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Executives

Fiona McKone - Vice President of Finance

Jay A. Brown - Chief Financial Officer, Senior Vice President and Treasurer

W. Benjamin Moreland - Chief Executive Officer, President and Director

Analysts

Brett Feldman - Deutsche Bank AG, Research Division

Jason Armstrong - Goldman Sachs Group Inc., Research Division

Simon Flannery - Morgan Stanley, Research Division

Michael Rollins - Citigroup Inc, Research Division

James M. Ratcliffe - Barclays Capital, Research Division

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

Jonathan Atkin - RBC Capital Markets, LLC, Research Division

Richard Yong Choe - JP Morgan Chase & Co, Research Division

Jonathan A. Schildkraut - Evercore Partners Inc., Research Division

Batya Levi - UBS Investment Bank, Research Division

Michael McCormack - Nomura Securities Co. Ltd., Research Division

Kevin Smithen - Macquarie Research

Michael G. Bowen - Pacific Crest Securities, Inc., Research Division

Timothy K. Horan - Oppenheimer & Co. Inc., Research Division

Crown Castle International (CCI) Q4 2012 Earnings Call January 24, 2013 10:30 AM ET

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Crown Castle International Fourth Quarter 2012 Earnings Call. [Operator Instructions] This conference is being recorded today, January 24, 2013. And I would now like to turn the conference over to Fiona McKone, Vice President of Corporate Finance. Please go ahead.

Fiona McKone

Thank you. Good morning, everyone, and thank you all for joining us as we review our fourth quarter and full year 2012 results. With me on the call this morning are Ben Moreland, Crown Castle's Chief Executive Officer; and Jay Brown, Crown Castle's Chief Financial Officer.

To aid the discussion, we have posted supplemental materials in the Investors section of our website at crowncastle.com, which we will discuss throughout the call this morning.

This conference call will contain forward-looking statements and information based on management's current expectations. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurances that such expectations will prove to have been correct. Such forward-looking statements are subject to certain risks, uncertainties and assumptions.

Information about the potential factors that could affect the company's financial results is available in the press release and in the Risk Factors section of the company's filings with the SEC. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected.

Our statements are made as of today, January 24, 2013, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

In addition, today's call includes discussion of certain non-GAAP financial measures, including adjusted EBITDA, funds from operations, funds from operations per share, adjusted funds from operations and adjusted funds from operations per share. Tables reconciling such non-GAAP financial measures are available under the Investors section of the company's website at crowncastle.com.

With that, I'll turn the call over to Jay.

Jay A. Brown

Thanks, Fiona, and good morning, everyone. We had an excellent 2012. In addition to delivering very strong results, we achieved several significant accomplishments during the year, as shown on Slide 3. We've completed $4 billion of acquisitions, including the T-Mobile tower transaction, which increased our tower count to over 30,000; the acquisition of NextG Networks, the leading provider of distributed antenna systems; and the acquisition of 2,300 ground lease related assets from Wireless Capital Partners.

These transactions position us as the largest infrastructure provider in the U.S., with approximately 22,000 towers in the top 100 markets and extensive small-cell operations in over 50 markets, with a concentration in the top urban locations where leasing activity is the highest.

Further, these transactions reinforce our strategic objective of being the leader in shared wireless infrastructure in the U.S., which we believe is the fastest-growing and most profitable wireless market in the world. We believe that these transactions will be accretive to our long-term growth rates and enhancing the shareholder value.

Additionally, during the year, we completed more than $7 billion in financing activities to refinance existing debt and fund the aforementioned acquisition. These financings lowered our average cost of debt by 170 basis points to 4.5% and extended the average maturity to approximately 7 years.

Further, in March 2012, we were pleased to be added to the S&P 500 Index.

In addition to these meaningful events, we consistently delivered strong results above our original expectations. For the full year, we grew site rental revenue by 15%, adjusted EBITDA by 19% and adjusted funds from operations by 20% compared to 2011. These results were considerably above our expectations at the beginning of 2012.

Further, our services business continued to outperform our expectations, delivering strong growth in 2012 as we continue to work very hard to meet customer deployment objectives and facilitate customers' installations on our sites. Similar to the results for the full year 2012, we achieved strong growth in the fourth quarter results, as shown on Slide 4.

During the fourth quarter, we generated site rental revenue of $570 million, up 21% from the fourth quarter of 2011. This 21% growth was comprised of approximately 6% from new tenant addition, reflecting the increased leasing activity driven by the 4 major carriers upgrading their networks; 12% from acquisitions, including NextG and 1 month of site rental revenue from the T-Mobile towers that closed on November 30; and approximately 2% from our existing base of business, from contracted renewals and contracted escalators net of churn. Further, we had approximately $5 million of non-recurring items in the fourth quarter of 2012 as compared to about $2 million in the fourth quarter of 2011.

Site rental gross margin, defined as site rental revenues less cost of operations, was $421 million, up 20% from the fourth quarter of 2011. Adjusted EBITDA for the fourth quarter of 2012 was $414 million, up 23% from the fourth quarter of 2011.

AFFO was $243 million, up 26% from the fourth quarter of 2011, as shown on Slide 5. And importantly, AFFO per share was $0.83, up 22% from the fourth quarter of 2011.

Turning to Slide 6, pro forma for the T-Mobile tower transaction and refinancing. We ended 2012 with total net debt to last quarter annualized adjusted EBITDA of approximately 6.3x and adjusted EBITDA to cash interest expense of approximately 3.4x. Our adjusted EBITDA leverage ratio and cash interest expense coverage ratio are comfortably within their respective debt covenant requirements.

Further, we completed a number of meaningful financings during the fourth quarter. We closed on a $1.65 billion senior notes offering at the holding company, with an interest rate of 5.25% per annum, the proceeds of which, together with cash on hand and drawings under our revolving credit facility, were used to pay for the T-Mobile tower transaction. These notes mature in 2023.

In December, we closed on a $1.5 billion senior secured notes offering at one of our subsidiaries. This was comprised of $1 billion of senior secured notes due in 2023 and $500 million of senior secured notes due in 2017, with a blended interest rate of 3.4%. The proceeds of these notes, together with a portion of the revolver, were used to tender and redeem in full $830 million of 9% notes and $965 million of 7.75% notes, saving $85 million of cash interest expense per year. Also, in December 2012, we increased the size of our revolving credit facility by $500 million to $1.5 billion, of which $1.3 billion is currently drawn.

