American Tower Corporation's (AMT) Management Presents at Deutsche Bank 29th Annual Media, Internet & Telecom Conference (Transcript)

American Tower Corporation (NYSE:AMT) Deutsche Bank 29th Annual Media, Internet & Telecom Conference March 8, 2021 9:00 AM ET

Company Participants

Rodney Smith - Chief Financial Officer

Conference Call Participants

Matthew Niknam - Deutsche Bank

Matthew Niknam

All right. Welcome, everybody, to our Media, Internet and Telecom conference. We are very pleased for this next session to be joined by American Tower's Chief Financial Officer, Rod Smith. Rod, welcome to the conference. Great to have you.

Rodney Smith

Yes. Good morning, Matt. It's great to be here. Thank you.

Matthew Niknam

Appreciate it. Well, for the -- for everyone on the line and on the webcast, I have a couple of questions I'm going to ask Rod, but feel free if you'd like to ask a question through the web portal. I have my laptop here with me. So I will be looking at the questions, and I'll make sure to ask them as they come in through the feed.

But without further ado, maybe just to get started, Rod, you recently reported fourth quarter results, it sounds like American Tower has a very busy 2021 in front of it. So maybe just to start, can you talk about your top priorities for the organization for 2021?

Rodney Smith

Yes, absolutely, Matt, and thanks again for having me. So we did just report earnings for fourth quarter of 2020 and the full-year, we are very pleased with the earnings there. And we're equally as pleased as we head into 2021. So we're really looking forward to the 5G densification that's underway in the U.S. and continued densification around the globe as we see wireless networks transition from 3G to 4G and continue to build out coverage and that overall density. So that certainly is exciting. We think the underlying trends here in the U.S. and around the globe for wireless really is very positive.

And one thing I'll note early on here, Matt, is that with the global pandemic, one of the things that we certainly did see is just how critical these wireless networks are around the globe and how critical the infrastructure that they run on is including the towers that we own around the globe. So we couldn't be more pleased as we head into 2021. The underlying trends are really looking great for us around the globe, not just in the U.S. but around the globe. Again, driven by 5G densification, but also 3G to 4G densification.

And as always, every year, we look to really maximize and drive a nice, strong organic growth. So that's what we look for kind of around the globe. We're also looking forward to building towers in the -- a few in the U.S., but mostly outside the U.S., that's the highest returning capital that we invest.

So we expect now to build up to 6,500 towers globally. That's up from about 4,500 towers in the prior year. And, of course, we announced our pending acquisition of the Telxius Towers over in Europe. So we're certainly excited about closing that transaction, quickly integrating those assets into our systems in Europe and marketing those to the wireless carriers and driving growth from there.

Every year, we have projects centered around efficiency, driving margins up, reducing SG&A as a percent of revenue. So you certainly will see us working on some of those initiatives globally again in 2021.

And then the final thing I'll say is, the last several years, we've really been looking for platform extensions and different ways that we can invest in and around adjacencies to the towers, things that connect into towers, other real estate like assets. So we're certainly looking forward to pursuing those as different things develop in the wireless networks around the globe.

So we couldn't be more excited about where we're headed into 2021 and really the underlying fundamentals in the U.S. and around the globe are really solid.

Question-and-Answer Session

Q - Matthew Niknam

Okay. Well, one of the interesting points from the last earnings call that we, I believe, a lot of investors found interesting was the longer-term AFFO per share target, the aspirational targets for double-digit growth through 2027. So can you help us think through the targets from a high level in terms of basic assumptions you're building in around organic growth, margin expansion and leverage profile over the next several years to get us through that 2027 timeframe?

Rodney Smith

Yes, absolutely. So yes, we did release some longer-term guidance. We released some guidance around organic growth in the U.S., which we can talk about. And we also announced kind of a reaffirmation of our aspirational goal of double-digit AFFO per share growth out to the 2027 time period.

So -- and the way to think about that, Matt, is it's really an average over that time period, specifically, meaning that we -- there may be some years within that long-term timeframe that we don't achieve 10% or more AFFO per share. But on average, over that time period, we certainly expect to.

