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Ladies and gentlemen, thank you for your patience in holding and welcome to the SBA first quarter results call. At this time, all participant phone line are in listen-only mode. Later, there will be an opportunity for questions. [Operator Instructions]. Just a brief reminder, this conference is being recorded.
Now I will be happy to turn it over to VP of Finance, Mark DeRussy.
Good evening and thank you for joining us for SBA's first quarter 2021 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer and Brendan Cavanagh, our Chief Financial Officer.
Some of the information we will discuss on this call is forward-looking, including, but not limited to, any guidance for 2021 and beyond. In today's press release and in our SEC filings, we detail material risks that may include our future results or may cause our future results to differ from our expectations. Our statements are as of today, April 26 and we have no obligation to update any forward-looking statement we may make.
In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website.
With that, I will turn the call over to Brendan to discuss our first quarter results.
Thank you Mark. Good evening. SBA had a solid start to the year with first quarter results ahead of internal expectations for most of our key financial metrics.
Total GAAP site leasing revenues for the first quarter were $505.1 million and cash site leasing revenues were $504.5 million. Foreign exchange rates were generally in line with our previously forecasted FX rate estimates for the first quarter. They were however a significant headwind on comparisons to the first quarter of 2020, negatively impacting revenues by $12.6 million on a year-over-year basis.
Same tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis, was 3.6% over the first quarter of 2020, including the impact of 2.4% of churn. On a gross basis, same tower growth was 6%. Domestic same tower recurring cash leasing revenue growth over the first quarter of last year was 5.6% on a gross basis and 3.1% on a net basis, including 2.5% churn.
Domestic operational leasing activity or bookings representing new revenue placed under contract during the first quarter was modestly lower sequentially than the prior quarter. But on the heels of our newly signed agreements with Verizon Wireless and Dish, we have seen substantial increases in our domestic new lease and new amendment application backlog. These backlog increases are supportive of significant increases in domestic operational leasing activity throughout the balance of this year. During the first quarter, amendment activity represented 77% of our domestic bookings with 23% coming from new leases. The big three carriers represented 86% of total incremental domestic leasing revenue signed up during the quarter.
Internationally, on a constant currency basis, same tower cash leasing revenue growth was 6.1%, including 1.3% of churn or 7.4% on a gross basis. International leasing activity remained steady during the first quarter. In Brazil, our largest international market, we had another solid quarter of leasing activity. Gross same tower organic growth in Brazil was 8.5% on a constant currency basis. During the first quarter, 85.3% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-U.S. dollar denominated revenue was from Brazil, with Brazil representing 11.1% of all cash site leasing revenues during the quarter and 8.1% of cash site leasing revenue excluding revenues from pass-through expenses.
Tower cash flow for the first quarter was $411.8 million. Our tower cash flow margins continue to be very strong, with a first quarter domestic tower cash flow margin of 84.4% and an international tower cash flow margin of 70.8%, or 91% excluding the impact of pass-through reimbursable expenses.
Adjusted EBITDA in the first quarter was $390.1 million. Our industry-leading adjusted EBITDA margin was 71.2% in the quarter. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 75.6%. Approximately 98% of our total adjusted EBITDA was attributable to our tower leasing business in the first quarter. Our services business had a very strong first quarter with $43.6 million in revenue and a higher contribution to adjusted EBITDA than any quarter in 2020. Activity levels have picked up materially. The increasing activity levels with our carrier customers have led increases in our services backlog and a resulting increase in our full year outlook for site development revenue. AFFO in the first quarter was $286.3 million. AFFO per share was $2.58, an increase of 13.2% over the first quarter of 2020 and a 16.2% increase on a constant currency basis.
During the first quarter, we also continued to expand our portfolio, acquiring 731 communication sites, including wireless tenant licenses on 697 utility transmission structures from the previously announced PG&E transaction, for total cash consideration for all sites of $975.5 million. We also built 62 new sites in the first quarter. Subsequent to quarter-end, we have purchased or agreed to purchase 413 additional sites in our existing markets for an aggregate consideration of $110.2 million and we anticipate closing on the majority of the sites under contract by the end of the third quarter.
In addition to new tower assets, we also continued to invest in the land under our sites. During the quarter, we spent an aggregate of $6.5 million to buy land and easements and to extend ground lease terms. At the end of the quarter, we owned or controlled for more than 20 years the land underneath approximately 71% of our towers and the average remaining life under our ground leases, including renewal options under our control is approximately 35 years.
Looking ahead now, this afternoon's earnings press release includes our updated outlook for full year 2021. We have increased our outlook for most of our key metrics from the outlook previously provided with our prior quarter earnings release. In addition to our increased outlook for site development revenue, which I mentioned a moment ago, we have also increased our outlook for full year site leasing revenue. The majority of this increased leasing revenue outlook is due to our recently signed global amendment and agreement with Verizon Wireless.
One component of this agreement involves the expansion of the current lease terms across our existing lease agreements with Verizon, resulting in average non-cancelable terms of approximately eight years. These term extensions increased our outlook for straight-line revenue for 2021 by approximately $22.5 million. While we anticipate higher levels of operational leasing activity throughout the year as a result of Verizon agreement that will contribute to improved organic leasing revenue growth in future years, we do not expect it to materially impact our previously provided 2021 outlook for tower cash flow and adjusted EBITDA.
