American Tower's Management Presents at Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference (Transcript)

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 |  About: American Tower Corporation (AMT)
by: SA Transcripts

Brett Feldman - Deutsche Bank AG, Research Division

All right. If everybody will just take their seat, we're going to start this in just a couple of seconds. Great. Well, thanks for joining us here. I'm glad you guys can make it. We still have some seats in the back. We have for our first session this morning, Tom Bartlett, the Chief Financial Officer of American Tower. Tom, welcome back to the conference. Glad you guys are here.

Hey, thanks, Brett.

Brett Feldman - Deutsche Bank AG, Research Division

Glad you guys could be here.

Thomas A. Bartlett

Yes, it's great to be here, but it's cold.

Brett Feldman - Deutsche Bank AG, Research Division

It is cold for Florida. This is going to be the same Q&A format that we'll be using all day. I'll ask most the questions up front, and I'll definitely give you guys a chance to raise your hand and ask some questions as well. You may have noticed, I'm working off of our conference guide. If you did not pick one up, my questions are in here. You can use them for yourself, so you can get them after the fact outside the door.

Question-and-Answer Session

Brett Feldman - Deutsche Bank AG, Research Division

Tom, I thought I'd just start off with something that came on the tape just a few minutes ago. You guys are launching a debt refinancing. Can you give us a little background on that?

Thomas A. Bartlett

Yes. Sure, Brett. I'm mean, there's not a lot I can say about it, but we're relatively opportunistic in the marketplace. And what we're looking to do is refinance our CMBS portfolio that we put in place in 2007. So the rate environment looked attractive, and we're in the market. And I'm told that we have a couple of days in terms of how these transactions typically go. But hopefully, it'll be a positive event. Our -- as you may or may not know, our existing CMBS has an average coupon or yield, if you will, about 5.5 -- in the mid-5s, and we'll be looking again for duration on this particular transaction between 5s and 10s, but hopefully we'll be achieving some attractive results in the market. The market seems to be ready.

Brett Feldman - Deutsche Bank AG, Research Division

Great. And it's $1.8 billion, I believe that's roughly...

Thomas A. Bartlett

That's right. That's right. It's $1.8 billion that we're in the market. And again, it's to refinance the existing portfolio that's outstanding.

Brett Feldman - Deutsche Bank AG, Research Division

And those are callable in July so there might a little bit of an early call here on some of these if this works out?

Thomas A. Bartlett

Yes. That's right. That's right. There's a May call associated with them. But given the rate environment, we thought that, that was a good trade.

Brett Feldman - Deutsche Bank AG, Research Division

Okay. And then just the last point on this. The CMBS, for those of you who remember a couple of years ago, we started seeing what were effectively mortgage-backed security or something similar to that in the tower space. They're actually 30-year notes, but they have, I guess 5-year anticipated repayments, where you really would make the payment within 5 years. You said you're looking maybe to get 5 to 10 years on what you're in the market right now. Would you still like the structure, where it's a 5 to 10-year anticipated repayment but with the option to extend up to 30 years? Or do you think you're just looking for straight maturities at this point in time?

Thomas A. Bartlett

Well, a little bit of both. I mean, we're looking at the straight maturities, but they do have the kind of the same notion that -- on the existing securities. And as you recall, we have about 5,000 towers that we put into this portfolio about -- in 2007. And given kind of the cash flow stream that's associated now with that portfolio and the growth that we've had over the last 5 years, it's a very attractive asset. And so as a result, we think we'll be quite successful in the market.

Brett Feldman - Deutsche Bank AG, Research Division

So we'll keep an eye on that. But hopefully, there might be an opportunity to get some interest savings that are not contemplated in the guidance. That would be the upside here?

Thomas A. Bartlett

That's right. That's right. As we talked about last week on our call, the benefit from the interest rate savings as a result of this type of a transaction weren't contemplated in our guidance.

Brett Feldman - Deutsche Bank AG, Research Division

Great. So let's turn our attention back to business operations, and I thought that maybe we could just start off with a quick recap of what you're seeing domestically, and then we could talk a bit internationally. Just high level, you just came out of the quarter. What are the principal things that are driving your U.S. business right now?

