American Tower Corp

NYSE:AMT

Earnings Call Transcript 2020-Q2

[Operator]

Ladies and gentlemen, thank you for standing by. And welcome to the American Tower Corporation Second Quarter 2020 Earnings Conference Call. As a reminder, today's conference is being recorded. Following the prepared remarks, we will open the call for questions. [Operator Instructions] I would now like to turn the conference over to your host, Igor Khislavsky, Vice President, Investor Relations. Please go ahead, sir.

[Igor Khislavsky, VP, IR]

Good morning, and thank you for joining American Tower's Second Quarter 2020 Earnings Conference Call. We have posted a presentation, which we will refer to you throughout our prepared remarks under the Investor Relations tab of our website, www.americantower.com.

Before the rest of my comments, I'll note that due to COVID-19, all of us on the call this morning are again dialing in remotely from different locations. So to the extent there are any minor technical difficulties, we would ask that you bear with us.

Our agenda for this morning will be as follows: First, I'll quickly summarize our financial results for the second quarter; next, Tom Bartlett, our President and CEO will provide an overview of our international business and the associated key trends and returns; and then finally, Rod Smith, our Executive Vice President, CFO and Treasurer will discuss our second quarter results and updated 2020 outlook. After these comments, we will take your questions. I'll remind you that this call will contain forward-looking statements that involve a number of risks and uncertainties.

Examples of these statements include: our expectations regarding future growth, including our 2020 outlook, capital allocation and future operating performance, our expectations regarding the impacts of COVID-19, our expectations regarding the impacts of the AGR decision in India, and any other statements regarding matters that are not historical facts. You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include, the risk factors set forth in this morning's earnings press release, those set forth in our Form 10-K for the year ended December 31, 2019, as updated in our Form 10-Q for the three months ended March 31, 2020, and in other filings we make with the SEC. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances.

Now please turn to Slide 4 of our presentation, which highlights our financial results for the quarter. During the quarter, our property revenue increased 2.4% to nearly $1.9 billion. Our adjusted EBITDA also grew by 2.4% to over $1.2 billion. And our consolidated AFFO and consolidated AFFO per share increased by 1.6% and 1.5% respectively to $924 million and $2.07.

On an FX neutral basis, growth rates for property revenue, adjusted EBITDA and consolidated AFFO per share would have been 8.6%, 7.6% and 7.4% respectively.

Finally, net income attributable to American Tower Corporation common stockholders increased by roughly 4% to $446 million or $1 per diluted common share.

And with that, I'll turn the call over to Tom.

[Tom Bartlett, President and Chief Executive Officer]

Okay, thanks, Igor. Good morning, everyone. I hope that you are all healthy and well. As we navigate the ongoing COVID-19 pandemic, our number one priority continues to be the health and safety of our employees, their families, our tenants, suppliers, and surrounding communities. The remote work policies I mentioned on our last call continue to service well throughout our global footprint.

And I am pleased to say that there are even a few geographies where certain employees have been able to return to the office with numerous incremental safety measures in place. I am also happy to report that our business continues to perform well as we work closely with our tenants to preserve and enhance mobile connectivity, when it is needed the most.

And outside of FX impacts, which have moderated slightly over the last few months, we have to this point not seen material impacts from COVID-19 on our operations. As we move forward, we believe we are well positioned to continue to provide high levels of service and drive solid results. The rest of my remarks today, similar to prior second quarter calls, will center on the key trends in return profiles we are seeing across our international business and what we expect in the future.

Since we entered Brazil and Mexico back in the late 1990s to provide geographic diversification to our foundational U.S. business, we’ve added nearly 140,000 communication sites in 19 countries outside of United States, focusing on partnering with large multinational wireless carriers in select markets with strong property rights, rules of law and vibrant wireless industries.

Since day one of our international expansion strategy, our mandate has been clear, build and acquire multitenant exclusive franchise real estate assets that would generate attractive organic growth rates, while driving margin expansion and growing returns on invested capital overt the long-term.

And so with an emphasis on building leading market positions in the largest democracies across the world with a goal of positioning ourselves is either the top one or two tower company in each market.

This strategy has been underpinned by our proven risk underwriting process including among other things contemplating FX movements and local country inflation trends. As we discussed with you before, all of our investments are evaluated using a ten year unlevered DCF model with varying IRR hurdles due to the inclusion of appropriate risk adjustments to account for the specific local country risk, the type of that asset counterparty and a host of other factors.

These hurdles range from the mid-to-high single-digits in markets like the United States and Western Europe, to the mid-to-high teens in some of our more nascent African markets to ensure that our shareholders are being appropriately compensated for the level of risk being assumed.

This balanced approach to market risk has enabled us to evaluate each individual investment opportunity in the context of its risk-adjusted return profile, long-term AFFO accretion potential and the NPV expected to be generated rather than utilizing a specific cap as to how big any market or region can get or should get in relation to the United States.

Operationally, we are also executing a number of risk mitigation strategies. For example, our MLAs include primarily local CPI-based escalators. Our overall portfolio has significant diversification. And we selectively issue local currency debt where it makes sense.

Further, the vast majority of our local country generated net cash flows are denominated in the local currency and we are generally reinvesting those same cash flows back into those very same markets.

Lastly, we have mechanisms in place through which we are able to pass through the cost of land to our tenants in Latin America and the cost of fuel and power to our tenants across India and Africa, helping to further derisk significant portions of our operating expenses across these regions.

Taking all of these items into account, we believe we have a risk evaluation and mitigation framework that will enable us to continue to be successful internationally over the long-term. Within this context the primary thesis underlying our global strategy has always been and continues to be that the evolution of network technology that we’ve seen in the United States will be replicated internationally, likely at an accelerated pace given the lack of fixed line penetration in many areas.

