think drivers of that pickup.

And with regards to kind of the C-Band question what we've seen historically, you've seen this as clearly as well being so close to us and to what the carriers are doing. They're going to be taking advantage and leveraging every last megahertz they have of the spectrum.

And so I think that they're not going to wait specifically for the new spectrum to be deployed there. That's going to fit right into their strategy at C-Band deployment schedule is going to be over a multi-year.

And so they're going to continue to build out their current 5G if you will, along the same kind of layered cake kind of spectrum capacity that we've talked about in the past. So we would expect that the carriers are going to continue to spend, continue to meet their own customers' needs, and they're doing it differently.

As you well know, they're doing it across many different bands. But they're going to continue to deploy. So as I said, we'll provide more detail on that deployment in our Q4 call. But we're obviously, very bullish in terms of how we would see 2021. And Rod, you have anything to add..

Yes. I'll add a couple of things. Good morning, Michael. Thanks for the question. So the pickup that we are seeing going forward really is centered on T-Mobile as Tom alluded to. So, everybody knows that there was a slowdown from T-Mobile that began late in 2019 as they prepared for their merger with Sprint that persisted through most of 2020 to date.

So that – now that we're lapping that, we've got a base of growth to grow from and that was the new T-Mobile deal, we have contracted levels of business going into 2021. So we do see an acceleration there. The other carriers have been pretty consistent through 2020, so that's been good to see this year so far.

And then related to the churning part of your question, we do see that churn for T-Mobile happening over a multi-year period. It really will begin in late 2021, and go out for a few years, about four years. And we'll talk more about that Michael when we give guidance in February..

Thanks for the additional detail..

Next, we'll go to a question from the line of Ric Prentiss with Raymond James. Please, go ahead..

Thanks, good morning. I hope you guys are doing well..

Good Morning, Ric..

A couple of questions. Hey Rod. A couple of questions, I apologize I got pulled off for a second there to give my name and firm when you were getting your prepared remarks. T-Mobile when they were talking about the new MLA said that the escalators could de-escalate over time.

Tom, you mentioned before I got cut-off that escalators are in the kind of consistent with the 3%, 3.5% range. But how should we think about escalators plus usage and then churn affecting that kind of a multi-year basis.

Do the numbers go up every year or percent going down? How should we think about that comment from T-Mobile say escalators are going to de-escalate?.

Well, I think as I mentioned before Ric. There are two escalators that are part of this agreement. As is typical with similar types of the agreement, we have the base escalator which we have in all as you well know in all of our agreements – master agreements which are in the 3% to 3.5% range.

And that will stay fixed for the entire term of the contract. On top of that is our – what we call is our use fee or our second escalator that's on top of the base escalator. And that escalator allows then – and that on an annual basis, and it's and it's determined based upon the prior year, monthly or the ending year run rates.

And that then allows T-Mobile to add equipment up to preloading agreements, up to certain rights on the agreement themselves. And that escalator is also in force over the lane of the contract. Now that second escalator unlike the first does decrease over time really as a result of the base getting bigger.

So it's a slightly lower escalator that it's applied to a higher base to drive consistent rate of incremental growth. And so the comment was that I believe that it does de-escalate. And on that second escalator the way we think about that, that is in fact true. But it's really as I said, a function of that the base is getting bigger.

And so you have a slightly lower use fee escalator being applied to it to keep a consistent rate of incremental growth, again, as part of the comprehensive or holistic agreement over the entire term of the agreement. So that I think, I'm trying to tie to connect the dots and tie it together.

That's fundamentally how that agreement, both escalators will work..

Okay. And I know you're going to give 2021 guidance on the February call. But should we think about given all the complexity here.

Maybe you guys might consider giving multi-year guidance in the future?.

That's something that we are thinking about. I mean I've been spending time with Rod and Igor. So that's very, very possible Ric, just to give people a sense of what it might look like on a multi-year period given the churn that we are expecting in as a result of the, kind of the Sprint leases coming off. But that's very possible..

Okay. And lastly from me, you mentioned -Rod mentioned Dish maybe back half of 2021 ramping up. Are you guys MLA discussions with them.