With regard to site leasing revenue, in addition to the Verizon straight-line impact, we also increased our outlook for better leasing revenue recognition in the first quarter than previously projected and for other increases in straight-line revenue associated with term extension separate from the Verizon agreement. We anticipate our domestic same tower revenue growth will begin to increase in the second half of the year and that it will end the 2021 at the highest rate of the year.
Our updated outlook for adjusted EBITDA and AFFO incorporate increased expectations for contributions from our services business and AFFO was also projected to benefit from slightly better nondiscretionary capital expenditures and cash taxes than we previously anticipated. Our customers ramping efforts around 5G give us great confidence in our projected growth.
As is always the case, our full year 2021 outlook does not assume any further acquisitions beyond those under contract today and the outlook also does not assume any share repurchases other than those completed as of today. However, we are likely to invest in additional assets or share repurchases or both during the during the rest of the year. Our outlook for net cash interest expense does not contemplate any further financing activity in 2021. Finally, our outlook for AFFO per share is based on an assumed weighted average number of diluted common shares of 111.4 million, which assumption is influenced in part by estimated future share prices.
With that, I will now turn things over to Mark, who will provide an update on our liquidity position and balance sheet.
Thanks Brendan. We ended the quarter with $12.1 billion of total debt and $11.9 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 7.6 times. This leverage ratio is elevated slightly above our target range of 7.0 to 7.5 times due to the PG&E acquisition during the first quarter. Our first quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 4.4 times.
On January 29, the company issued $1.5 billion of unsecured senior notes due February 1, 2029. These notes accrue interest at a rate of 3.125% per year and interest is due semiannually on February 1 and August 1 of each year, beginning on August 1, 2021. The net proceeds from this offering were used to fully redeem all the outstanding 4% senior notes, to pay all premiums and costs associated with such redemption and to repay the amounts outstanding at the time under the revolving credit facility and for general corporate purposes. As of today, we have $530 million outstanding under our revolver and the weighted average interest rate of our outstanding debt is 3% with a weighted average maturity of approximately 4.3 years.
During the first quarter, we repurchased 654,000 shares of our common stock for $160.9 million for an average price of $250.33 per share. All shares repurchased were retired. As of today, we have $475.1 million of repurchase authorization remaining under our $1 billion stock repurchase plan. The company's shares outstanding at March 30, 2021 were 109.3 million compared to 111.6 million at March 31, 2020, a reduction of 2%. In addition, during the quarter, we declared and paid a cash dividend of $63.4 million or $0.58 per share. And today, we announced that our Board of Directors declared a second quarter dividend of $0.58 per share, payable on June 15, 2021, to shareholders of record as of the close of business on May 20, 2021.
With that, I will now turn the call over to Jeff.
Thanks Mark and good evening everyone. As you heard, we had a strong start to the year with solid financial and operating results. Activities in the first quarter provides a foundation for the rest of 2021 and for the next couple of years. During the quarter, each of our largest domestic customers provided public disclosures expanding upon their 5G deployment plans making it clear with upgrades to their existing background network should be a key component of their network investment strategies over the next several years. We have begun to see direct evidence of this with significant growth in our leasing application backlogs and increasing volumes in our services business.
In fact, our services businesses has its biggest quarter in nearly seven years. And notwithstanding the strong first quarter performance, our services backlog have continued to grow substantially, setting us up to have our best services year in a very long time. The increased services volume and backlog are due to growing network planning and deployment efforts by our largest customers that are supportive of our anticipated growth in domestic organic leasing activity over the coming quarters. Our growing leasing application backlog further support our expectations around future new leasing activity.
Since our last earnings call, the results of the C-Band auction were disclosed. Verizon, AT&T and T-Mobile were all being full participants in the auction. Verizon and AT&T both paid premium prices for A Block spectrum, clear indication that the ability to move quickly in building out the top markets is a priority to them. On April 1, we signed a new global agreement with Verizon to facilitate their 5G network buildout, including the deployment of their newly acquired C-Band spectrum. This new agreement addresses several others, including the extension of committed terms under our existing agreements with Verizon, establishing equipment specific pricing, terms and conditions for upgrades to Verizon's existing leases and establishing parameters and volume incentives for new site leases.
We are excited to expand our existing strong partnership with Verizon and we believe both Verizon and SBA will benefit from years of incremental new business between our organizations. The agreement with Verizon as well as the substantial minimum lease commitment under our new master lease agreement with Dish at our existing activity levels and building backlogs with both T-Mobile and AT&T are all part of the foundation for a strong couple of years of heightened activity. Our domestic leasing backlogs are as high as they have been in quite some time. We have not incorporated any material amount of revenue from these chronic backlogs in our 2021 outlook because the timing uncertainty and reliance between application, execution and rent commencement but the future is certainly bright in this regard.