Our U.S. business model and international model are effectively the same. The sites look the same, the structures are comparable and the MLAs are fundamentally similar, but include the risk mitigation terms I discussed earlier. At the core, our international expansion serves as a way to significantly increase our total addressable market.

As consumers gain access to advanced smartphone handsets and mobile data usage increases, mobile network operators continue to deploy meaningful wireless CapEx. Service providers in international markets where we have a presence are expected to spend approximately $30 billion on their networks in 2020, in essence doubling the TAM of our U.S. market alone.

With mobile broadband penetration growing, we continue to expect to generate higher organic growth rates internationally and in the United States over the long-term while driving meaningful expansion in our international return on invested capital.

Fundamentally, we are utilizing our international strategy to increase and extend our overall global return profile. The ongoing COVID-19 pandemic has served to further highlight the criticality of wireless connectivity internationally, particularly in markets where fixed line penetration is minimum.

Unlike in the United States, where most of us are plugging into our Wi-Fi-enabled fixed line connections, as we work from home, mobile networks serve as the backbone of virtually all work-from-home functions in each international locations.

And as you can imagine, broad based stay-at-home orders and other restrictions that have been implemented in these markets over the last several months have led to additional strain in existing mobile networks.

For example, Vodafone Idea in India noted that they experienced a year’s worth of data traffic across their network in a single week following the implementation of lockdown measures. Similarly, major carriers across Latin America, Africa and Europe have outlined significant spikes in data usage and regulators have allocated additional temporary spectrum and implemented other policies to help maintain connectivity.

As I mentioned earlier, we are committed to doing everything we can to support our tenants as they deal with the strain of this increased usage on their networks.

Now I would like to take a few minutes to discuss the attractive economics that we are driving across our international business. In the second quarter, our international operations accounted for approximately 43% of our property revenue and about a third of our property operating profit.

Our international tower and DAS properties drove an annualized cash gross margin of over $1.8 billion in the quarter resulting in a nearly 9.5% NOI yield on our more than $19 billion in total international tower and DAS investments, as you can see on Slide 6 of our earnings presentation.

This NOI yield includes both sites that we have recently acquired, as well as sites that have been in our portfolio for a number of years benefiting from long-term tenancy and revenue growth. Our most seasoned vintage of international sites those built or acquired prior to 2010 is yielding approximately 24% in U.S. dollar terms illustrating the power of operating leverage within our business.

We view this type of return profile as a clear indication that international tower assets have the capacity to drive economics that are equal to or better than the United States tower model over the long-term.

Importantly, I’ll note that the NOI yield numbers I am referencing today are U.S. dollar equivalents. That is they take into account any foreign currency devaluation in a numerator, while freezing the denominator at historical exchange rates in the period in which the sites were acquired or built.

Over the last 20 years and especially since 2007, we have been steadily growing our international portfolio with a focus on macro towers in some of the largest three market democracies worldwide through a combination of our highly efficient newbuild programs and selective acquisitions including the Eaton Towers deal we closed at the end of last year.

We’ve added more than a 130,000 international sites in just the last decade including more than 24,000 sites we built ourselves. These sites typically have lower initial returns due to lower initial tenancy. You can see this on the slide where sites we’ve added to our international portfolio between 2010 and 2014 are generating yields of 10% and those added since 2015 are generating yields of around 8%.

Over time, our experience across all of our served markets has been that as networks mature, additional spectrum bands are deployed and consumers obtained advanced handsets both daily usage grows exponentially and significant additional network density becomes a necessity.

As a result, we’ve seen sites that have initially produced modest returns, attract collocations and amendments with minimal incremental costs, thereby driving substantial upside over time, no different than what we’ve experienced in the United States.

In Latin America, where we have owned and operated towers for now over two decades have invested approximately $8 billion and now have over 41,000 sites across eight countries, 4G deployments are in full swing. Our long time presence and scale have resulted in substantial business relationships with key operators in the region including AT&T, American Mobile and a number of others.

These relationships coupled with our extensive asset base has enabled us to drive average organic billings growth of around 10% in the region over the last five years, that’s by strong levels of new business activity and a continuing appetite for mobile data. Although organic growth rates are down a bit in 2020 in part due to falling local CPI, we continue to expect a long trajectory of solid underlying growth.

We are also focused on a new build program if network densification efforts accelerate. In fact, we expect to construct over 500 sites across Latin America this year and anticipate strong demand for new builds in the region over a multiyear period.

Importantly, these new builds typically have day one NOI yields in the high-single-digit range with just one tenant with an average tenancy ratio of around 1.5 across the region, we believe we are well positioned to drive meaningful margin and return accretion in Latin America for many years to come.

In Africa, the majority of our markets are in earlier stages of the technology evolution with 4G penetration only around 10% and average mobile data usage being a fraction of LATAM numbers as a result. We’ve invested approximately $5 billion across the continent and have an average tenancy of around 1.5 on our portfolio of nearly 19,000 sites, which are yielding roughly 11%.

Importantly, we partnered with key telecom operators like Vodafone, MTN and AirTel to bring enhanced connectivity to hundreds of millions of people. With extremely limited fixed line penetration, young tech savvy populations, and governments committed to modernizing economies through connectivity, we expect mobile broadband to play a foundational role in Africa’s growth story over the next decade plus.

We also anticipate that continued organic growth, our new build program through which we expect to construct well over a 1,000 sites this year, and our ongoing business development efforts will enable us to build on the strong foundation we’ve created in Africa as we deliver solid growth and increasing returns over the long-term.

