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SBA Communications Corp. (NASDAQ:SBAC)

Q2 2007 Earnings Call

August 3, 2007, 10:00 AM ET

Executives

Pamela J. Kline - VP - Capital Markets

Anthony J. Macaione - Sr. VP and CFO

Kurt Bagwell - Sr. VP and COO

Jeffrey A. Stoops - President and CEO

Analysts

Jonathan Atkin - RBC Capital Markets

Clayton Moran - Stanford Financial

Gray Powell - Wachovia Securities

Ric Prentiss - Raymond James

Brett Feldman - Lehman Brothers

TRANSCRIPT SPONSOR
Wall Street Breakfast

Operator

Ladies and gentlemen, thank you for standing by and welcome to SBA Communications' Second Quarter Results Conference Call. At this time, all phone participants are in a listen-only mode. Later, there will be an opportunity for your question; instructions will be given at that time. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to Vice President of Capital Markets, Pam Kline. Please go ahead.

Pamela J. Kline - Vice President - Capital Markets

Thank you for joining us this morning for SBA's second quarter 2007 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer; Kurt Bagwell, our Chief Operating Officer; and Tony Macaione, our Chief Financial Officer.

Before we get started, I need to get the standard SEC disclosure out. Some of the information we will discuss on this call is forward-looking, including but not limited to any guidance for 2007 and beyond. These forward-looking statements maybe affected by the risks and uncertainties in our business. Everything we say here today is qualified in its entirety by cautionary statements and risk factors set forth in last night's press release and our SEC filings, particularly those set forth in our Form 10-K for the fiscal year ended December 31st 2006 and our quarterly reports on Form 10-Q, which documents are publicly available.

These factors and others have affected historical results, may affect future results and may cause future results to differ materially from those expressed in any forward-looking statement we may make. Our statements are as of today, August 3rd and we have no obligation to update any forward-looking statement we may make.

Our comments will include non-GAAP financial measures as defined in Regulation G. The reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and the other information required by Regulation G is included in our earnings press release which has been posted on our website, www.sbasite.com.

Tony, would you comment on the second quarter results?

Anthony J. Macaione - Senior Vice President and Chief Financial Officer

Thanks Pam and good morning everyone. Our second quarter results were very solid and in that we exceeded the high end of our guidance on leasing revenue, tower cash flow, adjusted EBITDA and equity free cash flow. We had a very straight forward quarter with no material unusual or one-time items.

Total revenues were $100.3 million, up 14.8% over the year earlier period. Site leasing revenue for the second quarter was $79.6 million, up 27.7% over the second quarter 2006, driven by strong organic growth and acquisitions. Site leasing segment operating profit was $58.4 million, up 29.2% over the year early period. Site leasing contributed 95.6% of our total segment operating profit in the second quarter.

Tower cash flow for the second quarter of 2007 was $58 million, a 26.6% increase over a year earlier period. Tower cash flow margin was 75%, approximately same as the year earlier period.

Our Services revenue was 20.7 million compared to 25.1 million in the year earlier period, reflecting the impact of slower activity from AT&T in the second quarter compared to the year earlier period, when AT&T was a much more active customer for us. Profitability in the segment improved materially as Services segment operating profit was $2.7 million compared $2.1 million in the year earlier period. Our Services segment operating profit margins were 13% in second quarter, a strong improvement compared to the 8.2% in the year earlier period.

SG&A expenses for the second quarter were $11.6 million and $9.5 million on a cash basis when you exclude non-cash compensation charge of $2.1 million. This compares SG&A expenses of $11.5 million in the year earlier period or $8.7 million on a cash basis excluding non-cash compensation charges of $1.5 million and one-time AT&T integration cost of $1.3 million. We expect quarterly SG&A expenses to stay at these levels for the remainder of 2007.

Our net loss is $15.1 million compared to a loss of $75.6 million in the year earlier period. Net loss per share for the quarter was $0.15. Our weighted average shares outstanding for the quarter were 103.2 million. Adjusted EBITDA, which excludes certain items such as non-cash leasing revenues and ground lease expense and non-cash compensation, was $51.5 million in the second quarter, which was up 30.5% over the year earlier period. Adjusted EBITDA margin was 52.5%, up from 45.8% margin in the year earlier period.