Should we expect an MLA with Dish and could there be maybe C-Band effort earlier and then you suggested if people are aggressive with their other carriers?.

We know, on the Dish question, I don't want to get into any specifics with them or as you would expect, we're in significant conversations with them, as we're always talking to customers. They've stated that they are looking to start to build out their network.

I believe in the second half of the year, and so we want to make sure that we're there for them enable to service them to the extent that we can. So there are, candidly, a lot of conversation going on there. As I said that we'd like we have with all our customers.

On the C-Band that's possible in anticipation of that spectrum being deployed, carriers getting ready to be able to participate in that. That's always an opportunity we believe. I'm not sure how material that would be, candidly, Ric at this point in time, it's hard to tell.

The likes of Verizon, AT&T, I mean they deploy capital in a very regimented kind of measured way. And so it's hard to say that would materially change the timing or direction of growth rates. But it's very possible that there might be some acceleration of some growth as a result of that band in particular becoming available..

And I meant – sorry, I meant to also ask, are you seeing anything from cable operators who have started buying some spectrum and are registered for some auctions? Any activity from the cable interested in new towers?.

We've – and by the way we have cable customers today. Again, I don't want to get any specifics there Ric, particularly as it relates to new entrants into the market. But we're obviously, I think well positioned to be able to service them to the extent that they go down that path..

Appreciate it. Hope you, family and employees stay well in these crazy times. Good luck, guys..

Yes. You too, Ric. Be well..

Thanks, Ric..

And our next question is from Matt Niknam with Deutsche Bank. Please, go ahead..

Hey, guys. Thanks for taking the questions. Just a few on international.

I guess more broadly are you seeing any cause or slowing in the pacing of activity across your larger markets whether you like the macro or COVID-related pressure, sort of hampering carrier spending plans? And then just drilling down in terms of India, Colo and amendment activity looks like it's moderated now for three straight quarters.

So I'm just wondering what's the latest you're seeing there, and how should we think about the pacing of net organic growth from here? Thanks..

Yes. Hey Matt. Hey, thanks. Thanks for the question. I think on the contrary on international markets. I continually see incredible densification initiatives and new newbuild projects going on in just about all of the markets whether it's Mexico, Brazil, down in Latin America, Africa.

We're seeing significant increases in demand for build to suit new co-locations orders. So I can go by market and I can see significant levels of increase in Colo orders as well as build to suit. As Rod said, I would continue to set records on build to suit activities.

So I think that's just indicative of the amount of densification that's going on around the globe. With particularly in India, in India again, we hit on a gross basis kind of double-digit growth rates. And so what we see continued demand there.

I think there has been a general slowdown overall, not just regards to COVID, but I think also with regard to clearing through a lot of the AGR, a lot of tax issues, I think that put a slowdown if you will. Some of the levels of the spend that the carriers were doing in the marketplace.

But hopefully, much of that will be behind us and the carriers I now – I know are really starting to think about and move forward in terms of looking to increase kind of rates of growth going forward. COVID has impacted some of the build to suit activity in the marketplace in terms of getting permits and some of those types of things.

And as you well know, I mean India has really struggled as much of the world. But in particular, India has struggled with COVID, particularly over the last several months. So I know that has actually slowed down some of the build to suit activity. But on the growth side, the market is very strong..

And Tom, if I could just add a couple of points there. So on the organic tenant billings growth, we did have a basically a flat organic tenant billings growth for the quarter in India. But we had about 2.3% added through the newbuild program that Tom just mentioned. So we built just shy of a thousand towers in India in the quarter.

And I'll just remind everyone that in India, our day one returns on those new bills are solidly in the double digits. So even close to 14 %..

Thanks, guys..

Yes. Thanks, Matt..

And our next question is from Jon Atkin with RBC. Please, go ahead..

Thanks. So one international and one U.S. I guess on the U.S., given again all the moving parts around CBRS, and C-Band, and Dish, and the T-Mobile churn that Rod talked about. Can you frame the U.S.

organic growth rate next year? Just sort of directionally higher or lower than what you were forecasting for this year based on – based on what you're seeing right now.

And then internationally, apart from India where it sounds like you made a little bit of a different assumption with respect to bad debt there was some churn – there's some gross leasing a lot to unpack there.