At the same time, we are making substantial progress in our commitment to reduce the mobile industry’s carbon footprint through our innovative power and fuel program. In African markets, where grid power in many areas tends to be unreliable, we are now deploying next-generation greener technologies including lithium ion batteries and solar solutions.

We expect to invest more than $60 million in 2020 to enhance the uptime performance of our sites in the region, while reducing greenhouse gas emissions after deploying an excess of $100 million over the last few years. Not only do these initiatives benefit our tenants through higher uptimes and more efficient operating capabilities, but also they represent a critical part of our commitment to being a responsible corporate citizen.

These investments have helped enable us to reduce diesel consumption by more than 25% from 2017 to 2019 across our global footprint after normalizing for portfolio growth. Meanwhile, in Europe, where we have nearly 5,000 sites between Germany and France, and recently entered Poland by acquiring a handful of towers, networks are at a fairly mature stage with 4G having been broadly deployed over the last decade.

Organic tenant billings growth has been modest for us as expected in the low-single-digit range and new build opportunities have been somewhat limited. Despite this, we drove NOI yields of 8% across our European asset base as of Q2, largely as a result of the price discipline we displayed when we acquired these assets. We tend to think of our initial investments in the region as beachfront properties, allowing us to have a good position to evaluate other potential opportunities.

Consequently, we continue to look for ways to expand our European portfolio, but only at valuations that with underlying growth expectations allow us to hit our required return thresholds. Our entry into Poland, although on a small-scale initially is an example of our continued focus on finding macro tower portfolios poised for sustainable growth in markets with attractive regulatory frameworks, supportive regulators, and vibrant wireless sectors, all at sensible valuations.

And finally, moving to India, where we will have invested over $5 billion, pro forma redeeming our minority interest, we believe the wireless industry has now completed a much needed and long awaited consolidation to enable the deployment of 4G technology throughout the country by the remaining carriers. Through this process, we’ve experienced high levels of churns which is reflected in our current 8% NOI yield.

Although I’d note that the more than $400 million in cash settlement payments we’ve received from TATA are not incorporated in that number or it would be higher.

More recently, there have been pricing increases by all of the carriers in the marketplace, while the telecom regulator has indicated that it intends to be supportive of the carriers to rational spectrum policies and the Indian government continues to stress its Digital India initiative.

The key near-term issue that needs to get sorted out in the marketplace centers on the AGR decision by the Supreme Court including finalizing the timeline as to when the wireless carrier payments are to be made, particularly as it relates to Vodafone Idea. We are hopeful that India can return to being a significant growth engine for the company as it was for nearly a decade before the consolidation process kicked off several years ago.

We have several reasons for optimism in this regard. As I just mentioned, the market structure is now much more rational. Price competition in wireless has stabilized and the regulatory environment seems constructive. The Indian consumer has proven to have a tremendous appetite for mobile data with average smartphone usage per customer of well 10-gigabits per month, even before the impacts of COVID-19.

With that said, the majority of wireless users in India are still using legacy technologies, rather than 4G in large part because the networks are ill equipped and their current state to handle levels of traffic for more than 1 billion people. To get those networks ready, we continue to believe that significant levels of incremental network spending are necessary accompanied by material level of network densification.

With our nearly 75,000 site existing portfolio, and the additional sites we are adding through our new build program, we believe we are well positioned to benefit from our tenants’ network deployments over an extended period of time.

Additionally, we are continuing to meaningfully participate in connecting the unconnected in India through our Digital Village program with more than a 150 Digital Villages in place today and more in development, we are proud to be making a difference in the areas of digital literacy, e-learning, tower help, as well as providing enhanced access to career opportunities in many rural Indian communities.

Looking forward, we believe that we have a compelling opportunity to further enhance our international business by driving organic growth, focusing on operational efficiency and continuing to build and acquire sites using our proven investment evaluation methodology. Our preference continues to be to add incremental scale to existing markets, while strengthening ties with large multinational wireless carriers.

But there are handful of additional markets that could be attractive for us as well. We also believe there are additional opportunities to generate margin improvement as we further standardize operational processes, create regional centers of excellence and further reduce our power and fuel requirements. We also believe there will be demand for many of our innovative initiatives to extend our core platform of capabilities for new and existing tenants.

So in summary, we believe that our diverse macro tower-focused international portfolio positions us well for a prolonged period of solid growth and attractive returns on invested capital. We can further augment this to disciplined selection acquisitions in new builds on a global basis. While we expect our foundational U.S. business to drive the majority of our cash flows for years to come, we think our international operations can enhance and extend our growth trajectory by effectively doubling our total addressable market size.

The global demand for mobile connectivity shows no sign of slowing and we believe we are positioned to play a critical role in extending the reach of mobile broadband, while generating strong total returns for our shareholders.

So, with that, let me hand it over to Rod to go through the details of our results and updated outlook. Rod?

[Rod Smith]

Thanks, Tom, and good morning to everyone on the call. I hope you are safe and healthy. As you saw in today's press release, we had another solid quarter throughout our global business, driven by consistent demand for our mission-critical tower assets.

Before we turn to the accompanying charts, I would like to highlight a few specific accomplishments for the quarter. First, we met our revenue. Adjusted EBITDA consolidated AFFO expectations which I will discuss in more detail shortly.

Second, we had solid organic tenant billings growth across our business led by Africa at nearly 10% and Latin America at over 7%. Third, we constructed more than 500 towers across our international footprint. And finally, we further strengthened our investment-grade balance sheet by issuing $2 billion in senior unsecured notes across multiple tenors with very attractive economics.