Thomas A. Bartlett

I mean, right now as we continued from 2012, which was probably our highest year and I think the fourth quarter was actually our highest quarter in terms of new business activity, we're seeing a continued theme in the U.S. The AT&T and Verizon are leading the charge, if you will. Roughly 80% of our business in the United States right now is from amendment activity or the wireless carriers coming back and adding infrastructure to our existing sites, their existing sites. And we've seen the momentum continue into the first quarter, and we would expect the United States -- in the United States to have another similar level of performance as we had in 2012. So we're seeing activity from the Big 4, if you will: AT&T, Verizon and T-Mobile and Sprint. And they're very, very active. I think Sprint's probably at a -- has got all of the cylinders firing in terms of their deployment. T-Mobile is as well. And AT&T continues to be very, very aggressive in terms of their program. Well, I also see a higher backlog of build-to-suit activity than I have seen in the last several years in the United States. We built 2 -- 250 sites in 2012. I would expect to see that go up in 2013, particularly given the amount of search rings that I see in our U.S. tower group. So we had -- or same tower organic growth in 2012 in the kind of the mid-7s range. And we expect to see that in 2013. A nice thing is that you have escalators that help promote that, so you have 3.5% of revenue that's being generated from that. And I think right now, we're in that cycle of amendment activity. And I would expect to see that same level of activity while we've given 2013 guidance. I mean, we think that we're in the early innings of the buildout of 4G or LTE. And given the spectrum that AT&T and Verizon are deploying that over, they don't need to go on all of their sites, out of the gate, to get that nationwide coverage. But as you would see the pickup in device penetration in the United States, you will continue to see they're continually amending their existing sites with us and with others. And then when, in fact, they've hit the level of infrastructure that each one of those sites can stand, they'll have to start to split cells. And we saw the same level of activity with 3G. 3G took a decade to deploy, and we would expect that LTE will be the kind of the technology of this decade.

Brett Feldman - Deutsche Bank AG, Research Division

So you've brought up a lot of good points there. I want to go back to what's driving leasing activity. You mentioned that the Big 4 carriers are very active. Clearwire is actually involved in finally deploying an LTE network. They even took a cash contribution from Sprint recently. Is Clearwire factored into your guidance for this year?

Thomas A. Bartlett

Minimal levels of activity really are, Brett. I mean, if you talk to our sales teams out there, I mean, they are hopeful that some activity will be picking up from Clearwire, but it's very, very small.

Brett Feldman - Deutsche Bank AG, Research Division

So if we just think about the guidance you gave and we've already hit 2 topics here, a refinancing of debt, including what you launched there, if that goes well, that's not in guidance that could be additive? And then if Clearwire continues to be pretty active, that might be a little bit of a benefit to your outlook for this year as well?

Thomas A. Bartlett

It could be. I wouldn't expect it, though, candidly to be material or really impacting. I mean, by the way, we have 2,500 customers in the United States. You may not realize that, but there's still a lot of local municipalities, the Coast Guard, I mean, we have a lot of activity going on in the United States. Of course, the biggest bulk comes from the top 4.

Brett Feldman - Deutsche Bank AG, Research Division

I'm interested in your comment about the build-to-suit, this is where you're building towers. A couple of years ago, that had really slowed down. And one of the reasons why there was some spec developers out there that were going into the market and building towers for prices than none of the public companies really had any interest in doing. I'm interested, if you're building more towers now, what's behind that? Are you increasingly comfortable with the behavior of other developers? Or are you just seeing that carriers are coming to you and saying, "Hey, we need these sites. We need you build them for us."?

Thomas A. Bartlett

I mean, it's both. I think when we don't build towers on spec, and so we're building them underneath master lease agreements, terms and conditions. Obviously, starting out with an anchor tenant. And we're also picking -- choosy a bit, if you will, because we want to make sure that we're going to get that second tenant within a reasonable period of time. So -- and that's really when the beauty of our business model kicks in. It's not necessarily with that anchored tenant, but it's really with that second tenant. So there's a lot of activity that goes on with their sales teams to make sure that they'll actually have that second tenant on within a reasonable period of time.