And I would just highlight 2022 was one of those years that could be fairly challenging from an AFFO, a double-digit AFFO per share growth perspective, primarily driven by the volume of Sprint churn that we have coming in 2022. But when you look from 2021 out through 2027, we have a high level of confidence that we will be able to drive, on average, double-digit AFFO per share growth over that time period. Certainly, a key focus area for us and it really goes beyond an aspirational goal. Really, it's just -- it's a goal for us. That's what we focus on. That's the way we organize our business. That's the way we make decisions going forward here is to try to drive and achieve that double-digit AFFO per share.

In there, we do have some assumptions around organic growth, which we laid out. So we have at least 4% in the U.S. over that time period. That includes the Sprint churn that we expect to happen kind of in the early years there. And it's about 5% when you normalize it for that Sprint churn.

The other thing I would say is if you look at the back end of that, if you go to 2023 and beyond, after we get through the bulk of the Sprint churn that will hit in 2022, then the numbers become more attractive. And we expect growth, organic growth in the U.S. to be around 5% and then normalize for the Sprint churn about 6%, and that's from 2023 out to 2027. So really solid organic growth. We are seeing that trend, that organic growth activity kind of building. We expect that to continue.

Again, with 5G densification, the new spectrum auction, Sprint and T-Mobile kind of coming together and beginning to build a sustainable 5G network that will compete with AT&T and Verizon. We've got DISH looming out there. So we do have some assumptions around DISH beginning to build out a network, probably late this year into next year. But really out into the later years of this long-term projection, we would expect that DISH could be fairly active in there.

We also have a few modest assumptions around platform extensions. So we think that the idea of driving double-digit AFFO per share growth is really achievable based on kind of the underlying trends we see, just the densification of these networks, new spectrum, the growth in mobile data consumption that we're seeing around the globe, some of our efficiency initiatives and there could be some upside to that, certainly, when you think about platform extensions of where that may go or even new entrants into the wireless arena like a DISH or others if it really becomes material, that could be upside as well.

The other thing I would highlight here in our U.S. organic growth is that we do have a high level of confidence in that, and that is a big driver of this 10% or double-digit AFFO per share growth, where about 2/3 of that revenue over that time period between now and 2027 is under contract through our long-term MLAs. So that's kind of a key fact here that gives us a lot of confidence in the predictability and the stability in our, not only organic revenue growth, but also the AFFO and AFFO per share growth.

We are assuming and expecting that the carriers will continue to spend in and around $30 billion per year in the U.S., maybe even a little bit higher than that from time to time. And then when you think about inorganic contributions to that, of course, the AFFO per share growth numbers, it's an all-in number. So it does include some level of build-to-suits that we have in there, and it would include some M&A activity as well as and when that comes in.

Matthew Niknam

Got it. In terms of platform expansion initiatives, I know it's been laid out as one of the pillars of the sort of multi-year strategy. I mean, is there any detail in terms of whether that's a meaningful contributor? And you referenced sort of the M&A. And I believe new builds, I think you've talked about 40,000 to 50,000 over the next several years in terms of build-to-suit. If we -- and I'm going to touch on this a little bit later in the discussion. But if those are platform expansion initiatives, is that a meaningful contributor at all to that six-year target that you've laid out?

Rodney Smith

Yes. We have some platform extension assumptions in that long-term platform, but they're not significant. I would characterize them as modest at this point. So certainly, that's a place where we could see some upside driven there. But when it comes to platform extensions, things like edge computing and some other things that we're working on, it's still too early to have the confidence to build in material or meaningful numbers into our projections there.

So we continue to invest in some edge computing. We bought a data center in the U.S. We've deployed about half a dozen or so kind of full-scale edge compute centers that we're testing out and kind of managing through. But with that said, it's still too early to have it be a significant contributor to our kind of publicly laid out guidance. So that, we would look for that to be upside on these numbers as and when that business really develops.

Matthew Niknam

Got it. Okay. Let's jump to the U.S. business. So 2020, I think broadly for yourself and peers, we saw a little bit of moderation, especially coming into the year, activity seems to pick back up post the T-Mobile and Sprint merger closing. So maybe if you can update us in terms of what you're seeing around new activity levels from your top carrier customers in the U.S. and how we should think about the cadence of activity over the course of the year?

Rodney Smith

Yes. Yes, absolutely. So the first thing I would highlight here is we do have MLAs in place with many of our big carriers. And that those agreements kind of smooth out our new revenue, and it makes it so that the pipeline isn't as relevant as a short-term predictor of revenues as opposed to looking in the contracts and having fixed fees kind of scheduled out over a couple of years.