Once again, equity free cash flow increased materially in the quarter, reflecting strong EBITDA growth, low weighted average cost of debt and stable non-discretionary capital expenditures. Equity free cash flow for the current period was $29 million, an increase of 76.7% over the year earlier period. Equity free cash flow per share increased 64.7% to $0.28 per share in the coming period, up from $0.17 per share in the year earlier period.

During the quarter we acquired 68 towers, built 15 callers and ended the quarter with 5783 towers owned and the right to manage over 5600 additional all substantial communication sites.

Cash capital expenditures in the second quarter was $51.4 million. About which we spent $1.6 million on maintenance tower CapEx, $1 million on augmentations and rebuilds and $200,000 on general quarter CapEx. We also spent $43.9 million of cash and acquisitions, ground lease purchases and earn outs and $4.7 million on new tower builds and new build work-in-process.

With respect to the land underneath our towers, we spent in total 11.7 million in cash to buy land and lease and to extent certain ground lease terms. Our ground lease purchase program is going extremely well, and we are significantly ahead of plan. And at this point, I want to turn things over to Pam to provide an update on our capital structure.

Pamela J. Kline - Vice President - Capital Markets

Thanks Tony. The second quarter was quite a one first us in the capital markets. SBA ended the second quarter with $1.555 billion in the commercial mortgage-backed pass-through certificates outstanding, 315 million of the 0.375% convertible senior notes, $228.6 million of cash, restricted cash and short-term investments and net debt of $1.676 billion. We expected our cash balances combined with our growing cash flows from operations will be more than sufficient to meet our capital expenditure needs through the end of the year, even with our strong acquisition backlog.

We did not repurchase any shares of our common stock in the second quarter. Our net debt to annualized adjusted EBITDA leverage ratio was 2.1 times at June 30th 2007. All of our debt is fixed rate with a weighted average cash coupon of 4.9%.

Our cash interest coverage ratio from adjusted EBITDA to net cash interest was very strong, 2.6 times compared to 2.0 times in the year earlier period. Now, Kurt would you please provide an update on operations.

Kurt Bagwell - Senior Vice President and Chief Operating Officer

Thanks Pam and good morning. As you can see by our numbers, we're very pleased with Q2 results and our performance. Revenues and margins were strong. Costs were in line or better than expectations. We continue to steadily grow our asset base and we finished the quarter with strong backlog.

Our customer base overall remains active. History continues to repeat itself and at each quarter some carriers were slowing down a program and planning for the next, some are picking up activity and some just steadily deploy. Overall, the organic leasing activity in Q2 was very high, as we had our best growth lease up quarter per tower in a year and signed more new co-location tenants than at any time in the last 5 years.

Our customers continue to add to and refine our networks to produce high quality service for voice, data and video. Continued heavy subscriber increases and subscriber minutes of use increases are also driving the action. There is intense competition between the carriers to improve their networks in an effort to attract more users and reduce their churn.

In the second quarter, we saw good activity from Verizon, MetroPCS, T-Mobile, Cricket and Clearwire. It's expected that Sprint Nextel, AT&T and T-Mobile will pick up in the second half, we are just starting to see signs of that activity for both new leases and amendments to existing leases.

In Q2, 83% of the new leasing business signed on our tower was derived from new tenant agreement, while 17% came from amendments to existing agreement. This is a higher mix of new tenant agreement than we obtained in the recent past, reflecting more geographic expansion, new carriers entering markets for the first time and slightly left overlay work. We expect the overlay amendment activity to be higher in the second half of 2007 in terms of total dollars signed.

93% of the new revenue signed on our towers in the quarter came from telephony and other major broadband carriers.

Rental rate for new tenant leases remain solid. An average tenant rents across our entire portfolio increased yet again to $1757 per month, up from $1753 at the end of the first quarter. At the end of the quarter, we had 14,212 time leases, representing an average of 2.5 tenants per tower. We expect this pattern of increasing average monthly rent to continue each quarter.

Same tower year-over-year revenue growth on the towers we owned for more than a full year at June 30 was 10.5% net of churn and 12.2% excluding Cingular AT&T churn, which we view is one-time in nature and different from ordinary churns. Same tower cash flow growth was 13.5% net of churn for the same period and 15.2% excluding Cingular AT&T churn.

Based on the second quarter results of our peers, our organic growth rate once again led our industry and reflect the high quality and desirability of our towers. We are doing a great job on minimizing the cost associated with our tower portfolio, resulting from both the hard work of our employees and the high quality of our assets. We are the industry leader in low risk maintenance and augmentation costs per tower, which is a direct result of the fact that we have compared to our peers the highest percentage of towers on our portfolio built specifically for the independent tower ownership business.

On the asset growth front, we purchased 68 towers and build 15 more in Q2, bringing our total own tower base to 5783. We've purchased an even greater numbers of towers already this quarter; we have a strong acquisition backlog. We expect the new build activity to continue to grow each quarter through out the rest of the year. On both class of new assets, the subsequent leasing activities has been very strong, we plan to continue to push hard with our plan of growing our asset base in a steady high quality manner.

In the Services segment of our business, Q2 revenue was at $20.7 million and segment operating profit was $2.7 million or 13%. Q2 revenue was down 17% from the year ago quarter, the segment operating profit was up 31%. We are very pleased with our gains and profitability in the segment as we focus on profits over volumes. Forward services revenue was due primarily to reduced bookings from AT&T which historically has been one of our top 2 services customers. It would be a mistake for people to misconstrue our services revenue as a good indicator for our leasing business, as our services business is always much more relied on one or 2 customers in any given quarter.

Other carriers that we don't perform as much, services business were extremely busy as evidenced by our leasing results and increased leasing guidance. AT&T was not as busy in the second quarter, but we are starting to see AT&T become more active. We continue to anticipate this year will be a more traditional year for services, with each classic second quarter growing versus the previous one.

Overall, our operations at SBA continue to be strong and we believe 2007 will be a solid year for the industry and especially for our company, as our clients continue to expand their networks.

At this point, I'll turn it over to Jeff.

Jeffrey A. Stoops - President and Chief Executive Officer

Thanks Kurt and good morning everyone. We had another very strong quarter at SBA, meeting or exceeding the high end of our guidance and exceeding consensus estimates for leasing revenue, adjusted EBITDA and equity free cash flow. I'm going to keep my comments brief because our strong results speak for themselves particularly, our organic growth rate of substantial growth in equity free cash flow per share.

All in all, we had a very good first half of the year. We believe that the second half will be even better. We continue to operate in a very favorable customer demand environment. As we have discussed, we expected AT&T and T-Mobile will be more active in the second half leasing power space than they were in the first half and that all the other carriers will remain at least as active as they were in the first half of the year. Our leasing and services backlog support our expectation and we're starting to see increased activity in the field.

The operating results of our wireless carrier customers were once again good and all major wireless providers have publicly confirmed plan to invest material sums in their wireless networks. Last couple of months have been very active in the wireless business, including the announcement of a number of acquisitions and partnerships involving our customers. We view the acquisitions of the Royal carriers as good news for our industry as we expect AT&T and Verizon to roll out their full suite of wireless service and products to these markets overtime.

Or perhaps the most important to us is the announcement from Sprint and Clearwire of their partnership to share one nationwide WiMAX network. We view this announcement as increasing the likelihood of development of a nationwide WiMAX network, while it doesn't mean that Sprint and Clearwire will probably not both build out the same 4G market at least at the same time or initially, we always view that prospect is some what speculative and certainly not something we have accounted on our platform. We continue to be very active with both Sprint and Clearwire on developing 4G networks and expect to stay active.

The upcoming 700 MHz Auction is also capturing a great deal of attention. While we can't predict the winners, the amount of attention the auction is getting and the number of parties interested indicates to us that the auction will be successful and the spectrum developed. We expect our industry will materially benefit from the 700 MHz Auction particularly from the accelerated build out requirements. When you put all these factors together, you have an environment that we expect will continue to produce very strong organic growth for the foreseeable future. Our organic growth rate have been very strong and we expect to continue to produce strong double-digit organic revenue growth going forward.