In addition to the exciting events around our domestic leasing and services businesses, our international leasing activity also was solid during the first quarter. During the quarter, we signed up 50% of new international revenue through new leases and the other 50% through amendments to existing leases. We have strong leasing results in Brazil and South Africa, our too largest international markets notwithstanding continued challenges in these markets from the COVID-19 pandemic. We believe the underlying fundamentals for wireless network growth are strong in these markets and want to see a return to normalcy due to increased vaccine availability and other steps to reduce the COVID impact in these markets. We will be well-positioned for increased network investment and organic leasing growth.
In addition to our first quarter operational successes, we also made advances through positive capital allocation and opportunistic financing activities. As discussed on our prior call, we added a large number of high quality in assets to our portfolio through the PG&E transaction during the quarter. And while it's only been about two months since we closed on the majority of this transaction, we are very pleased with what we have seen so far.
We have received significant interest from our customers around these sites and we have established a very positive working relationship with PG&E, which allow us to maximize these opportunities for providing efficient access to these assets for our customers. In addition to the PG&E transaction, we are close to place under contract a number of new high quality assets that should be supportive of incremental future organic growth. We also continue to deploy capital into share repurchases during the quarter, successfully deploying almost $170 million to opportunistically take advantage of dislocations in our stock right while also effectively managing our leverage ratio.
I am particularly pleased that we were able to finish the quarter with net debt to adjusted EBITDA leverage ratio of 7.6 times, just above our target range of seven to 7.5 times. We knew that we would be above our target range temporarily due to the PG&E transaction but we are ahead of schedule on delevering back into our target range due to our strong first quarter results. In fact, on a pro forma basis for a full quarter's contribution through PG&E, the EBITDA from PG&E [indiscernible] 7.5 times from the first quarter. This result demonstrates the tremendous ability of our company to quickly organically delever even after substantial capital investments.
During the first quarter, we also completed a $1.5 billion unsecured bond offering at the lowest price for unsecured debt in our history. This combination of steadily growing EBITDA and access to low cost debt gives us great confidence in our longstanding approach to leverage and capital allocation as a key component to growing AFFO per share and creating incremental shareholder value. Our access to low cost debt continues today and I am confident we will have other opportunities to improve our cost of debt financially during this year.
In the first quarter, we produced $2.58 of AFFO per share, over 16% higher than the first quarter of last year on a constant currency basis. We also increased our first quarter dividend by 25% over the prior year while still achieving a very low AFFO per share payout ratio of 22.5%. Our ability to manage our balance sheet, optimize our operations and opportunistically allocate capital will allow us to continue to generate long term returns for our shareholders and capitalize on quality and foundation of the strong underlying metric of our business.
So I want to close with some comments about our performance through the pandemic. We are currently operating our Boca Raton headquarter, representing about 33% of our global workforce at 50% capacity with plans to fully return to the offices at 100% by early July. Our other offices are at varying attendance percentages with U.S. offices generally have higher levels of attendance than our international offices. I can thankfully say that the pandemic has had no material impact on our U.S. business and internationally I believe we have navigated the pandemic as well as anyone. In every case, we have worked carefully with local healthcare experts and our team members to prioritize safety first. I could not be more proud of the way we have navigated this pandemic to achieve safety of our tem members and meeting the needs of our customers and communities. We want to thank our team members and our customers for their commitment, collaboration during these challenging times and their contributions to our success. We look forward to an exciting rest of the year and sharing our results with you next quarter.
And with that, Justin, we are now ready for questions.
[Operator Instructions]. First, we go to the line of John Atkin, RBC. Your line is open.
Thanks very much. So I was interested in whether you have seen any actual equipment installed on your U. S. towers? What kind is it, C-Band or L-Band variety? And then I had a kind of a bigger picture question about escalators which historically have been fixed and we get a lot of questions sometimes about why that could eventually become more CPI-based over time in kind of the core U.S. business? Thanks.
So on C-Band type things, I will just speak generically, Jon. Signed leases and amendments, yes, actually installs yet, no. And you shouldn't read anything more into that other than the typical time it takes to go from execution to installation. And on the fixed escalators versus variable, I mean that's an age old question. It obviously depends on which side of the historical inflation you fall as to what you prefer. It's been discussed and in every case that I know of that the U.S. is people have landed on a fixed escalator concept. So I don't know what really to tell you beyond it's a regular topic of discussion and fixed is the way folks have gone.
Got it. And then any more color you could provide on Brazil on just kind of macro topics, economy, carrier landscape, sector [indiscernible]?
Brazil is strong still on progress. There is no question, the economy is feeling the effects like labor [indiscernible], employment rate Brazil is now currently around 15%. Our folks are optimistic that better times are shortly ahead. But we will need to see all that. I will say that notwithstanding the overall bleaker environment there, certainly compared to the U.S., our business and our operations continue to do just fine. So we are obviously thankful for that and communications continues to be a key need there and carriers continue to answer that need. But in general, everyone reads the same thing that I do and the same folks that I talk to, they still have some room to go in terms of improving their COVID position.
Lastly, just on the PG&E assets. Are there any kind of metrics around a portion of the portfolio that achieve a legitimate quality for lease up? What types of use cases you are finding when people do of these lease application? And just how to kind of think about the growth profile there?