During the fourth quarter, as illustrated on Slide 7, we invested $158 million on capital expenditures. These capital expenditures included $47 million on our land lease purchase program, which continues to perform very well as we work to extend the ground lease maturity and ground ownership of the land beneath our towers. In total, during 2012, we extended over 1,000 land leases and purchased land beneath more than 400 of our towers. As of today, we own or control, for more than 20 years, the land beneath towers representing approximately 75% of our gross margin. In fact, 36% of our site rental gross margin is generated from towers on the land that we own.

Further, the average term remaining on our ground leases is approximately 32 years. Having completed over 13,000 land transactions, we believe this activity has resulted in the most secure land position in the industry, based on land ownership and final ground lease expiration. Our team is doing a great job on this important endeavor as we remain focused on achieving the long-term benefits of protecting our margins and controlling our largest operating expense.

Of the remaining capital expenditures, we spent $18 million on sustaining capital expenditures and $93 million on revenue-generating capital expenditures. the latter consisting of $51 million on existing sites and $41 million on the construction of new sites, primarily small-cell construction activities. Sustaining capital expenditures in the fourth quarter was higher than the third quarter by approximately $10 million, primarily due to an IT upgrade that we did throughout the company and some structural-related activities that are typically higher in the fourth quarter.

For the full year 2012, as shown on Slide 8 and 9 of the presentation, site rental revenues were approximately $2.1 billion, up 15% from 2011. This 15% growth was comprised of the following: approximately 6% from tenant equipment added to our sites, reflecting the strong leasing activity we enjoyed in 2012; 7% from acquisitions; and approximately 2% from contracted escalators and renewal of tenant leases, net of churn, on our existing base of business that was in place at the beginning of 2012. Site rental gross margin grew 16% from 2011 to $1.6 billion. Adjusted EBITDA for 2012 was $1.6 billion, up 19% from 2011. And AFFO per share increased 18% from 2011 to $3.04 for the full year 2012.

Moving to the 2013 outlook, our expectations for growth in our base business remain unchanged from the 2013 outlook we provided last October. We have updated our 2013 expectations for the T-Mobile tower transaction and the refinancing activities that I previously mentioned. For the first quarter 2013, as shown on Slide 10, we expect site rental revenue of between $605 million and $610 million, and AFFO of between $259 million and $264 million for the first quarter 2013.

The sequential growth in site rental revenue from Q4 2012 to Q1 2013 includes the benefit of approximately 41 -- $44 million of additional site rental revenue from the T-Mobile towers, offset by approximately $5 million in non-recurring items that positively impacted the fourth quarter of 2012.

Turning to Slide 11, our full year 2013 outlook has been revised to reflect the expected impact from the T-Mobile tower transaction, together with the impact of recent financings we completed in the fourth quarter of 2012. We expect site rental revenue growth in 2013 of approximately $330 million, or 16%, over 2012. Of this amount, we expect approximately $270 million to come from acquisitions.

The balance of the year-over-year growth reflects our expectation of leasing activity to be similar to historical levels, with a significant portion of this activity already reflected in the run rate of site rental revenue, as a result of our previously disclosed agreements with the 4 major carriers relating to 4G/LTE amendment activity.

With regard to services, we are expecting approximately the same contribution to gross margin as we achieved in 2012. We expect 2013 AFFO per share to increase by approximately 21% to $3.68 per share.

As shown on Slide 12, during 2013, we expect to generate over $1 billion of AFFO and invest approximately $400 million to $450 million on capital expenditures related to the purchases of land beneath our towers, the addition of tenants to our towers and the construction of new sites, including small cells.

In summary, we are experiencing tremendous growth in our business. In fact, the compounded annual growth rate of AFFO per share from 2010, through our expectations for 2013, is in excess of 18%. Importantly, we have been able to produce this growth while positioning ourselves for future growth, without increasing the risk profile of our site rental revenues. We believe our results reflect the value of the disciplined investments we've made over a long period of time through share purchases and U.S. acquisitions and the industry-leading customer service we provide. We had a terrific 2012, with a number of significant accomplishments. And I'm very excited about 2013, as we continue to execute around our core business and integrate these important acquisitions.

With that, I'm pleased to turn the call over to Ben.

W. Benjamin Moreland

Thanks, Jay, and thanks to all of you for joining us on the call this morning. I want to take a couple of minutes and reflect on the tremendous year we had on a number of fronts. As Jay just mentioned, we delivered excellent financial results for 2012, and we acted intentionally to significantly enhance our portfolio through key acquisitions that should increase our growth prospects for years to come.

Today, with over 30,000 towers and over 10,000 small-cell nodes in the U.S., and a presence in 98 of the top 100 markets, we are the leading provider of shared wireless infrastructure in the U.S., facilitating wireless carrier mobile broadband deployment.

In addition to a strong year of site leasing, our U.S. services business performed exceptionally well as we continue to capture more of the revenue opportunities associated with assisting our customers in locating or upgrading installations on our sites. This increase in services activity reflects the unprecedented activity we are seeing from all 4 major carriers as they upgrade to LTE, and it is attributable to the confidence our customers have shown in Crown Castle, as regularly expressed in our customer surveys that consistently rank us as delivering the highest customer service in the industry.

During 2012, we invested $4 billion in acquisitions -- quite a year -- bolstering our premier portfolio of wireless infrastructure assets in the U.S., with 7,100 additional towers to the T-Mobile tower transaction. And following the NextG Networks acquisition, we are now the largest independent small-cell operator in the U.S.

Small cells are increasingly important as the rapid growth in mobile traffic and data demands shifts to low-mobility locations requiring wireless operators to bridge the gap between capacity and demand. Both the T-Mobile and the NextG portfolios are urban-centric, complimenting the location of our existing portfolio in the top 100 markets, which is where the wireless traffic is heaviest and where carriers traditionally focus their efforts on deploying new technologies and upgrades to existing technologies such as the current LTE upgrade.

Finally, we expect that our acquisition of ground lease related assets from WCP, which relate predominately to third-party towers, will allow us to apply the expertise we have gained as the industry leader in land lease extensions and purchases. Integration of the T-Mobile towers is underway and proceeding well, and I would like to extend my appreciation to the staff at Crown Castle and T-Mobile, who are assisting us with an orderly transition on those sites.

As evidenced by our recent domestic acquisitions, we remain firmly convinced that the U.S. market, the largest and fastest-growing wireless market in the world, has significant growth potential, with increasing smartphone and tablet penetration, growth of multiple subscriptions and where the ability of wireless carriers to make profitable investment is most apparent and the barriers to entry remain high.

As I look out into 2013 and beyond, I'm as excited about the prospects for our business as any time in memory, based on our ability to deliver the compelling economics of shared wireless infrastructure across this expanded platform. This is an unprecedented time in our industry, with all 4 major carriers actively upgrading their 4G networks, which is driving significant revenue growth on our sites.

