American Tower Earnings Call Insights: Acquisition Opportunities and Tower Build Program
American Tower Corp (NYSE:AMT) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Brett Feldman – Deutsche Bank: Thanks for that deep dive on your International business. I think that was very helpful. Sort of along those lines, you have been a little less active this year in terms of acquiring portfolios. I know you’ve done some deals but still below your recent run rate. You have a huge liquidity position. I was hoping you could share with us some thoughts on the opportunities you see out there, both Domestically and Internationally, and if you don’t identify an attractive deal soon, what other types of options you have for that cash?
Tom Bartlett – CFO: Hey Brett, thanks for the kind words. The pipeline continues to be incredibly busy. As you know, we have a very disciplined investment approach, and while we’ve closed on a couple hundred towers if you will in Q2, we’ve passed on many opportunities just because they didn’t meet our investment hurdles. But I can assure you that there is a significant pipeline globally in just about every market that we represented. I mean, to the extent that those don’t pan out as we’ve done in the past and we’ll continue to use is our buyback program. We have just over $1 billion of buyback available under the plan that the Board put in place just a couple of years ago. And so as we did this past quarter, we increased the pacing of that buyback, and to the extent that opportunities that meet our hurdles don’t pan out for the balance of the year, we’ll continue to use that as a means of returning capital back to shareholders.
Tower Build Program
Rick Prentiss – Raymond James: Thinking back on a little bit of Brett’s questions there. You reduced the tower build program, it sound like, primarily in India. Can you talk a little bit about what’s going on there in particular regards to Jim’s comments? And then as you look at transactions internationally, buying a portfolio versus building, how do you think about the price per tower, and necessarily is it a premium to the build cost and kind of how that relates?
James D. Taiclet, Jr. – Chairman, President and CEO: Rick, it’s Jim good morning. Our tower build program especially in India in our original budget submissions was very aggressive, and we’ve recognized that here, but we wanted to make sure if there was that much opportunity in the market to build sites this year, that did again meet our – in each particular individual case, our hurdle rates there. We wanted to make sure we had the capital to do it. And so, just based on carrier budgets and timing and schedules, it wasn’t as aggressively deployed as far as new builds as we thought. By the way, the colocation business did quite well so far in India as an aside to that. So we definitely budgeted more than we ever had for India to build towers. The team was very aggressive and kind of overshot, frankly. So we are scaling back the guidance a little bit in that regard. When it comes to build versus buy, price per tower is a derivative outcome of our investment process. As you know, whether it’s one tower or 10,000, we use the same model framework. So a price per tower is going to depend on build costs, it’s going to depend on how many customers we think we can get on it, and over how long a period, what’s the amount of equipment and therefore rent that the first customer’s signing up to pay. There’s a host of inputs that go into whether we are going to decide to build a tower or not and the two things that fall out of our 10-year DCF, whether it’s one tower or 10,000, are what was the multiple of cash flow, and what was the price per tower. So those things are derivative answers from an investment processes that’s going on a 10-year DCF.
Rick Prentiss – Raymond James: In rough prices, the build in the different regions, is it still kind of 60-ish in India, 150-ish in Latin America, just kind of broad build costs?
James D. Taiclet, Jr. – Chairman, President and CEO: Yes. About, $50,000 in the U.S., depending whether it’s a rooftop or whether it’s a ground-based tower, to $150,000-ish down in Latin America, $250,000 if you will, in the U.S. and in Africa in kind of that $150,000 range.