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Executives

Leah Stearns – Vice President of Investor Relations and Capital Markets

American Tower Corporation (AMT) Cowen Technology, Media & Telecom Conference May 29, 2013 3:30 PM ET

Unidentified Analyst

Format of this presentation is fireside chat. I have a list of questions that I’ll go through and then towards the end I’ll turn it over to the audience to see if you have any questions as well, so with that, first off Leah thank you for being here.

Leah Stearns

Thanks for having me.

Unidentified Analyst

I thought we’d start off with something that seems very topical right now, which is interest rate over the last week or so the 10-year Treasury’s interest rate seems to be going up and it seems to be having an impact not on just your stock, but other tower stock and others in telecom services world. Can you remind us what impact interest rates do you have on your business and just broadly how you think about the moving interest rates and how we should think about that as it relates to American Tower?

Leah Stearns

Sure. We completed probably the largest refinancing opportunity that we had in the near-term earlier this year with respect to our securitization refinancing. And so we don’t have any material maturities coming up until 2015 when we have about $600 million through a senior unsecured note. Everything else beyond that over the next year or so is primarily tied to our bank facilities. And so, 2018 is probably the first large maturity profile that we’ll have to address beyond 2015. And, as I look at the capital structure with respect to floating interest rate exposure, around 10% of our current interest rate is floating based.

So, pretty much long-term fixed rate that is the fundamental basis of our capital structure and the average duration of that capital structure is about 7 years.

Unidentified Analyst

Okay.

Leah Stearns

That’s very limited.

Unidentified Analyst

One of the other ways as I think, people think about interest rates on the towers is multiple pay, so when you think about all the M&A which has taken place in the sector, a lot of that is obviously debt financed, and the ability to pay high multiple comes with the assumption that you could have a low interest rate on that debt, is that somewhat of an issue. Is that something that we should be concerned about and maybe walk us through what happened with your ability to get cheap capital or cheap debt particularly as the interest rates do go up, has that changed at all?

Leah Stearns

We really take a long-term deal when we evaluate assets from a M&A perspective, specifically with respect to the long-term capital structure of any acquisition. So, while low interest rates have provided for very attractive asset evaluations within the sector, given the fact that we are an investment bank corporate and I think we have fairly consistent access to the capital market. As we’ve demonstrated in the past, I don’t see a significant shift in our ability to finance growth over the long-term coming on the like.

So, from our perspective I don’t think that there is a material pressure to our overall cost of funding to grow the business because in fact, we’ve funded the lot of our growth over the past couple of years with internally generated cash as well as some increase leverage but for the most part, that’s imbalanced.

Unidentified Analyst

Okay.

Leah Stearns

We haven’t financed all of our growth with that.

Unidentified Analyst

One of the other things that we’ve noticed, you’ve mentioned for example access to capital market and it seems like there has been a shift over the last year to in terms of tower companies across the sector being more administer or focused on secured debt versus unsecured debt, can you talk about how you guys think about choosing one over the other and how that might impact interest rate?

Leah Stearns

Sure, obviously secured debt provides a very low cost this year. We refinanced $1.8 billion in the secured market bringing down the average cost of that facility by 300 basis points to just over 2.6%, so it’s a huge win for us from an overall cost to debt perspective, but we do view that segment of the capital markets as being complement to our overall capital structure and strategy. We don’t view it as our primary source of funding. We primarily utilize the senior unsecured market. We complement that with some money from bank facilities and then obviously the securitization was part of that.

So I think if we were more if our leverage was higher as our peers have used secured debt primarily to fund their growth, I think that’s obviously one strategy, we think that we have more consistent access to capital by having more balanced approach to have.

Unidentified Analyst

So to that point if you did gear up, if want to take up leverage beyond the target three to five times, and you’ve talked about how if the right M&A opportunity came along you might be interested in doing that particularly depending on how accrued if it is, and you’re suggesting that one way you’d potentially be able to do would be the use of secured debt to kind of take that leverage higher?

Leah Stearns

We could but really our objective is to keep it as a complement, it wouldn’t be to purely utilize that structure, so we’d like to keep 20% to 25% of our capital structure in the secured market, and so that’s really where we are today, and so if you were to acquire assets obviously that creates some capacity, but I wouldn’t expect that’s a primary vehicle funding that acquisition would be through secured lending.