With that said, we are seeing kind of a pickup here in new business activity in the U.S., and we're seeing that around the globe as well. But specifically, in the U.S. on a monthly run rate basis, we're projecting that, that our activity level there will be up about 15% versus 2020. So we do see kind of an uptick there. We see all the carriers working and deploying assets and preparing their networks for 5G.

And, of course, the timing of that is such that it -- a lot of the monthly run rate that we'll add in 2021 will be back-end loaded, so it will have a bigger impact on 2022 as opposed to 2021. But the fundamentals are there. We are seeing the carriers pick up their spend levels, and we are seeing an increase in activity in the U.S., again, like 15%. But we're also seeing that around the globe as well in many of the countries in Latin America, as well as in Africa. And even in India, we're seeing gross new biz on a monthly run rate kind of outpace in 2021 versus where we were in 2020.

Matthew Niknam

And in the U.S., I mean, that pickup in terms of new business, is that primarily T-Mobile? Or would you say, it's a little bit more evenly distributed across the group?

Rodney Smith

I don't want to get into too much detail carrier by carrier. But I would just say that all the carriers are active. They all have a healthy level of activity, certainly from where T-Mobile was last year, they -- it's no secret that their activity level has picked up from where they were kind of pre-merger. There was a time in 2020 when Sprint and T-Mobile were really were focused on getting through their merger, and they did that very effectively and got that completed. And this year, they don't have that to focus on. So we are seeing kind of a bump up in activity level from them, certainly, but all the carriers are active.

Matthew Niknam

Okay. We just had the C-band auctions wrap up or we actually got the results. And so I'm wondering, I want to get your take in terms of when and how long you would expect C-band deployments to serve as a revenue tailwind? And then maybe secondarily to that, would you expect maybe a little bit stumping of activity near-term given the leverage positions at some of the larger carriers coming out of this auction?

Rodney Smith

Yes. So I'll address the last question first. And no, we don't expect to see a stunting or a muting of the activity level because of the C-band auction. If anything, it's almost the opposite where you look at the C-band auction and the values that the carriers have placed on that spectrum, it really just shows you how important that spectrum is to the carriers in 5G deployments in the U.S. So the fact that they bid at the levels that they did, really is an indication that they need that spectrum and they're going to utilize it. There's no point in having it if you're not going to deploy it and put it out in the tower.

So we do expect them to do that. The carriers have been through many auctions before. They know how the auctions work and that whole process. So I'm sure that they bid at levels they were comfortable with, and they're going to turnaround and deploy those things. And I think they need that spectrum in the networks fairly quickly. So that's what we would expect to see from that perspective is kind of a quick deployment of that.

And given the characteristics of that spectrum, given the fact that it is mid-band spectrum, it doesn't propagate quite as far, I think we could see not only additional amendments across the networks in order to bring that spectrum in, but then transitioning to more colocations as well to fill in any coverage gaps that may result from using that higher band, that mid-band spectrum in the networks. We think that could certainly be something that we'll see over the next few years.

I think from a timing perspective, the C-band spectrum will -- there will be a clearing process that the carriers and the owners of that spectrum will be going through over the next several quarters. So a lot of that -- some of that spectrum will begin to free up later in 2021. We think it's kind of a second-half, late 2021, kind of exercise to just get some of that freed up and begin to see the deployment.

And then once that happens, we think like other technologies, other spectrum deployments like C-band, we expect that it will be a multi-year deployment, three to five years. So we think it will start-up late in 2021, and we think it will drive revenues for us, both in our MLAs as well as outside the MLAs over the next three to five years, at least.

Matthew Niknam

Okay. I want to touch on a couple more in the U.S. before we move to international. On DISH, you referenced, I don't want to get into specifics, but we have seen some of the larger peers in the industry having signed agreements, MLAs with DISH. And I'm wondering what you're expecting in terms of their new builds. In terms of contemplating this multiyear plan, do you anticipate getting your sort of fair share? And I asked that in the context of DISH’s stated targets saying that they'll be able to get to a good amount of coverage with around 15,000 cell sites. How does that build and how does their target fit in with AMT's longer-term growth outlook?