But what are the biggest variables to think about as we think about 2021 either by country or within India? If India is that country that would need to kind of the most variability in the outlook? I would appreciate your perspective. Thanks..

Yes. Hey, thanks, Jon. We'll get in the specifics for 2021 and on our next quarter's call. I think as we've alluded to it, we've talked that we would expect an increase in the gross in the U.S. business. Michael if that wouldn't be before and I think it's a function of some of the activity that we're seeing happen with T-Mobile.

And we're very bullish on what's going on in the U.S. markets. I mean not a lot of different fronts not just in terms of the new spectrum, new technology being deployed, but potential new entrants into the market continued growth in demand.

Even though the realization process that the government is driving in terms of trying to ensure that broadband is therefore for all. I mean I think all of these would clearly give us a bullish sense of what we would expect in the U.S. market over the next couple of years.

And in particular in 2021, just on top of the ongoing demand that we see going on from a network usage perspective. Internationally, in each of the markets we – just in terms of guidance for 2020, I mean all of the markets are up from a revenue perspective. As I mentioned before they're significant densification efforts going on in all of the markets.

You can always go market-by-market and look at various metrics, and you can – you can see that there is a significant new infrastructure that needs to be added. New sites that need to be added in those markets to be able to support the growth that they have going on in those markets.

And so, as we've always said, and as you well know, the international markets are a couple of technologies behind generally. And so – and without any really strong wireline capability, and so on – and a pandemic even the market, the world that we're living in today there's even more of a demand for wireless infrastructure in those markets.

And so, I think all of that gives a good backdrop for what we would expect growth to look like in the internationally in those markets. We've always said it's going to be 200 basis points to 300 basis points faster than we're seeing in the United States.

And if you take a look at even in Q3, you look at Latin America; you look at Africa they're all up in the kind of 7% to 8% range. And so, it's – the model works. I think the strategy works and we're very bullish in terms of what we're expecting to see in our international markets over the next several years..

The 5,500 deals that upsized outlook that you gave us to any kind of a regional pick out that you could provide?.

I mean, I think we have. I mean Rod can give the one. I mean India was up a bit. We've seen continued growth in the India marketplace from a couple of the large carriers there. So there's an outsized, probably piece of that 5,500 that is there. And as Rod mentioned, we're getting double-digit rates of return right out of the gate.

We're seeing also significant demand in Africa. In Nigeria – markets like Nigeria, Uganda, some of the markets there we're seeing upticks in the overall build to suit the activity. Brazil is a market we've always talked about. It's been indeed probably twice as many sites in the market as they are today.

I think to be able to meet the demand and provide a good quality signal, and so we're seeing increased demand for site builds in Brazil as well. So it's a bit of a mix across the three of them I'd say. And I'm hopeful that we're going to be able to see continued increases in rates that built the suit going forward.

It's our best rate of return capital dollars spent in the business. And so, we work very closely with our carriers to be able to kind of maximize that category of CapEx..

Thank you, very much..

And Jonathan, I'll just give you a few numbers here to support Tom's comment. So of the 5,500, India is going to be the lion's share of that probably close to 3,500. In Latin America maybe around 500. In Africa, you can think of that as about 1,300 or so in that range and handful in Europe, maybe 40 in Europe and in a small number in the U.S..

Got it. Thanks, so much..

Next, we have a question from Tim Long with Barclays. Please, go ahead..

Thank you. Thank you. Just one quick clarification if I could and then a question. I just want to make sure I heard it right as far as not to kill the team of Sprint MLA here. But it is the comment that this is likely going to be a four-year period. I think I heard that? And then second, I'm just interested in talking a little bit about Europe.

Obviously, still pretty small but a few hundred, 200 acquired sites there. Could you give a little more color on that, and maybe update us on views there with the MLA landscape is obviously still a lot of activity in the European theatre. And you guys are underrepresented? So just an update there would be great. Thank you..

Yes. Sure. No, Tim. The churn in the – as we said multi-year, three to four years that you would expect to see a lot of that churn flush through. So hopefully that will give you a sense of the time period on that. Europe has always been a market. We've been looking at Europe for, and getting deeper into the region for many, many years.