Now, let’s turn to the details of our second quarter results. Please turn to Slide 8 and we will review our property revenue and organic tenant billings growth. Although we experienced some unfavorable FX translational impact, primarily resulting from the global pandemic, overall, we generated solid underlying revenue growth.

In the interest of understanding our fundamental operational performance, I’ll be referring to growth rates for some of our key metrics on an FX neutral basis in addition to our standard as-reported basis.

As Igor mentioned earlier, our second quarter consolidated property revenue of nearly $1,900 million grew on a reported basis by $44 million or 2.4% over the prior year period. And on an FX neutral basis by $158 million or 8.6%.

Our U.S. segment represented 57% of our consolidated property revenue with international comprising the remaining 43%. A key contributor to our consolidated property revenue was our tenant billings revenue of $1,620 million, which grew by nearly 10%. The components of our tenant billings growth included around $71 million in colocation and amendments.

Roughly $50 million in contributions from escalators and $72 million in day one tenant billings from acquisitions and new builds. These positive items were partially offset by churn impacts of $46 million and $2 million in other items.

Our U.S. property segment revenue totaled nearly $1,100 million for the quarter and grew by $80 million or 8% over the prior year period. Our international property revenue of nearly $806 million declined by $36 million or 4.3% as compared to last year’s levels, primarily due to the FX translational headwinds we just discussed.

Moving to the right-side of the slide, you will see that our consolidated organic tenant billings growth was in line with our expectations at 5% for the quarter. For our U.S. property segment, organic tenant billings growth was 4.7% comprised of new business activity which contributed 3.7%, escalators, which contributed 3.2%, churn of 1.9% and a roughly 30 basis points negative impact from other items.

As expected, this growth rate reflects a sequential deceleration driven primarily by relatively modest contributions to our new business from T-Mobile over the last few quarters.

With that said, and as I will discuss in more detail when we review our updated outlook, we have seen new business activity from T-Mobile begin to pickup with further acceleration anticipated towards the end of the year.

Our international property segment organic tenant billings growth was 5.4%, led by Africa at nearly 10% and Latin America at over 7%. Europe was just over 2%, while India was 0.4%, again, in line with our expectations given anticipated churn and general market conditions.

The component parts of international organic tenant billings growth where new business activity which totaled nearly 7% are mostly local inflation-based pricing escalators which contributed 3.7% and other items which contributed around 20 basis points. These items were partially offset by churn of 5.3%, much of which was in India.

Now, please turn to Slide 9 and we will review our adjusted EBITDA and AFFO results. Our second quarter consolidated adjusted EBITDA of just over $1.2 billion grew on a reported basis by about $28 million or 2.4% over the prior year and on an FX neutral basis by $19 million or 7.6%. Our adjusted EBITDA margin was 63.3%, up roughly 70 basis points over the prior year.

This increase was attributable to a combination of our solid organic growth, diligent focus on cost controls, and a favorable impact of some incremental net straight-line. These favorable impacts were partially offset by approximately $21 million in bad debt reserves, against certain receivables in India.

Although we operate in 20 countries, our U.S. business again drove the substantial majority of our property segment operating profit in the quarter accounting for 68% of the total, while our international business generated the remaining 32%.

Moving to the right-side of the slide, you can see our consolidated AFFO of $924 million grew on a reported basis by nearly $15 million or 1.6% over the prior year and on an FX neutral basis by around $69 million or 7.5%.

Consolidated AFFO per share of $2.07grew on a reported basis by $0.03 or 1.5% over last year’s levels and on an FX neutral basis grew by $0.15 or 7.4%. This growth in AFFO and AFFO per share was driven by our previously discussed growth in adjusted EBITDA, as well as interest expense management, careful oversight of cash taxes and lower maintenance capital spending.

Let’s now take a look at our updated expectations for 2020. Before I get into the numbers, I want to cover a few of our high-level assumptions. First is our updated expectation regarding the post-merger acceleration in new business activity from T-Mobile. Our prior outlook assumed activity levels would have materially increased by now and that we would be seeing increased levels of new business from T-Mobile starting this month.

Although, we have seen a modest increase in activity, it has not yet reached the level we expect to eventually see, based on the T-Mobile’s public comments. As a result, we now expect this acceleration of new business to come much later this year. Consequently, we are reducing our U.S. organic tenant billings growth expectations for 2020, which I will discuss in more detail shortly.

Next is our updated expectations regarding customer collections and additional reserves for some bad debt. For the most part, tenants throughout our footprint have continued to pay on-time and without interruption through the pandemic.

However, in India, we have layered in approximately $65 million in additional bad debt assumptions for the full year. This is primarily attributable to the expected timing of payments from the government owned carrier BSNL, as well as the possibility that Vodafone Idea future payments become interrupted or delayed as they weigh a final outcome of the ongoing AGR court proceedings in India.

Additionally, we have assumed roughly $10 million in incremental bad debt reserves for a few tenants in Africa.

Lastly, we have updated the foreign currency exchange rates in our full year outlook. The impacts of these revised FX rates on full year expectations, as compared to our prior guidance are estimated to be a positive $45 million of property revenue, $20 million for both adjusted EBITDA and consolidated AFFO.

Aside from these adjustments, our other high-level assumptions remain largely consistent with our prior view as demand for our telecommunications real estate across all of our markets is expected to remain solid.

If you’ll please turn to Slide 10, I will now review our revised outlook midpoints. Our updated guidance for property revenue is $7,720 million, which is a decrease of $30 million compared to the midpoint of our prior outlook and reflects a growth rate on a reported basis of 3.4%. On an FX neutral basis, the growth rate is approximately 8%.