Unidentified Analyst

Okay, so let’s talk about fundamental business.

Leah Stearns

Sure.

Unidentified Analyst

So let’s talk about amending activity first, if that’s okay.

On your last call, you indicated that just 30% to 40% of cell sites on the towers now have an LTE component. Is there an indication for what percent cell sites eventually should or will have LTE?

Leah Stearns

Well, I think eventually all of the carriers will migrate their platform to LTE. It will just take some time and I think that initially their objective was given the low penetration handset, the low rate of handset penetration for LTE devices really enable them to initially go out and address a subset of their core network. And so, that’s what we’ve seen happened over the past two to three years and that’s really that Phase 1 deployment strategies that have kind of coming to fruition.

We would expect over the next 12 to 18 months that they will transition from that coverage build, which is again getting coverage across the major market but within the U.S. to more of a capacity developed and that’s when we would see them instead of just adding initial capability, coming back in, filling in, tries to address the higher level of handset penetration that we’re seeing evolve within the market. And so I think that’s we’re basically coming up to that point today.

Unidentified Analyst

Okay. So we’re approaching the bridge between amendment activity and result (inaudible).

Leah Stearns

Yeah.

Unidentified Analyst

Just sticking with the amendment activity for just a moment, you also mentioned on the call or suggested that the rate per amendment has doubled over the past year. As carriers go back to current cell sites to add additional equipment, can you talk about what’s happened there, that surprised you a little bit?

Leah Stearns

I think a lot of what we’re seeing is initial amendment through LTE was primarily coverage driven and now it’s a combination of coverage and capacity. So while they may not be cell splitting initially, they’re adding more capacity to an LTE amendment as it’s a coverage and capacity type of amendment.

In addition we’re seeing elements like remote radio Edge, generators being added to sites as carriers overall add more stuff like I should call it as the tower sites as they add more equipment.

Unidentified Analyst

Is this very similar to what you saw when we move from 2G to 3G or does this kind of have a different feel to it, for whatever reasons.

Leah Stearns

I think we’ll follow-up very similar path we would expect given now that we have at least the resemblance of four major initiatives running parallel for 4G deployments, I think we will see all carriers push forward to a capacity build that 3G builds were aggressive as well, but I think we definitely are seeing a lot of interest in the U.S. market given the structure and the investment that I think a lot of players, new entrants are focusing on so it remains to be seen but I think where we find target that things are pointing to the positive.

Unidentified Analyst

Okay, let’s talk about cell splitting and new activity so you mentioned that we’re kind of at that bridge now and especially more in 2014 or we’ll talk more about that, but can you give us some color on the level of cell splitting that you’re seeing now when it was in the first quarter or talking as you sit here today. And then, give us the sense of if that’s the same activity level we’re seeing just one, two, three quarters ago or are we actually now starting to see that build whether it’s in actual business or just in application?

Leah Stearns

Sure, what we talk about is sign new business so that is really the activity that our customers are signing leases and that tends to commence a quarter or two later. And so sign new business has shifted, we’re starting to see a shift from nearly all amendment activity to a more balanced amendment in new leasing environment. The shift is going from about 90% amendment to 10% new leasing today we’re probably at 75% amendment and 25% new leasing, and so we’re starting to see…

Unidentified Analyst

And that’s on the application level?

Leah Stearns

That’s on the signed application correct, and all in and as the activity continues to be very strong in the U.S. right now that we’re in 2013 we have all four carriers that are very actively deploying LTE across our network. Last year we primarily saw the activity from AT&T and Verizon, and so now that we have Sprint actively working on Network Vision, we have T-Mobile working on their Challenger strategy those are all driving additional amendment activity to our sites.

Unidentified Analyst

And then when we think about the book-to-bill are effectively going on from applications to install, I think that’s roughly six months and if that’s the case and you’re talking about even now, is it likely that maybe towards the tail end of the third quarter, but certainly in the fourth quarter that we’ll actually start to see the revenue benefit if you will, getting of the revenue benefits in software, is that fair?