Brett Feldman - Deutsche Bank AG, Research Division

I was going to say, so you make sure they understand your criteria if you have a signed tenant before you put any steel on the ground.

Thomas A. Bartlett

Correct.

Brett Feldman - Deutsche Bank AG, Research Division

And presumably high visibility in the second, you typically get them within a year or 2 years. What are you going for on that...

Thomas A. Bartlett

Yes. I mean, it's probably within 18 months that we're looking for that second tenant. We're successful on many. Some, less so. But yes, we're looking for that tenant -- the second tenant within a reasonable period of time. And given the kind of how close we are with our customer base, we have pretty good line of sight into knowing that we're going to be able to pick up that second tenant.

Brett Feldman - Deutsche Bank AG, Research Division

Great. This next topic, I want to spend maybe a little bit of time on. And I want to talk a bit about the master lease agreements and in particular, how they dictate how much revenue is what I'll call presold and where you still have opportunities to outperform the minimum commitments in the MLAs. So first, would you just remind us, in the U.S., you have what you call holistic MLAs? Could you just remind us who you signed these agreements with?

Thomas A. Bartlett

Yes. I mean, we have many master lease agreements with many of our customers, as you well know, Brett, in the U.S. Over the last 18 to 24 months, we have what we've called this holistic -- and I'm not even sure who within our business came up with that name, but master lease agreement with 3 carriers, the AT&T, T-Mobile and with Sprint. And they all take on -- they take on a slightly different flavors. The notion of this type of an agreement was for us to become more strategic to those carriers. And it was something that they are willing to do and interested in doing. And from an operational perspective, it's making it easier for them to deploy their networks. And it's taking some of the time, if you will, out of the equation so that they can get on to their sites, our sites, more quickly than they otherwise would have been able to do. And the first one we've put in place was with AT&T, about 2 years ago. And again, they were very anxious to kickstart even further their deployment schedules. And so we wanted again to make it operationally easier for them to get on our sites. And so that was the reason that they really wanted to enter into this type of a transaction. And for that, what we have done is we, typically, we would extend the master lease agreement, I think it was to 9 or 10 years. And it would have the typical escalator in it as all of our agreements do. But we also then gave them the ability to amend their existing sites that they had with us plus a few over a period of time. And for that, they pay us an additional right -- what we call a right-to-use fee. So that in addition to the escalator, you have on an annual basis this right-to-use fee for a number of years. Not for the full term of the master lease agreement, but for a number of years. And they then have the ability within certain buckets on their existing sites that they had with us at the time to add infrastructure, i.e. antennas. And so that amendment at that time, the pricing for that, would have been cared for within this right-to-use fee that we would have already received them, and that's an annual right-to-use fee on top of the annual escalator.

Brett Feldman - Deutsche Bank AG, Research Division

So the idea here is that they're paying you a fixed and growing fee for specific usage rights on towers they're already on. And it seems that many of the operators that have these holistic MLAs are taking advantage of those presold commitments to use that space to upgrade their network.

Thomas A. Bartlett

That's right. That's exactly right. And as I mentioned before, though, there are a number of other sites that we may be building for them that weren't necessarily cared for. And they're also now, as I mentioned, having that certain bucket size. They're actually exceeding that bucket size. And you would expect just because of the demands for LTE, and so we call that additions to pay. So there is revenue being recognized as we're not surprised, but there's revenue being recognized over and above that right-to-use fee from the carriers.

Brett Feldman - Deutsche Bank AG, Research Division

So the reason I'm asking all this is that the large majority of what's happening on towers right now, you said it yourself, something like 80% of the activity are amendments. And a lot of that amendment, a lot of upgrade is covered under your MLAs. So there may be some that's incremental, but a lot of that they're probably taking advantage of the presold commitments. And so we sort of look at this externally, we say there's a peak level of amendment activity happening this year and probably through next year. And after that, that will start to diminish. But because of the way your MLAs are set up just because amendment activity may start to taper off, it doesn't necessarily mean that incremental revenues taper off because they have committed to these fixed and growing streams. In fact, this type of activity that they might engage in after amendments, according to what you just said, is not covered under the MLA. Meaning, as they started to put more equipment on-sites beyond the buckets or more likely started adding new sites after they've upgraded the existing ones, that would be incremental above and beyond the holistic MLA. Is that the correct...