Further, the expanding LTE networks are expected to accelerate the growth of computing devices, including smartphone and tablets, over the next several years, and it is the wealth of such devices that is the major driver for mobile data traffic growth and wireless data revenue. According to CTIA's semiannual survey, the consumption of data continues unabated as Americans consumed more than 1.1 trillion megabytes of data from June 2011 to June 2012, which is more than double the previous year, according to CTIA.

The survey also revealed that smartphone adoption continues to grow impressively. As of June 2012, smartphones made up 131 million, or 41%, of the embedded wireless connections, and up 37% from a year ago. And the number of wireless-enabled tablets, laptops and modems was up 42% year-over-year.

Further, mobile Internet usage is already beginning to displace PC usage, and the U.S. is leading this trend. It is expected that by 2015, there will be more consumers accessing the Internet through mobile devices than through PCs. These figures illustrate Americans' growing appetite for more mobile data and the utility that it provides. And we provide the essential shared infrastructure and services that assist our company -- our customers in meeting these challenges and facilitate the execution of their network deployment plans. To that end, I believe the growth we are currently experiencing is an early indicator of the important and increasing role our assets and capabilities will play in enabling wireless carriers to meet the mobile broadband demand of consumers.

So to wrap up and go to questions, we are delighted with the 2012 results and the 2013 outlook of 21% AFFO per share growth. And I believe they demonstrate the quality of our assets and our ability to execute for customers. To that end, I want to take this opportunity to thank all the men and women of Crown Castle who have worked very hard to make our goals a reality.

With that, operator, I'd like to turn the call over for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from the line of Brett Feldman with Deutsche Bank.

Brett Feldman - Deutsche Bank AG, Research Division

Just some -- a question here on the guidance. If I look at the fourth quarter, your SG&A kicked up a notch. I was hoping you can give us a little color on that. And then what's the level of SG&A you're anticipating in your guidance for 2013?

W. Benjamin Moreland

Yes. So Brett, there's a -- you're right, and some of the numbers, Fiona can walk you through. But generally, year-over-year, and most of all of it is in the fourth quarter run rate. We'll see about a $20 million increase not only in G&A. It's evenly split between G&A and above-the-line tower costs to goods sold and basically indirects, which represents the staff and resources we are adding to really handle the LTE activity we're seeing, the services level activity we're seeing. We've added resources in the DAS, small-cell business as you can -- as we have mentioned before. And then with -- and then some modest increase from the T-Mobile acquisition. So the run rate is largely already stepped as we sit here in January of 2013. But on a year-over-year basis, it looks to me about -- right about $20 million, total. And that's about evenly split. Again, about $10 million on G&A and about $10 million above the line.

Brett Feldman - Deutsche Bank AG, Research Division

Okay. And so if your run rate in G&A is going to kind of persist in, say, the first quarter, that would imply that you also expect an above-run-rate contribution from your services business earlier in the year, even though on an annual basis, it's probably going to be flat. Is that the right interpretation?

Jay A. Brown

That's right.

W. Benjamin Moreland

That's right, yes.

Brett Feldman - Deutsche Bank AG, Research Division

And then just to get back to the comment that Jay made earlier, he was talking about how -- because of the -- essentially the master lease agreements you have, so much of your revenue is kind of baked into the run rate. So I'm just curious, like how sensitive is your guidance this year to the actual level of leasing activity going on in the market in light of those master lease agreements?

W. Benjamin Moreland

Let me frame that for you a little bit. When you think about new leasing activity, as we all work on every day around here, the financial or GAAP revenue reality is about half of that activity is pre-sold, and about half of that is new revenue in the year. Okay? So roughly evenly split. And let me give you a little window into what we see. Among the half that is not pre-sold, i.e., new revenue growth that would come on to the GAAP statements this year, among that half that's not pre-sold, we can already see in the pipeline about 70% of the volume we expect for the year. So we're really optimistic about the year. Now it's January 24. And as Jay mentioned, we didn't raise guidance beyond the financing and the T-Mobile acquisition because it's so early in the year. But it's encouraging that we can see in the pipeline 70% of the application volume that we expect among that half that's not pre-sold. So let's hope that continues and we see continued activity, and you could certainly see increases throughout the year. But we'll just have to see.

Operator

Our next question is from the line of Jason Armstrong with Goldman Sachs.

Jason Armstrong - Goldman Sachs Group Inc., Research Division

Just a couple questions, maybe first on capital spending, if you could just maybe walk through different line items. I think one in particular that was a little bit higher than we had expected was the Tower Improvement line. So help us think through what's going on there. And as part of that, just sort of initial augmentations on the T-Mobile towers and how you would think about that in 2013? And then maybe just one on sort of granularity. The non-cash revenues were down fairly significantly quarter-over-quarter. Maybe just some sort of help on what's going on there?

Jay A. Brown

Sure. On the first question around capital spending, we saw an increase in the fourth quarter, both on land purchases. Obviously, some of the changes that happened, and expected changes that were happening with the tax codes, caused some people to want to sell properties earlier than maybe they otherwise would have. So we benefited from that and increased the spend that we would have on land purchases during the fourth quarter. And then the amount of activity, as Ben alluded to in his comments, that we're seeing from the carriers, is driving a lot of tenant adds to our sites. So we saw an increase in spending there. And usually, there's a push, as there was in this past period. Usually, there's a push in the fourth quarter, and we certainly saw that. We certainly saw that this fourth quarter. I think as we think about the full year 2013, as I alluded to in my comments, from a CapEx standpoint, we'll probably end up spending about $150 million related to the land lease extension program as we purchase land. We'll spend probably another $150-or-so million related to construction of new sites, which would include and would be mostly comprised of small-cell-related activities. And then probably somewhere in the neighborhood of $100 million, or a little over $100 million on adding additional tenants to existing, either towers or DAS systems. And as we think about what we think we'll spent on T-Mobile, obviously, that activity around spend is completely tied to leasing activity. And in terms of the structural capacity and ability to do that, we think those assets, in terms of the cost to add additional tenants, will look very similar to our existing portfolio. So I think it will largely just be determined by what does leasing activity as we go through the course of the year look like. But the $100 million, we think, will largely cover that, based on Ben's comments around what we're seeing on the current activity levels, Jason. The second question around on cash, obviously, as we began to focus a year ago on this AFFO metric -- and believe it's a great one, because it focuses everybody on a cash -- on a cash side rather than thinking about it just from GAAP revenues and GAAP expenses, the business is comprised largely of these lease -- long-dated lease arrangements, both in terms of revenue and cost. And as we have movements in those, there are effects that happened to that AFFO number, either increases in non-cash revenues or decreases off the revenue line. And the same thing occurs at the expense line. So there's some volatility that was seen in that number over time, based on the timing of payments and the arrangements that we make. Obviously, anything that we do, where a lease has a prepaid component related to it, that would have an impact or a postpaid, if you will, component to it. That would also have an impact to those numbers. And then add to that, in the fourth quarter, we also did the T-Mobile transaction. So all of the -- all of those existing leases, both at the revenue line and expense line, came through. So we have -- as we talked about I think a little bit last quarter, we've historically guided that number a bit conservatively. It's difficult for us to have quite as much precision as we can at the site rental revenue and adjusted EBITDA line, so we've guided that number a bit conservatively. And I think, as I've mentioned in past calls, we would expect, as you look at the delta between non-cash revenues, straight-line revenues and straight-line expenses there, a bit of a drag on the EBITDA, if you will, as we move down to the AFFO and the cash line. We expect that, that gap will completely close by -- within the next 3 to 4 years. So the trend line there should be a movement towards AFFO and EBITDA coming a little closer together. So hopefully, that's helpful on the second question.