Rodney Smith

Yes. I think, certainly, we expect to get our fair share of activity through a DISH network build. So DISH has a commitment to build a 5G network covering 75% of the U.S. population. That needs to be a pretty robust build. There's another element there that in order to do that in a real competitive way, it takes additional investment and additional sell-side sort of along the way there. So if you think about our long-term guidance, we certainly do have some activity level in there for DISH. They've got those commitments to build a network. We see them taking all the right steps towards actually deploying and building that network. Part of that is the agreements that you've seen them sign and announce, which we think is evidence that they will build out a network. But the activity level we have in our plan is still fairly modest, right? It's -- let's say, if they can build a network for 15,000 sites, that kind of a build is certainly within our projections.

If, in fact, they build a very competitive network, which we think is entirely possible and that site count goes up to, let's say, 40,000 or 50,000 sites needed in the U.S., again, we do expect that we would get our fair share, and there could be a potential for some upside from DISH if they really build a highly competitive robust 5G network here over the next 3 to 5 years. But we certainly have kind of the -- some modest levels of DISH already included in our network. But there is room there for some upside if they invest and build out something on the order of 40,000 to 50,000 cell sites in the U.S.

Matthew Niknam

Okay. And just to tie everything together, we talked a lot about the growth activity over the next several years in the U.S., but let's maybe pivot to churn for a little bit. And one of the biggest headwinds in the next several years, obviously, comes from Sprint site decommissioning. And so you can remind us how to think about the timing and impacts for when this flows through your financials over the next several years?

Rodney Smith

Sure. So we have talked about the Sprint churn. We talked about this on our last earnings call. The first thing I would say is the Sprint churn that we have in our projections, really is contracted Sprint churn. So there's not a lot of unknown or mystery there. So in the MLA that we have with T-Mobile, it contemplates about $375 million of annual revenue that will churn off of the T-Mobile network, primarily though Sprint, a portion of those Sprint sites that they that they acquired.

In terms of the timing of that, the way that we expect it to run through our books and records here is over a 4-year period. So beginning in 2021, this year, in and around the fourth quarter, around October time frame, it will be the first kind of step down in run rate revenue, and that step down will be roughly about 53% of that $375 million on a monthly run rate basis will step off in October. Now, of course, as that -- that represents a little less than $200 million of annualized revenue that will come off of the run rate in that fourth quarter. Now, of course, the way that, that will actually hit our financial statements is about 1/4 of it would hit in 2021 with 3-quarters hitting in 2022. That's where you get the biggest impact. Any 1 year impact will be in 2022. Beyond that, when you get into 2022, we'll have another 16% step down on our monthly run rate or about $60 million. In 2023, we'll see another 13% of that $375 million step down or about $50 million. And then the final tranche of churn will be 2024, which would be roughly 19% of that $375 million or about $70 million.

So the way that you'll see it kind of run through our financial statement is 2022 will be the -- we'll see the largest impact from the Sprint churn. And then from that point forward, you'll see a reduction there, and you'll see us kind of pulling out of that, and organic growth numbers will begin to come back up again. And you see that in our long-term guidance as well.

Matthew Niknam

Let's pivot to international. So maybe from a high level, given we are coming into a new year, you just gave guidance. Can you maybe help us unpack the forecast for 5% net organic growth within the international business this year? And I guess, broadly, just talk about what your expectations across the key regions.

Rodney Smith

Yes. So happy to do it. So we did lay out guidance here for 2021 of about 5% organic growth. And there's a couple of regions I would point to that kind of lead the way for us in terms of organic growth. In Africa, we're expecting greater than 8% organic tenant billings growth. So really strong growth there across Africa. And I will remind you, we did increase our portfolio there last year when we bought the Eaton Towers in Africa, which covered about 5,500 sites across a handful of markets, some existing markets and a couple of new markets there. Within Africa, I would highlight in Nigeria, we are seeing a rebound of organic tenant billings growth. We're seeing our new biz activity, up about 70% in Nigeria, and we're driving organic tenant billings growth in 2021 of about 10%. So we're seeing a nice bounce there or a nice pick-up there in Nigeria, which Nigeria is a great market, and we think that could last.