Thomas A. Bartlett

Yes. That's exactly right.

Brett Feldman - Deutsche Bank AG, Research Division

So just because we may be at peak amendment activity now and into next year does not necessarily mean we're at peak incremental revenues in the tower side?

Thomas A. Bartlett

That's right. That's right. Now the -- as I mentioned before, this holistic MLA has -- comes in a couple of different flavors. And if you take a look at the relationship that we have with Sprint, what we wanted to make sure is that throughout our portfolio, we're really taking the kind of the risk out of the portfolio from a churn perspective. And with Sprint, we had a significant amount of iDEN equipment, iDEN leases that we had in place with Nextel. So it made a slightly different trade with Sprint. And with that particular trade, they were -- they're on an, obviously, a number of our -- 1/2 of our towers if you will. And 1/2 of those probably had iDEN gear on that, that they would be decommissioning, which they've started to do over the next couple of years. What we've done with them is saying that, listen, you will pay for all of those leases for the entire master lease agreement with escalators. But if you do want to in fact take some of that iDEN gear off of the sites, that's fine. You can go on to any other site within the portfolio or you don't. Doesn't matter. You make the choice, but you're still going to pay for that lease for the extended period of time. So we thought and we think that our investors are looking for that steady rate of growth, if you will, with regards to our revenue streams and didn't want to see this choppiness, if you will, in terms of incremental churn that we would've otherwise experienced.

Brett Feldman - Deutsche Bank AG, Research Division

And that's a good point. Your guidance for this year, when you talked about the core organic growth, in the U.S. I think you said about 1% annual revenue churn, which is actually a little below historical averages. The reason why it's so low despite the iDEN churn is down is because there's 0 iDEN churn effectively. That's what I'm trying to tell you.

Thomas A. Bartlett

Correct. Exactly.

Brett Feldman - Deutsche Bank AG, Research Division

So your peers have actually baked in some assumptions on churn because their MLAs are a bit different, but you don't have to worry about that. That would be right?

Thomas A. Bartlett

That's exactly right.

Brett Feldman - Deutsche Bank AG, Research Division

Okay, good.

Thomas A. Bartlett

That's exactly right.

Brett Feldman - Deutsche Bank AG, Research Division

I'm going to pivot here a little bit and talk a bit about what's going on outside the U.S., where you've been generating higher growth. Could you maybe just sort of recap for us because you've had a couple of prolific years. You're in India, you're in Latin America, you're in South Africa, you just went into Europe. What is the platform that you've put in place? And do you feel that you have the key foundation? Or are there other significant incremental investments we should expect?

Thomas A. Bartlett

No, no, I think we have. I mean, over the last 2 years, we've now put ourselves in a position to be in 10 markets outside the United States, and in Asia, down in Latin America, down in Africa and now most recently, in Germany. We have a business development and management teams spanning the globe and overseeing those particular investments, much of the SG&A investment that we made in 2012. And a sizable amount of the SG&A investment that we've announced for 2013 that's part of our guidance is in support of those investments. We've been in Mexico and in Brazil for some time now, i.e. 8 to 10 years; and in Africa, just recently; in Asia for 3, 4 years. And so we've made the levels of investments, the management teams in place, the financial systems all those types of things in those particular markets. So we think we have a terrific platform for growth going forward. We think we're in some very interesting markets that are going through some very rapid deployments of growth. Keep in mind that in the emerging markets, the landline penetration is insignificant. And so wireless is bringing life to villages, to communities there that otherwise wouldn't have had any form of communication. So that's why there's such a tremendous demand. The technologies are 1 to 2 behind that in the United States. So we're still seeing voice being deployed in many markets for the first time. And we're now starting to see 3G. And in certain markets like Germany or even in South Africa or Mexico, we're starting to see some inklings of some 4G spectrum being issued. But that's why we would expect that the growth, same tower organic growth rates in our international markets to be some 200 to 300 basis points faster than the United States.

Brett Feldman - Deutsche Bank AG, Research Division

And you also target higher returns in those markets as well. Could you walk us through that?

Thomas A. Bartlett

Yes, we absolutely do. We look at every investment on a risk-adjusted rate of return basis, whether it's buying back a share of stock or making a DAS investment in the United States or building or buying a tower in the United States, to doing the same thing in every one of our other markets. And so every 10-year discounted cash flow that I see, as part of our investment committee process, has risk adjusted not only as part of what the local country risk would be, but also the local counterparty and the type of service that we would be looking to enter into.

Brett Feldman - Deutsche Bank AG, Research Division

You -- I remember you talking over the last few years as you were looking at some of these new international markets, part of what your challenge was, was to convince the operators in those markets that they should adopt the tower colocation model. And so you were really going in there and saying, "You should do this and we should be your counterparty." You clearly had a lot of success in certain markets, Latin America, obviously, in Africa, you were ahead of the curve there. Are you finding that you continue to be kind of the only real significant infrastructure operator? Or has your success resulted in competitors coming into some of these markets? And how is that impacting your business opportunities there?

Thomas A. Bartlett

Yes, no. I think our success has drawn interest from other players in the market. In just about every M&A type of situation that we get into, there is a couple of other players beside us looking to make those investments. And so we look at everything again, continuing in a very disciplined way and make sure that we don't overreach. And make sure that the underlying business models are sound. I'm told that there are certain investments that we've made over the last year or so that we weren't the high bidder. So I do think that there is a certain level of credibility that we have as a result of our -- the success that we have had on a global basis is, obviously, well as in the United States. But there are transactions that do come to me. I mean, there are a significant amount of transactions that we pass on in the United States as well as outside the United States. And we hold right to our bottom line, and we'll pass on transactions where somebody else would come in. So there is competition going into the marketplace. So I do think that there's -- and by the way, I think it also is indicative of the fact that I think that there's more interest from the carrier side to want to monetize these, from their perspective, less-than-performing assets.

Brett Feldman - Deutsche Bank AG, Research Division

One of the areas where we saw that, that was new was in Europe, you did a deal in Germany. This was your first European deal. I mean, forever the tower industry kind of stayed away from Western Europe. It just wasn't giving you the right dynamics, the right amount of growth, the right amount of potential customers. I'm curious what was it that made Germany interesting? And then in light of the international platform that you've kind of built, was that a scenario where you were kind of the only one who's really positioned to go in and chase that? Or are you finding that everyone else is sniffing around Europe?

Thomas A. Bartlett

No. There was a lot of competition for that transaction, and that was a particular market. As you know, we've had a [indiscernible] business development team in London that's looked over EMEA and kind of the low-hanging fruit was looking into Africa, but we spent an awful lot of time looking at and know the Western European and Central European market quite well. And this was a particular transaction that we very much liked the counterparty with KPN with a 15-year master lease agreement. And our other customers, if you look at who else is in the -- first of all, Germany has the fourth largest economy in the world, so it's one that you don't kind of want to pass by either. But you have Vodafone there, you have Telefónica there. And so there are -- you have Deutsche Telekom there, obviously. So they are our customers in other markets. And really what we're trying to do on an international basis is trying to leverage the relationships that we have with our existing customers and try to follow them into as many markets as we possibly can. So we have Vodafone in several markets, we have Telefónica in several markets, we have Bharti in several markets, American Móvil in several markets. So to the extent that we can kind of web this fabric together with numbers of countries with counterparties across it, it changes the level of discussion. And so we feel that this was an interesting market for us. First of all, just with the existing counterparty that we're with, they're just starting to now deploy 4G, and we're hopeful that with the other 3 counterparties that are already in the marketplace that there could be some opportunity there.

Brett Feldman - Deutsche Bank AG, Research Division

And is Germany kind of a one-off? Or are you looking at Europe now in a whole new light and saying that realistically, this could be the next great way we extend our international?

Thomas A. Bartlett

I'm not quite there yet with Western Europe, but I wouldn't say it's a one-off either. I mean, we did think it would be a very interesting kind of entry strategy into Western Europe. We want to be able to demonstrate success in the marketplace, and there is other activity going on. There has been other activity going on, as you well know, in Western Europe for many years. We just never felt that there was the opportunity to create the value and the right type of MLA to put in place and the right type of entry strategy. But -- so we'll keep our eyes open and see what else happens in the region, but we're very focused on making Germany successful.

Brett Feldman - Deutsche Bank AG, Research Division

Can we talk a little bit about your capacity and interest in continuing to do sizable transactions? I believe you said on the call that you have about $2 billion of liquidity. How do you determine what the available amount of liquidity is for you to invest in any given year?

Thomas A. Bartlett

Well, I mean, it really starts with the cash flow that we generate. So we'd take a look at 2013, I think our midpoint is around $1.4 billion of AFFO, and we're growing our cash flow EBITDA by a couple of hundred million dollars. So staying even within that 3 to 5 band will allow us to lever up or add more debt, if you will, and say lever up or add more capacity. And so that's kind of the starting point. Again, the first place that we allocate capital is to our required reap dividend. And then we look at our CapEx program, which I believe midpoint is in the $600 million range. And what we've been able to do historically, particularly over the last 3 to 4 years is live very well within our means in terms of that 3x to 5x net debt-to-EBITDA and put our hands opportunistically on capital in the marketplace. And last year, we invested a couple of billion dollars of investment into M&A. And the $2 billion of liquidity that we have in our revolvers just gives you the flexibility to be -- from a timing standpoint. I don't necessarily consider that M&A capital, but it gives you the flexibility of being able to be responsive into the marketplace to the extent that you need to be to meet the needs of a counterparty. And then like we did in the beginning of this year, we went back into the market, and we're able to tap the market and pick up some attractive financing and bring down the level of the revolver. So it's kind of this flywheel concept that we've put in place, and we feel that with the means that we have and if we're able to kind of continue with the growth rates that we've been able to generate, we think that's a pretty interesting model.

Brett Feldman - Deutsche Bank AG, Research Division

How do you think about financing deals? And here's the reason why I'm thinking about it. Latin America continues to see a lot of portfolios coming to market next to international has said that they are considering selling their portfolio. That could be a nice, large transaction. You have a long relationship with NIHD, so we'll just presume you might have some level of interest there. AT&T has very vaguely discussed maybe selling real estate. They have brought it up at an investor conference recently, and one of their biggest real estate holdings is wireless towers. I do know whether that's part of that statement or not, but that could be a large transaction. Do you feel that you could do big deals across the globe exclusively in cash? Or are there scenarios where you do issue equities? Some of your peers have issued equity, and it's been accretive.

Thomas A. Bartlett

Sure, sure. I mean, there may be a transaction there that is just too big to be able to kind of maintain our -- the integrity of our capital structure, and we feel that there might be a need for equity. I mean, to the extent that it makes sense to us, I most definitely believe it would make sense to our investors. The good news with the transactions that we're talking about, here they come with an awful lot of cash flow. And so from an agency perspective, they do, and I do, look at the cash flow that the businesses are going to be generating, such that you'll be able to bring down your leverage ratios within a relatively short period of time. So that even if you look at the transactions that we had done in December, we probably spent upwards of a $1 billion on a few transactions. And on a pro forma basis, we're just a little bit north of 4. So you are able to bring that leverage down as a result of the cash flow. But to your point, I mean, to the extent that there's just an incredibly strategic transaction out there for us, and we think it makes sense for the business, a lot of ability to create value, we would look at all forms of considerations.

Brett Feldman - Deutsche Bank AG, Research Division

As you noted, all the transactions you've done have brought cash flow due to your low cost of debt funding if -- effectively have been accretive to cash flow per share immediately because they create cash flow and change your share count. If you were ever to consider issuing equity, do you have some broad parameters, like it must be accretive within a year or something along those lines?

Thomas A. Bartlett

Yes. I mean, what we do, I mean, we look everything on a kind of a 10-year discounted cash flow basis to look at the kind of the underlying IRRS on an unlevered basis that it would create. That's kind of the first step. The second step is then to look at, "Okay. What will it do from an overall consolidated AFFO and ROIC basis?" And that's where Jim and I spend an awful lot of time making sure that we look at the value there. We haven't had the transaction, where it hasn't been accretive from an AFFO perspective, so we haven't actually had to deal with that particular scenario. But having said that, sure. I mean, we would look at it in terms of saying, "Okay. If in fact we did do this transaction, what's a reasonable period of time by which it would be accretive?" And does that make sense for the business? And I don't know that I have a necessary -- necessarily a time period by which it would have be accretive. It would be pretty short, candidly. But from an ROIC perspective, when you're adding investments, sometimes that -- you can put impact the ROIC in a short-term basis. What we've been able to do, though, historically, is to be able to grow both of them, which we think is kind of pretty compelling and indicative of the kind of discipline that we have within our investment philosophy, if you will. But I don't -- I wouldn't say that there's any kind of prescribed formula there in terms of when or the timing in terms of it being accretive.

Brett Feldman - Deutsche Bank AG, Research Division

Got it. We have about 5 minutes left, so I want to make sure I give everyone a chance. If you have a question, please raise your hand. They'll bring a microphone over. So we have one here in the middle.

Unknown Analyst

Could you just clarify your comments on the Sprint MLA? And is it really, just to the iDEN churn, does it bake in a certain amount of iDEN churn and then anything above that would be called an incremental churn or...

Thomas A. Bartlett

No. There's -- there -- for the balance of our master lease agreement, right, I mean, there is no iDEN churn that we'll see. They will decommission, they have the ability to decommission the iDEN infrastructure off of our sites. They also, though, have the corresponding ability to put CDMA on that site or any other site. But they will continue to pay for that lease for the length of the master lease agreement. So you wouldn't see any churn. And that was really the trade that we made. We wanted that growing revenue stream with the escalators. And they wanted candidly the flexibility of being able to either put infrastructures, CDMA infrastructure, replacing antennas and radios at that particular site or they wanted the ability to go on any -- another site within the portfolio -- within our portfolio.

Brett Feldman - Deutsche Bank AG, Research Division

I think we are -- you're next.

Unknown Analyst

So with the notes that you guys issued today, I mean, it looks like for the past couple of years, you guys have been moving away from the secured notes. So like, why are you guys kind of moving back towards that now?

Thomas A. Bartlett

A couple of reasons. I think a couple of years ago, if you took a look at the secured market, it wasn't that deep. You didn't have necessarily the liquidity in there. And right now, we just see a kind of a significant benefit, if you will, from the unsecured and the secured market from a rating perspective. But equally as important, we've already done the work. We've looked -- I mean, we have 5,000 -- 5,100 towers or whatever it is what's in the portfolio. We've already done the homework on all of those particular towers. So it's an easier put for us right now candidly to put them back into a secured environment. But the -- under the real benefit is really just from a -- at least what we're seeing is just from a rate environment.

Brett Feldman - Deutsche Bank AG, Research Division

I think we have time for one more down here.

Unknown Analyst

Just to clarify on the Sprint MLA. As you sort of move, I mean, I guess as a decommission iDEN on certain towers and have the flexibility to move more CDMA onto it -- or CDMA onto another tower, is that going to be on a new RAD center or would it be on an existing RAD center?

Thomas A. Bartlett

Either.

Unknown Analyst

It would be either?

Thomas A. Bartlett

Either, right. So they can -- they could go on to an existing RAD show if that's what their desire is. Or in that case where they already have a CDMA RAD as well as a Nextel RAD, which we did there was a piece -- I think what it was a few percent of our portfolio, where they had 2 platforms on the same tower, they could take down the iDEN, if they would like and then put that on another site.

Brett Feldman - Deutsche Bank AG, Research Division

All right. Well, I think we actually have run through our time.

Thomas A. Bartlett

Sure.

Brett Feldman - Deutsche Bank AG, Research Division

Thanks a lot for being here.

Thomas A. Bartlett

Thanks, we really appreciate it. Thank you.

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