Operator

Our next question is from the line of Simon Flannery with Morgan Stanley.

Simon Flannery - Morgan Stanley, Research Division

A quick housekeeping question. First, the $5 million of non-recurring revenue, what's the EBITDA impact on that? And then, Ben, I was wondering if you could give us a little bit more clarity. You talked already a lot about small cells and DAS. I think a year ago, on this call, you said you were hopeful that you could grow this business, EBITDA 5x to 6x over the next 5 years. And I'm just wondering if you could sort of update us on where we are on that sort of trajectory and what do you see for 2013? That -- it'd be great to get some more -- just some more clarity on sort of materiality here.

Jay A. Brown

Okay. Simon, on the first question, we did have $5 million of revenues benefit in the fourth quarter, and it was largely offset -- remember, in our outlook for fourth quarter, we did not include the T-Mobile transaction. So we didn't include the costs associated with adding folks for that transaction either. So most of that was offset by the additional cost and staffing cost that we had in the quarter. If you were trying to exclude it, there wasn't necessarily an offset directly related to that, so it would have fallen through. But if you're trying to compare that to the outlook we gave previously, most of it was consumed by cost increases that we have not previously guided to, related to the T-Mobile transaction.

W. Benjamin Moreland

Simon, my enthusiasm around the small-cell business has not abated at all. We've got 9 months of operating with the NextG folks, and we are adding resources, as I mentioned earlier, which is evidence of our commitment and enthusiasm for the business. I still believe you'll see us grow that number 4x to 5x over what we bought over that period of time. We're finding significant opportunities to put capital to work and very attractive all-in returns. And we're seeing a continued migration of capital spending and commitment on the part of carriers to the small-cell technologies and architectures. I would also mention on this call, don't be confused by a lot of the -- what we see out in the press around confusing nomenclature around small cells and DAS and what does it look like in picocells. The real critical element that we offer is the property rights that we have secured and the fiber that connects whatever architecture, whatever electronics the carriers ultimately want to install. And so while they -- it may have initially been a shared DAS system, where you had multiple carriers in each box, if you will, to otherwise going into the small-cell environment of picocells next pullover. The economics to us and the benefits to the carriers of the shared economic proposition of the largest component of cost being the fiber and the rights that we secure, that's all well intact. And so we try not to get distracted, if you will, in the -- with what's going on out there in the marketplace. We're able to accommodate really all of this through what we're doing in the business. And our enthusiasm, frankly, has increased over time and like very much what we see there. And it's certainly confirmed by public statements on the part of most of the major carriers.

Operator

Our next question is from the line of Michael Rollins with Citi Investments.

Michael Rollins - Citigroup Inc, Research Division

I was just wondering if you could provide just a little bit more details on the bridge for 2013 revenue growth? So you mentioned that there's -- the $330 million of growth implied in your guidance ranges from 2012, I think you mentioned $270 million from acquisitions and $60 million in leasing activity. But as I put that $60 million of leasing activity over last year's numbers and try to make a couple of adjustments for some of the acquisitions that were included for part of 2012, I'm only coming up with about 3% to 4% revenue growth. Now I was just wondering if you can bridge these numbers to the organic revenue growth to get a cleaner sense of what the cash growth looks like for 2013?

Jay A. Brown

Yes, Mike, thanks for the question. I think the $60 million is obviously a year-over-year comparison, and there's a couple of things that would affect that. If -- one of the things that I mentioned was what's -- is the contracted escalators on the existing leases net of churn. We expect churn in 2013 to be about 1%, maybe a little less than 1%. So that number is at levels a little bit lower than what we've seen over the last couple of years. We think that will offset the benefit of about 1% of rent escalations that we would see in the number. So the $60 million that you're correctly highlighting, that number would reflect basically all -- that would all be organic growth or new tenants going on the existing systems. And that would be a combination of new tenants on towers, as well as new tenants going on DAS systems. There's another -- if you parse through the numbers and look at -- to Jason's question earlier about what are the movements in the straight-line revenues, there's another about $40 million to $50 million of benefit from cash escalations on existing leases, which is why, when you look at the AFFO growth that we're showing for the year, of about $190 million of AFFO growth, about 80 -- a little over $80 million of that is obviously coming from the interest expense save. And then we've got about $110 million that's coming from the base business. T-Mobile is -- when you add the combination of the financing costs there and the increase in cost, T-Mobile is basically a push. So we're not getting any benefit really at the AFFO line from T-Mobile when you consider the cost increases that Ben referred to. So that $110 million would be what we're getting in the organic leasing business, a combination of cash escalations and leasing, and not really getting any benefit on that cash line from contracted escalations that are variable in nature. So hopefully, that reconciles you -- reconciles it down.

W. Benjamin Moreland

I just listened -- just listening, I want to just make sure that's -- so that $110 million would also be after normal growth and operating expenses x people costs. So normal growth and site maintenance and ground leases and things. So you're basically dropping $110 million through to AFFO. And just to be doubly clear, the T-Mobile accretion, net of financing costs, that $20 million is basically covering the increased run rate of people costs, resources, as I talked about, which is basically paying for the resources we've added through the services business, the DAS business and all the things we enumerated earlier. So that's basically, Mike, I think, the easiest way to sort of cut through it. And then to get back to the $190 million is about the $80 million or so of interest save.

Michael Rollins - Citigroup Inc, Research Division

That's really helpful. And if I can just ask one other follow-up to that, on the $80 million of interest saves, as you look at all the refinancing activity that you've now completed, is there another leg down of interest cost for 2014 or '15? Or should we look at that $80 million of interest save as really the getting back to, I guess, the run rate of current interest cost in the market today?