Going into Latin America is the other market that I would highlight. So we're expecting to see greater than 7% organic tenant billings growth across Latin America. And in there, you -- we are seeing some elevated -- some growth in new biz. We are seeing some higher escalators. But we're also seeing a little bit of elevated churn particularly in Brazil and Mexico, if there's still a little bit of carrier consolidation in those 2 markets.

And once that subsides, these networks will continue to invest in 4G. They'll transition into 5G. There will be nice, healthy structures there in terms of the wireless markets. And we think we can drive really solid organic tenant billings growth over the long-term, both in Africa and certainly, in Latin America.

If you look at Europe, Europe, we're projecting about 3% or greater than 3% growth in Europe. And we're primarily now in Germany and France. We have a small portfolio in Poland, but that certainly small compared to what we have in Germany and France. And the fundamentals there are improving, certainly. We're seeing -- we are -- we have seen some consolidation churn there in some of those markets, but we're also seeing organic new biz kind of on the rise.

And when we bring in the Telxius transaction, which will cover assets almost 31,000 assets across the 2 markets in Europe, and then there's a few markets down in Latin America, in Brazil, Chile, Peru and Argentina. But when we bring in what will be on the order of about 20,000 to almost 24,000 sites into our European business across Germany and Spain. That will be a catalyst to drive higher organic growth rates in the region. Part of that is because of the location of these assets, being in Germany and in Spain with the largest portfolio being in Germany, which we think is the best market in Europe as far as organic growth, our ability to drive organic growth.

And the other fact here is that they're anchored by Telefónica, who's very strong and certainly, in Spain and in Germany. And we would expect very low churn on that portfolio over an extended period of time as Telefónica is the anchor and makes up most of the revenues there. And then you combine that with growth and higher levels of organic new business, we think we're going to trend position that European market from a 3% growth rate to a 5% or 6% growth rate across all of our assets really being led by the Telxius transaction in that Germany investment.

So we think Europe is becoming more attractive. But when we say Europe, I think it's important to point out that not all countries in Europe are the same, right? Not all assets are the same as well. So we are very selective, very disciplined when we look country by country, asset by asset, kind of around that region. And we're very pleased that we have the ability to execute on the Telxius transaction. And we do think that it's going to drive the highest growth rate, certainly that we've seen in Europe across our newly constructed larger portfolio.

And then the last thing I would say in the international is India. We're expecting 2021 to be flat, basically zero organic growth in India. And there's certainly a lot going on in India, and there's a lot of good things going on in India. So India has gone through significant marketplace consolidation. The construct and the backdrop is really becoming quite good with 3 large carriers. They're driving the wireless industry there. We are seeing a lot of activity primarily from RJio and Airtel, both on kind of the amendment colocation, new biz side as well as new sites being constructed in the market. So we'll build around 4,000 sites in India.

And so we're seeing -- when you think about that 0% organic tenant billings growth, we're seeing double-digit gross growth when you take the gross growth and the escalators in there, you're talking 11%, 12%, 13% gross growth there. And unfortunately, we're still seeing an elevated level of churn in India. So that's offsetting that gross growth, where we'll see churn in that low double-digit numbers in the 11%, 12% range as well. So it offsets the growth. We do think that India will -- is trending towards a more normalized overall growth rate, and that will be driven by reductions in churn over time and continuing to have solid levels of growth. That's what we expect to happen in India over many years. And there's a few catalysts that we're looking for in terms of things that will really drive that churn rate down. Number 1 is price increases, the wireless carriers raising prices on their subscribers. We have seen that before it happened in 2020. I think there's another opportunity there for the carriers to raise prices and we think that will happen in 2021.

Voda-Idea, specifically, is in the market looking to raise capital, either through debt or equity issuance. So they've been very public about their process there. And we do feel as though they're getting close to completing some sort of a capital transaction. That will be good. And then the third piece is seeing the India Government and the DoT provides support for the wireless carriers across the sector. They can do that in a few different ways. They can do it by adjusting some of the AGR fees. They've already allowed them 10 years to make their payments, which was a big help for the carriers in order to get them a longer runway to do their capital planning.

And to make those arrangements. The carriers that are affected by the AGR issue, and I guess, I would say, primarily or at least as far as we're concerned, 2 of our customers, Vodafone and Airtel have continue to petition the government to look at the way they're calculating these fees, and they're making the argument that there's calculation errors that significantly overstate the liabilities. So the government has agreed to look at that, and they are looking at that. So there could be some continued relief there in terms of setting those AGR fees, penalties and interest, all at a lower level, maybe a correct level if you support the approach that Voda and Airtel are taking.

