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FiberTower (NASDAQ:FTWR)

Q4 2010 Earnings Call

March 11, 2011 11:30 am ET

Executives

Kurt Van Wagenen - Chief Executive Officer, President and Director

Carolyn Capaccio - Vice President

Thomas Scott - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Secretary

Analysts

Gary Morman

Richard Prentiss - Raymond James & Associates, Inc.

Gerard Hallaren - JRPG

Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to the FiberTower's Fourth Quarter and Year-end 2010 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Friday, March 11, 2011. I would now like to turn the conference over to Carolyn Capaccio of Lippert/Heilshorn Associates. Please go ahead, Ma'am.

Carolyn Capaccio

Thank you, Brandy. Good morning, everyone. Thank you for joining us for FiberTower Corporation's 2010 Fourth Quarter Conference Call. Joining me today on the call are Kurt Van Wagenen, FiberTower's President and Chief Executive Officer; and Thomas Scott, Senior Vice President and Chief Financial Officer.

Today, Kurt will open the call with an overview of the quarter, Tom will follow with financial detail and Kurt will conclude with closing remarks and open the call for questions. Before we get underway, let me inform you that FiberTower issued a press release yesterday after the markets closed, which provides the details of the company's quarter financial operating results. The company also prepared a slide presentation for today's call. If you are not logged into the webcast and would like to view the slide presentation, you may do so at the Events and Presentations page in the Investors section of the company's website at www.fibertower.com. If you have any questions, please call Lippert/Heilshorn & Associates at 415-433-3777. Please note the information recorded on this call today speaks only as of today, March 11, 2011, and therefore you are advised that time-sensitive information may no longer be accurate at the time of any replay. Before we begin, I will review a Safe Harbor statement, which can be found on Slide 2 of the presentation.

Management's comments today will contain forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Information about the potential factors that could affect the company's results is available in the Risk Factors as updated in the company's SEC filings. Also please note that the company uses some metrics not in accordance with generally accepted accounting principles, commonly known as GAAP, to monitor the financial performance of its operation. Non-GAAP financial metrics should be viewed in addition to, and not as an alternative for, the reported financial results as determined in accordance with GAAP. Adjusted EBITDA is defined as net income or loss from operations before interest, taxes and depreciation and amortization, impairment and restructuring charges, stock-based compensation, gain on early extinguishment of debt, debt exchange expenses and other income or expense.

During the fourth quarter of 2010, FiberTower recorded revenue associated with an early termination liability or ETL of $329,000 bringing the total 2010 ETL to $1.3 million. As this ETL is not recurring revenue, management has adjusted measurement metrics including revenue and adjusted EBITDA throughout the call and the presentation to exclude the impact of ETL. Reconciliations can be found for this at the end of presentation.

It is now my pleasure to turn the call over to Kurt Van Wagenen, President & CEO of FiberTower. Kurt, please go ahead.

Kurt Van Wagenen

Thank you, Carolyn. Good morning, everyone, and thank you for joining our call. Yesterday, we announced fourth quarter results, as well as key elements of our strategy for 2011. We postponed our announcement by a week in order to finalize adjustments to our plan and complete cost reduction steps in light of the impact we anticipate to our financial results from the customer termination notice we recently announced. We will review all of this on today's call.

Let's begin with Slide 4. Our fourth quarter 2010 performance demonstrated the consistency of execution that we have built into our business, capping off a year of accomplishment for FiberTower. Year-over-year revenue growth continued to improve in Q4, and adjusted EBITDA improved from the positive level we achieved in Q3. We had another strong new bookings quarter in Q4, our best of the year, and our new business funnel remains healthy. We also continued to scale our hybrid network, deploying 106 new sites in Q4, surpassing the target of 100 that we announced on our last call.

Adding scale efficiently is the crux of our long-term growth and profitability objectives, and we are making good and consistent progress in this area. In all, we achieved the objectives we set for ourselves in 2010 as follows: We grew revenue and the mix of new sales bookings continues to be well diversified across our customers, market and types of service, which is a strong endorsement of our capabilities, product sets and the hybrid network architecture we used to meet our customers' evolving backhaul needs. We also matured our business processes, and we are consistently meeting our customer commitments related to on-time delivery of service and high-quality network performance. We met our financial objectives of being adjusted EBITDA positive, which we achieved as of July. And we grew scale by adding new sites and expanding our fiber footprint.