Jay A. Brown

Yes. I think on -- there is one other bond out there, the 7.5% -- 7.25%, $500 million -- 7.5%, $500 million notes that we would look to potentially refinance over time. But if you look at the whole balance sheet, $11 billion, the average coupon is at about 4.5%. So at 4.5%, I think we've gotten most of it out at this point.

Operator

Our next question is from the line of James Ratcliffe with Barclays.

James M. Ratcliffe - Barclays Capital, Research Division

Two, if I could. First of all, can you give us a little additional color on, now that you actually own or lease, I guess, the assets, the strategy for lease-up on the T-mobile tower? Are there particular carriers that you think are most likely to be picked up there, et cetera? And secondly, can you talk about what sort of lease-up activity you're seeing in areas where there's already LTE? So Verizon activity in, I guess, by now, the bulk of the country and AT&T? Are you starting to see infill? Or is it still most of the activity you're seeing for just POP coverage at this point?

W. Benjamin Moreland

Yes, James, thanks. With T-Mobile -- and thanks, I was hoping we'd get to address this. We've owned it 60 days, and we're still in this transition period, working through loading all the data in the systems and beginning to take applications on our own from carriers. So there'll be a little bit of an integration process that'll last probably another 90 days until we're completely essentially integrated. But we already are having productive conversations and would -- have very high expectations, as we talked about on the last, last quarter's call, for those sites going forward. It's early days. And so we wouldn't put a whole lot of that in the 2013 run rate, if you will, in terms of contribution inside the year. But nonetheless, we're seeing pretty -- we're having very good conversations and have very high expectations for the long-term growth prospects there. And coming off of a very low base of run rate of tenancy, as we've talked about before, it doesn't take a whole lot of additional tenants to make that investment perform exceptionally well. So we're probably more enthusiastic about it 60 days in than even when we started. And that could be a potential source down the road for outperformance, if we see things happening, as we would certainly hope. With respect to sell splitting, James, and infill locations, I would tell you that it's too early to raise guidance based on that. And remember that anything we would see incremental for the year would only have a stub period contribution for '13 that would be more meaningful into '14. So it wouldn't be a huge amount for '13. But I would tell you that when I -- my previous comments about where we can already see 70% of the application volume we expect on the non-pre-sold activity, some of that is clearly coming from that activity. And so we're optimistic we'll see that continue to build throughout '13. And it's sort of a very good next leg of growth for us going forward, particularly given the 22,000 sites Jay mentioned now with the T-Mobile portfolio, the 22,000 sites that we have inside the top 100 markets. We think it's -- we have lots of sites that are going to be very attractive for infill and cell splitting. And we'll just have to see how that develops. But certainly, we think it's headed in the right direction.

Operator

Our next question is from the line of Rick Prentiss with Raymond James.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

A couple of questions if I could. First, just want to go back to the straight-line stuff a second. Obviously, a lot of people are confused by straight-line still. Jay, I think, just to make sure I understood you correctly, you feel that while it's a volatile line item, that you guys are being very conservative on your guidance still and how you take people through that. And I think I heard you say 3 to 4 years before that adjustment goes away?

Jay A. Brown

That's right. And trending towards that. So the line should trend towards that.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

Okay. Second question. With the pending T-Mobile PCS acquisition, T-Mobile has made it very clear they want to keep the MetroPCS DAS networks that have been built in New York, Boston, Philly and California. I believe a lot of those were built by NextG, which you guys own. T-Mobile explicitly said they want to add LTE and HSPA Plus to that. Is that in your guidance? Does that help you guys? Or is it something that they just spend CapEx on by their own?

Jay A. Brown

Yes, Rick. I don't want to really get into specifics on what may or may not happen contractually with those upgrades. In many cases, they will take additional slots on those systems, which will be a revenue event for us. And so I'm not sure we would put that fine a point on the revenue guidance. There's certainly an expectation and internal budgeting and forecasting around the small-cell business, and it comes from a lot of different places. And as we've talked about for years, if you forecast -- if you're within 70% accuracy on exactly where it comes from inside a given year, you've done pretty well. But so implicitly, some of that's -- it's sort of in our thinking. But I wouldn't put too fine a point on that.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

Okay. So if it does happen, there could be a little more upside to that as well, just kind of -- if DAS does play out?

Jay A. Brown

There could be. Sure.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

Okay. And then on the cell splitting, we've heard that the leader in deploying LTE in the United States has put out search rings to look at that cell splitting to create LTE capacity. I think, as you were mentioning, does that kind of imply that if search rings are out, are you seeing them and that it is probably by a midyear-type event that you might see some of that activity show up at the towers?

W. Benjamin Moreland

I think that's a pretty fair assessment, but I don't want to scope that for you yet. And we don't make it a practice to talk about our carriers' business. So let's let them talk about that in detail. But I think, certainly, some of that we're seeing in the pipeline.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

Makes sense. I'll ask you something you can answer directly, stock buybacks. What do you think about getting your leverage back down into your target zone? And as you look at the CapEx program and acquisitions and -- where does stock buyback and leverage fit in to kind of your thoughts of running your business?

Jay A. Brown

Sure. Broadly, what I would tell you in terms of capital allocation, we haven't changed the plan. We look at every dollar of capital that we spend, and the goal is to maximize long-term cash flow per share, as we -- and we measure AFFO per share. So we put everything from construction of new small-cell sites to tower sites, to buying back stock or acquisitions. All of them run through that risk-adjusted filter that we put everything through. And we continue to look at opportunities there and feel like we had a good year of putting cash to work, money to work, on acquisitions primarily, that we thought we're better, frankly, than what the opportunity was of us buying back the stock. And so we'll continue to look at opportunities in that same vein and on the go forward. With regards to the deployment of leverage to do those activities, we obviously, over the course of the year, took leverage up about a turn in the quarter to take advantage of some opportunities that we saw. We thought it was shareholder friendly not to issue shares to do the acquisitions that we did. And given the low cost of debt in the market and the term that we could achieve, we thought that was appropriate. I do think, over time, what you'll see us do is come back down as we grow EBITDA and bring the leverage back down to the 4x to 6x target level that we'll operate the business at most of the time, and aiming to get ourselves back in terms of -- back to -- somewhere in the neighborhood of 5x debt to adjusted EBITDA. We may, from time to time, use some portion of our cash flow to pay down debt, but I don't think that will be any meaningful allocation of the cash flow. I think most of the deleveraging is likely to come from just growth in adjusted EBITDA.