Leah Stearns

I think some of that will happen, I don’t know the true shift will occur until 2014 or even the 2014 just because of the priorities that the carriers have, but I would say, we do expect that our customers will continue to be very active in adding capacity to their LTE networks. So I think especially as we see handset penetration go above that 10% to 15% level that it is at today, the networks really were designed for the that initial overlay, which is really what we call entity mild life, so there has been coverage of the country, and as more and more bandwidth in terms of handsets coming to the market, and they are adopted by the subscribers throughout the country those networks will be able to accommodate the initial level of handset penetration that we have today, but any ramp that will really drive a significant need for capacity and so, that’s really the question I think will be when does that handset penetration reached that typical end.

Unidentified Analyst

I think one of the things investors struggle with this is, how do you quantify this? So you think about amendment activity and we think about is roughly $300 to $500 maybe per amendment. And then we think about cell splitting, which effectively means a new cell site is being added and to user around maybe $2,000. So it’s a 4:1 ratio. So every one cell split is equal to four amendments. But when I try to think of how many cell splits are going to be out there.

Leah Stearns

Right.

Unidentified Analyst

Any idea of how we could start to think about that.

Leah Stearns

Well, I think for us, what’s really important is to understand that we have designed holistic agreements with some of our customers to help provide us long-term visibility and to what our core organic leasing revenue can be on. So it’s really a cash same tower equivalent. And so, as we look out into the future that really ties to amendment type activity and so new leasing will drive incremental growth of often beyond that baseline core organic growth.

So the way we think about it is as we see catalyst evolve in the market, whether it’s capacity and so carriers like [Softnet] coming into the market, Clearwire becoming more active or Dish coming into play or even a FirstNet taking off. So those are all things that can help provide support to our long-term thesis that our growth in the U.S. are in organic cash basis should be between 6% and 8%.

And so, I know it’s really hard for people to quantify exactly what that split will be between new lease and amendment, but we think that with the fundamental MLA structure that we have in place with our customers that gives us kind of the confidence in the 6% level and then obviously these are the catalysts help to bridge us to the higher end of the range.

Unidentified Analyst

So that’s a great point. So when you think about, so I adjust to two concerns investors have for the tower industry, which may explain why you guys have underperformed year-to-date relative to the market. Number one is interest rate, which we’ve already talked about, but the other one is that, this is as good as a gift and that perhaps starting in 2014 growth can moderate even because the initial LTE build out and then completed or because I demonstrated for example starts to kind of creep in once we haven’t yet really seen, but it sounds like when you think about going forward, we’ll see more cell splitting starting 2014, but more interesting is also this additional spectrum that’s going to kind of come into the marketplace. So there is the broadcast your spectrum there is perhaps the Xbox, there is the FirstNet deployment, there is the Dish spectrum, there is the LightSquared spectrum and maybe there is other spectrum that I’ve been thinking of.

I guess spectrum that carries actually already have, but they haven’t yet deployed. Is the deployment of additional spectrum a meaningful revenue opportunity for tower providers like American.

Leah Stearns

It is, it is. It’s really important to couple of different factors in the industry, one is it help to facilitate the ongoing adoption of high bandwidth application for our customers. So for then it’s going to give them what bigger wider type for them to distribute content, and so we think that it’s very important that carriers have enough spectrum to be able to do that in an economic fashion, and so it will incentivize them to continue to build out their networks if they have enough spectrum, and it’s good for us, because it basically comes along with more equipment on cell sites, as they address that capacity need, so we see tremendous opportunity for our business over the long term coming from additional spectrum coming into the market.

Unidentified Analyst

And to that point, if they are able to use that new spectrum on the current equipment that they have on the tower that is not running opportunity for someone like American Tower, but it is part of the use more equipment, which I think logically suggest if they will, that’s really the revenue opportunity.

Leah Stearns

That’s the material revenue opportunity I would say there are some contracts that are not factored, that don’t provide for that the use of spectrum that’s not currently owned by the carriers.

Unidentified Analyst

They’re spectrum specific.

Leah Stearns

In some cases they are spectrum specific classes. I think the majority of the opportunity for the tower companies will come from the additional equipment just because that’s fundamentally what we’re charging for is the utilization of space on the tower. It’s really the leasing of that we’re seeing.

Unidentified Analyst

I know that there has been a shift over a many year period now where used to be that you charged by the weight and that evolved to be more specific to the deployment, and now perhaps it’s even a specific spectrum aspect to the contracts that you’re signing. Do you find that the contracts in terms of how they’re being structured continue to evolve or it’s been fairy consistent now for some time?

Leah Stearns

I think that we’re trying to evolve with our customers as they’re trying to be successful on their deployment of their wireless networks. And so as we sit down to meet with them to understand what their next phase of network investment is going to be, we try to make sure that we can share with them the success that they will bring on to the business by bringing in wireless data usage on to the network and obviously that will help drive revenue growth for them and to the extent that we can obviously bring on more equipment to our sites to help them build out that network.

We’ll charge them for that, but we like to think that will structure such that we can give them some certainty in administrative ease through these holistic agreements, but also it’s in fact they need to build out more as they’re finding data to be a very successful endeavor for their business that we can share and then effect.

Unidentified Analyst

Okay. I wanted to shift in to your actual financial results now, if that’s okay. Talking specific about guidance, when we compare the company’s 2013 guidance to the results you put up in the first quarter, in our view your guidance seems conservative, and to that point Tom acknowledged, Tom being your CFO that you only give initial guidance two months ago before your first quarter call, which start seem to suggest that it wasn’t about, he wasn’t interested in wanting to raise the guidance so soon after just putting it out there, my specific question is, is there anything out there other than perhaps FX that could result in deceleration in growth or headwinds that you will to grow that we should be aware.

Leah Stearns

There are couple of things, I can think of our just some relative prior period comparisons then in our international segment in the second quarter in 2012, we had a revenue reserves of cell, that will create a tough comparable foot growth for international next quarter, and then in our services segment we’ve expected we forecasted in our outlook that segment will be flat year-over-year and given that we had a ramp up in activity at the end of last year and there was a continuation of that strong activity in the first quarter that would have seen a deceleration through this the latter half of the year.

So those are the two things that I would highlight we still think that the rental businesses is experiencing very strong demand and we thought that we came out with some very thoughtful and appropriate guidance at the beginning of this year, and again that was only two months ago so, and to the extent that things are materially different, we tend to not touch outlook unless we have a M&A, a new transaction to incorporate and given that the towers that we acquired in Mexico during the first quarter we’re already in our original outlook, we didn’t necessarily have anything material to incorporate at the time of the first quarter call.

Unidentified Analyst

Okay. And the EBITDA on the AFFO side that’s affectively profitability, is there any one-time events or things that we should be aware from headwind perspective there is well for example an increased investment in debt or in headcount perhaps tied to that or the services business.

Leah Stearns

No, I mean our debts investments have been fairly measured and that’s just based on demand that we’re seeing from the customer side. I would say there is nothing on the AFFO front that I can think of that would create headwind.

Unidentified Analyst

Okay. I wanted to talk about Mexico and you just mentioned it, but more specifically how you’re going to be bringing that into the QRS, the QRS being their qualified REIT subsidiary. So they are going to effectively look at that now in the REIT world. You’ve indicated that you’d like to bring Mexico into the QRS starting on January 1, 2014. What needs to be done and where are you in that process?

Leah Stearns

So we did bring Mexico in the first quarter. So that conversion is complete. We did that as a result of some tax planning locally. And so, that processes has wrapped up, and we would kind of expect that to be absorbed within our current thoughts around distribution for the year. We’ve said that obviously all contingent on our Board approval that we would expect to grow the distribution by 20% compounded annually over the next several years. So…

Unidentified Analyst

And that’s factored in.

Leah Stearns

And that factored in.

Unidentified Analyst

And specifically why Mexico, you’re in obviously a multitude of different countries to sides of the U.S. and Mexico. What made you think that that was the next best asset to bring in besides the U.S.?

Leah Stearns

Sure. There were a couple of factors of play. We were able to recharacterize some of the intercompany debt that we had in place as a result of the conversion. We were able to designate that intercompany debt has been unsecured. That allowed us to charger a higher interest rate locally to the entity. It enabled us to repatriate more cash out of the country since they are the assets that had funded the investment in, are fairly more matured. We can now bring back the cash that those assets are generating. And as a result there is a higher interest deduction locally and therefore we pay a lot of cash. So there are a couple of benefits that came out of that conversion.

So, again, each country will look at it within the context of our overall tax strategy and overall cash flow strategy.

Unidentified Analyst

And I know this stuff gets complicated (inaudible). So, you in theory can bring in any country into the QRS. This is not the best country to actually have a restructure. It’s that they have some U.S. guidelines and then you effectively give in back that net income after the local tax to the U.S. QRS. Is that a fair way of thinking about it?

Leah Stearns

Almost. The key is that when we went through our PRL process with the IRS we did go over we them how our international businesses are structured. And so, we got comfortable that our international businesses should qualify as good real estate assets under the IRS Code and therefore, we should be able to bring any international tower asset into the REIT should we choose to and we can pick and choose entities. It doesn’t have to be a whole country either. And, to that point the income that is generated in the local market is actually recaptured based on U.S. taxable income and that is what is required to be distributed. We actually don’t even have to bring the cash back out of that country to be left to pay out. We can do that from funds that are in the U.S. already. So, again this isn’t going to materially change our expected distribution amount for the year, but they will continue to support the long-term growth of our distribution.

Unidentified Analyst

And I guess to that point, should we expect that each year that will be another country or asset that we’ve got into the QRS and it’s a matter of not wanting too much because it’s complicated and takes time and this is just something that will naturally occur. Was there some specific circumstances that you would see with Mexico that doesn’t made sense while that specific asset made sense?

Leah Stearns

This is opportunistic. So I would say it’s not. I wouldn’t say I would expect 20 years, but we will continue on an ongoing basis to evaluate each market until the extend that it make sense for us from a multitude of reasons. We’ll make sure that we get that done.

Unidentified Analyst

Okay. So I want to talk about expansion. Since the C Spire acquisition in the first quarter of 2011, all American’s larger tower acquisitions in that land. The all of your tower acquisitions that bank in international markets whereas both the other public tower providers currently in SBA have remained pretty active in the U.S. market. What would you say as post-American to focus relatively more on international opportunities, particularly routed to some of your comps?

Leah Stearns

Certainly we were just as interested in all of those assets. So I want to emphasis that. Now we continue to be very interested in the assets in the U.S. However, we just found much higher returning opportunities for us on a risk adjusted basis in the international markets where we have invested. So we felt as though as we looked at a much boarder set of opportunities that we were making the appropriate capital allocation decisions for our investors, and so we think that we know we now have operations in a lot of markets globally and that helped us to have a more balanced approach to deploying capital. And so we will look at everything on a relative basis and if we see opportunities to deploy capital and higher returns elsewhere that’s where it will go, but I would emphasize we were interested in all three assets in the U.S.

Unidentified Analyst

Okay. To that point when you think about international M&A on a go-forward basis or just M&A on a go-forward basis, how important it will be to continue to be committed to markets you run into and what I’m getting to by that is to sustain a level of relevancy in that market, to sustain a level of leverage with your carrier customers in negotiations. Do you feel your REF playing with the access that have you in these countries, is there really a need on American’s part to continue make investments since you’ve kind of already put your foot forward in these markets already.

Leah Stearns

Well, I think we’ve demonstrated that in the U.S. particular scale has helped and so we’re very interested in adding scale in our existing markets, and so we continue to look for additional opportunities to deploy capital, add or above our risk adjusted trial rates to make sure that we’re adding to that asset base becoming more relevant to our customers. I think that we’ve great portfolio that where we’ve stand today in our market, but I think that there is the opportunity to maximize the value of those portfolios by adding more towers because is not lot of additional SG&A that needs to come along with new sites.

Unidentified Analyst

And that’s really the scale component right, it’s the SG&A aspect because it’s already very high gross margin tied to these assets, maybe effectively that to keep the premium loans. You made an acquisition of KPN towers in Germany, which I think was surprising, I think there is many general view that Europe is an unattractive market for a tower providers like yourself given the maturity of the market, how competitive it is there is also the regulatory aspects of the European Union. Is it fair to assume that was a one-off and maybe you could kind of talk about why you did that?

Leah Stearns

Sure, that was a very, I’d say opportunistic transaction. We weren’t necessarily looking in Germany, but there is an opportunity to participate in auction we evaluate that the transaction and we won, so we’ve launched operations in Germany. We felt so that was really a cornerstone market to be in, if we want to be on the continent, so lot of smaller market in Europe, we think that the most stable financial country to be in.

And, so from our perspective Germany made sense for a lot of reasons, one was that three of the four carriers in Germany are existing customers of ours in other markets. So good solid common customer base that we’re following into that market.

The fourth carrier who we were not already working with KPN who is our counter party in this case. I think a lot of the concerns long-term about Europe from a regulatory perspective has been around network sharing and as a result of our negotiation with KPN we secured a 15 year natural lease agreement, which protects against the downside of any network sharing on return. And so that was critical for us as we evaluated the risks in the market to make sure that we weren’t exposing ourselves to that type of regulatory risk.

Unidentified Analyst

And to your point, I know that you’re very return oriented company. Over that 15 year lock up you’ll get the proper return, which you think and God forbid something goes wrong, and it doesn’t look that great and you’re 16. You have already captured the return that you are looking for?

Leah Stearns

And so from our perspective a lot of what Germany was all about was it’s more of a financial day one cash return. It’s not really a growth driven business model. We do hope that there will be additional growth through 4G deployments in rural markets. We primarily purchased a world portfolio in Germany from KPN and so as the government is requiring carriers to build out in rural markets for their LTE deployments we hope to capture some of that, but again it wasn’t, the valuation was not predicted on the type of growth that we will see in front of the market.

Unidentified Analyst

Okay. This is going to be last question before I turn it over to see if there’s any from the audience. Just want to talk about your debt profile, refinancing opportunities. You’re envisioning the debt markets including the recent $1.8 billion refi, but also by the way helped you increased your AFFO guidance. Can you remind us what other potential debt instruments are coming? I know you’ve talked about that initially and the ability to potentially do other refis?

Leah Stearns

Sure. I think for the most part the opportunities are behind us. Again, because we do look to latter and extend maturities we don’t tend to have large maturities that’s coming up anytime soon.

So if I look at the capital structure we have a $600 million senior note that’s coming due in 2015. The current rate on that is 4.58. So, again, fairly manageable and the next maturity is a revolver of which one is drawn in 2016, and then 2017 we have about $1 billion of bank debt that’s currently outstanding through a term loan and through a $300 million revolver that’s drawn, a portion of our revolver that’s drawn, and then a small amount of senior debt.

So again we have an average duration of seven years, very low floating rate exposure in our capital structure. So most of the opportunity is behind us, but we’ll continue to look at the market if there’s any opportunistic exchange or other mechanisms that we can take advantage of.

Unidentified Analyst

I guess the other way and then to also think about the ability to potentially reduce your lock even further if that was so desired. Well we can take your leverage up and you talked about leverage being three to five times, but when we think about the desire to take advantage of this market that we’re in and recognizing what your leverage is versus other health provider and how the market seems to be accepting of that, and also recognizing that you could actually use that money for other things like, for example, a buyback particularly with the stock underperforming the market maybe that would argue to you that the stock is being under valued. Beyond just M&A, would you take your leverage up beyond that target leverage ratio?

Leah Stearns

We think that our target leverage is a critical component of our overall strategy and it will enable us to be consistent throughout business cycle and we’ve seen that happen in the past. We’ve seen that provide us the opportunity to step in on transactions and others to either they’re not find funding and close a transaction. And so, while there are very committing capital markets today to be advantageous and take advantage of that would probably could kind of close that out exactly and we want to make sure…

Unidentified Analyst

(inaudible)

Leah Stearns

We want to be able to [access] especially if there are constrained markets. We want to have the capacity to have them. So that’s really how we’re trying to position ourselves from a capital structure.

Unidentified Analyst

Okay. Is there any questions from the audience? No. Okay. I’ve one last question is you have minutes left, is I want to talk about DAS and small cell. You’re one of the leaders in DAS and small cell, which I think sometimes, is underappreciated. Hope illustrations is more focused on indoor DAS since outdoor DAS only makes economic sense, I think, in more dense areas where I think for the most you guys don’t necessary have a footprint today. It also seems you centered around partnerships with carriers and I was wondering then, can you just describe your earnest or willingness to get further to the DAS and perhaps even the small cell market and how much of that is going to be predicated on your carrier saying we have a specific deployment that we would like you to hop us with versus you kind of being more proactive in that?

Leah Stearns

Well, I think first and foremost it’s important to step back and think about how our customers are thinking about small cells, because at the end of the day what we need to happen is we need there to be comments need throughout the industry to match in order to make small cells work on a collocation basis. All carriers need macro towers, because they all need coverage, they all need capacity in suburban and real environment. But small cells are typically expected really to be used in urban or dense urban environment. So carriers have historically really owned their network at the core. And so, for us as we go out and talk to our customers daily about what their strategy is evolving to entail the small cell. It really is how can we work with you in the urban market to make that work. And it continues to diverge from carrier to carrier. So it has yet to be clear to us that there is a common need for us to step in and playable in the dense urban environment on a small cell scale.

What we do see as being attractive is looking at indoor venue arena type installations and what we would consider more an indoor DAS environment. We just deployed a network at – high capacity network at the Daytona 500 Speedway. And so that’s a type of place where you have a mass amount of people coming together a lot of traffic over a condensed period of time and all carriers really need to have a significant amount of capacity to provide coverage in an event like that. And so those are the places where it’s fairly clear that you can have multiple tenants on our property. And that’s really where we make our highest invest returns or where we can match up carriers out of the gate.

So we’ll continue to look for ways to achieve that. It has not become clear to us here on the small cell side how we can participate and, obviously if it does, we’ll be sure of that. But I think until the carriers converge their thoughts on how they’ll deploy small cells whether micro cell densification of the networks or enterprise or other type of installations that are common, I think we’ll kind of stand in the sidelines.

Unidentified Analyst

And to your point, it sounds like you’re agnostic whether it’s DAS or micro cell or picocell, first off, my understanding that, correctly that there is not one specific form that you prefer over another. And then the second thing there is that it sound like you’re just saying that you need the carriers to kind of group around a specific format that they kind of want to deploy and then you could have a little bit more visibility on what you should be providing for them.

Leah Stearns

Exactly, because they’re going to be building the infrastructure to support it and if you want multiple tenants to use it there need to be a commonality between the strategies of the carriers. And I think today, if you ask any of our customers, I think they all have a slightly different perspective on what small cell will mean to their network deployment whether it’s microcell (inaudible) which could also mean I’ll be putting real elevation, platforms on macro side so they’re putting small cells on macro sides or it could mean enterprise pico cells. So it’s putting in – to be an enterprise customer it’s going to their campus and putting in picocells throughout and that’s really a single tenant opportunity because they’re not our customers, not something that we necessarily can multi-tenant. So those are the challenges that we’re finding in small cells and I think one-third of the comments seems behind how the carriers are going to deploy it and if it is maybe on more of a microcell in-fill that we can definitely participate on that.

Unidentified Analyst

Okay. And the audience, David.

Question-and-Answer Session

Unidentified Analyst

Yes, just to carry that forward. What you’re saying you’re is kind of it seems to me assumes the ideas that there will be a one-sized that’s all kind of familiar to this whereas in different venues there are different price performance relationships with respect to different types of technologies used in different venues. And so, if you’re waiting to core lessons I think that there is going to be core lessons as opposed to different carriers that we want to use one type of solution in one type of environment and the other in different types of environments. So they won’t potentially not be (inaudible)?

Leah Stearns

I think the core lessons comes around where you have a common need. So it may not be technology or pricing strategy made. I think it’s more, if you are in an indoor environment like see now, everyone needs coverage on the casino floor. So it’s fairly clear that there are multiple tenant opportunities for that casino, whereas if you were in a suburban neighborhood and maybe some existing macro type coverage, the commonality of that deployment for all carriers could be limited. So the ability to multi-tenant that type of installations maybe limited. And so I think until and that’s why we like indoor, that’s why we like the opportunities that indoor does provide. And so that’s why we are pursuing, I think until we see a common need in the small cell arena it will be very difficult for us to make a significant investment in it.

Unidentified Analyst

Okay, great. With that we’re actually out of time. So thank you very much for being here.

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