So there's a lot of things happening in India, certainly, and a lot of good things that are happening. And there are just a few structural things we'd like to see benefit to carrier share in 2021 and beyond. It's the AGR issues, it's the pricing issues and it's Voda raising some capital.

Matthew Niknam

And just 1 follow-up on India before I jump to Europe. In terms of thinking about churn, obviously, it's been fairly elevated with the carrier consolidation in the last several years. But any visibility or line of sight, maybe if you think about the sort of 7-year plan laid out, expectations for churn because, obviously, the gross activity is there. But how should we contemplate the churn levels moderating in terms of getting you to what's maybe a more longer-term sustainable growth rate for India? How do we think about that trajectory?

Rodney Smith

Yes. I would say that India certainly needs a lot more cell sites and a lot more infrastructure than they have today in order to provide ubiquitous 4G coverage across the country to all the subscribers there. So we do think without these other hurdles that we see there, that churn would come down to a more normalized rate, and that would be in the low single digits, maybe it's 2% to 3% churn kind of in India, might get you to kind of a normalized state. And as that happens, that will give you the ability to have high single-digit organic tenant billings growth in the market, maybe double digit, organic tenant billings growth.

With that said, it's hard to predict the timing of when that churn will come down. And again, it goes back to those let's say, at least those 3 things that I just laid out, right, driving price increases on the subscribers, Vodafone raising capital, shoring up their balance sheet and being able to maintain their network and then reinvest in their network would be a big step, and then having further relief or accommodations or support through the government.

And the government has stated that they prefer a 3-carrier sector in India. And they also have a Digital India initiative, which really relies on everyone in the country having access to the Internet, into electronic commerce platforms and electronic banking and things like that. And the way most Indians connect into the Internet is through the wireless network. So it really is important to the government. So we do think it's likely that, that support could, in fact, be there here as we move through 2021. But that's the way to think about it.

And in terms of our guidance, we do have churn coming down here in the next several years. I would say we're not taking an aggressive stance in that. So to the extent that there's good news or relief of Voda-Idea and support in the industry here in the short term, that could represent some upside in terms of our India business here over the next couple of years.

Matthew Niknam

So let's pivot to Europe. And I have a question coming in from the audience. Just as a reminder, if you have any questions, just type it in, I'll see them on my end. With Europe, let's maybe start with the Telxius deal, huge deal. And so I have a question that I'm going to sort of weave into my own question. The question really on is, how did the Telxius deal emerge? And then if you can provide a little bit of background around the genesis of that deal process? And I'll leave in also, can you talk about what specifically attracted you to the portfolio?

Rodney Smith

Yes, absolutely. So there's a few things. I don't want to get into too much detail in terms of the negotiation with Vodafone or how it came up. But I think you can you can surmise that these bigger transactions, they're always competitive, right? So I would say, it was a competitive transaction.

The other thing I would say is we've got a really strong partnership with Telefónica. We supply them with infrastructure throughout Latin America and in Europe. We've done a few deals with them in Latin America. We've looked at some of their assets in different places. So we do have a nice relationship with Telefónica and a real partnership with Telefónica. So that connection with them, I think, certainly, was a factor in terms of us getting into the process here with Telefónica.

And then other than that, it was a competitive process, and we approached the Telxius transaction like we have approached other potential deals in Europe and other deals around the globe. Our process hasn't changed. Our strategy hasn't changed. We still look at running discounted cash flow models and valuing the assets and all these assets, no matter what continent or country they're in, they do have a value. They may not all be the same value, but we're very good at identifying what the value is in executing on the transaction. So we really do like the Telxius portfolio.

The thing that we like about it the most is it's just a straight up M&A deal. It's a sale leaseback, and there's not a lot of other complexity around it. Some of the other deals we've seen in Europe have some other complexities in it, whether they're minority stakes being sold or buyback rights in the future or different things, sale leaseback kind of transactions. They could be a little bit more complicated than the very clean deal that we just completed with some that were in the process of completing with Telefónica.