W. Benjamin Moreland

I would just add, I think, Jay, you mentioned we are probably at the highest interest coverage -- interest coverage has actually gone up through this refinancing and through the increased debt we took on to do these acquisitions. Interest coverage, as a multiple of adjusted EBITDA, is actually higher than when we started, which is pretty phenomenal. And as we look back about being disciplined over a long period of time around the capital structure, I would observe that we've taken EBITDA in this company from somewhere around $700 million to $1.6 billion run rate and not issued any shares. And we've done that through a lot of investment and a lot of organic growth. But that's how you get to $3.04 a share. And this year, we'll have, as we've talked about, over $1 billion of adjusted funds from operations. So we're quite pleased with that outcome.

Operator

Our next question is from the line of Jonathan Atkin with RBC.

Jonathan Atkin - RBC Capital Markets, LLC, Research Division

I was interested in following up on your DAS business. And can you give us a sense of how much revenue and cash flow contribution are coming from those assets? And, Ben, I think you talked about over 10,000 small-cell nodes, and maybe you could provide a perspective on how that compares with previous periods post the close of the NextG transaction?

W. Benjamin Moreland

Yes, John. Let me say -- first of all, I'm probably -- I don't want to break out -- we're not going to segment report. I mean, we operate it as the same business. We look at it on a return basis, on capital we're putting in. As Jay mentioned, we're making significant capital investments on the build side. And that goes through our normal capital allocation processing. We're very pleased with what we see there. And the growth there, in terms of revenue, is at or above our expectations and deal pipeline. Obviously, we've put additional resources in it, as we've talked about, which cost money in the short run to build out that capacity and enable us to handle that pipeline that's continuing to grow. So that's probably all I would say. It's -- other than to say that, we're continuing to be very pleased with the growth we're seeing, revenue and margins and the opportunities in the marketplace to put real money to work at very attractive returns, which is what we had thought when we came into this. And importantly, it's the same financial model and proposition that we can offer to customers, which is the compelling nature of the shared infrastructure, where it's cheaper for them to go on our sites and operate on our sites, notwithstanding the ease and speed-to-market that it creates just on a pure financial basis, just as it is on the towers. And that relationship is well intact and, I think, will certainly continue. So we are not breaking it out separately, but we own it. It's paying its way, and we certainly expect to see the kind of returns out of it that we initially modeled.

Jonathan Atkin - RBC Capital Markets, LLC, Research Division

And then -- Ben, you gave some very helpful comments on small-cell and DAS and some of the nomenclature confusion and so forth. Is it correct to assume then that the basic architecture that NextG had used, you're open to expanding that to other approaches, as long as your kind of leveraging the core fiber assets?

Jay A. Brown

Absolutely. And we're working on that everyday right now.

Jonathan Atkin - RBC Capital Markets, LLC, Research Division

So given your fiber assets, I just wondered if there's an element of your DAS business where you will consider providing backhaul, but not operator maintaining nodes themselves? Perhaps the carriers prefer to build them or already built them, but you could leverage fiber in more of a direct backhaul way, as well as operating the small-cell business?

W. Benjamin Moreland

Yes, John. We are doing that in a limited -- in limited geographies today, where -- it's obvious where we could provide dark fiber, where we've got overpass [ph] in cell sites. So we've got that in a limited way today. And I would say it's a significant, meaningful contribution, but it's certainly a way to leverage that embedded plant. And that's something we're going to continue to focus on.

Operator

Our next question is from the line of Phil Cusick with JPMorgan.

Richard Yong Choe - JP Morgan Chase & Co, Research Division

This is Richard for Phil. I just wanted to ask on the T-Mobile towers. If you were going to kind of change tower heights, how long does that take if -- granted it's still early in the integration process? But is this something that can be done very quickly, in terms of getting through zoning or not? Or once you decide to do it, it's going to take a while and would end up being more of an impact in 2014 or beyond?

W. Benjamin Moreland

Yes. Richard, not really a difference per se in a T-Mobile site going through zoning on changing height as we would on our own sites. I mean, it's a process. It depends on where you are in terms of zoning. But what I would also point out is that over time, as the equipment has gotten smaller and lighter and the desire for tall sites, frankly, has abated, because now we're covering much smaller cell sites, diameters, it's more and more likely that these sites become available and useful to a carrier without necessarily augmenting the height of the tower. And that's something that we've seen change over the last 10 years in the industry. Very often times, the smaller sites, based on their location, and the smaller electronics and the tighter separation that we're able to put the different rad centers on the sites, make it such that these smaller sites actually have more utility than they might have when they were originally built. And we're seeing that on our own portfolio, and we continue to expect to see that on the T-Mobile sites as we move forward.

Richard Yong Choe - JP Morgan Chase & Co, Research Division

And I guess, is it fair to say then that given where things are, that most of the most recent activity over the past few years are probably on smaller sites? And so the bigger sites are taken and it's not...

W. Benjamin Moreland

Well -- and again, a lot of the activity -- the majority of the activity in the industry the last couple of years has been LTE amendment activity on existing installations. So there's not been a lot of new leasing in the marketplace. As we've talked about on this call, we expect that to gradually change over time with infill and capacity cell splits. But the last 2 to 3 years, it's -- the vast majority has been upgrade of existing installs.

Operator

Next question is from the line of Jonathan Schildkraut with Evercore Partners.

Jonathan A. Schildkraut - Evercore Partners Inc., Research Division

Great. Most of my questions have been asked and answered, but I do have a few additional. First, in terms of the EBITDA outlook, you look at the first quarter and you look at the annualized number that you've given, and it seems like EBITDA is not going to grow through much of the year. Now earlier, you highlighted how, given your MLAs, a lot of the potential revenue growth or the cash revenue growth is already captured in your GAAP numbers. So I'm wondering if this is kind of a similar impact on your EBITDA? And then I'll come back with a follow-up.

Jay A. Brown

Yes, Jonathan. It's the same answer as the answer to Mike's question about revenue.

Jonathan A. Schildkraut - Evercore Partners Inc., Research Division

All right, great. And then could you give us the details in terms of the split between amendments and new cell activity as it applied to the fourth quarter? And for -- that's embedded in the outlook for 2013?

Jay A. Brown

We're currently seeing about 85% of the activity to be amendment-related. Most of that would be LTE-related activity, and 15% would be brand new tenants going on the towers. And we have a similar assumption for 2013.

Jonathan A. Schildkraut - Evercore Partners Inc., Research Division

Great. And just as a follow-up to that, in terms of the 3G overlays and kind of the time periods that were overlay versus kind of moving into some capacity infills, how -- maybe you can relate that experience as to where we are in the kind of that 4G upgrade cycle?