Additionally, we made progress on our technology and network development initiative as follows: During the quarter, we launched our all-Ethernet platform, as we evolve to a next-generation network that supports the growing need for Ethernet backhaul services across our customer base.

In January, we expanded our fiber footprint to a long-term dark fiber bank agreement with Zayo, further adding scale to serve demand for wireless backhaul. This agreement provides for immediate access to 2,500 fiber miles of dark fiber on a long-term basis and offers us connectivity to existing on-net sites and the potential to build to off-net sites with an option to lease additional fiber in the future.

In February, we announced our development together with BridgeWave Communications of an ultra-high capacity, multi-channel, reconfigurable radio or MCRR, specifically designed for our unique 24 GHz spectrum. This radio delivers full-duplex, 1 gigabit Ethernet transport at very low latencies and advanced Ethernet features that our carriers require. This radio is a key step forward for us, as it leverages our microwave assets that offer a cost-efficient backhaul solution comparable to our fiber-fed sites. Trials of this product exceeded expectations and the MCRR is planned for second half 2011 roll-out.

Moving on to Slide 5, I'll briefly discuss fourth quarter financial highlights. Fourth quarter 2010 revenue was $20.1 million, an increase of 20% from the fourth quarter last year. Revenue grew over 4% from the third quarter. Average monthly revenue per deployed site grew 15% from $1,789 in the fourth quarter of 2009 to $2,049. Our new sales to customers enabled us to maintain growth on this metric despite growing the number of deployed sites by 5% year-over-year. Q4 adjusted EBITDA of $945,000 grew sequentially and in 2010 improved $12.1 million. As anticipated, capital expenditures increased to $12.2 million in the fourth quarter of 2010 and with $32.5 million for the full year as we invested in network expansion and accelerated new site deployments. The majority of our 2010 capital expenditures were invested on- or near-net in order to increase density in our markets.

Let's move to Slide 6 and discuss fourth quarter operating highlights in more detail. We ended the fourth quarter with 6,400 billing customer locations. During Q4, bookings were the best of the year. In terms of the composition of new bookings in the quarter, approximately 68% of our sales bookings in the quarter were on-net, and for the year, on-net sales represented 77% of our total bookings. On-net bookings include both additional bandwidth to existing customers, as well as the addition of new customers on existing sites. Adding bandwidth and customers to existing sites leverages our invested capital for those sites and we continue to add on-net capacity relatively quickly with lower incremental costs.

Ethernet services accounted for approximately 56% of total fourth quarter sales bookings and were over 50% of our bookings for the year. As of the end of Q4, Ethernet represented approximately 20% of our total billing revenue, and we are seeing an accelerating migration from TDM to Ethernet backhaul services across our customer base, which we expect to continue. Our Collocation Rate remained slightly over two customers per site. We deployed 106 new sites in Q4, for a total of 159 in 2010. Of these 106 sites, we had a good mix of fiber-fed and microwave-fed sites, which validates our hybrid solution for addressing backhaul demand from our customers.

Now, let's move on to Slide 7 where I will discuss our 2011 priorities. We recently announced that we received an early termination notice from a customer. Customers make decisions to take down service from time to time as a normal part of their business. In this case, the termination resulted from circumstances specific to this one customer. To ensure we receive an adequate return on capital, we include in all of our contracts early termination liability provisions that enabled us to receive a lump sum payment when a customer cancels service before the end of the contract term. Nevertheless, we expect this termination to have a material impact on 2011 results, and we have adjusted our priorities accordingly.

The monthly billing revenue associated with these disconnections in circuits under review is approximately $344,000 and the early termination fees associated with this revenue are approximately $2.2 million. The monthly billing revenue I just mentioned represents approximately 45% of this customer's total billing revenue. We believe it is prudent to assume that we make the additional circuit terminations from this customer, which would also be subject to additional termination liability charges.

In light of this financial impact, we have taken immediate actions to reduce our costs, including a 10% headcount reduction. In 2011, we expect to remain adjusted EBITDA positive through these actions and careful cost management while maintaining the consistency of execution that we achieved in 2010. We are focusing our sales team on prioritizing those opportunities in our sales funnel that leverage our existing network. These opportunities allow us to deliver service faster to customers and provide quicker paybacks as opposed to building new network.