With our strong organic growth and our expectation that it will stay strong for the foreseeable future, we have a continued interest in growing our tower portfolio with high quality assets. We are having very good success in that regard. We have a significant number of towers under contract to acquire and are actively pursuing additional opportunities. We are also continuing to build towers and buy the land under our towers. We continue to focus on acquiring towers that on average has fewer tenants per tower than our current portfolio and adds good or better growth prospects at acquisition prices that we believe will in the long term produce returns materially above our cost of capital.

We are staying disciplined and have chosen not to pursue a number of opportunities where we did not think we could produce our desired returns. Having said that however, we are well ahead of where I thought we would be year-to-date on the number of quality towers we have acquired or have under contract to acquire. I'm very confident that we will meet the high end of our goal of expanding our tower portfolio by 5 to 10% this year of quality assets.

We have funded these acquisitions primarily with cash, but we've also used some stock because it was either required by the seller or we chose to conserve cash for other acquisition opportunities that we know or expect will require cash. In every case where we issued stock, the transaction was immediately accretive to equity free cash flow per share. We do not repurchase any shares of our stock in the second quarter, as we continue to review a number of additional acquisition opportunities out there that we believe would be better investments for our shareholders.

If those acquisition opportunities do not work out for us, we continue to have Board authorization in place to repurchase an additional 2.8 million shares from time-to-time through December 31, 2007. We feel great about the rest of the year. We've increased the midpoint of our full year guidance for a number of metrics reflecting our strong first half of the year results and our expectations for an even stronger second half. We are particularly excited about our expectations for continued material growth in equity free cash flow per share.

SBA is currently in a sweet spot for equity free cash flow per share growth as evidence by our 65% year-over-year growth and 22% sequential quarterly growth. We expect strong growth in equity free cash flow per share to continue. I believe 2007 is shaping up to be another very good year for SBA and we look forward to reporting future results. And Dale, at this time, we are ready for questions.

Question And Answer

Operator

[Operator Instructions]. We'll go to Jonathan Atkin with RBC Capital Markets. Please go ahead.

Jonathan Atkin - RBC Capital Markets

Yes, good morning. Couple of questions; one, I noticed your build guidance was lowered by 20 towers for the year and was that driven by more M&A than you thought or just zoning issues, what's kind of driving that? And then in terms of the M&A activity, the 68 towers in 2Q in the 99, so far in 3Q. What's the typical, any multiple transaction side, in terms of number of towers, capacity of the assets reach into the country. Can you give us a kind of a profile of the towers that have been acquiring recently?

Jeffrey A. Stoops - President and Chief Executive Officer

Yeah, on the fist question Jonathan, it's not really... because the new build number is not caused by M&A as we have plenty of capital to do both. It continues to be driven by difficult operating environment where zoning and having the right first tenant on the tower upfront before we build it continues to be the gaining issues in our ability to produce more volume. So, it's all about operational issues and having the things in place that we require to have in place before we build the tower. But we're working hard at it and as Kurt said, expect to continue to wrap that up as we move from quarter-to-quarter. What we're buying actually varies quite a bit from a single-tower transaction to the largest we have on the contract is probably 60 towers and it varies on the multiple depending on the maturity of the tower. We're paying anywhere from 13 times tower cash flow for more mature assets to 20 times tower cash flow for assets that are essentially new builds. I would say the average is probably around 17 times type tower cash flow multiple run rate on day one, and I would guess 1.5 tenants per cover on average which is not only accretive to our existing valuation, but it also we think offers a better growth profile... I mean our existing growth profile is great but at 2.52 tenants buying towers that are below that which we believe obviously be as good as our portfolio growth profile and probably will accelerate given the difference in starting tenants. So we are extremely pleased with what we are being able to accumulate out there in the acquisition market and it's really a testament to our hard work and the fact that we've been in this business for ten years and we do have a great network out there and we are prepared to buy good towers one at a time, if it makes sense to do so.

Jonathan Atkin - RBC Capital Markets

Thanks. And then in terms of services margins, what's been kind of driving some of the increase there?

Anthony J. Macaione - Senior Vice President and Chief Financial Officer

Just at a price point, Jonathan in general on some of the work we've been pretty selective with that and part of the revenue shift, we were doing very well our site development services which is a higher margin business than our construction services, it's a lot of volume business but a higher margin and it's more on the front end of the carrier deployment, so that's up quite a bit year-over-year.

Jonathan Atkin - RBC Capital Markets

And then finally, I think you've been in the market for a fairly senior operations person can you fill us in on any management changes?

Jeffrey A. Stoops - President and Chief Executive Officer

We just hired a new Vice President to head up our new build efforts so, Gary Lervine [ph]. And we have that person started Monday and to head a well known option we are expecting some good things.

Jonathan Atkin - RBC Capital Markets

Thank you.

Operator

We got to Clay Moran with Stanford Group. Please go ahead.

Clayton Moran - Stanford Financial

Good morning. Can you talk a little bit about the factors that has enabled the surge in tower buys, seems clearly could be an acceleration in the rate there and is this pace sustainable or is to how long is this pace sustainable and then just do you foresee a time when the opportunity to acquire towers in the U.S. close down such that you would start to look overseas?

Jeffrey A. Stoops - President and Chief Executive Officer

What's sustaining... what's creating the dynamic environment today Clay is the many respect the same factors that have made it competitive on the new build side. There are lot of very entrepreneurial people who've been around this industry for years, who were out there developing towers on their own, new builds 1, 2, 5, 10 at a time. And their goal in life is to get them developed, get a tenant or two on them and then sell them to folks like us. They don't have the long term capital structure in place that allows them to hold those assets. They can build them at what is a good price for them, sell them at what they think is a good price and we can buy them at what we think is the great price for us going forward, so that's the dynamic there. There is couple of different private equity folks back folks out there who have made the decision to sell for reasons that were unique to their own private equity funds, whether its timing or raising a new fund, so there exists a lot of different factors out there that are pretty unique to each individual seller, but when you added all up, its allowed us to have a great pool of opportunities. I think a lot of the reasons that I've just described will continue to play themselves out for the foreseeable future. A number of towers have been built over the last couple of years by people other than the big three tower companies. Those will be people who would be looking to monetize those overtime, so we feel pretty good about it. I don't know if we'll get 10% every year. We're pretty confident we're going to get it this year and our goal for next year would be a similar 5-10% portfolio growth, feel pretty good about that. But after that the crystal ball gets a little more cloudy.

At some point I would think there maybe a reduction in the opportunities. We're going to test that little bit but we really think that our best value creation continues to occur here in the United States. But before we would ever reach the point where we would just come to you and say, look we can't run the company anymore. We would certainly look internationally. I do fully expect in the future to do that, but its not something that we need to do today to deploy the capital that we wanted to deploy and we got plenty of opportunities right here in the U.S.

Clayton Moran - Stanford Financial

Okay. Is there any change competitively in the U.S. M&A market?

Jeffrey A. Stoops - President and Chief Executive Officer

It's a little bit more competitive. I mean based on the answer I gave to Jonathan, probably last year, a year ago the answer would have been, our average whose maybe 15 times to 16 times and now it is 17 times, although we view the lease up environment today is better than it would have been a year ago, so we are extremely happy to be getting the quality assets that we're getting ahead of what we continue to believe would be a lot of lease up activity over the next couple of years. So in that respect maybe it's a little bit more competitive, but the number of players out there who are competing with us and who they are and what their financial resources are, that really hasn't changed that much.

Clayton Moran - Stanford Financial

Okay thank you.

Operator

And we'll go Gray Powell with Wachovia. Please go ahead.

Gray Powell - Wachovia Securities

Good morning. Thanks for taking the questions. I just had two quick ones. In terms of new entrance such as Leap Wireless, MetroPCS and Clearwire, just generally speaking how far advanced a market launch you typically see them putting equipment on towers. And then looking forward, what do you expect to be the bigger components of incremental demand; traditional spinning from the big 4 or the impact of emerging carriers?

Kurt Bagwell - Senior Vice President and Chief Operating Officer

Greg, this is Kurt. I'll take the first one. Yes, typically I would say 6 to 9 months they are putting equipment on some of the first tower that they've leased. They will put equipment on some of the last towers that are included in the launch right up until a couple of weeks before their launch. But they've got to get started on the market launch 6 to 9 months in advance for deploying some of that equipment.

Jeffrey A. Stoops - President and Chief Executive Officer

And on the second, Gray, a year ago it was more heavily tilted towards the traditional big 4 and we continued to think that they will still be the predominant source. I mean T-Mobile has a lot of work to do and others will continue to invest in their network but this year the contribution from the emerging carriers and I assume in that category you'd define Leap and Metro and Clearwire, those guys have contributed a higher proportion of our incremental revenue growth than they historically have and we would expect that to continue, but if we had to obviously weigh one category as where the biggest number will come from, it's... we think its till going to be the traditional big four.

Gray Powell - Wachovia Securities

Okay. And then just as on a different subject. As you look at your growth in free cash flow compared to the opportunities to reinvest in your business, do you think that you're going to continue to focus cash entirely on growing the portfolio or is there a chance sometime maybe 12 or 18 months for more meaningful share repurchase program?

Jeffrey A. Stoops - President and Chief Executive Officer

We always have the opportunity to be a share repurchaser and we will be a share repurchaser at the point in time that I think that's a better use of our capital than continuing to add high growth assets. So, I mean, that's the heart of our strategy right now. We always have share repurchases ahead of us, but we are out building our portfolio today with quality assets ahead of what we think will be a very high growth period.

Gray Powell - Wachovia Securities

Okay, great. Thank you very much.

Operator

And we'll go to Ric Prentiss with Raymond James. Please go ahead.

Ric Prentiss - Raymond James

Thanks. Good morning guys. Couple of questions for you; first, Jeff, you said one of the exciting parts of your story which is the growth in the portfolio of 5 to 10% a year. What are your thoughts about going elephant hunting? I mean, there is T-Mobile folk out there that has I guess about 5600 towers. What are your thoughts about the big tower portfolios? And then another question, Sprint and Clearwire were talking about obviously exciting to getting those networks build. But also the possibility of some infrastructure sharing within markets, Clearwire maybe collocating its front side. What's your view on that please?

Jeffrey A. Stoops - President and Chief Executive Officer

Well in the first topic, I mean we would approach any opportunity Ric kind of revised wide open; we did a big deal last year which worked out very well for us. We don't view any deal as a must-have because of any strategic reason, I mean we're fine besides we are, but it's all about growth that accelerates growth and equity free cash flow per share and if we can do it be over does that we're interested. If the deal can't be done on terms that would do that, then we're not. AIC is a great example of the deal that really worked well for us in growth and equity free cash flow per share. Yes, we would be happy to look at a bigger deal on the right financial terms. We look at them one at a time or there on us. In terms of Clearwire and Sprint, I mean, from a... I think the heart of your question is thus can Clearwire come in and somehow take advantage of existing Sprint contractual rights and equipment and lease it SBA hardly since they are very specific and none of our customers have the right to commend and just add equipment. So we don't see any particular worries there about any type of ability of Clearwire and use existing Sprint locations and somehow not capture what we would otherwise get from a new tenant on that perspective.

Ric Prentiss - Raymond James

Okay and then with the 700 Mhz auction coming up you have mentioned as briefly. Will your services business get any benefit if people kind of look through the process or really after people win, the spectrum of your services business might get a piece of that business?

Jeffrey A. Stoops - President and Chief Executive Officer

Historically it's after. I mean, if you look at last year's AWS auction, other than a few calls about what kind of resources do you have, the real action doesn't start till people win.

Ric Prentiss - Raymond James

Great. Good luck guys.

Jeffrey A. Stoops - President and Chief Executive Officer

Thanks Ric.

Operator

We'll go to Brett Feldman with Lehman Brothers. Please go ahead.