Well, obviously, all the ones that we talked about are in use. We have interest in some of the other 28,000 that are currently not in use. And the demand has been both for amendments by existing customers and new leases. So we are pretty pleased with how things have gone the first couple of months.
Justin, I think we are ready for our next question.
Next up, we have Michael Rollins of Citi. Your line is open.
Hi. Thanks and good afternoon. Just first, just following up on your comments regarding the activity levels, with the Verizon on the book and you have had a couple more months of discussions and activity, is 1Q the trough for domestic organic growth by leasing growth that was reported at 5.6%? And how do you think about what the peak range could be for this metric again, now that you have a couple more months of conversations and agreement? And then just secondly, are there any updates on the possible timing for merger-related churn relating to the T-Mobile and Sprint deal? Thanks.
Yes. Hi Mike. On the same tower growth rates, Q1 is certainly right around the trough. It's possible that Q2 also would be at a similar level based on what we have got in mind today. A lot, just as a reminder, that metric is a calculation based on the trailing 12-months. So it's really backward-looking and a lot of the significant increases we have seen in the organic leasing activity has just started to happen recently here. And so I expect that it will start to increase in the second half of the year and we will exit the year at a higher rate and frankly continue to increase as we move into next year.
As far as how could it be, I can't really say for sure. I think on our previous call, we talked about on a net basis getting to mid single digits. I think that is certainly achievable. A big question mark is the timing of the churn which now leads to your third question, which is about the Sprint and T-Mobile overhang.
The numbers that we gave on our previous call are still pretty much the same. We don't have, nothings occurred that would make us change our expectations. Just as a refresher, this year, we have about $8 million or so of impact to 2021 is what we are anticipating. We have already incurred a decent portion of that. So that's probably about the right number for this year. Next year is expected to be a little bit bigger, closer to $30 million of impact next year before it steps down the following couple of years to somewhere around $10 million to $15 million per year. And so we see the biggest impact potentially in 2025 and 2026.
Having said all that, that's an estimate based on the timing of when those leases, the overlapping leases come up for their maturity date. It's certainly possible that T-Mobile plans will change in terms of what sites they need to keep. And so we will have to keep eyes on that and we will certainly inform you if anything changes.
Next up, we are going to Phil Cusick with JPMorgan. Your line is open.
Hi guys. Thanks. Can you help us think about activity ramping from this year to next year as we go from the guided activity and talking about an exit run rate accelerating from here? I just want to pull the churn discussion out and really think about what activity could be doing?
Well, it's clearly going to accelerate, Phil, as the C-Band spectrum is clear. Verizon themselves stated that one of the reasons for the team that was able to get ahead of the actual clearing and have the equipment already in place and ready to go. But I think as a practical matter, there will be a fair amount of just-in-time delivery of new C-Band equipment as it relates to when they get the spectrum cleared. And AT&T's commentary was that much of their C-Band spending is not even going to occur until beginning of 2022. So if you think what our customers have said at face value, we should move through this year and continue to grow as we move through 2022.
And if I were to assume 2019 as a good example of what happens when two carriers are really spending, do you think 2022 activity could be better than that $63 million or something that was in 2019?
I mean it could. We don't want to too far ahead of ourselves but if you take your premise of all four carriers being very, very busy, I think 2022 will be that year.
Yes. Okay. Last thing, the service this quarter, just really strong. Anything that we should think of just sort of like a one-time or not repeatable in the second quarter? Or is that a good new run rate?
I don't know how long to take it out, but there is nothing that we know of today as to why Q2 should be materially different.
Good. Thanks Jeff.
Yes.
Next, we have the line of Spencer Kurn with New Street Research. Your line is open.
Hi guys. Thanks for taking the question. I was wondering if you could elaborate on the deal you struck with Verizon. One of your peers signed a more holistic deal where a certain amount of revenue was contracted annually and you guys didn't. So I was curious, why didn't you take that approach?
We historically have thought it's best for all parties to operate on a more a la carte basis, Spencer. So you are correct. Our straight line only includes the results of the term extensions. It does not include any type of use rights, because that's a different deal. And that's just the way we historically have run the business and like to do things.
Got it. And If I could just --
I don't know if it's any more complicated than chocolate versus vanilla.
Well, it's worked out favorably for you in the past. So we will have to see how things shape out. And one follow-up. In your prepared remarks, I think you said that you didn't include any benefit from the increase in your backlog that you saw this quarter because of the uncertainty around the commencement timing. Is it the case that you had already baked in some impact of the C-Band into the guide and the application that you saw this quarter basically met your expectation? Or is it the case that if these sites do commence, it could be incremental to your expectations that you laid out last quarter?
Yes. Hi Spencer. It's Brendan. We did certainly expect and included in our original guidance an increasing amount of leasing activity throughout the year. The backlogs are supportive of that. And the big question mark, which we did mention in our prepared remarks, it's just simply the timing of those applications turning into signed agreements and then the next step of the signed agreement getting dates at which the rents would kick in. And so we have got certain assumptions we have made around how that's going to play out. It certainly will be increasing as we move through the rest of the year, but that was already assumed. So to the extent that we are off at all and it is a little bit faster, I guess it could be higher. But I think as we get later in the year, the potential for that to be a material impact is very limited.