The other thing we really like is the Telefónica is the counterparty, really strong counterparty in Europe in those markets, certainly, in Spain and Germany. So that's a really nice fact. These -- this portfolio, overnight, gives us significant presence in Germany and Spain, 2 great markets, 2 key markets within Europe. And Germany, we think, is the most attractive market in Europe in terms of driving growth rates in the regulatory construct and different things like that. So we really like the counterparty here and then the growth rates. We think that this transaction will drive mid-single-digit growth rates across our entire European business as we go forward.

So in the 5% to 6% range, that makes it look and feel a lot like the U.S. growth rates, and we think that's really attractive to be able to deploy capital in a developed market with very predictable cash flows with mid-single-digit growth rates, very similar to the U.S., that was certainly one of the points that attracted us to the portfolio. So we do think it's a really good portfolio for us. We think the financial results over the long-term will be really good for us and for our shareholders. And we'll continue to look in Europe, and we'll continue to be very disciplined and selective.

So there'll be transactions. And I think there was one announced after we announced the Telefónica-Telxius transaction. So you won't see us all of a sudden act differently in Europe. We'll continue to be very disciplined, have a very disciplined approach. We'll look at everything, and we'll execute on the things that we really like if we can get the right terms and conditions, the right price, the right value for the right assets, you'll see us move. And if we don't get those things, you'll see us be patient.

Matthew Niknam

And another one from the audience. Can you talk maybe a little bit about the AFFO per share accretion you anticipate from Telxius?

Rodney Smith

Yes. I would -- I think I'll keep it very simple here and just say it's AFFO accretive right out of the gate. And of course, that AFFO accretion builds over time. So that's the way we underwrite deals. We look for them certainly to be accretive. This deal is accretive. And this deal, we will -- it gives us the ability to do some things with the financing for the deal with euro-based senior notes and things like that at a really attractive rate. So that certainly will be something that the company will benefit from for years to come in terms of locking in these very low euro rates. And be able to do it in a way where we've got the euro-denominated asset base and cash flows to support that.

So we wouldn't be taking currency risk here would be underwriting this new asset, this new euro-denominated asset and cash flows that we own with very inexpensive euro borrowings. And we -- it could give us the ability as we move into 2022 and even beyond to refinance U.S. senior notes with euro-denominated senior notes over time. It still be in that position where we're matching cash flows and asset base with our euro-denominated borrowings. And in a way that will help us drive down our overall cost of borrowing as a company globally.

Matthew Niknam

Let's talk about leverage. And I think it's a good segue because I believe you alluded on the last call to leverage pro forma for Telxius, settling in the high 5s. And so I'm wondering if you can talk about whether that embeds any assumptions around public or private equity fundings, first? And then secondly, if you can talk about the path to delevering and when you would anticipate getting back to within that 3 to 5 turn leverage range you've historically aspired to?

Rodney Smith

Yes, absolutely. So we did -- as part of the transaction, the Telxius transaction, we are anticipating that we would increase our leverage to the high 5 times. Our stated financial policy is between 3 times and 5 times. And as you know, Matt, we're investment grade, investment-grade credit ratings are important to us, so we're committed to maintaining that. And we think that, that high 5 times leverage on a temporary basis, which would be out over a couple of years, is entirely consistent with our investment-grade rating.

So we don't expect any risk of downgrade, any risk of outlook change, and we've worked closely with the rating agencies in that process to identify that high 5 times number as the right one to move our leverage to on a temporary basis. You'll see us delever from that point forward over a number of years, a few years, let's say. So I think you'll see us with higher than 5 times leverage for a few years.

In that scenario, in terms of the higher leverage and investment-grade credit, it's really independent and not tied to whether we do public equity or private capital in terms of filling the gap, right? As long as we stay at that high 5 times leverage and have a commitment to delevering that -- the remaining purchase price will be filled with some form of equity, whether it be private capital or public equity.

So either way, the leverage won't change there. And we certainly view that this transaction in terms of its size and given our market cap, it gives us a lot of options in terms of how we finance this going forward. So you're right to point out that one of the things that we're looking at is raising private capital, potentially. So we are in pretty advanced discussions with a number of large global investors and looking at terms and conditions around private capital. And to the extent we do raise private capital, the balance of what we would need to close on the Telxius would come from some of public equity, whether it be common stock issuances or mandatory converts. We're still kind of working through the detail there. But the key is a big chunk of the purchase price will be covered by the increased leverage here. And the balance would be equity, and it could come in the form of a few different things.

The other thing I would add, Matt, is when you think about Europe and our interest in potentially raising private capital. It really would be through a sale or maybe a few sales transactions of minority stakes in our European business. It's not specific to the Telxius transaction. It's really our European business kind of post the Telxius transaction that we would be looking to optimize the capital structure, maybe bring some private capital in there through the sale of 1 or more -- to 1 or more investors, minority stakes in that European business.

Matthew Niknam

And so to tie this together into a broader capital allocation question, how do you prioritize uses of excess cash, given where you're going to be in terms of a leverage position pro forma for this deal?

Rodney Smith

Yes. There are a few things I would say there. Certainly our view and focus on capital allocation has not changed. So first and foremost, we fund the dividend being a REIT. We certainly would look to do that. Our dividend growth for 2021 is expected to be around 15%, and of course, subject to our Board approval. Next is we like investing capital to build assets. And as I said earlier in the call, we're expecting to build around 6,500 towers around the globe. We're also expecting to invest some other CapEx internally through our land programs and redevelopment CapEx to support revenue growth and different things like that as well as the very small amount of maintenance CapEx.

So we would fund the dividend, we would then fund our internal CapEx programs. And along the way, we'll be delevering. So some of the capital beyond those 2 pieces will go towards delevering. But then we would continue to kind of balance and look at M&A opportunities around the globe. And we would look for the most attractive ones and try to figure out how to -- how we bring those into our organization and what the financing might look like at that point. But we would be delevering over the next couple of years.

So it does make the financing maybe -- requires a little bit more creativity from that perspective. And certainly, there are a lot of things that can drive delevering down as well. So we would be in a process here of delevering. It doesn't mean that we'll be closed for M&A transactions. We'll continue to look at M&A transactions really around the globe, just like we always have. And then we'll -- the question will be for the right ones, how do we finance those transactions. And we'll address those questions as and when they come up based on specific opportunities.

Matthew Niknam

Okay. Just 1 last one to wrap up. On the M&A topic. So your last 2 deals have actually been geared towards the U.S. and Europe. So I'm wondering, does it indicate an increasing preference for developed market assets? Or is it just -- those are 2 deals that situationally came up that were attractive, and we're still sort of open for M&A on a broader basis globally?

Rodney Smith

Yes, definitely the latter. Our views have not changed when you think about us as a global company and looking globally for M&A. It just so happened that we were very fortunate that at the end of 2020, we have the opportunity to buy the InSite platform. It's a business and an asset we know very well. So we did everything we normally do in terms of taking our disciplined approach and looking at that asset, and we came out successful, and we were really happy to get that.

And then again, based on our close relationship with Telefónica and those assets coming up to market, we were able to buy that asset, which is still pending. Which you're right to point out the fact that, that gives us 2 pretty substantial deals in developed markets with very high credit rated countries, with really high credit rated counterparties. And we think that's great. It's nice for us to be able to add those, that invested capital in those assets in that represent stable cash flows within developed countries.

But we still have an appetite to grow around the world. We continue to look at opportunities around the world. And of course, everything we do is risk adjusted. So we measure the risk-adjusted rate of returns and the hurdle rates around the globe. And whenever you see us make a completed transaction, whether it be in a developed market or otherwise, it's because we're clearing those risk-adjusted hurdle rates we have for that country and that asset class.

And so again, we go through a very disciplined process here. And we think our company is very uniquely positioned to benefit from wireless development around the globe. And I think we're excited about being in a really strong position to continue that development, not just in developed markets like in the U.S. and in Europe but also in developing markets in Latin America and Africa. And again, I think the backdrop in India, over the long-term, it looks really positive for us. So we couldn't be more excited about the combination of assets that we have in really strong developed markets as well as the markets that we have more on the developing side of the emerging

Matthew Niknam

I think we're just about out of time. So maybe we'll end up there. Rod, on behalf of myself and everyone maybe thank you and hoping we can do this in person next year at The Breakers in Palm Beach.

Rodney Smith

Yes, that sounds good. Love to do that. Thanks, Matt. It's great being with you today.

Matthew Niknam

Take care. Thank you.

Rodney Smith

Bye.