For our U.S. segment, we now expect property revenue of $4,380 million, which is $35 million lower than our prior projections. About $20 million of this decrease is attributable to the timing of T-Mobile activity with the remaining $15 million or so being driven by an adjustment in our non-cash straight-line revenue expectations as a result of an accounting true-up.

For our International segment, we now anticipate property revenue of $3,340 million, which is $5 million higher than our prior expectation. This is being driven by roughly $45 million in favorable FX impacts, along with around $10 million in other outperformance, partially offset by a $50 million currency neutral decline in pass-through revenues across our footprint due to lower fuel prices.

At a high level, our expectations for our international businesses are broadly consistent with our prior outlook, which demonstrates the critical nature of our assets, as well as the effectiveness of our more than 5,000 employees across the globe. We could not be more proud of the way our global teams have performed throughout this pandemic.

Moving on to the right-side of the slide, we now expect organic tenant billings growth to be between 4.5% and 5% on a consolidated basis. This includes projected U.S. organic tenant billings growth of approximately 4.5% for the full year.

As I just mentioned the change to our U.S. expectations is driven by our adjusted timing assumptions around T-Mobile’s activity ramp up with us rather than a fundamental change in underlying long-term trends. For our International segment, we are reaffirming our outlook for organic tenant billings growth of approximately 5%.

Moving on to Slide 11, you will see that we now expect our full year adjusted EBITDA to be $4,930 million, which is $40 million below the midpoint of our prior outlook and reflects nearly 8% growth over the prior year on an FX neutral basis.

The drivers of this reduction in outlook are, a roughly $75 million increase to our bad debt reserves, primarily in India, and approximately $17 million reduction in net straight-line, and a $10 million reduction from our services segment which is the result of the revised outlook for T-Mobile activity.

These negative impacts are expected to be partially offset by a favorable FX translational impact of $20 million, as well as an additional $42 million or so of general outperformance we now anticipate throughout our business, particularly on the direct expenses and SG&A side.

As part of our adjusted EBITDA projections, we now expect cash SG&A as a percent of total property for the year to be in the high 8% range or around 7.4% excluding bad debt.

Lastly, we now expect consolidated AFFO for the full year to be $3,670 million, which is $20 million above the midpoint of our prior outlook and reflects nearly 9% growth over the prior year on an FX neutral basis.

We have been able to offset the expected decline in cash adjusted EBITDA through, $25 million and lower net cash interest, $10 million in lower cash taxes, $10 million in reduced maintenance capital expenditures and about $20 million in FX favorability. On a per share basis, we expect to generate consolidated AFFO of $8.23, up $0.05 relative to our prior guidance.

Moving on to Slide 12, let’s review our capital deployment expectations for the year. Our full year dividend subject to the Board approval is expected to be approximately $2 billion resulting in an annual common stock dividend growth rate of right around 20% once again.

As previously discussed, in future years, you could expect our dividend to grow roughly in line with our REIT taxable income. That will be consistent with our REIT requirements, as well as with our internally held dividend philosophy and is likely to result in growth rates dipping below 20% beginning next year.

Subject to Board discretion, we anticipate the impact of any deceleration in the growth rate to be gradual and expect our dividend to grow between 15% and 20% for each of the next several years.

We also expect to deploy nearly $1.1 billion towards our CapEx program with more than 85% of that investment being discretionary. This is down $25 million from our prior outlook with $15 million in lower redevelopment CapEx and an additional $10 million decline in maintenance CapEx.

We have spent roughly $757 million on M&A so far this year including our acquisition of MTN’s minority stakes in our joint ventures in Ghana and Uganda earlier this year and our entry into Poland through a small transaction in late June.

The purchase of TATA’s remaining interest in our India business, which at current exchange rates had an approximate value of $329 million is currently pending regulatory approval in India. We continue to expect to complete the purchase of these shares this year. We also deployed around $56 million through share repurchases earlier in the year.

This combined with our year-to-date dividend declaration of $967 million brings our total capital returned to shareholders so far this year to over $1 billion.

Finally, as a step towards ensuring we have access to a wide variety of options for raising capital, we intend to implement an aftermarket stock offering program. We anticipate having the ability to from time-to-time sell up to $1 billion of our common stock. It’s our intention to use the proceeds for general corporate purposes, which may include investment opportunities or debt repayments among other things.

Turning now to Slide 13, I will briefly discuss our investment philosophy, historical capital allocation and the associated financial returns. Since 2010, we have deployed nearly $46 billion through a combination of common stock dividend, our internal capital investment program, M&A transactions and common stock repurchases.

As you can see on the capital deployment chart to the left, approximately $27 billion was invested in M&A. Over $10 billion was returned to our common stockholders through the combination of dividend distributions and share repurchases. Roughly, $7 billion represented discretionary capital investments and with the remaining $1 billion being dedicated to non-discretionary maintenance capital projects.

As Tom alluded to earlier, the vast majority of investments to-date have been geared towards macro towers. This has been guided by our longstanding investment objectives, which have always been and continue to be focused on generating maximum total shareholder returns by driving long-term AFFO per share growth and attractive return on invested capital, all while prudently managing risk.

Based on our significant experience and our constant review of all types of communications infrastructure, we view macro towers, whether in the United States or in select international markets as the most compelling assets for us to own as we pursue our investment objectives.

Likewise, as we explore innovation initiatives as a means of extending our platform of communications real estate our longstanding investment objectives and our disciplined approach will remain the same. As you can see, from our historical results, our investment process has worked well for our shareholders.

A key element of our success has been that our tower portfolios, regardless of where they are located shares several value-creating characteristics including the ability to monetize growth in mobile data consumption, significant and proven operating leverage driven by contractual escalators, new business commencements and a high likelihood of multi-tenancy and very low ongoing capital maintenance.