Next, we have the line of Rick Prentiss with Raymond James. Your line is open.
Great. Thanks. Good afternoon guys.
Hi Rick.
Hi Rick.
We were all surprised with the cash taxes mentioned. How did you get there?
You broke up a little bit. I think you are asking about the change in our cash taxes.
Our cash taxes.
Yes. So the cash taxes for the balance of the year, it's actually in part due to expected benefits that we have now from the PG&E acquisition in terms of amortization of that asset. That was not I think fully more when we gave the original guidance because that deal actually just closed right before we gave the last guidance. So that's something we are going to benefit from. Any other things that affected it are fairly minor differences in some of our international market. But PG&E was really the biggest difference.
Because when we think longer term, how should we think about cash taxes will move around?
Well, obviously as a --
I mean, they are going to go up.
Yes. They are certainly going to go up. It's interesting because as a REIT, we obviously have limited federal cash taxes at any point, but there are currently state cash taxes that we do pay because we are not paying our full AFFO out as a dividend. So there is some opportunity to improve on that front. But on the other side, the more impactful thing will be our international taxes, which as we continue to grow in those markets and some of the depreciation shields run off, you will see the cash taxes in the international market decline.
Makes sense. And how should we think about the CBRS opportunity? What's the timing and size available to put capital to work?
The timing is now. The primary interest right now will come from municipalities, private networks. We are actually building some school systems to help bridge the digital divide that are focused on CBRS. And while some of our cable customers are also active, I think in terms of the national wireless carriers, they are going to focus really on the mid-band and use the CBRS stuff really as more of a niche solution for them. So the biggest opportunity is really, for CBRS in particular, are with outside of the national wireless carriers today.
Makes sense. And then have you thought about giving us a table showing Sprint churn as far as colo versus other sites as more of your peers are doing the same?
We haven't thought about it, but we will think about it.
That would be great. All right. Thanks guys. Stay well.
Next, we have line of Batya Levi with UBS. Your line is open.
Great. Thank you. I think my first question [indiscernible]? How do you think this next big change organically be around maybe into next year or as C-Band becomes more of the mix down the road? And how does the amendment revenue compares to higher earnings? Thank you.
Batya, you broke up on a lot of that. And I don't think any of the three of us here heard everything you said. Could you try that again?
Sure. I was asking that about the amendment revenue mix. I think it was 77% this quarter. How do you think about that trending towards the year-end and maybe with the C-Band deployments becoming a bigger part of the mix? And [indiscernible] average in terms of how do these amendment revenues compare on a monthly basis now versus prior upgrades?
Okay. The 77% and this is purely a guess, but I am going to guess it goes down as we hit year-end, mostly because all the Dish business is going to be new leases. So that's probably going to, to the extent it changes, it will be for that reason, because most of the other activity is from the other three carriers is definitely going to be amendments. And in terms of the pricing, we really never get into that. But I will tell you that based on load and usage basis, the pricing is entirely consistent with what our history has been.
Okay. Got it. Maybe one quick follow-up. The new tower purchases 413, can you tell us where they were and how is the M&A activity in those markets?
Those are actually under contract, most of those, Batya and they are mostly located internationally in existing markets of ours.
Got it. Okay. Thank you.
Next, we have the line of David Barden with Bank of America. Your line is open.
Hi guys. Thanks so much. I guess, a few questions. So on the services activity, in the past we have had one or two carriers being the driver of that. I guess how democratically distributed would you describe services activity running ahead of expectations at this stage? I guess the second question was just on this commencement question, Mark and some of the comments that John Stankey made about "skittishness" with respect to supply chain. Any observations, Jeff, maybe that you guys have from your perch as to how you see the probability, the confidence interval around accelerating activity give those questions for the same? Thanks.
Yes. On your last one, well, your first one, it's still not too democratically spread out. Our services revenues are still disproportionately coming from a few actors, which actually is good, because we have the opportunity to expand that base as we move through the year.
In terms of your second question, we haven't really seen any supply issues yet, David. That's not to say, if somebody says that they are out there and they are, we haven't seen them yet. And in terms of what it's going to mean for us, as I think we have explained many, many times, once a lease or amendment is executed, when it actually begins to accrue revenue is the earlier of the date certain or when we actually install the equipment.
So we are all rooting for fast equipment availability and dates of install that are earlier than the specified the end date in the contract. If that happens, we begin to accrue greater revenue earlier. But I mean right now, as we think about life and how this year and next year is going to play out, we are not really thinking about equipment delays.
Okay. Great. And then if I could do one more follow-up. Just in light of the PG&E deal, obviously now that that's kind of ripened and closed, has there been an elevated or any amount of inbounds from other corners of the world looking to kind of do you have done? Or is that more a forced situation that was kind of unique?
Well, PG&E had its own unique needs, but we have had many, frankly, inquiries from other utilities around the country.
Okay. Good. Thank you guys.
Thanks.
Next, we have the line of Nick Del Deo, MoffettNathanson. Your line is open.