And we've always struggled from a valuation perspective and a growth perspective. We think of the U.S. business being the largest driver of cash flow as kind of the developed market and create a consistent rate of growth.

And then we've looked at our Europe, our international markets candidly as ways to increase the slope of the curve from a cash flow growth perspective. And so we're willing and have been able to take some higher levels of risk if you will going into international markets using significantly higher risk-adjusted hurdle rates.

But really is a function of the core U.S. business. And so when we take a look at Europe as being somewhat – more of a developed market, the growth rates have just not been particularly strong.

I mean the beachfront properties that we have in France, and Germany and now just entered into Poland; the growth rates have been in the 2% to 4% kind of rate of growth. And so when we think about allocating capital that generally hasn't been overly exciting, candidly in terms of the overall rates of growth.

And then when we take a look at the underlying valuations for a lot of the assets in the particular markets, we really struggle with some of the growth expectations that you would have to realize to be able to support some of the underlying valuations for those assets.

Now, we're – given the size and kind of the scope of American Tower, we're part of every deal that goes down in the region. And so, we're watching it very closely. We're participating in certain areas. As you said, we're undersized, I guess, relative to some of the – to Cellnex, for example, in the marketplace. But that's okay.

I mean we're – that doesn't bother me in terms of our presence. We're going to continue to look at a deal by every deal on its own and take a look at the underlying variables of the deal and expectations of the deal and to the extent that the ROI and the NPDs can be sizeable.

We'll look to participate in it and see kind of where we land in terms of being successful there. But just because we're relatively under sized versus the other players in the marketplace that doesn't concern me at all.

We're all here about creating AFFO per share growth and ROIC growth, and to the extent that they can contribute to those two variables. We're going to weigh in and participate. So, we'll see where that lands over and it will continue to develop. There are a lot of assets, as you said. They're going to be coming up on the marketplace.

There are a lot of large carriers, who are looking to monetize their assets. So, there very well could be some opportunities there. And as I said, we'll just take a look at them one at a time..

Okay, thank you very much..

Hi, Tim. Tim, I think the other part of your question was the breakdown of the sites that we acquired in Q3, so we acquired a little over 300 sites in Q3. 195 of those were in France through our arrangement with Orange, which we've talked about in the past.

And then there was an additional block here in Chile and Peru, which are our additional tranches with the – on the Intel agreement that we have. So that makes up the majority of that that 305. So it's really in France, Chile, and Peru..

Okay, great. Thanks for the clarification..

And next we go to a question from David Barden with Bank of America. Please go ahead..

Hi, guys. Thanks for taking the question..

Hi, Dave..

Hi, Tom. I wanted to come back to the T-Mobile agreement a little bit, last quarter you guys took T-Mobile out of your second half guidance. Your competitors actually spoke pretty optimistically about what that was going to mean for them.

And so, the conclusion was that T-Mobile was steering business away from American Tower in an effort to gain leverage to negotiate a new MLA. And as a result of that, as we look forward to conversations that are going to emerge around the C-Band deployments, brand new networks not going to be deployed everywhere, only need to be deployed somewhere.

Is there a thought that other carriers, DISH included, are going to look at what T-Mobile did in terms of how they steered business to some players in a way from others to gain leverage in these negotiations that somehow the balance of power between the towers and the carriers might have changed somehow.

Could you kind of comment on how you think that might evolve in kind of the next phase of network development?.

Yes, Dave, I mean, I don't think that's the case candidly. I think given the real estate that we have and the sites that we have, we're quite comfortable that the carriers are always going to have to come to us. I mean, that's kind of the beauty of the business that we have and the real estate that we have.

I mean, we're always in negotiations with all the carriers. We're trying to meet their needs along the way is any typical kind of lesser or lessee kind of a relationship, but I don't think there's any real credence to the fact that there's leverage that's created as a result of moving or not coming onto our sites.

I mean, we have a very long-term view of our business, of our customer base. We think that I think that's indicative of kind of the 15-year agreement that we put in place with T-Mobile.