Jay A. Brown

I guess what I would say is historically, as we've gone through the process, you end up with a period of time -- generally, it's a 2- to 4-year period of time where the carriers go back and touch the sites that they're already on. And during that period of time, where they're doing the initial deployment of whatever the new generation of technology is, we see the leasing results similar to what I was just speaking to, be somewhere in the neighborhood of 75% to 80% of the activity to being amendments. And then as they move towards -- having touched all their existing sites, then we see that transition go back much more towards brand new cell sites and cell splitting. And obviously, there's been a number of carriers who commented on that, as they roll out their plans for the next couple of years and talk about the need that they have to go back in infill sites, cell split, add additional sites where the activity has been over the last couple of years, more in the amendment time frame. So I think we would say, probably, balance of '13, looks like that will continue to be a heavily amendment-tied activity base. And then as we transition into '14, probably early '14, mid-'14, we start to move back towards a more normal cycle.

Operator

Our next question is from the line of Batya Levi with UBS.

Batya Levi - UBS Investment Bank, Research Division

A couple of questions. One, your commentary about churn. How do you think that will trend throughout the year? Do you expect any ramp from the iDEN churn in the second half? Or is that more a 2014 event? And is there any level of discussions with Sprint right now, maybe to lock that churn with increased activity from Sprint? That's something that you could do this year? Also, another question on maintenance CapEx. I think you lowered your outlook for this year, and you have more towers, including T-Mobile [ph] in your base. Can you talk about what drove that reduction?

Jay A. Brown

Sure. On the first question with iDEN, we don't expect to see any churn from iDEN in the calendar year 2013. We would expect to see that in 2014 and 2015, in terms of impacting the revenues. We believe that we'll be somewhere in the neighborhood of about 3% of revenues. And for assumption purposes, I would expect we'll see somewhere in the neighborhood of 2/3 to 3/4 of that in calendar year 2014, and then the balance of it in 2015. At least, if I was trying to predict it at this early stage, that's the best I could do. But I don't -- contractually, they don't have the right to do any of that in 2013. On the maintenance CapEx side, some of the change there that we gave in the outlook was us pulling forward into the fourth quarter some of the IT upgrade that I mentioned in my prepared remarks. So we actually got that done in the fourth quarter, along with some of the tower maintenance activities. We were able to pull that forward into the fourth quarter. And so it's really just moving those expenses between the 2 periods and bringing some of that -- we brought some of that activity and work. We were able to get it done a little earlier than what we had previously expected.

Operator

Our next question is from the line of Mike McCormack with Newman Securities (sic) [Nomura Securities].

Michael McCormack - Nomura Securities Co. Ltd., Research Division

Just looking at the maintenance CapEx run rate, it looks like it's a pretty similar level, if we look at '12 versus the guide on '13. Just trying to get a sense, with a much larger tower portfolio, what the piece parts are there? Then secondly, thinking about M&A opportunities, it would seem that domestically, there's not much left. Do you guys have any thoughts about revisiting some of the international opportunities?

Jay A. Brown

On the first question, with regards to maintenance, we spent -- in 2012, we had the IT refresh that I mentioned, an upgrade, which was out of normal experience in terms of the amount we would spend on a normalized basis to maintain the towers. And then the amounts that we would see in '13, obviously that has the impact of T-Mobile coming in. So when you're comparing year-to-year, I think the cover that we had in '12 was the increase related to IT. And so it doesn't look like it's a large step as it would otherwise. Typically, maintenance CapEx per tower is relatively low. I mean, we spend between $500 and $700 per tower per year on maintenance CapEx. And so there's not really a big uplift related from -- directly from towers. But in the year-over-year comparison, it would just be the elevated amount we're spending in '12.

W. Benjamin Moreland

And a lot of it runs through the P&L on a current basis, just as we fix things ongoing. Mike, on your second question around M&A, every time we think there's not something else to do, something comes up in this industry. So I would caution you to say there's nothing else to do. I don't know about that. But I would say, that as we have always done, we'll look at anything, and we continue to look at really everything on the market, including international. We have -- we haven't talked about it on this call, but we've had a very nice growth in our Australian business. We are forecasting good growth again in 2013. There's a lot of activity going on in that market. Other international markets, we certainly could look at. Again, we do it on a risk-adjusted basis, against the stock price, and decide, "Where do we find the best opportunity to drive AFFO per share long term?" And thus far, you've seen us take advantage of the opportunities we've seen as we have. But I wouldn't predict the future. I'd say let's -- we'll continue to do it that way and see what happens. And I would never say that there's nothing else on the market. You just never know in this business.

Michael McCormack - Nomura Securities Co. Ltd., Research Division

Okay. Ben, when you think about the tower portfolios of both AT&T and Verizon, has there been any change in their posture? On their interest in maintaining versus selling?

W. Benjamin Moreland

Not that I'm aware of. Obviously, you'd have to visit with them.

Operator

Our next question is from the line of Kevin Smithen with Macquarie.

Kevin Smithen - Macquarie Research

If you look at CapEx minus land purchases over site revenue, the figure has grown from 7% in Q1 to 19% in Q4. While some of that is for new DAS nodes, revenue-enhancing CapEx on existing sites looks like it's gone up from about $26 million in Q1 to over $51 million in Q4. Can you give us the breakdown of that existing site CapEx between the IT upgrade, core CCI sites, T-Mo sites and DAS sites? On the DAS portion, is there any element of maintenance CapEx on the fiber nodes in there? And can you clarify for us how you account for carrier reimbursements for DAS CapEx? Is this booked as site revenue?

Jay A. Brown

Okay. In terms of the granularity on CapEx, we spend about $10 million related to the -- $8 million related to IT. So that clears off that component of it for you. Most of the CapEx, as we've seen the rise over the course of the year and over the last couple of years, most of that would be related to an increase in activity that we're seeing. Obviously, all of the -- that's driving the services business. So on the services side, we're seeing services revenue as we install tenants and add largely, as I mentioned in my prior comments, a significant portion of that related to the LTE upgrade. So we're adding equipment. We get the services revenue associated with that. And then there is, in some cases, a component of that where we're adding additional CapEx to our sites. I mean, given the scale of our DAS business relative to the tower business, the vast majority of CapEx on existing sites is related to towers and not related to the small-cell business. On the construction of new sites, revenue-generating on new sites, almost all of that is small cells. And then with regards to your last question as to the extent that we get carrier contributions related to CapEx, whether that's on the tower side or on the DAS side, the way we would account for that is that, that would be -- a portion of that would be rent revenues that we would recognize over the term of the contracted contract, the contracted lease. And then obviously, we would receive cash in the current period associated with that.

Operator

Our next question is from the line of Michael Bowen with Pacific Crest.

Michael G. Bowen - Pacific Crest Securities, Inc., Research Division

Just a couple of questions for you. With regard to the T-Mobile towers, I think, if I have my math right, your guidance implied, on the revenue, based on the EBITDA margins -- it looks like the EBITDA incremental margins were around 37%, 38%. I was wondering if you could walk us through your thoughts of kind of where this might move going forward? Kind of how long it would take? What are some of the steps you'll be looking at? And then as far as anything you're looking at internationally, can you talk us through how you think about return on invested capital in any particular market other than the U.S.?

Jay A. Brown

On the first question, Michael, you're right. We did bring those assets over to about a 37% margin, direct margin off of the revenues. That's a function of having about 1.6 tenants on them today. And the growth in those margins, as you know, is largely a function of what leasing looks like. The incremental margins on adding an additional tenant to these sites is very high. So we've taken -- when we first acquired the portfolio of assets that we had prior to T-Mobile, in the early days, back in 1999, we acquired those assets with about 1.3 tenants on them. And the margins were in the low -- the high 20s, low 30%, depending on which portfolio they were. Today, those direct margins on those assets is in the 80% range, and that's largely a function of adding, in many cases, 2.5 or more tenants to the tower. So really, it's a function of how do we add tenants over time. As we talked about when we did the T-Mobile transaction, we assumed a little less than a tenant add, thought that the assets could hold a full tenant addition to them, given the current capacity of the assets. And without necessarily getting the margins on those sites all the way to the same level as our legacy portfolio, the returns are incredibly, incredibly high with just adding 0.5 to 1 tenant on those assets. So time will tell, and it'll largely be a function of leasing.

W. Benjamin Moreland

Mike, on your second question, in terms of how we think about risk-adjusted sort of hurdle rates and things, the way we do it internally is we constantly are updating our thoughts and variables around our internal cash flow-generating capacity of the business we own. And we translate that into a cash flow per share number, the AFFO number you see on the sheet. We didn't look at the long-term growth rate of that and how we can grow that from the base business that we own in any given time. And we look at the slope of that line. And as we're looking at domestic acquisitions that would have a similar risk profile, similar credit, we see -- it's as simple as, is it accretive or not to that slope of that line, which would otherwise include just buying back stock as sort of the default candidate for how you would spend the money. And if we see an opportunity to add accretion to that number, as we have been very aggressive in this last 12 months, with $4 billion of acquisitions, then we'll move on that. As we look at international markets, one of the things we look at and we add to that mix, is what is the inherent cost of debt in that market? What is sort of the risk-free rate in those markets? Because at its essence, we're essentially a lender to wireless carriers. We're lending them steel as opposed to dollars or -- and so when we think about it that way, it definitely puts a risk premium or a higher hurdle rate, depending on the country. And thus far, notwithstanding some growth in those markets, thus far, we haven't seen something that we're willing to pull the trigger on and win an auction over, given some of the other opportunities we've seen in the space. That's not to say that there are not some good opportunities out there, and we may do something in the future. But that's been our judgment, as we've talked about on this call, where we see the growth opportunity on a risk-adjusted basis in the U.S. and the Australian market.

Operator

And our final question is from the line of Tim Horan with Oppenheimer.

Timothy K. Horan - Oppenheimer & Co. Inc., Research Division

Jay, just on the AFFO redeployment. It sounds like you're happy with debt levels. You've done a major acquisition here, you've accelerated some land repurchases. Not to put words in your mouth, but it seems like stock buybacks are really the best option at this point, unless -- and can you handle another acquisition, if you could? And then maybe, secondly, Ben, do you think -- have the carriers caught up with customer demand at this point? It seems like they've been under-engineering the networks for the last 2, 3 years. But do you think they've been surprised with LTE uptake and usage? Just some thoughts on the overall network.

W. Benjamin Moreland

Sure.

Jay A. Brown

Sure. Tim, I think, on your first question, as Ben mentioned, every time that we think the environment has settled and we have great clarity on what it's going to look like for the coming months or quarters, something else will come up in terms of an asset or otherwise. And so we have historically looked at our capital and the investment of that capital based on what we think maximizes long-term cash flow per share. And so I would give you the same answer. And as we look at it, we would love to find more opportunities to invest in land purchases and acquiring ground lease assets. We'd love -- based on the returns that we're seeing in the small-cell business, we'd love to allocate more capital towards that endeavor. Happy to buy back shares if we can't find another alternative, or potentially acquire assets. So we'll just have to see what's in front of us. And we'll make the -- what we believe to be the best decision, based on maximizing long-term cash flow per share when the opportunities are in front of us.

W. Benjamin Moreland

The -- in terms of the networks, Tim, for the -- what we see in the market, I'm an interested wireless consumer like all of us on this phone call. And I look at things at CES and I look at press releases and things, and I don't think the market nearly has caught up with customer demand or carrier -- or consumer demand. I think that's a very difficult goal, because I think the market continues to develop new devices and new applications and new ways to use wireless spectrum. So I think there's going to be a long road here on devices and capabilities and services that we probably can't even imagine, particularly when you look at some of the machine-to-machine and automotive and other ways to offload what you normally would think of as a desktop Internet experience that -- now it's very clear. In a mobile environment, we all use it considerably more than in a wired environment. So we've been at this about 14 years, most of us on this call, and we've always thought we're going to get to some plateau. And I think none of us could have appreciated at the time the real technology shift that's happening in all of our lives around wireless. And we're very pleased to be positioned where we are, to have a shared financial model in terms of the shared elements of the infrastructure that is compelling for the carriers to operate on our sites. We're very pleased with the position that we've created in terms of the largest and the concentration in these top 100 markets, as we've talked about. 2012, I think, will prove out to be a real watershed year for Crown Castle. We took some very deliberate actions to enhance our profile, if you will, in the U.S. And I think, long term, that's going to pay tremendous benefits. And I would just point out, as we conclude here today, we did 18% AFFO per share growth last year in the midst of an enormous amount of activity around integrating the NextG organization and our friends that joined us there. In fact, if you would just -- for the negative interest carry we took on for the T-Mobile sites, we actually hit by 20% bogey for the full year 2012. And then we've shown up here in January, with guidance for you that's 21% on a forward basis. So we are feeling really good about our business and the prospects, and we've got a lot of work to do. We've got a lot of people working hard on integration, at the same time, dealing with an unprecedented level of activity in the business. So a lot going on here, but we're very pleased to have you join us on the call, everybody. And we'll talk to you on the first quarter call. So thank you very much.

Operator

Thank you, ladies and gentlemen. That does conclude our conference for today. We'd like to thank you for your participation. If you would like to listen to a recall -- I'm sorry, a replay of today's call, please dial (303) 590-3030 or (800) 406-7325 and enter the access code 4581 -- I'm sorry, 9198. Again, that's 4589198. I'd like to thank you again for your participation, and you may now disconnect.

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