Hi. Thanks for taking my questions. First, returning to the PG&E sites. If you think back to other assets you have acquired that may not have been adequately marketed, is that's how long would it take them into kind of hit their stride and start seeing the benefits of being plugged into your sales engine? Was it basically right away? Or does it take a little time?
No. It always takes time, always takes time. I mean six months to a year to really get to the point where it's just like a home-grown asset.
Okay. That's helpful. And then maybe one on the M&A front. Obviously, a lot of talk of higher capital gains taxes this year. Would you expect that to potentially increase the pool of towers for sale in the U.S.? Or you are not hearing much on that front?
It has historically, Nick. So I would expect it to do so again. But I don't know that the magnitude will be so great that it will be like a tsunami of deals. But clearly, there will be tax sensitivity, if the capital gains rates are increased.
Okay. So maybe you pick up a few more, but not enough to really change the trajectory or anything?
I wouldn't say we are going to get to 20% portfolio growth off the tax law changes.
Okay. Fair enough. Thank you Jeff.
Next, we have Tim Long of Barclays. Your line is open.
Thank you. Two questions, if I could. First, I think you guys mentioned something on CBRS and kind of digital divide and some benefits there. Could you talk a little more broadly about some of the government push for more rural broadband? And what do you think that might mean overall for your business? And then second, can you just update us on any updated developments on kind of the whole edge compute data center world where we know you guys are kind of kicking the tires right now? Thank you.
Yes. The government involved in broadband and bringing broadband to more rural areas is right in the middle of that, Tim. The initial bills have been mostly focused on fiber because they are trying to establish a minimum uplink and downlink speed which for fixed wireless today is not available. And there is a tremendous amount of lobbying going on right now to basically free that money for wireless as well as fiber and that all remains to be seen.
In addition, the other aspect of the legislation that's been proposed is mostly for CapEx. And we have tried to make it clear, if you are industry channels that surely not CapEx that you need, there's a lot of CapEx out here. If somehow the relief could be structured in a way that guarantees rental payments and OpEx for periods of time, then I think you really have something that's going to be impactful for our industry. So the work that we are doing so far actually has not revolved so much on any federal programs.
There is an ERIC program that is for education that is federally administered that's a part of it. But mostly we have been working with county school districts and actually private funding that's interested in economic development to make this stuff happen. So we are excited about the potential. What we have done to-date hasn't really involved much of any federal funding because that cake is still not baked yet.
The edge compute, it continues to be a focus of ours. I continue to think it's going to bear a lot of fruit. We actually have two new customers and two new facilities that are under construction since our last call. But what really needs to happen, right and we have been very clear on this, I think from day one is, you need to have a use case world where you need computing power right at the cell site. And we are not there yet. I think we are going to get there. But until we get there, that's when you really want to know that the edge computing opportunity is a good one that we think it's going to be.
Thank you very much.
Next, we have Walter Piecyk with LightShed. Your line is open.
Thanks. Jeff, I wanted to go back to Phil's question. He was drilling on 2022. But do you think 2022 is the peak year for colo and amendments?
I don't know. I mean, we will see. It all depends on how quickly our customers want to spend. [indiscernible]. You had AT&T saying, they are not really going to start their C-Band work until 2022. So I mean, it could be, but it also may not be.
Got it. But I think, Phil, had you drilled down pretty nicely and it's $60 million versus $63 million, whatever. So you have good sense where 2022 is and how much of Verizon and now with Dish and stuff like that in there. So I am just curious if you think there's much left over to take that number even higher in 2023?
Yes. I would disagree that we know enough now to have 2022 fully baked and compare that to what ultimately will be the full build-out plans for our customers. It's going to be multi-year. It's not just a two-year gig. And it's not even really starting until late this year at the earliest. So the more we talk, the less I am prepared to say 2022 will be the time.
Got it. And then Brendan, I think, when you were talking about, I mean the last two quarters you gave us a good sense of the churn that was ordered out at T-Mobile and Sprint. So I think you reiterated that $8 million-ish number, $9 million-ish whatever. But I think, Brendan, you also mentioned a lot of that has already been loaded in the first quarter. So was it a couple of million in Q1 of that $8million-ish or $9 million that has already kind of hit your numbers?
Yes. It was a little less than $2 million. It was probably about $1.8 million or so. So, it will be a little bit bigger. So yes, I mean we saw a bunch of these releases that ended right at the end of last year, beginning of this year. So that piece we already knew about and then there are some other extra pieces that we are assuming happened that may or may not, but they are relatively small.
So when you talk about, Brendan, the mid single digit growth, should we think about that including that Sprint number or Sprint Nextel or Nextel, T-Mobile number or is it after that?
Yes. Long term, the question I was answering was, what do we think it could get to in terms of being in a growth rate. So yes, that's a net number, but it's all --
Including Sprint, because obviously that Sprint churns are going to start cranking up?
Yes. But obviously in any given year, it could be higher or lower, because the Sprint churn is lumpy. So depending on the year, some years will be below that. And I guess conceivably it could be higher than that if you had really low churn and high lease up.
I was just hoping it's like a Dave Schaeffer long term or it's like that number we are always waiting for. And then last question is on the Dish massive or Dish. Are they using massive MIMO antennas in terms of their new lease activity? Or are they using a more traditional approach?