We think that, as we said in the past, that these types of master lease agreements are incredibly strategic and important to us for a number of reasons, not just to driving sizable predictable growth, but we also see really very sizable growth overall as a result of the additional right to use kind of base escalator.

Historically, if you look at ATC in the United States, we've garnered, we generated over 50% of the new business in the United States on a fairly consistent basis. And so, I think that's indicative of the types of relationships that we have with our carriers over time.

Are there always other issues in terms of some of the negotiations, sure we get some high priced sites, sites that have been out there for a very long period of time that have escalators on them. And we work very closely with the carriers then to try to bring those back to market, but then generating other types of value for us over a long time.

So we're in constant – I'm in constant conversations with our U.S. customers. And so, I don't see that kind of activity. And if it does, as I said, it would be noise and it would not impact the way we think about our business or the way we strike kind of long-term lease agreements with any of our customers..

Got it. Okay. Thank you for that. And then Rod, could I ask you just one quick one. You mentioned that part of the guidance in the quarter was related to non-run rate outperformance factors.

Could you kind of elaborate a little bit on what those were and what they contributed?.

Sure, Dave. I think you're referring to the Q3 numbers. So, the non-run rate items, they're primarily in India. We had a few settlements in India about $25 million worth of settlements in India that will not be recurring that were in our Q3 numbers..

Got it. Okay. So that was the big delta in the Indian performance, all right. Thank you so much..

Correct..

And our next question is from Sami Badri with Crédit Suisse. Please go ahead..

Hi. Thank you for the question. So a lot of the questions today have been focused on the model, the 3Q results, the escalators, and it's all been very helpful. But I wanted to just shift gears to the micro data center and to the edge compute commentary that you made earlier on the conference call.

And I think the one thing that a lot of market constituents and the analyst community is interested in is what is American Tower's core strategy entering this market? Is it going to be the provider of Colo? Is it going to be the leasing aspect? Is it going to be the go-to-market with Flexential and other providers? Can you just give us more color on what we should expect from AMT over the next couple of years on what your tactical strategy is going to be within the edge ecosystem? That'd be very helpful just to get a good idea on where all the chips are going to fall..

Right. No, no, I appreciate it. Thanks for the question. I tried to cover that in some of my prepared remarks. I mean, it's the highest level. We're really trying to create tower like communications infrastructure business models.

They really augment, if you will, the value of our existing assets, expand our revenue base beyond the traditional tenants if you will and expand our role in that whole delivery system. It's all about extending the platform. And clearly part of that platform is that compute capability.

And so, we're looking as part of that platform and the compute transport functions and really trying to create ways of being able to incrementally provide service to our customers.

And so, if you think about kind of our longer term views of it, we're candidly looking at okay of the 40,000 sites in the United States, which could all be considered edge compute locations. It is at the edge. It is at the very edge of the edge if you will.

How many of those sites would fit well in terms of fitting them out to be able to support the number of enterprise accounts, to support hyperscalers, to supplier data centers in ways where we can provide and be really part of that process to provide lower latency types of applications.

And at each one of those sites then given kind of the real estate that we have, how many shelters can we put at each one of those locations, how much power can we drop into each one of those shelters and how many comes down to how many cabinets can we load up in each one of those new shelters? And so, we're looking at sites that potentially can hold two or three shelters, each shelter holding 8 to 10 cabs each providing 100 kilowatt of power into each one of those shelters themselves in a way that it can provide them kind of really an on-ramp for accounts in that particular location into the wireless world.

And so, the models that we have and the trials that we have right now are trialing exactly that. And looking at then what are the price points for each one of those cabinets, can we get a traditional kind of $1,900 to $2,000 per cab in each one of those locations.

How stackable are the shelters going to be? And then – and really looking at what that demand is. And so, we have several proof-of-concepts that we're working on in tandem with some potential partners and actually are looking at those now in front of certain enterprises to be able to determine really what is the opportunity there.

In terms of how far we go along the kind of the value prop scale, that to be determined. Clearly, we have co-location in real estate, so those are kind of given.

Then the question is, okay, how far do we go up the stack and then how do we provide those kinds of capabilities? As I mentioned in my remarks, it's not like we're looking to hire 1,000 software engineers or 2,000 sales reps to start selling into enterprise accounts and providing them access to cloud-based services. That's not our skill set.