A main focus for 2011 is the prudent management of our cash balance and our capital outlays to ensure sufficient liquidity for the business. We have established a $10 million to $15 million capital program for 2011, which compares to $32.1 million in 2010. This year's program concentrates the capital outlays on meeting existing customer commitments, increasing density in key regions, supporting bandwidth growth at existing sites and maintenance on the network. Still, we have a very strong pipeline of new business and the wireless industry’s demand for backhaul infrastructure continuous to accelerate. We recognize the plan I have outlined for 2011 does not allow us to pursue all the backhaul growth opportunities we are seeing and that we need incremental funding to do so.

Let me assure you, we have been and will continue to explore alternatives to position the company to participate on a larger scale, and we are committed to finding a solution that we believe is in the best interest of our shareholders. Now, I'll turn the call to Tom for a review of our financials.

Thomas Scott

Thank you, Kurt, and good morning, everyone. I'll begin with a review of our financials on Slide 9.

Fourth quarter 2010 revenue grew 20% to $20.1 million, compared to $16.7 million last year. Our top line growth was driven primarily by selling additional capacity to current customers and by selling new services such as Ethernet. Fourth-quarter revenue was comprised of recurring, existing business, organic growth, new sold locations and from new billing sites. Cost of service revenue increased 11% to $17 million or 84% of revenue for the quarter ended December 31, 2010. This compares to $15.2 million or 91% of revenue last year.

Included in fourth quarter 2010, was a $2 million impairment charge related to unrecoverable construction in progress. Excluding this charge, cost of service revenue was approximately comparable to last year, resulting from our ability to leverage our cost structure. Sales and marketing expense decreased 5% to $1.1 million or 6% of revenue, compared to $1.2 million or 7% of revenue in the year-ago quarter.

General and administrative expense decreased 62% to $4.3 million or 21% of revenue, compared to $11.1 million or 66% of revenue a year ago. Last year's quarter included substantial professional fees associated with our debt restructuring activities, resulting in a large decrease in G&A expense quarter-over-quarter. Total operating expenses were $30.1 million for the fourth quarter 2010, compared to $34.4 million in the year-ago quarter. Interest expense decreased 68% or $6.9 million to $3.3 million in Q4 from $10.1 million a year ago. Again, this decrease reflects the impact of our debt restructuring activities.

Our fourth-quarter net loss was $12.8 million, compared to a net loss of $27.8 million in the fourth quarter 2009. Adjusted EBITDA for the quarter improved $3.2 million to $945,000 compared to a loss of $2.2 million the same period a year ago, and improved $253,000 from the third quarter of 2010. This represents incremental adjusted EBITDA margins of 93% from the fourth quarter of 2009 to the fourth quarter of 2010 and incremental adjusted EBITDA margins of 30% from the third quarter of 2010 to the fourth quarter of 2010.

Capital expenditures were $12.2 million, compared to $1.7 million in the fourth quarter of 2009, and $10.9 million, $6.5 million and $2.5 million in the third, second and first quarters of 2010, respectively. This planned increased in capital investment through the year was driven by success-based new site builds, as well as capacity upgrades through our current network, our buildup of Ethernet services provided to existing customers and the addition of new customer locations to existing sites.

All new sites were selected on a success basis with signed customer orders and according to our profitability criteria: to focus on maximizing revenue, margin and return on investment. Additionally, we increased our deployment of dark fiber in the quarter to reduce our recurring fiber cost and support new service to our current and new customers.

Turning to Slide 10. I'll briefly summarize our 2010 results compared to 2009. Revenues rose 18% to $74.8 million, compared to $63.2 million in 2009. Net loss for 2010 were $49.4 million, compared to net loss for 2009 of $2.1 million, which included the recognition of a gain of $98.2 million on the early extinguishment of debt. 2010 adjusted EBITDA loss improved $12.1 million to $1.2 million, compared to a loss of $13.3 million for 2009. 2010 incremental adjusted EBITDA margin was 105%.

Capitals expenditure for 2010 totaled $32.1 million, compared to $8.6 million in 2009, and reflects our investment in new sites and network growth to support increased bandwidth demand for our customers.

Turning to Slide 11. I'll review our quarterly cash flow and discuss our cash balance. During the fourth quarter of 2010, cash consumption was $9.8 million compared to $34.3 million in 2009. For the year, net cash generated by operations was $1.1 million, compared to a use of $18.5 million for 2009, improving over $19 million from the year-ago period. At the end of the fourth quarter, our consolidated unrestricted cash and cash equivalents was $21.3 million, compared to $31.2 million last quarter. As Kurt mentioned earlier, our capital plan for 2011 will be in the range of $10 million to $15 million, and will be focused on meeting customer commitments resulting from our strong sales in previous quarters.