More traditional.
Got you. Thank you very much.
Sure.
Next, we have Brett Feldman from Goldman Sachs. Your line is open.
Yes. Thank you. Two questions, if you don't mind. We are talking a lot about C-Band and the historical conventional wisdom has always been higher frequencies are more useful in dense areas and less useful in less dense areas and your portfolio seems to skew a little more less dense. Now that you actually have insight from some conversations with carriers about how you are thinking about using the C-Band, what level of visibility or confidence do you have that they are actually going to go to all of the towers they currently use with you in markets where they hold C-Band licenses and upgrade and support C-Band? Or do you think there's some towers that won't fit and the other side of it, if you put your optimist hat on is, to what extent do you actually think they are going to increase their density if you begin going outside they maybe historically have not as they see that? And then the second question, if I just sort of think back on some of the earlier questions before, it sounds like you really haven't changed your approach to your leases. You are sitting with fixed escalators. You still like a la carte and there are some emerging operators who have signaled that maybe that has created opportunity for them that they have been able to get into some spaces where maybe you are not winning business because you haven't been as flexible. How have you gone comfortable with that trade-off that as you went through this vast iteration of major negotiations? It doesn't seem like you really budged a lot.
Well, I would put out our historical results as the reason why we are comfortable with that and our first quarter results and where we will be this year and where we will be next year and kind of leave it at that.
In terms of your first question on density, I think we have seen enough so far to know that it's going to be fairly broad. I mean I would never tell you to count on 100% of their release. But it is going to be broad. It's going to be closer to a 100% than it is to 50%. And we won't really know, I think, until we get into it a little bit, particularly with the existing carriers as to how much new leasing will come about this because clearly they are all pursuing colocations first because that's faster, cheaper, it's just a smart way to go about it. And it will be a little bit of time before we see the demand for new leases. But it would be like anything else. I mean if the demand is good enough and there's money to be made, they are going to collocate.
Thank you.
Next, we have Eric Luebchow of Wells Fargo. Your line is open.
Yes. Thanks for taking the question. I just wanted to follow up on that last point. You mentioned in the Verizon deal, there were some parameters around new site builds. And it seems like recently the big three wireless carriers haven't done as much with the public towerco's on new builds. So do you see an opportunity beyond just the initial amendment activity for new sites, either with Verizon or any of the other carriers? Or is it just too early to tell at this point?
No, we definitely see an opportunity and this agreement will facilitate that.
Okay. Great. And then just one more for me. I am just wondering in the initial discussions with the C-Band winners, your large customers, have you have seen any amendment opportunity beyond the C-Band radios, perhaps then looking at lower frequency spectrum upgrades to support uplink to allow them to get better propagation out of the mid-band spectrum?
Yes. I mean there is a variety of requests and equipment contents that go about this. It's not just strictly C-Band radios. A big part of this is the massive MIMO antennas. That's different than what your question was, but we are seeing a whole variety of different things here, of which really the unleashing of the C-Band has now given everybody the reason to go back to the macro networks that they knew was coming. So here we are.
Okay. Great. Thank you.
Next, we have line of Colby Synesael with Cowen. Your line is open.
Hi. Great. Thank you. I appreciate with the Verizon MLA that there is not a use case. I am curious in deals like that, if you put in place some type of an incentive to potentially go on to X amount of their sites faster than otherwise and if, for example, they do that they get pricing lower than they might otherwise. I am just curious if there is those types of structures and deals? And then secondly --
Yes. We do have an incentive, Colby. And you say deals like this. I mean this is the first global master agreement we have ever done for Verizon.
Okay. But I guess, to your point, there is an incentive that if they go into X amount of sites by X amount of date, it would be more cost effective on a per site basis than if they took longer?
Yes. X amount, X price, X date equals X discount.
Got it. And then secondly, Brendan, I am curious if there's any more refi opportunities? Obviously, that was nice savings. And then lastly, I am just curious what drove the AFFO beat? I think that's where in terms of revenue, EBITDA, AFFO, that's where we saw the biggest beat and if I just take your first quarter number and annualize that, that already gets me to the midpoint of your 2021 guidance. Just curious if there's anything one-time in there? Thank you.
Yes. Hi Colby. So refi opportunities, there definitely are opportunities without doubt. We have some debt that is reaching points where it can be refinanced. And based on the current market environment, we would expect to be able to refinance it at better rates than we are currently paying on several of those instruments. So I would just say, stay tuned since we are constantly looking at that and I would expect us to take advantage of those opportunities.
On the AFFO beat, I think you are referring to, basically, our increase in our outlook for, in addition to the beat. But yes, I mean, I guess they are one-timers in some sense. One of the main contributors was in the services area, which we already talked about. We actually had a very strong quarter. So the margin contribution from services was very high. That's not a recurring business. So I guess you could call it one-time. But we do expect to continue to see a similar level of activity throughout the year based on the backlog that we have. We also --
And then get to that point I just, sorry and I guess I think Phil Cusick asked this, but are you seeing a similar margin profile for that as well?
Yes.
Okay.