Lastly, the high quality nature of our model is highlighted in our consistent and attractive financial returns. In the last decade, we have added more than 153,000 sites, many of which were less mature towers located outside the United States and came with lower, day one tenancy and margin profiles.

Even taking this into account, as you can see on the charts in the right, our return on invested capital has risen by around 50 basis points over the last ten years and stands now at nearly 11%. We view this as a testament to our disciplined investment approach and the powerful operating leverage inherent in the tower model.

We can now turn to Slide 14 and I’ll make a few closing remarks. First, we finished the second quarter with a solid set of results and believe we are well positioned as we head into the second half of 2020 and beyond. Pro forma for refinancing activity earlier this month, we have over $5 billion in total liquidity with an average tenor of more than six years and an average interest cost of under 3%.

This position reflects our early redemption of all of our 2020 and 2021 senior notes, which leaves us with no senior note maturities until 2022. As Tom and I both discussed, outside of translational FX effects, the impacts of the COVID-19 pandemic on our business thus far have been modest. We are pleased to see our global infrastructure assets play such a critical role in keeping people connected through this difficult time.

And in closing, I will make two final points. First, we are energized about the United States as we look out over a multi-year period. We expect the new wireless landscape to drive higher levels of network deployment activity as C-band spectrum becomes available. DISH begins rolling out their network and 5G activity across the industry lands up.

And second, our international markets also show great promise as our primarily large multinational tenants continue to invest heavily in their networks including around $30 billion expected in 2020. Networks across the globe are seeing tremendous growth in mobile data usage as consumers gain access to advance handsets than applications and we expect a long cycle of carrier capital spending to support these trends.

From our advantage point today, we continue to be excited about the future of wireless communications and the central role our real estate will play.

With that, operator, will you please open the line for questions?

[Operator]

[Operator Instructions] Your first question comes from the line of Matthew Niknam [Ph]. Please go ahead.

[Unidentified Analyst]

Hey guys. Thank you for taking the question. Just two if I could. First on the U.S., if you can give us any additional color on what you are seeing in your discussions with the new T-Mobile, whether this delay is really timing-related or have there been any changes in terms of spending plan on them relative to earlier expectations?

And then just secondly, on the ATM program, can you help us think about the investment opportunities you are evaluating and the decision to use equity as a percent of means of funding this relative to the debt you’ve traditionally used given where your leverage is today? Thanks.

[Tom Bartlett, President and Chief Executive Officer]

Hey Matt. How are you? This is Tom. On the T-Mobile side, based upon everything that I think they said publicly, I think it’s fair to say that it really is just timing. And they are working through all their plans. They closed their deal in April then settled their transaction with DISH, not that long ago. So, we believe it clearly is timing. And are looking forward to really supporting them as they continue to really build out their network even further.

On the ATM side, it’s good plumbing. It really is just having more flexibility. It’s not a significant number clearly, compared to general ATM programs as part of market cap. So it really is just kind of good plumbing to have a flexibility of having access to a number of different sources of capital.

[Rod Smith]

And if I can, Matt, maybe I would add…

[Unidentified Analyst]

And just a follow-up – go ahead, Rod.

[Rod Smith]

I am sorry, Matt. Yes, let me just add a couple of points on the U.S. growth. Number one is, everyone kind of saw the slowdown from T-Mobile as the sorts of middle to third quarter of last year.

Now that we are almost lapping that slowdown and that’s where the further way from the beginning of that slowdown, the bigger impact that it has on the organic tenant billings growth deceleration. So, the fact that they haven’t started up yet is, what’s causing us to reduce our outlook from about 5% down to about 4.5%.

And the other expectations in the U.S. industry remain the same. So, we haven’t seen any changes in our expectations relative to the other carriers or anything else going on in the U.S. it really is isolated to the new T-Mobile and the timing of when they begin to spend.

[Unidentified Analyst]

And that was going to be my follow-up. I appreciate it. Thank you.

[Rod Smith]

Okay.

[Operator]

Your next question comes from the line of [Indiscernible]. Please go ahead.

[Unidentified Analyst]

Great. Thank you. And just to follow-up on the U.S. activity, can you provide an update on how you think about the potential decommissioning that T-Mobile can do? I think the Sprint sides are – upward maybe next year.

And second question on LATAM. How do you think about the growth going forward given that the macro environment is weaker and with the potential acquisition of other carriers could potentially create some churn activity. Yes. I would like to see your thoughts on how you think that could impact your growth over the next few years. Thank you.

[Tom Bartlett, President and Chief Executive Officer]

Yes, Batiya [Ph] it’s Tom. With regard to – I’ll address the LATAM question first, I mean we are really excited about the opportunities that we continue to see down in the market, particularly in a market like Brazil which is still so underserved. I mean, if you take a look at customers per site, it’s significantly higher than what we are seeing in the United States.

And so, we continue to see a – the opportunities for further densification where our build programs are continuing to grow. So we are actually very energized and our teams in the markets are very excited about the opportunities there. Yes, there is some consolidation perhaps going on in the market, but that was fully understood, fully expected. So there really no surprises there.

And I think the government themselves, particularly with regards to what we are seeing in the pandemic continue to want to drive a connectivity and digital connectivity in their markets. So, we are quite excited about that. And as you all know it represents a relatively small piece of revenues. I am sorry Batiya, [Ph] second question on the U.S. side, was?

[Unidentified Analyst]

On the T-Mobile decommissioning activity that could start potentially next year? ... with last year. So we think that, that's a good...