And so we would look to augment our capabilities with other capabilities to be able to jointly provide what we think could be a very interesting value proposition to the enterprise accounts around the country. So, time will tell. However, this is in early stages now. As I said, we're really dedicated.

We have a number of resources dedicated to try to understand what this is, what the CapEx requirements are going to be at the site location and really again to come back to driving tower like communications infrastructure business models. So that's it, and kind of a short – a couple of sound bites.

And you'll continually hear more and more about our strategy there as it develops and as we continue to go down the journey..

Got it. Thank you. That was actually a lot of detail, just one quick follow-up on that. And this fall mainly has to do with domestic versus international and this micro opportunity.

A lot of the focus and the commentary has been focused on domestic deployment of micro data centers, but what about international, right? There are clearly big differences in terms of how the network looks abroad.

And do you see edge being a much bigger opportunity abroad versus domestic at least within the next two to three years? Or is it going to be predominantly focused on domestic opportunities for now?.

As I mentioned before, traditionally our international markets are a couple of technologies behind where they are in the United States. Having said that though, I think one of the real advantages that we bring to a venture is our global reach and the lack of really processing capability in many of our emerging markets that we have today.

And so, while I think the strategy will probably more – will initially develop in the United States. I think the real value, ultimately, particularly as the – as the world shrinks. And as the cloud learns – we'll connect this off and does move to the edge.

I think that our global reach is actually a real interesting element to what, as I said, we bring to the party. And so, it's difficult to say how the outside of the United States market might develop. We might find in certain markets that it may develop more quickly and that the kind of the edge compute capability turns into more than just in edge.

You may be able to cluster certain edges to provide more of a metro data facility. Again – and particularly in areas of the world where there really isn't a lot of data center presence.

So it will be very interesting question and one we're kind of getting our arms around and understanding exactly what are the benefits as a result of having that global reach? I think candidly that they're significant and we'll try to leverage that as much as we possibly can..

Got it. Thank you very much..

You bet..

And our final question comes from Batya Levi with UBS. Please go ahead..

Great, thank you. A couple of follow ups on the T-Mobile MLA again. I think you adjusted the straight line for this year, $20 million higher than the original guidance. What drove that? And second in terms of, as you look at the T-Mobile deployment, you have a pretty good insight into their long-term network span.

Would you be able to provide some color if you think that you took a larger share of T-Mobile's future activity with this long-term contract? And also to the extent that T-Mobile acquires more spectrum or builds more sites, do you – can you give us some commentary in terms of could there be upsides to this existing MLA or is it mostly captured at least for the next few years?.

Yes. No, thanks. Let me start and Rod to get in to add any additional color. On the straight line, I mean, it's – we're just refining the calculations as you might expect. It's a very complicated calculation. And so, it was just a kind of refinement of the calculation as that we were able to do.

So there's nothing remarkable, I think, going on with regards to the actual straight line calculation. And with regards to your other question, I mean, all of our contracts are designed to take more than our fair share of the business.

And as I mentioned before, historically in the United States we've captured over 50% of the new business in the United States. And so our contracts are designed to do that, but in a way that's providing a meaningful capability and service to our customers.

And so with regards to the agreement that we put in T-Mobile, we are absolutely, we believe more strategic to them. We're working side-by-side with them on a number of different initiatives as we typically do when we enter into these types of relationships.

Clearly, there is a desire for them to one to put more equipment on our sites as a result of the fact that they're already paying for it. And so, as a result of that, we would think that we would get an outsized part of their business. And so this is no different.

And so to the extent that there's acceleration, there are different initiatives that they're looking to undertake, which knowing T-Mobile, we would expect so. We would hope that we would be really in the catbird seat in terms of being able to pick up a lot of that incremental business.

And that's, as I said, historically, what these kinds of comprehensive holistic master lease agreements have really positioned us to be able to take advantage of that we hope so..

Got it. Thank you..

And Mr. Khislavsky, I'll turn the call back over to you..

Great. Thanks, Leah. Thank you everybody for joining this morning and have a great rest of your day..

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect..