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Crown Castle International Corp. (NYSE:CCI)

Q4 2009 Earnings Call

January 28, 2010 11:00 am ET

Executives

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

Jay Brown - Chief Financial Officer, Senior Vice President, Treasurer

Fiona McKone - Vice President of Finance

Analysts

David Barden - Bank of America

Jason Armstrong - Goldman Sachs

Simon Flannery – Morgan Stanley

Rick Prentiss – Raymond James

Brett Feldman - Deutsche Bank

Jonathan Atkin – RBC Capital Markets

Batya Levi – UBS

Manish Jain - JP Morgan

Clay Moran - Benchmark Company

Michael Rollins - Citi Investment Research

Gray Powell - Wells Fargo Securities

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Crown Castle International Corporation fourth quarter 2009 conference call. (Operator's Instructions) I would now like to turn the conference over to Fiona McKone. Please go ahead, ma'am

Fiona McKone

Thank you. Good morning everyone. Welcome to those who have just come off the AT&T earnings call and thank you all for joining us to review our fourth quarter and full year 2009 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 investor 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 subjects to certain risks, uncertainties and assumptions. Information about potential factors that could affect the company's financial results is available in the press release and in the risk factor section of the company's filing with the SEC.

If 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 28th 2010, 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 discussions of certain non-GAAP financial measures including adjusted EBITDA, recurring cash flow and recurring cash flow per share. Tables reconciling such non-GAAP financial measures are available under the investor section of the company's website at crowncastle.com. With that I'll turn the call over to Jay.

Jay Brown

Good morning, everyone. We had a tremendous 2009 on many fronts, as highlighted on slide 3 of the presentation posted on our website. Let me quickly summarize some of our accomplishments, and then I'll take you through them in greater detail.

I'm very pleased with our excellent fourth quarter and full 2009 year results which reflect the continued demand for wireless infrastructure. Throughout 2009 we have consistently delivered results above our original expectations. For the full year we posted site rental revenue growth of 10% site revenue margin and gross margin growth at 15% and 20% respectively. An adjusted EBITDA growth of 17% compared to 2008. Each of these was considerably above our expectations as we ended 2008.

Second, we had strong application volume from the wireless carriers to go on our U.S. towers throughout all of 2009. In fact applications for the year were up 26% in the U.S. when compared to activity in 2008.

Third, we achieved our refinancing goals to ladder and significantly extend our debt maturities with the completion of six financing's since the beginning of 2009. Raising (ph) $5.2 billion of debt. The completion of these refinancings means that we are now positioned to resume investing activities that we believe will enhance long term recurring cash flow per share.

With that let me turn to slide four as I highlight some of the results for the fourth quarter and then on to the full year 2009. During the fourth quarter we generated site rental revenue of $403 million up 13% from the fourth quarter of 2008. Site rental gross margin, defined as site rental revenues plus the cost of operations was $284 million up 18% from the fourth quarter of 2008. Adjusted EBITDA for the fourth quarter of 2009 was $264 million up 17% from the fourth quarter of 2008.

It is important to note that these growth rates were achieved almost entirely through organic growth on assets we owned as of October 1st 2008. As revenue, growth from acquisitions was negligible. Recurring cash flow defined as adjusted EBITDA less interest expense less sustaining capital expenditures was $132 million, compared to $125 million in the fourth quarter of 2008. Recurring cash flow per share was $0.46 compared to $0.44 in the fourth quarter of 2008.

Also, during the fourth quarter we spend $62 million on capital expenditures. These capital expenditures included the resumption of spending on our land lease purchase program. Over the course of 2009 we continued to be very successful in extending the maturity of our land leases as we extended 1700 leases with an average term extension of 29 years. I would expect that we will continue to increase the level of spending on purchases of land beneath our towers throughout all of 2010 as well as continue to extend the maturity of the remaining ground leases.

For the full year 2009 as demonstrated on slide five of the presentation, site rental revenues were approximately $1.5 billion, up 10% from full year 2008. Site rental gross margin grew 15% from full year 2008 to $1.1 billion. Adjusted EBITDA for the full year 2009 was $1 billion, up 17% from the full year of 2008. I would note that due to our rigorous control of costs in 2009 all of the growth and site rental revenues found its way to site rental gross margin and adjusted EBITDA.

Recurring cash flow increased 11% from full year 2008 to $539 million even after the impact of approximately $90 million of additional interest expense in 2009 as a result of our refinancing activities. Recurring cash flow per share increased 9% from full year 2008 to $1.88 per share for the full year 2009.

Moving to the outlook for the first quarter in 2010 as shown on slide six and seven, we are excited about our expected growth in site rental revenue and adjusted EBITDA in 2010 as demand for our sites continues. Although we are only a month into 2010 we are seeing encouraging signs of this growth of application activities slightly ahead of application activity we saw in January 2009, and consistent with the expectations of 2010 outlook that we provided in November of last year.

Before I move on I would like to take a moment to dive into the details of our 2010 outlook for interest expense given the number of moving pieces that occurred during the last four months. In order to help with this reconciliation we have provided some additional detail on slide eight. The schedule outlines the changes in interest expense from 2009 to 2010 due to the full year impact of the debt we issued throughout 2009. The recent $1.9 billion we issued earlier this month to refinance the 2005 tower revenue notes and the effect of the debt, we have bought back in the open market. As you can see from the graph, ignoring the impact of forward starting interest rate swaps, we expect interest expense in 2010 to be approximately equal to that of 2009.

I would like to draw your attention to the right-hand side of the page to the line labeled amortization of interest rate swaps. As noted in the press release this charge predominantly relates to the amortization of non-cash interest for the forward starting interest rate swaps we put in place when we originally introduced the 2005 tower revenue notes. As illustrated on slide nine, upon the recent financing of these notes, the five year forward starting interest rate swap related to the 2005 notes continued to be deemed effective and accordingly we are required to amortize the fair value of these swaps through our interest expense life (ph). As such we will recognize non-cash interest expense for each of the next five years related to these interest rate swaps.

I should note that the swaps related to the 2005 notes are due to be cash settled on or before June 2010 and the liability will ultimately be determined on the cash settlement day. While the ultimate cash gain or loss related to these swaps will be recognized when the swaps are settled, this is separate from the non-cash interest charge which will remain unchanged regardless of the actual cash settlement amount.

Currently, as presented on slide ten, the liability on a settlement basis associated with all of our forward starting interest rate swaps is approximately $400 million. We have also provided sensitivities of these swaps to changes in interest rates. With that detail out of the way and returning back to the big picture, based on the aforementioned we expect recurring cash flow to grow approximately 16% year over year. Ignoring the non-cash interest expense associated with the forward starting interest rate swaps I just mentioned, I would expect that this growth rate would increase, as we invest our remaining cash balances and recurring cash flow throughout 2010.

Turning to the balance sheet as shown on slide eleven, and taking into account all of the transactions today, total net debt to last quarter's annualized adjusted EBITDA, as of December 31st 2009 was 5.7 times. Overall leverage is down approximately one and a half turns over the last two years, illustrating how quickly this business can de-lever. Adjusted EBITDA to cash interest expense as of December 31st of 2009 was approximately 2.6 times. Further, after the completion of the 2010 notes offerings, we spent $494 million to purchase $461 million of debt. The table at the bottom of the slide reflects the current debt balances. Given that we were able to maximize the proceeds of the 2010 notes at a very attractive rate, we were able to utilize the excess proceeds to retire more expensive debt while maintaining a leverage neutral position.

Lastly I just want to spend a couple of minutes summarizing the successful year that we have related to our financing activities and what it means for 2010 and beyond. At the beginning of 2009 I outlined my objectives with respect to our balance sheet as shown on slide twelve. These goals were to refinance our near term debt maturities without incurring any equity dilution. The meaning (ph) to extend our debt maturities over multiple years to maintain a reasonable level of leverage that we believe will enhance shareholder returns to insure that we have the flexibility to invest our cash flow in activities we believe will maximize long term recurring cash flow per share. Lastly to do this without meaningfully increasing our then run-rate interest expense. I'm pleased to say that we accomplished all of these goals.

Turning to slide thirteen in the last 12 months we erased $5.2 billion of debt. Our recent $1.9 billion notes offering was issued as a weighted average coupon of 5.75%. Predominantly, for 10 year paper which is lower than the yield on the five year paper we issued in 2006 and was the largest deal of its kind since 2007. In addition to the very attractive coupon we were able to spread the debt maturities over five, seven and ten years.

Importantly as a part of the terms of these new notes, we have the ability to divide the collateral securing these notes into separate pools of assets if we so choose. The effect of this provision is that future refinancings of these notes could be accomplished to the issuance of a more traditional secured bond, a bank facility or a separate and smaller structured notes offering. This obviously increases our overall refinancing flexibility with regards to future refinancing options.

Also during the fourth quarter we extended and up-sized our legacy revolving credit facility, increasing the revolver to $400 million from $188 million and extending the maturity from January 2010 to September 30th , 2015. The revolving credit facility is currently undrawn. Today our weighted average years to expected maturity of our total indebtedness is substantially longer than any other companies in the tower industry. As we were able to extend the maturity of the debt we refinanced from approximately 18 months to nearly eight years. As you can see on slide fourteen the results of all of this refinancing activity is that we are now in a position to resume our historical process in investing cash flow in activities we expect will maximize long term recurring cash flow per share as we believe this is the best measure of shareholder value creation.

As was our practice prior to 2009, we would expect these investing activities to include share purchases, land purchases, tower acquisition and new tower and distributive antenna systems construction. I believe that the investment of our expected cash flows in areas related to core tower business has the potential to meaningfully enhance our long term growth rates and recurring cash flow per share. Given our view of the importance of recurring cash flow per share, I'm pleased that we were able to accomplish the refinancing of our balance sheet without incurring any equity dilution, and without compromising our ability to continue to invest for the long term.

Finally as much fun as it is to talk about successful refinancings and the minutiae of hedge accounting for interest rate swaps, I have to say I'm very glad we have turned our attention to allocating capital to enhance recurring cash flow per share as we continue to execute around our core tower business. With that I'll turn the call over to Ben.

W. Benjamin Moreland

Thank you, Jay. That's a lot to talk about on the fun of balance sheet, hopefully we're done with that for a while. I appreciate everyone joining us this morning on the call. I want to take a couple of minutes to reflect on the tremendous year we've had on a number of fronts. First as Jay has outlined, we have largely completed our refinancing activities with an outcome we are very proud of and it clearly surpassed our expectations when we started the year.

Next, throughout this challenging environment where we could have become distracted, the company's financial results distinguished it from among its peers by focusing on execution for customers to delivering industry leader customer service. I am pleased with the efforts of our team to execute at a very high level on multiple fronts which has positioned us very well as we move into 2010.

Today as we look forward we have materially reduced the company's risk profile, and are excited to be returning to our historical ways of allocating discretionary capital to investments that add incremental growth to our already impressive operating results.

As Jay just mentioned we had an excellent quarter and full year 2009, as applications to go on our sites increased 26% for the full year of 2009 compared to 2008. We believe the increased application activity we enjoyed is consistent with the expected network investments over the coming years, fueled by the continued growth in the broader wireless and mobile internet markets. In addition to a great year of site leasing, our U.S. services business performed very well. Service revenues were up 15% and service margins were up 19% compared to the full year of 2008. This is attributable to a higher take rate on the part of our customers.

While we took a hiatus from investing our cash flow in 2009 to address our balance sheet, our long term goal is simple and unchanged. We are focused on maximizing long term recurring cash flow per share, and I'm excited to return to enhancing our growth with opportunistic investments such as share purchases, tower acquisitions, land purchases and other activities that we believe are (inaudible) to long term recurring cash flow per share.

As Jay mentioned, the 2010 outlook for recurring cash flow per share is 16% on a comparable basis adjusted for non-cash interest rate swaps, that's before any incremental investment or share purchases which I would expect to add to that number as we go through the year.

Let me help quantify this potential for you as our investment capacity is significant. Based on our 2010 outlook for recurring cash flow and additional and existing cash balances we have on hand today, we have approximately $1 billion to invest in 2010.

There are a lot of positive dynamics in the wireless industry which has created the opportunity for us to post these strong operating results that make us excited about our investment prospects. The growth in the broader wireless and mobile internet markets continues unabated. According to recent estimates, 3G penetration in North America was 29% in 2008 and is expected to grow to 38% and 46% respectively for 2009 and 2010, when those figures are finally in. Global mobile subscribers now exceed internet users by more than two times.

Furthermore in recent weeks, AT&T and Verizon Wireless have altered their pricing strategies to drive further growth in wireless minutes of use, text messaging and most importantly data plan adoption. Both carriers are now requiring subscribers with mid-range phones to purchase a data plan, thereby capturing a greater share of the growing number of smart phone subscribers and increasing average revenue per user.

Wireless data services continue to be of increasing importance to the carriers as they represent a significant area of growth to the carriers with smart phone users generating roughly twice the amount of revenue as other mobile phone customers. The increase in data usage is resulting in an increased investment in network equipment and cell site deployment. The recent changes to data plans are likely the first step to tiered data plans, which are expected as the carriers migrate to fourth generation networks.

During 2010 various new handsets and other devices are expected to be introduced. These include the just announced Apple iPad, the recently launched Google Phone, several Android and Palm devices together with the continued launch of new applications and apps stores.

In December, Verizon updated specifications for wireless devices that will run on its LTE fourth generation network, which ultimately will connect a full range of electronics and machines, and enable a new class of services such as online gaming, media sharing and video entertainment. To that end we are pleased to be seeing a significant amount of LTE applications as Verizon builds its fourth generation network.

Clearwire, the first company to launch 4G services was very active in 2009 in continuing to develop their network and we expect the level of leasing activity to remain high this year, following Clearwire's securing additional capital to fund its 2010 build target of 120 million covered POPs through 2010 versus 40 million in 2009.

Another new entrant, Cox Communications recently competed successful trials in Phoenix and San Diego for voice and high definition video streaming over LTE, the first clear indication that Cox is moving toward deploying the next generation wireless technology and expects to formally launch its own network in March. In addition to Clearwire and Cox, Verizon plans to launch 25-30 commercial LTE markets in 2010 covering 100 million POPs and AT&T Mobility will be conducting LTE trials with wider deployments expected in 2011.

And indicated on this morning's call, most of you probably heard that they will be increasing their capital spending per wireless network improvements by as much as 10% or $2 billion this year. All of these deployments point to a long term secular growth curve associated with data deployment that we anticipate will extend the growth profile of our business over the next several years. We would expect to see a steady application volume over the next several years with a ramping of activity as we go through 2010.

I believe we are best positioned in the tower industry to translate this expected revenue growth opportunity into recurring cash flow per share for the following reasons. We have the best located sites in the industry with 71% of our portfolio in the top 100 VTA's (ph) where a significant share of the incremental leasing demand of 3G and fourth generation activity originates. We deliver for wireless carriers having the highest level of customer service in the industry as ranked again by our customers. We have the fewest shares outstanding per site of any publicly traded tower company. Depending on the company, anywhere from 25%-50% fewer shares per site. While this is relatively simple math, this means that as we add additional revenue we can expect that this revenue will be divided among fewer shares than our peers which translates into higher recurring cash flow per share growth. Again, the most important determinant of value in our judgment.

Finally, we had a great 2009. As I said, we are excited about 2010 and our ability to return to our historical approach of allocating capital to maximize recurring cash flow per share. We believe we are uniquely positioned to translate this growth into value without raising our risk profile.

As we have appropriately refinanced our balance sheet with longer term debt that reflects the long term contracts underlying this great business. We remain U.S. focused and have no developing country risk in the business. We have the best located assets in the industry with significantly more tower in the top 100 markets than anyone else. We have the highest customer satisfaction service scores in the industry as we continue to deliver for customers. I look forward to continuing our track record of success and further enhancing our growth with opportunistic investments over time.

The year we just completed with the progress we enjoyed does not happen by accident. We have a team of highly dedicated and talented employees and I am pleased to thank them publicly for their efforts over the last year. With that, Operator, I would be pleased to turn the call over for questions.

Question and Answer Session

Operator

Thank you, Sir. We will now begin the question and answer session. (Operator's Instructions) Our first question comes from the line of David Barden with Bank of America. Please go ahead.

David Barden - Bank of America

First, Jay I'm sure the only other topic that you enjoy talking about more than the balance sheet had been the straight line accounting issue. I guess before it becomes an issue in 2010 as we look ahead in the guidance, can you map out for us what you think the delta year over year would be in the impact of straight line accounting in revenues and costs, and whether you see any big contractor newels (ph) that we need to kind of be thinking about now before people start asking about results at the back end? And then second on the guidance outlook itself, to the point Ben that you made about the (inaudible) are taking up their expectations, we had big volumes of applications at the end of last year we saw Clearwire get funded – I guess there were questions among the investors overnight why the outlook hasn't changed more for the positive. If you could talk to that, that would be great.

Jay Brown

We talked about the fund on the last quarter call and it may be helpful to go back through a bit of this this morning. If you look at the revenue growth on the base of business that we had on the books in 2008, that book of business grew 4% in the full year 2009 over 2008, and that would incorporate all of the escalations, cash and non-cash, all the releases that were on the books and would be net of turn. In any given year we would expect that number to be 3%-4% and so last year I guess it was towards the high end of that range, the 4% level. About 6% of the growth was related to brand new tenants going on the towers. As we look at 2010 at this point we would expect a similar range in terms of escalations as what we've talked about historically. So I don't see anything at this point that would be outsized and I think we made a couple of comments about the timing of how we see the year and that it's back-end loaded.

W. Benjamin Moreland

I'll just say in terms of the revenue outlook its $112 million year over year growth, $90-odd million of EBITDA – 9% at the EBITDA line and 16% at the cash flow line, again on a comparable basis to last year plus the impact of additional investment which we were clear to highlight in our prepared remarks. So you could expect that we'll get some benefit of putting some cash to work in a hopefully productive way. I would also say that we are in the fourth week of the new year, and so frankly not a lot has changed since we gave you guidance at the beginning of November of last year so it is early and the carriers are still in their planning stages, still finalizing budgets.

And while we are very encouraged by what we hear in public, in the dynamic we see long term in the industry which continues unabated, we want to be very careful in how we forecast revenue going forward, this early in the year. I do believe it is back-end loaded, we are expecting to see some things develop over the course of the year and we expect to see the continuation of a number of positive trends we saw last year. For example the Clearwire build which we enjoyed significant benefits from and as we executed around installation leasing of a lot of sites for them last year. So I would say to you it's somewhat back-end loaded and it's also very early in the year and we want to be very conservative here as we start the year.

David Barden - Bank of America

Thanks.

Operator

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

Jason Armstrong - Goldman Sachs

Hey. Thanks a lot, guys. Maybe first question just on AT&T's comments this morning. They're pointing more towards amendment activity I think as kind of the biggest surprise. It seems like cell site adds may map out 2009, but amendment activity they were basically talking about 2X the levels that they've done in '09 is what the guidance says for 2010. So just thinking through your outlook for 2010 and this type of trajectory, how did you think about amendment activity from the existing carriers as it relates to the guidance? And then second question just on the service revenue side is much higher than we would have thought, any color here as to why the big step up in revenue and is that sort of a leading indicator?

W. Benjamin Moreland

Sure, Jason. First of all on the service revenue you give me a great opportunity to congratulate our team. Our take rate in terms of the addressable market and the opportunities to perform the service and installation on our sites we've materially altered in a good way up this last year. We captured significantly more market share so that's the reason for that fourth quarter and the full year results.

Now as we always start the year that can be volatile and very hard to predict so we always start the year taking a haircut do that former performance in the prior year so that's continuing in this guidance as we go forward for 2010, but it is absolutely a function of take rate increasing through the addressable markets on our sites.

To your other comment about the amendment, I would certainly say that we continue to see the amendment activity increasing and that is true. AT&T I believe they mentioned and we saw that they did about 1,900 new installations or colos (ph) or new builds last year in terms of new cell sites. I'm not sure they have said exactly what that will be in 2010, but we do see it with the legacy carries as I would differ from brand new deployments. The legacy carriers increasingly, as you would expect, are improving their networks through more and more amendment activities on sites compared to maybe old historical times when they might have been building more new sites for coverage reasons, so more and more amendment activity. And as we've talked about before that comes on at several hundred dollars a month as opposed to maybe a couple thousand dollars a month so it takes more of those to add up to that same level of revenue. That would be consistent with what we're seeing in our pipeline.

Jason Armstrong - Goldman Sachs

Okay, gotcha. And if I could just go back to the first question just sort of layering this on, I mean the AT&T news I think is being perceived pretty positively as it relates to anybody attached to the wireless food chain today. Your comment on not much has changed in the last couple of months as we gave guidance, I would actually argue this is a pretty big data point, but Clearwire, $4 billion in funding is an even bigger data point and they were sort of specifically called out last quarter as we do not have a full Clearwire build in our numbers and they are the biggest incremental tenant generally into 2010. So I'm wondering why that isn't enough to tweak guidance here and what do you need to see over the course of the next quarter to be able to change the update?

W. Benjamin Moreland

Well, implicitly in our 2010 guidance that we gave you towards the end of '09 we had had a tremendous year with Clearwire and we were very clear, I think, with everyone about the work we had done and we had a great year and it was a very significant contribution to our growth. Certainly there's a fair amount of that implicit in the 2010 guidance going forward and they're funding success. While we've haircut it somewhat because of not knowing exactly which markets they will embark on beyond their 2010 build, we've had to be a little bit cautious in terms of what do you see on the second half of '10 would lead into late 2010 and then on into 2011 revenue for us. Right now we're focused with them on meeting their 2010 market launches covering 120 million pops and that is sort of already in the pipeline so we'll see how that develops sort of second half of this year when I think we'll see their next phase of deployment and certainly we expect to participate meaningfully in that.

Jason Armstrong - Goldman Sachs

Got it, thanks.

Operator

Thank you. Our next question comes from the line of Simon Flannery with Morgan Stanley.

Simon Flannery – Morgan Stanley

Thanks very much. Good morning. If I could turn to the use of free cash flow, just to be clear, are you comfortable keeping the leverage you have now, is that the sort of target leverage you want to have over the next couple of years given the refinancings you've completed? And then in terms of use of cash maybe you can comment on the M&A environment, are you seeing values out there domestically or internationally? And if you wanted to could you start buybacks in the next several weeks or is that something more for sort of later on in the year? Thanks.

Jay Brown

Good morning, Simon. I'll take the first one and Ben can take the second one. With regards to leverage I don't think we've changed our view on leverage. Over time I think you'll see us approach a leverage area somewhere in the neighborhood of about five times debt to EBITDA, but maintaining about the level of nominal debt outstanding that we have currently. So I think you'll see a few levers, but do that through growth in EBITDA rather than continuing to take cash flow or cash balances and pay down debt at this point. The most recent debt purchases that we did approaching $500 million was really an attractive us of the proceeds as a result of us being more successful than frankly I think we thought we were going to be in the most recent $1.9 billion notes offering both in terms of the size and rate we were able to achieve allowed us to take about $500 million of those proceeds and go out and buy back some of the more expensive coupon debt, but I don't think you'll continue to see us deploy cash flow or cash balances to reduce the leverage and I think overtime you'll see a deleveraging, but slowly through growth in EBITDA.

W. Benjamin Moreland

Yeah, just to punctuate that. In Jay's comments he made a comment about leverage neutral. That was absolutely the case. We didn't intend through the refinancing activity to put more leverage on the company and so through Jay's and the team's effort, being successful there you ended up with more proceeds frankly at lower rates than we had expected or had positioned ourselves defensively to undertake. And when that happened we decided to sort of rebalance and that's now largely done.

So Simon that then sets up your next question which is then as you think about use of cash and investment proceeds so the cash we have on the balance sheet plus the cash we expect to generate the rest of the year, without accessing any additional credit is about $1 billion and we expect to go back to doing exactly what we've done for years up to 2009 which is to allocate capital in ways that we think grows and produces the highest long-term recurring cash flow per share growth. That will undoubtedly probably take us to doing some M&A as well as stock purchases.

Because as we've shown you in the past, we do a pretty rigorous analysis, the best we know how, to predict future leasing results on our own sites and on anything we would look at acquiring. And on any given day that will lead us to different answers and so over time everyone has witnessed us purchase about 30% of the stock out of the market based on that analysis, but our sites were more valuable on those particular days relative to their future leasing prospects than what we saw in the open market and we could purchase. And then on days where we did M&A transactions which we've done a number of, just the reverse is true. We saw a unique opportunity to consolidate a portfolio that we thought on a relative value basis created more growth potentially when added to our own portfolio.

As boring as it sounds we will go right back to what we were doing in 2006, '07, and '08, and if you go back and read some of those scripts from that time that's where we're headed.

Simon Flannery – Morgan Stanley

Okay. So just to be clear you could do buybacks this quarter if you wanted to?

W. Benjamin Moreland

Well we talk about it routinely with our board and so just to refresh everybody's memory, our approach will be, as it has been in the past, we have a constant capital allocation dialogue with our board and we get specific approval to move forward with specific amounts that we don't particularly announce because it's become our practice and we are very disclosive on this that we could be buying on any given day and we certainly report those after the fact.

But the objective, it's an M&A activity whether we're buying external towers or buying our own sites through buying shares. And so it seems a little counterintuitive or counterproductive to us to go out and sort of announce what the price target and the amount that we would be buying shares at when in fact we're seeking to make an investment just like we would buying towers.

Simon Flannery – Morgan Stanley

Great, thank you.

Operator

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

Rick Prentiss – Raymond James

Thanks. Good morning, guys. A couple of followup questions, obviously a very strong effort over the last year on the balance sheet, long layoff before any other issues, but you think about the November 11 anticipated refinancing, what are your thoughts about would you build up cash to pay that down, will you be opportunistic to take out some of the marketplace or that's like the next (inaudible) it out there but it's a long way off just trying to think of how you're thinking about it.

W. Benjamin Moreland

Okay. We've got about two years, as you mentioned it's a long way off. We've got about two years before that comes due and we'd not expect that we'll hold back cash to pay for that. I think as I mentioned in my prepared remarks, one of the benefits that we got as a part of these most recent notes offering is the flexibility to split the pool of assets into multiple pools so that we could do smaller pieces of financing to refinance that . So I think we got a lot of flexibility. We could ultimately take some of the assets, pull them out, and go and do a more traditional bank loan to finance the assets. We could do a secured bond, we could do a separate securitization or we could leave them in and just add additional notes as we did in this most recent offering to push out that maturity date.

So I think there's a lot of options on the table and would expect that we'll be able to refinance those notes rather than we're certainly not going to hold back cash and reserve cash to pay for that in light of the environment that we've seen over the last year. We've had access to the credit markets in pretty difficult times and most recently in better times and so I think we feel like we have a lot of options and have actually even increased those options since the last time we were dealing with the notes.

Jay Brown

(Interposing).

W. Benjamin Moreland

Yeah, that's one other thing to mention. I mean we looked at the main call on those notes is about $155 million at the point at which we issued these most recent notes so we could've upsized the deal as it was significantly oversubscribed. Had we upsized it and used the excess proceeds to pay off those notes we were having to pay north of 10 points up front just in terms of make hold payments and that in terms of a cost of capital just was too high and we didn't think it made a lot of sense.

Rick Prentiss – Raymond James

Okay. And then your RF engineering project, can you update a little bit on what you think the anticipated unsatisfied demand is on the towers?

W. Benjamin Moreland

Rick, that hasn't changed appreciably and yet we are doing a significant refresh of that and for those that might be interested maybe we'll invite you over to have a look at that at some point in the future, but we are going through a very detailed review that is overlaying individual frequency propagation as well as topography by site so we're getting a much more granular look at sites including even building clutter and things that may be shading sites.

And the early returns, we're through I guess maybe half a dozen large markets and there is not an appreciable difference from something just over one tenant per tower, about one tenant per tower of indicated demand. Now as we've talked about in the past and for those that may be new to the call, what that suggests is we can identify where a carrier could benefit relative to their average single strength in the market could benefit by occupying one of our sites. It doesn't necessarily mean they will, it's just a measure of what is out there in terms of capacity that could be utilized to help them improve their RF signal strength in a particular location and it has been helpful in our marketing efforts and also just planning efforts and evaluation of our own footprint, our portfolio sites against maybe an M&A candidate because we do the same exact analysis on an M&A candidate.

So it's relative comparisons that we're most interested in. I would say it's, as we've always said, it doesn't predict when that site will be taken down by the carrier and we're continuing to try to refine the predictability of that around traffic count, population density, and a number of other factors that we're looking at. But later in the year we'll be done with probably 80% of our portfolio in this refined much more granular approach and we'll be happy to take anybody that's interested through it. It gets pretty technical pretty quick.

Rick Prentiss – Raymond James

And final quick question, NOL, is this kind of where you're at as far as the NOL balance and when you think you might finish using those up?

Jay Brown

The NOL balance is about $2 billion currently and we would expect we'll not be in a position based on the current growth in revenues and assuming we don't do any M&A transactions I would assume that we'll kind of be through that and somewhere in the neighborhood of the 3-4 year time period at which point we would start to build the NOL through that period of time at which point we would start to consume the NOL. So I think we're still quite a ways off here, Rick, before we're in a position where we're paying cash taxes other than alternative minimum tax which should be relatively minor in the overall scope of cash flow.

Rick Prentiss – Raymond James

Great. Thanks, guys. Good to get back to operations, huh?

W. Benjamin Moreland

Absolutely.

Operator

Thank you. Our next question comes from the line of Brett Feldman with Deutsche Bank.

Brett Feldman - Deutsche Bank

Thanks for taking the questions, guys. You talked about how you talked extensively about how you're interested in getting back to reinvesting money and that menu of options includes acquisitions. I was wondering if you could talk a little bit about your appetite for international markets and if there are certain markets that are more interesting to you than others?

Jay Brown

Brett, we’ve answered this before and we do have somebody on my team, actually, on executive team who spends a fair amount of time on this. We’re constantly looking at international opportunities. The only thing I would say about that is right now we have not seen an opportunity that we’re prepared to pursue at a price level that frankly I think would win, relative to the alternatives that we seen in our own market here or in Australia.

That’s not to say we discount the opportunity or don’t underwrite and appreciate the wireless growth store in a number of other markets including emerging market. It just is that on a relative value trade against what the opportunities are we see in our markets we’ve just a view thus far that we haven’t seen anything that we thought measured up in terms of a risk-reward perspective that made us want to allocate capital in that direction.

But I would never say never. And we have been involved and are aware of really ever major transaction globally right now. And we’ll certainly keep our head in the game there, and paying close attention. And if we something that looks attractive relative to the alternatives, you should expect we’ll pursue it.

Brett Feldman - Deutsche Bank

Have you actually set up shop in any foreign markets just as a way of getting maybe a stronger foothold and being a bit closer to what’s going on and to maybe catch some of these opportunities as they emerge?

Jay Brown

No, we haven’t. No, we haven’t. We have obviously this activity would be based out of the States or to a limited degree out of Sydney.

Brett Feldman - Deutsche Bank

Okay. I guess part of the reason I’m asking is I’m wondering if you think it might become increasingly necessary for you to do that as we think about maybe where SG&A can trend over the next year or so?

Jay Brown

No doubt you can get more educated on a market by being on the ground. I appreciate that. It’s not a long list of potential tower buyers. And I can assure you we get a phone call on pretty well any significant transaction that may be going on out there.

Brett Feldman - Deutsche Bank

Okay. And then on the domestic side. I mean, now that you’re kind of back in the game in terms of being involved in potential acquisitions here. What are your initial thoughts on where evaluations are? Do they look reasonable to you? Do you find that they’ve increased? I’m just wondering about the probably that you might actually be able to do a lot of deal close this year?

Jay Brown

Well, it looks a lot like it did. It’s being to sort of remerge, I think. Through 2009 a lot of sellers did exactly what you would have expected them to do, which was just sit tight while the market sorted itself out and balance sheets got repaired.

Today I think we see some opportunities out there and it’s just like we’ve seen in prior years, some expectations of value are unrealistic. Which drives us right back to buying our own shares in the open market. Because the same trade. And then in other cases we seen opportunities that we are pursuing. And would have expectations that we’ll be able to do some things.

So again, it’s going to be very similar to what we’ve seen in the past. And it’s all about relative value and what’s the best way to add value and grow cash flow for the company.

Brett Feldman - Deutsche Bank

And just to wrap it up here. I mean, I know you can’t talk too specifically about what you’re looking at. But collectively or even individually do you see any potential acquisitions that if you completed them are so large you actually might now repurchase any shares this year?

Jay Brown

Well, I can’t speculate on what may come to the market. Obviously we thought maybe some things coming on the market that we’re not aware of. So I don’t really know how to answer that, Brett, other than to say, we’ve got a billion dollars to invest before we would even contemplate borrowing any money. Which theoretically if you buy something with cash flow even at our 5-6 times total leverage range, obviously it’s leverageable at a point. So you could add some credit to that as well. It’s just impossible to speculate what may be coming to the market.

Brett Feldman - Deutsche Bank

All right. Well, thanks for taking the questions.

Operator

Thank you. Next question comes from the line of Jonathan Atkin with RBC Capital Market. Please go ahead.

Jonathan Atkin – RBC Capital Markets

Just a clarification on the RF Engineering tool. You said that’s one tenant per site?

W. Benjamin Moreland

Yeah. That’s just for a few markets. We’ve done about half a dozen large markets. So it’s very hard to extrapolate that, John out to the hard country.

Jonathan Atkin – RBC Capital Markets

Okay.

W. Benjamin Moreland

I wouldn’t really read anything into that directionally. I think previously we had said 1.2, 1.25 I wouldn’t read anything directionally into that. I think what’s more helpful, and if you ultimately take you through this, as you’ll see the level of granulatory (ph) here now that we’re able to go through this with is many, many factors increased. And to have that remain is attractive. And yet again, it doesn’t predict the timing in the prioritization of the capital spin with the carriers. And that’s another piece that we’re trying hard to develop some more predictive methods around. Which is looking at our historical results. And then trying to sort of reverse engineer where you can develop some predictive modeling around when you’re going to see the capital deployed at a particular site.

Jonathan Atkin – RBC Capital Markets

In the past, I think when you’ve communicated that 1.25 number it was exclusively voice driven. Now you’re factoring in data as well?

W. Benjamin Moreland

Partially. Not completely. We can’t measure things that aren’t deployed yet.

Jonathan Atkin – RBC Capital Markets

Okay.

W. Benjamin Moreland

So for example, 4G and things aren’t out there. It’s primarily voice and 3D services.

Jonathan Atkin – RBC Capital Markets

And then I was interested in the comments on Cox because they’ve obviously announced a wireless offer and that could be NB&O based or it could be network based. Are you seeing a distinct signs that they’re moving forward with a meaningful network builds?

W. Benjamin Moreland

Yes. I think we and all of our peers in the industry have been working with Cox and expect that we’ll see activity out of them as they continue to deploy their spectrum that they acquired. And buy – from what we can tell it certainly looks like a network build and a launch. But that’s certainly for them to decide and disclose publicly.

Jonathan Atkin – RBC Capital Markets

And then finally, on TCF margins that’s fluctuated a bit. I wonder if you could maybe go into some of the factors that I think it was down 50 basis points sequentially.

W. Benjamin Moreland

Yeah. We had about a million dollars in the fourth quarter in the US associated with some R&M activities that we were able to get done. Specifically we end up not being able to do that much in the fourth quarter. We were able to get some of that done. Which created sort of a million dollars up there.

The other thing I would mention in terms of the run rate would the Australian dollar increase. So the operating expenses there moved up with that currency exchange ratio. And we’ll kind of see how that goes. But nothing has really changed there. I mean, basically for the full year on an apples to apples basis, we help costs, except for ground leases almost entirely flat, year over year. And then we saw ground lease expense go up its typical 2%-3% year over year. So I don’t think there’s really anything of any note there if you go back up to sort of a big picture perspective and look at it on a year over year basis.

Jonathan Atkin – RBC Capital Markets

Great. Thank you very much.

Operator

Thank you. Our next question comes from the line of Batya Levi with UBS. Please go ahead.

Batya Levi – UBS

Just a follow up on the margin question. Can you give a sense of how the land purchases penthouse margins going forward, how do you expect that ground lease expense going up 2%-3% on track as you buy more land?

And maybe a follow up on the straight lining question. If you look at the drivers of revenue growth, incremental revenue growth every quarter last year. It looks a straight line was some sort of a help every quarter. Can you give us a sense of how that changes in 2010 versus ’09. Thanks.

W. Benjamin Moreland

On the first question with regards to land lease purchases, obviously when we buy a ground lease that removes that expense out of the land lease line. So it improves operating costs, reduces operating costs. And then we have a lower base upon which we’re then escalating.

So I don’t think it necessarily changes whatever the remaining base is, probably, continues to escalate as it has historically in the 3%-4% range. But it’s a goal of ours to incrementally and often increase in the weighted average maturity of the lands underneath our towers. And we do that both through land lease extensions as well as purchases.

Now, one of the things that I would just commend our employees for, and we have a large group here that works on this, last year when we pulled back on CAP Ex in order to work on the balance sheet, we dramatically removed the CAP Ex and removed the amount of CAP Ex we were spending on land purchases in a hurry. And at the same time our employees were able to continue to maintain the level of lease extensions that we have been able to do historically.

So I think that’s an important activity. And we’re happy to extend the ground leases. Sometimes with landlords and other occasions where we think the price is attractive it makes sense to go ahead and buy the land. And obviously that does have some incremental benefit to the tower cash flow margins.

On your second question, there are always going to be leases that are extended. There are 60,000 tenant licenses that we have in our US business. And so if they come up to the end of their five year or 10 year term and we roll those out, as we’ve mentioned in some of our prior calls, we’ve aimed to extend the terms to 10 and 15 years in many cases. And as we extend those leases out to their next term, they are going to be leases that get a benefit from where those (inaudible) were previously into their near term.

And against that you have a big portion of the licenses that don’t show any escalation in a given year because they’re somewhere in the middle of their 10 year term, or 15 year term as it was. They maybe two years down or three years down and you don’t see any benefit from those licenses in the GAAP reported revenues.

So the cash revenue is growing in the neighborhood of 3%-4%. When you blend that across the whole portfolio, as I mention, when you look at the 2009 results, you can see that you can see from where we set the benefit from escalations on the old book of business was 4%. And as I said, that’s right in line with sort of where cash escalations are generally, from the sort of 3%-4%. Maybe a little bit volatility year to year. Bu I think that should help you as you think about it longer term. I know I have often adjusted to people to think about business over a longer period of time rather than looking at the quarter to quarter changes for many reason. The timings at which we turn on licenses, obviously affects what’s the sequential change in revenues is quarter to quarter. And when you’re trying to figure out what the escalations are going to be, it’s a recurring revenue business and all of the revenues that we book are cash at a point. And it’s just predictive of that in some cases. And sometimes it’s trailing that number.

So look at the revenue base of business that we have today. And look at that over a long period of time, a five or six year period of time. It’s going to grow 3%-4% and maybe some ups or downs along the way. But I just take that book of business and assume it’s going to grow at about 3%-4%.

And then if you’re trying to reconcile back to cash flow, obviously I think that’s the place to go, is to the cash flow statement. I think you can see on the cash flow statement, cash from operating activities was about $3-$4 million when adjusted for the sustaining capital expenditures. You take that out of cash from operating activities. RCF was about $4-$5 million below where cash from operating activity minus the sustaining capital expenditures are.

So I think most of what you want to look at on the income statement or look it on the cash flow statement, I think the cash numbers that we showed in 2009 of about $540 million of cash flow is pretty good number to work from.

Batya Levi – UBS

Okay. Thanks a lot. Just maybe one follow up question on the (inaudible) number. It looks like you see to decommission sell sites throughout 2009. What are some of the reasons for that and how do you think your total count will change in 2010? Thanks.

W. Benjamin Moreland

Yeah. We have over time looked at opportunities to remove some sell sites where we were cash flow negative. Sometimes we end up moving those tenants onto other towers that are relatively close to them that we think are better assets. So it’s just a culling of the portfolio. We use some of the tools that Ben was mentioning earlier in his comments about our engineering tool. We study hard to make sure that there’s not future opportunities on those sites. So those would be the few towers would be decommissioned would be sites where we don’t see any future opportunities for leasing on the sites and we’re just carrying a negative asset.

I think we’ve gotten through most of that. So I think the amount of sites that we’ve seen over the last year or two years, that probably is reduced on the go forward. But it’s an activity that we constantly study and look at and try to be smart about profitability around the business.

Batya Levi – UBS

Okay. Thanks a lot.

Operator

And our next question comes from the line of Mike McCormick with JP Morgan. Please go ahead.

Manish Jain - JP Morgan

This is Manish Jain for Michael McCormick. Just wanted to follow up on your comments regarding the application activity you mentioned, up 26% in 2009. I wanted to see if that’s changed meaningfully so far in 2010 at all? And then, kind of timing on those applications actually turning into signed contracts. If you could give a sense on that.

And then you mentioned that the indication that you’d be increasing your discretionary CAP Ex in 2010. I wanted to get a sense of what levels you’re thinking. Is it more like 2008 levels or are we getting somewhere between 2009 and 2008? Thanks.

W. Benjamin Moreland

Sure, Manish. On the app volume, look it does ebb and flow. It bounces around month to month. And so all we have to look at is a partial month of January. And so I can tell you that it is compared to last January modesty higher. I wouldn’t read anything into that. Because it’s a very small period of time to be evaluating where we are for this year. And it does move around materially from month to month.

In fact the fluctuation in application volume it could be as much as 30%-40% in any given month. Depending upon what’s going on in various markets with carriers.

I think you asked a specific question about apps coming in the door until they ultimately commence, it’s about five months on average.

And then I think lastly the order or magnitude of the amount that we likely put to work in terms of investment, I don’t know how to tell you exactly how much. Although I will tell you that we expect to go back to the view that says look, we’ve got financing capacity. We got a $400 million revolver that’s undrawn. And so, we don’t expect to leave a lot of cash sitting around in the checking account in efficiently not earning any yield. And so you should expect over the next few months or quarters that we will return to that approach which is to be pretty efficient in how we think about cash. And we will, as we’ve had, we will always maintain flexibility on the balance sheet through the revolver and just credit capacity. And at 5.7 times, I don’t think Jay didn’t say this, but it’s by a lot, the lowest leverage we’ve ever had in the company.

And as we also mentioned, don’t expect to re-lever. We’ll probably let it roll off another few quarters just through growth. And so we’ll probably be down in that five times range before long with three times interest coverage. And that’s a very comfortable, and I think a very efficient way to finance the business going forward.

Manish Jain - JP Morgan

Okay. Thanks a lot.

Operator

Thank you. And our next question comes from the line of Clay Moran with Benchmark Capital. Please go ahead.

Clay Moran - Benchmark Company

Couple of questions. You talked earlier in the call about 2010 being back end loaded. I think I remember the third quarter you didn’t really say that. I thought it was more the back end you were less certain about, maybe would be a little softer. So are you referring in the back half to new lease activity being stronger? Or are you talking about reported revenue growth?

W. Benjamin Moreland

Both, actually. It would be activity we would expect and reported revenue growth. I mean, we saw more activity in the second half of last year then we saw in the first half. And I don’t know whether that’s a trend or not, you’d see that year to year. I wouldn’t suggest that. But this year, I think we’ll continue to see, we have expectations for increases. I mean, I’ll give you a potential and really that’s all it is. You could begin to see more LTE deployments going into 2011. And we would expect that to be very little revenue impact in 2010. But activity that would then benefit us in 2011.

So splitting hairs a little bit. But I would say we except today to see more activity in the second half of ’10 then we expect to see in the first half of 2010. But I’m not disappointed with where we started here four weeks into the year.

Clay Moran - Benchmark Company

Okay. And then new builds. Can you talk a little bit about where that ended up in 2009? Any plans you have specifically for 2010? Does the shot clock running change anything? And then also, have you noticed any change in the return expectations in the industry for new builds, the initial return?

W. Benjamin Moreland

We have done builds. We’ll continue to do some. We’re pretty selective. As we’ve talked about before, we’re doing that with a partner who’s putting up initial capital in that respect with an option to purchase the sites on our part in the future based upon specific hurtle rates. Which are what I would say incentivizing us to maximize the performance of the sites. And we share in that profitability. So it’s a very efficient way for us to effectively capitalize the billed activity off balance sheet with not absolute obligation to acquire the sites but only an opportunist basis. And we market the sites and we bill them.

And we have seen activity there that we’re pleased with in 2009. Going forward we’d expect about the same level. Probably in the 100-150 site range per year. We’re very selective about the sites we build. We turn down a number of sites where we think the co-location opportunities if for no other reason just the timing makes the return requirement very challenging that we impose on ourselves.

And I would say it’s probably always going to be a fairly insignificant contributor even if – when and if we acquire these sites for our own account, it’ll be a fairly insignificant contribution because it’s small. But at the same time I’d say we’ve seen return requirements in the broader market get fairly competitive again. And we’ve seen some examples of where some (inaudible) are willing to commit capital on very, very low initial yield. And we’re going to watch very carefully.

Obviously we’re going to do what we can. Where we believe we can create value. And to the extent we can’t, then it just doesn’t make sense to proceed.

Along the same lines, through, I would add, we are remaining committed to the Das (ph) business. We’ve got a team of professionals that are working on that. We are pursuing a number of opportunities. We do see reasonable returns in that business. Again, it’ll be small. It won’t be a significant impact. But at the margin, as you think about allocating capital, to the extent you can allocate some capital at incrementally high returns. We’ll it’s certainly something we want to do. And it provides the capability in a service that we offer to customers that we think goes very well with the broader tower business.

So we are actively pursuing opportunities there. And are pleased with the systems we have on the air today.

Clay Moran - Benchmark Company

Okay. Thank you.

Jay Brown

And I think we maybe take one or two more. Okay.

Operator

Thank you. And our next question comes from the line of Michael Rollins with Citi Investment Research. Please go ahead.

Michael Rollins - Citi Investment Research

Just at the risk of being repetitive. I want to follow up on the straight line question. And basically I think one of the things you guys are known through a lot of years is just the depth of your disclosures as evidenced by even in the press release that you have out there over night. And I think the issue is when you look at the sequential revenue growth, can you normalize per one times that you guys have put out there. Sequential revenue growth in 3Q is 4.5%, 4Q is 2.3%, 1Q at the midpoint of guidance 70 basis points.

And full year ‘010 guidance at the midpoint is slightly – let me see if got this correct, I think about 7.5%. And investors try to fully reconcile back to cash revenue as they’ve done, I think, historically for this business model. Can you give us more disclosures, either today or will those disclosures be available in the 10K? Because I think what the opportunity is, is trying to think about all the qualitative things that were said on this call and cross the wireless industry. And thinking about how to specifically translate into cash revenue growth? Whether it’s for 2010, thinking about the exit rates for 2010. And so that’s basically the question. Can we get some more of those details, either today or in the future so that investors can better understand what the cash revenue trends are of the business. Thanks.

W. Benjamin Moreland

Yeah, Mike, thanks. I think we have tried to try to reconcile this number. I think we’ve realized that we had a great 2009. Frankly, much better than what we expected when we went into the year. The movement sequentially quarter to quarter though, when you look at 2009, there was nothing new to the tower business.

You can go back and look at our results in 2007 and 2008 and there are periods of time where the revenue growth sort of spikes to $9-$10 million in any given quarter. And then the next quarter it might be $1-$2. And it comes down to your looking at a business that’s producing a $1.6 billion of revenue a year. And trying to figure out an incremental delta of a million dollars, the timing of which is affected by numerous different things. Everything from the time at which a new license turns on, and the activity that our carriers be of turning up brand new market.

We’ve spent a lot of time, I think, over the course of the year talking about the launches in various markets throughout the year. And some of the timings of those launches and when licenses went on affect, the incremental steps, quarter to quarter.

As we look at 2010, it looks like, you’re correctly pointing out the sequential change is a little bit lower going into Q1, then what we say in some of the quarter in 2009. And we think that’s largely just back end loading of the timing.

So I think in the back half of the year the sequential changes in quarters looks closer to what we saw kind of in some of the sequential quarters in 2009.

I would say I think importantly, we always try to take this conversation from just talking about percentage revenue changes, to what does it really mean to the business. And we think the best measure of value in the business is that recurring cash flow per share. What has the business produced in terms of cash. Because ultimately that’s the amount that both we can invest on. And then longer term often times people think about the valuation in terms of what the dividend is going to be paid. And what is that on a per share basis. So we think that’s the best measure of value.

And if looking at the income statement or adjusted EBITDA gives anybody pause, I would encourage you to go to the cash flow statement and look at cash from operations and that cash from operations number as I mentioned earlier in the conversation is right on top of where we're reporting our recurring cash flow numbers. So whether we talk about this on cash from operating activities or talk about this in terms of recurring cash flow, I think you basically at the end of the day get to the same answer and I think we're still very disclosive.

I broke out sort of organic growth in acquisitions and then also giving segment reporting showing you exactly what's happening in the US business against what's happening in all of our international operations. You can see pretty clearly each of the markets that we're in, what percentage is coming from acquisitions and what's organic and what's coming from the escalation activities.

Operator

Thank you. Our next question comes from the line of Gray Powell with Wells Fargo Securities.

Gray Powell - Wells Fargo Securities

Hi, everyone. Thanks for taking my questions I just have a couple. I'm pretty sure you guys have already hit on this, I just want to make sure that I have it correct. Does your guidance for 2010 assume that leasing activity from carriers is the same better or lower than 2009 levels?

Jay Brown

It's about the same. It's a little bit higher, but again, backend loaded.

Gray Powell - Wells Fargo Securities

Okay, great. And then now that you guys have significantly reduced leverage, how should I think about your ability to invest in the business and the potential to supplement growth and free cash flow per share? And specifically like you mentioned earlier if you exclude the impact of refinancing debt in 2009, the absolute dollar amount of recurring free cash flow growth in 2010 is about 16%, I'm just trying to figure out how much doing things like buying back stock or buying towers could actually add to the per share growth rate longer term.

W. Benjamin Moreland

Great question. The simplest way to do that without getting into cash on the balance sheet that you currently have that's one time or the incremental cost of borrowing and what's that incremental positive spread against what you're buying versus what you're borrowing — the simplest way to think about it, Gray, is to say okay we'll call it $600 million of recurring cash flow generation out of the business which is what Jay was just referring to which also does track back to the cash from operation activities and the cash from operations.

The simplest way to think about that is literally to say okay just to be extreme and put the bookend on this, what if we spent all that buying shares, what would that shrink the share count and thereby obviously contribute to a total return? Or very similarly if you were to pay out a dividend of all of that amount at the implied dividend yield that we're currently trading at, that's somewhere in the 5%-6% range. So either way you do that math.

So you're very right to look at this because it's how we look at it and say okay what's the unlevered, using that term very loosely, what's the growth from operations, if you will, and this is about if you look at our guidance year over year it's about 16%, and then what would then be augmented on top of that through putting $500-$600 million to work in or around where we're currently trading or alternatively making an acquisition in and around the same multiple? And it's 500-600 basis points on top of that which is how over a number of years and we stopped talking about it last year because of the incremental step in interest expense that we had to suck down one time which was about $90 million which as we talked about now is in the run rate and behind us — but that's why my long-term goal is I would love to see us continue to be able to grow recurring cash flow per share in the range of 20% a year. I think that's a target that we should be able to achieve if we're smart about making investments and we execute at the operating level and it takes both and that's just kind of how we think about it and the way we get to the math that you were just asking about.

Gray Powell - Wells Fargo Securities

Okay great, that makes a lot of sense. And then this is just kind of following up on that topic just in terms of your investment discipline, like on any investment that you make whether it's buying stock, buying towers, buying back debt, what is the target time period for accretion to free cash flow per share?

W. Benjamin Moreland

Pretty quick. We don't have a lot of tolerance for dilution even in the short term.

Gray Powell - Wells Fargo Securities

Okay.

W. Benjamin Moreland

With that I think we've run over our time and I want to thank everybody for hanging with us. We had a lot of good questions. I appreciate your interest in listening to the fourth quarter and full year results and we will see you on the call next quarter. Thank you very much.

Operator

Ladies and gentlemen, this concludes the Crown Castle International Corporation fourth quarter 2009 conference call. If you'd like to listen to a replay of today's conference please dial 303-590-3030 or 1-800-406-7325 followed by a pass code of 4200189. We would like to thank you for your participation and you may now disconnect.

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