[Tom Bartlett, President and Chief Executive Officer]

Yes. No. You are right. I mean, those – a vast majority of those sites come up for renewal towards the end of next year.

We believe they are obviously well positioned sites and we will likely try to mitigate as much of that churn potential as possible and hopeful that between the new build it’s going on in the marketplace as well as, DISH's expectations for building out, they will be successful in terms of mitigating that. But that’s all part of the lot of the negotiations and discussions that are going on as we speak.

[Unidentified Analyst]

Alright. Thank you.

[Rod Smith]

And Batia [Ph] I will just a couple of comments on the Sprint T-Mobile, maybe I put the merger kind of in context with the U.S. market. So, you know, that the U.S. is experiencing kind of exploding growth in mobile data, about 30% a year increases. We’ve seen accelerating deployments for 5G kind of heading our way that the number of new spectrums heading into the market that will have to be built out.

The carriers continue to invest heavily in 4G as they focus on their customer experience and strengthen their networks to handle the growing data demand. So all that is, really constructive in terms of what’s happening in the U.S. landscape. When you look at T-Mobile in particular, they have come with pretty significant build-out requirements.

So they said that they are going to spend $40 billion over the first three years, build an additional 10 to 15 sites, particularly in some of the rural areas where they are expected to cover 97% of the population on low-band spectrum of about 75%, on mid-band spectrum within three years. So, they’ve got an awful lot of work to do. They are certainly going to be deploying capital.

So we continue to believe that it’s in their best interest and good for our shareholders, as well to the extent that we can enter into an arrangement where they can have quick access to our site and potentially renegotiating the way some of the churn happens over time. So to spread that potential churn, which is we continue to believe it’s in the range of 3% to 4% of our overall property revenue.

That’s the overlap piece. And we continue to expect that could be spread out over time and we could give T-Mobile easy quick access to our sites through a holistic deal which will help them deploy their network.

[Unidentified Analyst]

Got it. That’s helpful. Thank you so much.

[Operator]

Your next question comes from the line of Jonathan Atkin. Please go ahead.

[Jonathan Atkin, RBC Capital Markets]

Yes. I wondered if you could talk a little bit more about Brazil and kind of the directionality of the organic growth rates. You talked about OI, but maybe Nextel and that consolidation, does that represent perhaps a little bit of a headwind or not big enough to matter? And then, I just wondered a little bit about India.

You talked a little bit about the bad debt provision, but if you talk about just actual leasing activity in the market any changes that to kind of call out over the next couple of quarters versus what you’ve seen. Thanks.

[Tom Bartlett, President and Chief Executive Officer]

Yes. I mean, Jon, first on Brazil, just kind of getting a little bit deeper into the market, it’s a market that we expect the wireless CapEx is going to be in the $3 billion to $4 billion range. So, obviously, very, very strong, a high growth market for us. The CapEx percent of carrier revenue is to be around 25%, which is actually a bit higher than we’ve seen in prior years consistent with last year.

So we think that that’s a good sign. Their margins are in the 40%. So the carriers themselves, I think are quite well capitalized and very focused on building out their 4G overall initiatives. The local CPI is actually been down over the last several years, so was our escalators in concert with it. And that’s being really reflected in some of the 2020 escalator that we are seeing this year.

But Vivo, Tim, America Movil, including Nextel, in that transaction is relatively insignificant relative to our overall growth rates. And we are seeing organic tenant billings growth of over 8% in Q2, churn was in the kind of the mid 1% to 1.7% for the year. And we expect for the year overall, billings growth is 7%. So, we are bullish on the marketplace. We think we are well positioned.

We have really solid relationships with what we expect to be kind of the three main players in the marketplace. And as I mentioned before, we believe that the networks are overburdened. They have roughly 3000 to 4000 sims for sell-side. It’s really twice what we are seeing in the U.S. So, the teams are excited or bullish. We are building out sites. We have a lot of interesting things, I think, going on with the various carriers. And so, we are excited about what we expect in the marketplace.

On the India side, again, if you take a look at the kind of the total growth that we’ve seen in the market, and again it’s double-digits on a total gross basis. Carrier spending continues to be strong, building out their networks. They continue to make the network investments to support the overall usage demands. I mean, I think I mentioned in some of my comments that, we really remain optimistic about the market.

The structure is now much more rational. There is price competition and wireless has actually stabilized and the regulatory environment is very, very constructive. There is a significant appetite for mobile data from a customer perspective. They are using over 10 gig per month and that was even before the COVID-19 impact.

So, as well as they are still using the significant legacy technologies, 2G technologies, rather than even 4G. So we think is that the network continues to get equipped as the government continues to expand its overall Digital India strategy that there is going to be a significant amount of further densification and network investment going on in the marketplace.

[Jonathan Atkin, RBC Capital Markets]

And then, lastly on the U.S., yes, and on U.S. you talked Sprint T-Mobile at some lengths done, what about the rest of the industry? There is two other national carriers and if you think about in aggregate kind of their activity level and do you think that you are expecting there that will be different compared to year-to-date trends?

[Tom Bartlett, President and Chief Executive Officer]

No. I mean, they have been very interested. I mean, very, very steady in terms of their build out. You’ve heard them kind of tweak what they expect their overall CapEx expectations are probably for the year. But for us, we’ve been very consistent. We are expecting to be so.

[Jonathan Atkin, RBC Capital Markets]

Thank you very much.

[Tom Bartlett, President and Chief Executive Officer]

Sure, Jon.

[Operator]

Your next question comes from the line of Sami Badri. Please go ahead.