Brett Feldman - Lehman Brothers

Yes. Thanks for taking the question. Pam mentioned earlier that you were not very active in the capital markets in the second quarter. I thought maybe you could just review what your plans are going forward with regards to incremental financing especially when you think about some of the volatility we've seen in the mortgage markets. Do you still think that market is going to be open to you going forward? Or do you think you are going to have to start looking at other forms of debt financing as you add leverage?

Jeffrey A. Stoops - President and Chief Executive Officer

We think that market... the CMBS market for tower spread will continue to be open. We're tracking things pretty carefully there and the market is there. I mean the rates may move up and down a little bit, but as people continue to work through and look at the various asset classes and they look at the results that are being produced by the tower industry. They will quickly conclude that what we have is very different from sub-prime mortgages, so we do see that market continuing for us.

We have a... we're very pleased with our capital structure and flexibility today. We have a lot of cash that we have sitting on the balance sheet ready to utilize and we also are building a large pool of unencumbered towers that we can use for other financing if we so choose. By the time we close the towers that we have under contract we'll have over a thousand towers outside our existing securitization unencumbered... I don't know Tony, what $15 million, $20 million plus of tower cash flow that is totally free for us to use for additional financing if we so chose, so we feel pretty darn good about our ability to continue to access financing to stay in our target range of 6 to 8 times and continue to execute our plans.

Brett Feldman - Lehman Brothers

So based on the current plan and that growth in the cash flow it's outside of securitization, when would you normally expect to go back to the market? Is there something that you think you are going to do a couple times of the year or is it annual event or is it a hard to pin down right now?

Jeffrey A. Stoops - President and Chief Executive Officer

It's kind of hard to pin down and it really would vary based on the acquisition opportunities that we see but kind of it in a regular $100 million to $200 million per year of new investments, you could probably safely assume that we would go back to the markets once a year or so to kind of re-top up the gas tank to 8 times leverage and then delever, invest and then that process would repeat itself kind of once a year.

Brett Feldman - Lehman Brothers

Okay and then there is one more question on different topic. You alluded to a lot of the network initiatives out there that should keep leasing levels pretty healthy for some time. I know you are not ready to give away guidance or anything like that, but if you could just may be qualitatively talk about the backlog of business you have right now and may be how that has compared to similar points in time at previous year. In other words, do you feel your visibility, it's incrementally higher now than it's previously been or is it about the same?

Jeffrey A. Stoops - President and Chief Executive Officer

The length of the visibility based on application is about the same because carriers, they kind of work 3 to 6 months ahead and that's it. The magnitude of our backlog though is great particularly compared to where we been in the last couple of years and we're coming off what I think is the best July we've had in 5 or 6, 7 years in terms new leases signed up. So we see... I mean, all that stuff is real and its hard evidence of the very vibrant leasing background. But then the more qualitative aspects are just the ongoing dialogue that we're having with every carrier about what their plans are longer term and it adds up to just a lot of work between now and the end of 2009.

Brett Feldman - Lehman Brothers

That's great. Thanks. I appreciate it.

Operator

[Operator Instructions]. And we do have a question from Amar Ahmed [ph] from Owl Creek [ph]. Please go ahead.

Unidentified Analyst

Yes, I just wondered if you could expand on why is shares you have purchased towers versus up your cash?

Anthony J. Macaione - Senior Vice President and Chief Financial Officer

Because we see other opportunities out there that will require cash without any... it's basically a maximization of our capital resources.

Unidentified Analyst

Okay. But I guess, I'm just confused because it seems as if you have I guess, maybe it was like 16 million shares used fro CapEx and you're still planning on spending about $66 million in cash, so I guess, are you finding yourself unable to make cash repurchases?.

Jeffrey A. Stoops - President and Chief Executive Officer

No, what you don't know is what we're looking at is not under purchase and sales.

Unidentified Analyst

Okay.

Operator

And we have no further questions at this time. Please continue.

Jeffrey A. Stoops - President and Chief Executive Officer

Gale and Edward, thank you. And everyone on the call, thanks for joining us and we look forward to our next report.

Operator

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Source: SBA Communications Q2 2007 Earnings Call Transcript

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