Long-term outstanding debt, including accretion, as of December 31, 2010, was $164.8 million, comprised of $130.1 million in 9% Senior Secured Notes due 2016, and $34.7 million in 9% Convertible Senior Secured Notes due 2012. Our 2012 notes revert to Cash-Pay beginning with the next interest payment date of May 15, 2011.

Moving to Slide 12 to discuss our fourth-quarter site performance at the economic level. During the fourth quarter, market-level EBITDA margin expanded from 39% in the third quarter to 40% in the fourth quarter. This level includes contributions from new sites we deployed in the first, third and fourth quarters. As we have discussed previously, reaching positive adjusted EBITDA in 2010, hinged on delivering an excess of $2,000 in revenue per site, and we grew the figures sequentially in Q4 from Q3 despite the inclusion of new sites.

New sites initially contribute lower adjusted EBITDA margin affecting overall adjusted EBITDA margin in the early stages of new site deployment. But we do expect these sites to result in expanded adjusted EBITDA margins over time. Note that the recent contract terminations are expected to reduce our current average monthly revenue per site by approximately $100 per site.

Let me summarize by reiterating that we have sufficient cash on hand to fund our 2011 operations and our capital requirements. Since we received the customer termination notice that we recently reported, we have stress-tested our model across numerous scenarios to determine what degree we can remove cost from our operations without affecting customer service in order to best preserve liquidity. As a result, we have removed costs from our business in order to address the revenue reduction and allow us to maintain positive adjusted EBITDA. By continuing to grow the top line and managed costs, we will further offset this impact to monthly revenue.

We also note -- we have no debt maturity this year, with our first debt maturity not occurring until late 2012. Given the current bandwidth demand we are seeing from our customers, our own strong sales pipeline and numerous revenue opportunities at hand, we're evaluating financing options that will enable us to pursue these growth prospects. With that, I'll return the call to Kurt for final remarks.

Kurt Van Wagenen

Thanks, Tom. In closing, 2010 was an important year of growth and operational performance for FiberTower. We built scale in our network footprint, made significant progress in evolving our technology and achieved our financial objectives. We have the financial liquidity to support our business this year, and we'll continue to make disciplined investment that are designed to capture the specific bandwidth needs of our wireless carrier customers. That concludes our prepared remarks. Operator, we are ready to begin the Q&A session.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Gerard Hallaren with Avian Securities.

Gerard Hallaren - JRPG

In terms of trying to understand your business better, could you either present a framework or give us a sense of what is the bandwidth consumption at one of these sites? And what is the potential bandwidth consumption? Or what is the capacity? Perhaps that's a better way to see it -- say it.

Thomas Scott

Hi, Gerard, this is Tom. From a bandwidth consumption that the FiberTowers experiencing at its sites today, we're seeing approximately 20 megabits of capacity which include the T1s, as well as Ethernet traffic on the average site as of the fourth quarter. I think the best...

Gerard Hallaren - JRPG

20 megabits?

Thomas Scott

20 megabits, correct per site.

Gerard Hallaren - JRPG

Is that your average rate or is that your capacity?

Thomas Scott

That is our average provided rate today. In terms of what we're seeing from a go-forward basis, we are selling mostly Ethernet products as Kurt noted in his script. And we're seeing those incremental sales really between 20 and 50 megabits of capacity to a variety of carriers. As we sort of evaluate where we think bandwidths could be going over the next few years, we're planning for a world where we're migrating to 200-to-300 megabits of capacity at a site over the next three-to-five years.

Kurt Van Wagenen

It's probably also important to note that as we've mentioned in the prepared remarks, we can add capacity at a site relatively quickly. And with high margins, those are, our most -- these are our highest margin revenue growth opportunities are adding capacity at existing sites and typically are in excess of 70% flow-through margins.

Gerard Hallaren - JRPG

Let me make sure I understand what you said. Your average customer is taking about 20 megabits a second from the site. Much of your new business is in the range of 20-to-50 megabits. And right now, your sites are providing 20 -- I'm sorry, 200-to-300 megabits. And then you can flex that up without a great deal of difficulty or expense.