We are. And that is subject to shift a little bit depending on the mix side type work versus construction. Construction is typically a little bit lower margin. But as of right now, most of the work that's happening is a lot of it's pre-construction. So I would expect that to stay similar. And as we get toward the latter part of the year, you would probably start to see more construction work and so maybe the margin starts to shift down slightly at that point.
So the projects have much higher volume.
They have higher volumes. That's right. And then, other contributions on AFFO, it was a couple of different things. We obviously had a little bit better cash taxes which we talked about on an earlier question. We also had lower non-discretionary CapEx than we had expected. We even lowered our guidance for the full year slightly for that as well. So it's a mix of each of those things. And frankly on the per share number, the share buyback helped a little bit as well in reducing our share count. So a mix of all those things.
Okay. And I mean I guess the point that I was at, when I look at your taking that number, I already got to the midpoint of your guidance. So it would seem that number should be going up through the course of the year.
Yes. I mean some of it's timing related. I mean we did do well in the first quarter in certain areas like the CapEx and frankly even our SG&A costs that we expect to be, both of those items to be a little bit higher as we move through the year. So some of it's just the timing issue. But overall, we were able to improve our full year guidance, in part because of the performance in the first quarter.
Got it. Thank you.
Next we have the line of Brandon Nispel of KeyBanc Capital Markets. Your line is open.
Great. Two questions. Jeff, a question for you. Can you quantify the year-over-year change in the backlog of signed but not commenced new leases? And I guess when was the last time backlogs were this high? And the second question was around the minimum commitment that you would have with Dish. How do the minimum commitments trend throughout the life of the contract? Thanks.
While they do have certain time periods, which we are not going to disclose. So there's X business by Y day. And so it's broken out in more discrete periods over the contract. So there is definitely incentives and commitments to move things along during the life of the lease.
In terms of the dollar volume on the backlogs, we generally internally talk about backlogs in terms of the number of amendments and the number of leases. And where we are today versus where we were a year ago, which is, remember, we hadn't even got to the T-Mobile, Sprint and maybe we just got to the finish line right about now. I mean they are more than twice the size, but it's a different time.
And I guess, when was the last time that backlogs was this high?
It's been a few years.
It's been a number of years.
Yes. I mean we have had periods. Obviously when you go back to the LTE upgrade, they were high. They probably were higher than they are now, although we are still building and that may very well be eclipsed in future here. But if you go back a couple of years ago when T-Mobile was particularly active, we saw some higher levels. But we are definitely at a high level by historical standards, even if it's not the highest and it's continuing to build, which is the most --
Of recent times, yes. The LTE, the one thing we have made clear before is backlog from 3G to 4G, the average amendment prices was much higher, due to the heavy equipment nodes that were being added. We certainly expect volumes to rise with that. But pricing will be a little bit different this time within the less heavy additional weight loads that would be in question as part of the upgrades.
Got it. Thank you for taking the questions.
Yes. We have time for one more question.
Thank you. Next will come from David Guarino, Green Street. Your line is open.
Hi. Thanks guys. A question for you on data center. So since the start of the year, we have seen a pickup in the number of transactions. Have you guys evaluated any other acquisition since the one last done in Jacksonville? And I guess what's the company's appetite to grow the data center footprint?
We have a greater appetite, provided that it comes along with edge deployments at our cell sites. So as that continues to grow and as we continue to demonstrate the synergy between a regional data center and the MEC centers at our tower sites, which is what we are beginning to now experience in Jacksonville in particular, we would continue to look. We are very mindful of what we are though. We are wireless infrastructure company. And these regional data centers, if any, would be pursued only because of the success or the perceived success we will be having around the cell sites.
That's helpful. And is that just in the U.S. you would be looking? Or can we see you guys look internationally as well?
Yes. The concept applies everywhere.
Okay. Thank you.
And the final question comes from the line of Matthew Niknam of Deutsche. Your line is open.
Hi guys. Thanks for squeezing me in. Can you give any more color in terms of the latest you are seeing from Dish and when we should anticipate them to maybe become a more meaningful driver for cash site leasing revenue growth in upcoming quarters? And then one housekeeping item, maybe for Brandon. If you can give us the contribution from a revenue and a tower cash flow perspective for PG&E in 1Q? And should we effectively double that into 2Q, given the full quarter? Thanks.
Brendan?
On the PG&E one, I believe the contribution was somewhere between $4 million and $5 million of tower cash flow and only slightly higher on the revenue side, because the costs are very limited there. And you should pretty much double that, because it closed pretty close to the middle of the quarter.
Yes. And on Dish, Matt, a lot of signed leases times 10 for application. So tremendous amount of activity. But whether we see revenue out of that this year will depend solely on how quickly Dish goes through the site acquisition, permitting and construction phase of things. And I can't give you anymore guestimate than what I have said because that's what it would be. That's what's going to drive revenue recognition this year, is the pace of the installs for Dish. But I mean it's all moving in the right direction.
Understood. Thank you.
Yes. Thank you and thanks everyone for joining us. We think it's going to be a great year and we look forward to sharing our progress with you next quarter.
Ladies and gentlemen, this does conclude the presentation for this afternoon. We thank you for all your participation. You may now disconnect.