American Tower Corp at MoffettNathanson Media & Communications Summit (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Terrific. Well, I think per that, the topic of the day is COVID. It certainly hasn't had a noticeable impact on the operations or outlook for your core business, and the industry seems pretty sanguine about its ability to navigate through the crisis. Some people are kind of to split over what it might mean in some developing or, call it, middle-income markets, where the impact could potentially be more severe, though it's not clear at this point. What sort of things have you done to prepare for a potential worsening of the outbreak in some of these markets, like sub-Saharan Africa or India or Brazil? And how do you think the business would hold up if conditions there start to deteriorate noticeably?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. So as close as it feasibly could be. Okay. That's good to hear. Yes, as we think about coronavirus in the U.S., again, obviously, core tower business seems largely unaffected. One aspect that really hasn't been discussed that much, at least not that I'm aware of, is how it might impact your indoor DAS business. As many of the venues you serve, like casinos as well as airports and so on are closed, you are seeing pretty dramatic reductions in foot traffic, and that might continue for some time. Can you remind us how much indoor DAS contributes to your results? And should we expect any sort of revenue hits or contract restructurings or anything like that?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Okay. Good to hear. The other aspect of your domestic portfolio that I thought you might be seeing some sort of impact is broadcast given what it means for the customer, right? So broadcasters' revenue streams are generally advertising-based, and some of the pressures they've already faced are pretty -- are being amplified by the crisis. So again, can you kind of size this vertical and the growth you're seeing from it and talk about if there are any indications of incremental stress on those customers that might affect you? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 11, 2020 / 7:00PM, AMT - American Tower Corp at MoffettNathanson Media & Communications Summit (Virtual)

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Okay. Understood. On the flip side, crises can create opportunities for players that are well positioned with solid balance sheets, like AMT. Have you seen any indications that the current crisis might shake loose some assets that you could pick up, whether towers, land parcels, human capital? Or is it just too early to tell?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Terrific. Well, on that note, let's transition away from the crisis towards other themes. Let's go over to 5G. Obviously, that's something people are talking about, excited about. Do you see 5G as an upgrade cycle that's really going to accelerate growth for the industry, the way 4G did? Or are the attributes of 5G is such that it's more likely to help sustain growth over time?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Cool. I definitely want to get back to some of those initiatives you alluded to in a little bit. Have you seen the carriers preposition any equipment that's usable for 5G in any material way? Or is it really -- is there a lot of runway in that front?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : One of the concerns with 5G is that unlike with 4G, where there's kind of a clear use case, right, data to support smartphones, there's not necessarily an obvious use case for 5G to incent the carriers to invest. Are you concerned at all that, that lack of an obvious use case today is going to inhibit the pace of adoption -- or rather, the pace of investment? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 11, 2020 / 7:00PM, AMT - American Tower Corp at MoffettNathanson Media & Communications Summit (Virtual)

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : All right. Let's turn to T-Mobile, Sprint. Obviously, a lot of attention being paid to that as -- given the way it's reordering the wireless market here. You have -- at least among the big 3 tower cos, you have the shortest average remaining Sprint contract term. But it kind of introduces a funny dynamic where, if you think that T-Mobile can't upgrade those sites in advance of the lease expiration, it might be in a position where it has to extend them. Or alternately, that dynamic will get priced in some sort of MLA, you might sign them. So does that make the roughly 2 year, maybe 1.5 years, at this point, average remaining lease term that you have with Sprint a bit of a misleading statistic to evaluate your exposure?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. You alluded to the contract you signed with Sprint back in 2011 when they were doing the Network Vision project. If I remember correctly, there was a provision in that arrangement where Sprint is continuing to pay for iDEN sites even after they were decommissioned in exchange for some other goodies. And at the time, I remember some of your executives saying that Sprint would pay for those sites forever, was the terminology. Is there anything about the way that those leases were structured that might lead to additional or embedded risk for American Tower above and beyond the exposure you've laid out? For example, a chunk of iDEN -- old iDEN leases rolling off that are above and beyond the overlapping -- they're on overlapping towers -- or I guess not on overlapping towers, rather.

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. It sounds like on the tone of your comments, there's not a chunk of risk we should be concerned about.

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Yes. Or really -- I mean excess churn risk as it relates to some of those iDENs.

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Let's talk about DISH for a moment. Obviously, you alluded to them as a potential driver of the business looking forward. Are you able to share anything about the degree of sophistication or seriousness with which they seem to be approaching the project based on your discussions you're presumably having? Or is that too customer-specific for you to get into?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. And they're starting with a clean sheet of paper. They probably have somewhat more flexibility in terms of choosing initial tower locations, the network is lightly loaded, and it's already larger versus a more established player. Is it possible that someone like American Tower with the big national portfolio could, say, cut a deal offering lower rents or some other attribute to win a materially larger share than your fair share from DISH? Or is that sort of an unworkable conspiracy theory?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. And DISH has also talked about using new technologies or new approaches to reduce their CapEx and their OpEx. I mean aside from deploying the gear to support a single technology instead of multiple technologies on the tower, maybe using a little less ground space, that's really not relevant for your business, is it? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 11, 2020 / 7:00PM, AMT - American Tower Corp at MoffettNathanson Media & Communications Summit (Virtual)

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Got it. Verizon is a big customer of yours. A few years ago, you signed an MLA with them, which I think has helped to sustain your domestic growth despite their increasing focus on small cells at the margin. As we think about the future deployments from Verizon, whether it's MIMO antennas or C-band or something else, should we be thinking of that MLA as having pulled forward any revenue that you might have otherwise received for them? Or is what they've been doing consistent with the incremental rent they're paying you under the MLA?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Fair enough. I want to hit on a few of the overseas markets in which you operate. There's been a ton of activity in Europe, whether M&A or other structures, separations, and there's a lot more in the pipeline. You don't seem to embrace that region like you have some others. If I'm not mistaken, one of the reasons that you've been more cautious is because of the prevalence of master service agreements, or MSAs, rather than more traditional leases. So is that a correct assumption? And to what degree is the carrier's interest in MSA structures weighed on your interest relative to more general pricing or other considerations? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 11, 2020 / 7:00PM, AMT - American Tower Corp at MoffettNathanson Media & Communications Summit (Virtual)

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. That's great color. India has been a tough market over the last couple of years. The AGR tax issue now, it's conceivable that Vodafone Idea might go under. And if it were to come to that, India would look far different than the other major markets in which you operate, and it would basically be a duopoly, kind of setting BSNL's -- BSNL aside. How would you envision the Indian tower market performing under that sort of outcome? I mean, would the independent leasing model really even work with only 2 real players?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay, terrific. I want to spend the time that we have left talking about some of the potential new revenue streams that you alluded to earlier because you have some meaningful aspirations for those in the coming years. On your earnings call 1.5 weeks ago, Tom kind of teased that -- or he said 15% of your non-MLA new business came from nontraditional tenants in the first quarter. So help us size what that actually means? Can you share what portion of your new business is not MLA related and how that 15% has changed over time?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. The idea of edge deployments, edge data centers is one that's really captured investors' attention. Yes, I've always thought it is -- I can see how it makes a lot of sense from an engineering perspective for certain applications, but the economics seem a little less clear to me. So again, recognizing it's early days given the sort of work you've done, how appealing do you think the economics might be? And what customer set or what applications might find it particularly appealing?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Great. It's going to be really interesting to see how that plays out in the coming years. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 11, 2020 / 7:00PM, AMT - American Tower Corp at MoffettNathanson Media & Communications Summit (Virtual) Unfortunately, we're out of time. I wish we had more. I guess on that note, are there any kind of closing thoughts or insights that you want to share with the listeners?

Question: Nicholas Ralph Del Deo - MoffettNathanson LLC - Analyst : Okay. Well, terrific. Well, Igor, thanks again for joining us. It was a very interesting discussion from my perspective, and I appreciate you taking the time.