Thomas Scott

Let me repeat some of that. You got most of it. From a carried traffic perspective, FiberTower is supplying about 20 megabits of capacity to the average site in the FiberTower network. New sales to customers are in excess of that, in the 20-to-50 megabit range, and is typically an Ethernet product. With respect to the available capacity at the average FiberTower site, it really depends. But we are planning and continuing to add capacity to flex up forwards 200 to 300 megabits of capacity over the next few years. So it's kind of Kurt’s point, there will be incremental capital that is going into the network to support those capacity upgrades. But it's something that we add as the customer is re-hitting those trigger points to add incremental capacity for customers.

Gerard Hallaren - JRPG

So when you are flexing up, are you adding something on the order of, like say, 20 megabits or 40 megabits?

Thomas Scott

Unfortunately, the answer is: it completely depends. We are -- in some cases, we are building fiber to sites where you are creating a significant amount of capacity. In other cases, we are installing incremental radio links where that is completely a function of the bandwidth of the radio that we install.

Gerard Hallaren - JRPG

Yes. All right, thank you very much. By the way, the radio that you're selling that you developed with BridgeWave, is that yours to sell or is that yours to install and it's been made to your spec?

Thomas Scott

It's ours to install in our network. It’s proprietary to our 24 GHz license spectrum. We'll use it in our network to deploy higher capacity microwave solutions at our sites to meet our customer requirements. But we also do have an agreement with BridgeWave which allows them to resell that, or to sell radios as well to others, leveraging our 24 GHz spectrum.

Operator

[Operator Instructions] And our next question comes from the line of Ric Prentiss with Raymond James Financial.

Richard Prentiss - Raymond James & Associates, Inc.

A couple of questions. Just finished up a bunch of meetings with different carriers in this last week, and as we get ready for the CTIA show, it seems like a lot of carriers are obviously focused on backhaul. But it also seemed like more were willing to talk about microwave versus fiber than we’d heard previously. As you look at the appetite out there, what would you say kind of the carrier preference is between a microwave solution and a fiber solution?

Kurt Van Wagenen

Yes, Ric, it's a great observation. It's an observation that we've noticed as well over, really, the last 12 months. If we think about 2009, there was a very strong reference. If you think about what was going on in 2009 in terms of providing backhaul solutions to the major carriers. For the most part, the carriers who were aggressive about finding long-term backhaul solutions for their Next GEN networks in 2009 were really focused on the Tier 1 markets and somewhat the Tier 2 markets. That process has evolved to smaller markets, the Tier 3s and even some of the Tier 4s now. So what we saw after the course of 2010 was definitely a greater appreciation for the benefits of a hybrid network and the microwave component of that network to reach sites that are just not either physically feasible or economically feasible to reach with a fiber solution. We do think that that's also been one of the key reasons why we've had such success in our sales performance in 2010. That we do offer that hybrid solution. And in many cases now, we're getting customers asking for us to provide solutions to sites without actually even asking the question about whether we'll serve them with fiber or microwave. So we have certainly noticed that shift as well.

Richard Prentiss - Raymond James & Associates, Inc.

It also feels like 4G, LTE flavor is happening faster than people might have thought three, six, nine months ago, which is increasing the appetite for even more backhaul. You mentioned, first, do you agree with that kind of thought? And then second, when you said you would want funding to pursue additional backhaul, what sort of scale are we looking at as far as you might be interested in trying to draw down somehow?

Kurt Van Wagenen

Okay, Rick. Let me answer the first question and I'll let Tom talk a little bit about funding. We absolutely are seeing kind of the 4G deployment happening at an accelerating pace, and that certainly happened through 2010, and with our sales funnel, which is very healthy in 2011, a lot of it is focused on LTE deployments, 4G deployments and several of these customer opportunities that we won in 2010 we announced publicly, including supporting Metro PCS' LTE deployment, Verizon's LTE deployment in Ohio. But we are certainly seeing, a rapid, a more rapid deployment of these next GEN networks. And one of the impacts in terms of backhaul is the greater appetite for Ethernet of provided backhaul services, which we've seen accelerate as well and which I mentioned in my prepared remarks, over 50% of our bookings were Ethernet services in 2010. And it was really just an immaterial amount of our bookings in 2009.

Thomas Scott

Rick, on your last question on financing. We're taking a very incremental approach to evaluating financing alternatives for the business. 2010 was really about driving scale in the network, getting the business to EBITDA positive and taking those sold customer commitments and delivering against the obligations to those customers. We're really finishing that process here in the first half of 2011, and are looking at incremental financing options that will enable us to drive down our cost of capital and continue investing in projects such as the ones Kurt was describing.

Operator

[Operator Instructions] Our next question comes from the line of Gary Morman with Alpine Associates.

Gary Morman

Kind of along the lines of the previous question or talking about 4G may be coming a little quicker than people expected. I assume you've seen -- there's been various analysts reports talking about a rumored, or a potential network hosting deal between Sprint and Light Squared has been mentioned in the couple of these reports. So two questions. One, I assume your relationship with Sprint is good. And then two, if that kind of thing were to happen, I mean, could that potentially be sort of a boon to you guys?

Kurt Van Wagenen

Sure, Gary, let me address at least what I can of that question, because we don't really address rumors and we certainly are not privy to discussions that various carriers might have amongst themselves. What I can say is that Sprint is one of our largest customers, a very good customer for us. We tend to be bullish on any kind of arrangements that support -- or actually that we believe are going to drive demand for backhaul going forward. So as carriers – our belief is as carriers establish relationships, whether they’re hosting or other, that allow them to deploy more 4G-related devices that require greater bandwidth and particularly backhaul bandwidth that, that tends to be good for us, good for the industry and good for us as a business, particularly since Sprint is such a large customer of ours and an important customer.

Operator

[Operator Instructions] And our next question is a follow-up question from the line of Gary Morman with Alpine Associates.

Gary Morman

I have a question regarding the customer termination that you guys had announced prior. I know you've stated, you’ve basically lost about 45% of this customer’s revenue, and that they are -- I think you've stated they're reviewing their other services that they're receiving from you guys. Now, in your sort of cost-cutting plans for this year, are you sort of assuming that they're going to terminate the rest of the business or is that a big unknown? Is there anything -- I guess, also, is there anything in particular about why they terminated that concerns you?

Kurt Van Wagenen

So let me first comment that we do not believe that these terminations had anything to do with the quality of our service and they were very much specific to this customer. We can't speculate on what they may or may not terminate. I think what we said in the prepared remarks is that it's just prudent for us to stress-test our 2011 plan, as Tom mentioned, under various scenarios to ensure that we can maintain liquidity. And so we’ve certainly done that in various scenarios and do believe that we can maintain liquidity through 2011 under various scenarios. I think it is also important to note that we took a headcount reduction to offset some of the impact, actually, really all of the impact at this point, but we do not believe that we can cost-cut our way to profitability. And we are not going to cost-cut to the extent that we sacrifice our ability to meet customer commitments or to provide a high-quality service to our customers. And we also -- I think if we also factor in that our sales funnel is healthy. We had a great 2010 from a sales perspective. We're still fulfilling commitments that we sold in 2010 that allowed new revenue in 2011. That growth is an important part of managing, what we consider from time to time a normal part of a customer’s business which does certainly include terminations at times.

Operator

Our next question comes from the line of Mark Holland [ph] with Salomon [ph] Investments .

Unidentified Analyst

To better gauge the backhaul market, for example, like Verizon and AT&T Wireless, they're doing some on their own backhauling of their LTE circuits themselves. Do you have any feel on what percentage these companies, of the whole -- of the total 100% backhaul market, what percentage they're backhauling versus how much is opportunity for you guys?

Kurt Van Wagenen

We don't have a split in terms of exactly how much they're hauling. The thing that I would note is within, for example, AT&T parent territory, we have historically seen very little, if any business, from AT&T Mobility. That same fact is true from Verizon Wireless within parent territory. So when you look at what we are typically providing, we are typically providing services to the – that the non-LEC-based carriers across all of our 13 markets, and providing AT&T service within non-AT&T parent territory and vice versa for Verizon Wireless. From a market share's split-down, those two firms basically split the country in two from a POPs perspective. So it does take about half the backhaul market away. We would note that given our size, there is ample growth opportunities for us to expand the number of sites that we have constructed. We're at roughly 3,200 sites in our network today with hundreds of thousands of sites available for the business. And we also have the ability to continue selling those incremental customers at our existing sites, as well as incremental bandwidth.

Operator

And at this time, there are no further questions. I like to turn the call back over to management for any closing comments.

Kurt Van Wagenen

Thank you, operator, and thank you, everyone, for joining our call today. We look forward to speaking with you again on our first quarter call. That concludes the call.

Operator

Thank you. Ladies and gentlemen, this concludes the FiberTower Fourth Quarter and Year-end 2010 Earnings Conference Call. You may now disconnect. Thank you for using AT&T Conferencing.

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