[Sami Badri, Credit Suisse]

Hi. Thank you very much for the question. I just wanted to take a step back to India and just talk about – I was hoping you could give us some of your views on U.S. hyperscalers, really kind of starting to navigate that region and how that actually changes anything. And then maybe perhaps just thinking about your international strategy and what you’ve observed in India and how that could potentially happen in other markets?

Does this at all change your international M&A strategy, your expansion strategy at all? Are there regions that you are going to start avoiding simply because you don’t want to get tangled up in these kinds of speed bumps along the road and just want to get your take kind of on those different dynamics there?

[Tom Bartlett, President and Chief Executive Officer]

I think that the fact that we are seeing another – number of hyperscalers investing in India is a very good thing. There are significant investments being made into the networks. They see the same things that we do in terms of the kind of the digital transformation that’s going on in the marketplace and they are bringing many more applications and products to the consumers to those particular markets.

And given that the wire line penetration is very, very low in that market, as well as most of the markets that we are in outside of the United States. We think that then most of that traffic to be able to utilize those applications is going to go over those wireless networks and clearly the carriers are going to want to invest in their networks to be able to support it.

It’s no different than what we’ve seen here in the United States. And so, I think it’s a very good sign candidly. And I would hope that we would continue to see more of that kind of activity being in – occurring in the markets outside where we have a presence.

[Sami Badri, Credit Suisse]

Got it. Thank you for that color. And then, just take me back to the U.S., and on prior earnings calls, you’ve talked about the micro datacenter opportunity and probably within the last twelve months if opportunity has quickly evolved from proof-of-concepts in 2019 and now fully funded, we see competitors and you guys have now kind of drawn the lines of the sand coming to the table. So if you could give us an update on the micro datacenter opportunity within the U.S.?

[Tom Bartlett, President and Chief Executive Officer]

Well, I mean, the underlying premise clearly is that, we believe the cloud is moving to the edge and we see this. There are a number of factors that are supporting it, whether if you are looking at CRAN, you are looking at what’s going on with cloud infrastructure and with the deployment of 5G, we think that enterprise customers are going to be looking for low latency access as well as cloud, kinds of capabilities out of the edge. And so, we remain very bullish on the whole opportunity.

We do have a number of trial sites. I think we have five or six trial sites down in the Southeast and actually out in west. And the way we are looking at it really is that, at this point in time, there are really kind of a couple of distinct trends that we are paying attention to. First of all, on the distributed compute and then more broadly on the mobilized computing where we think that the TAM is going to be significantly higher and that we will be able to create some scale.

And we've talked about the distributed compute, which is really where we are focused right now with regards to a number of our kind of trial sites. And that’s where enterprise workloads moving to the public cloud and there is a growing near-term market segment use for on and off for private cloud computing in somewhat of a hybrid solution.

And so, when in many of the sites that we have, we have 50 kilowatts of power and we are providing kind of local compute capability for mid and smaller sized enterprises. And so, it’s an interesting market segment. I don’t think it’s actually being serviced, particularly well today. But clearly, that’s not the big opportunity that we see going forward.

The big opportunity is clearly on the mobile edge compute. And it’s one where we think that we are actually going to be able to further scale. But we are really just in the early innings of it. But the concept of the strategy is that we expect we’ll be able to build a neutral host, multi-operator, multi-cloud datacenter in several thousand of our sites that we have across the country.

And we do have a meet-me room/data center in Atlanta, which is, as I said tied to a major datacenter down in the marketplace. And so, we are tracking in the opportunity and what it will mean to be able to really develop this type of a strategy. We realize that we don’t have lots of the skill sets that are going to be required to really scale this.

And so, like our other kind of innovative initiatives, very potentially we’ll look to partner to be able to gain access to those kinds of skill sets and capabilities, distribution, software engineers, those types of things to really be able to scale and grow the opportunity. So, early innings as I said, but we remain quite bullish on the overall opportunity.

[Sami Badri, Credit Suisse]

Got it. Thank you very much.

[Operator]

Your next question comes from the line of Ric Prentiss. Please go ahead.

[Ric Prentiss, Raymond James]

Thanks. Good morning guys. Everybody, hope you and your family and employees are doing okay through this COVID-19 time.

[Tom Bartlett, President and Chief Executive Officer]

And you, as well.

[Rod Smith]

Yes. Thanks, Rick.

[Ric Prentiss, Raymond James]

Yes. Wanted to touch on the Sprint decommissioning question again. Obviously, T-Mobile has a lot of dominos they are trying to knock down in the process. But it sounded like, to Batiya’s question, you guys might be more interested in spreading the effects of the churn through holistic over time versus maybe taking a one-time payment like you did with TATA?

[Tom Bartlett, President and Chief Executive Officer]

Ric, it will come down to math. Right, it’s really a TBD type of an event. We expect really based upon what T-Mobile has said is that, they are going to need thousands of sites over and above what they are expecting right now after the decommissioning, right? And so, there could be an opportunity for those sites. There could be an opportunity for those sites in the hands of somebody else.

And so, it’s a bit of three dimensional chess right now in terms of what these transactions with all of our customers and potential customers. I would expect that there will be churn of some sort. I don’t know it will be all at once or over an extended period of time. But we believe that longer-term, there are clearly going to be a number of offsets and if you just take a look at the wireless growth that we are seeing in the marketplace.

And what we’d expect and the amount of capital that all these carriers are looking to spend and the fact that this is going to be coming into the full there, we would expect solid growth going forward. But, so it’s really a TBD at this point. I would want to give you a sense of that anything is certain, or anything is put in concrete we continue to work all those items with our customers.

[Ric Prentiss, Raymond James]

Right. So it’s all mass negotiations, see how it plays out. Okay.

[Tom Bartlett, President and Chief Executive Officer]

Right.

[Ric Prentiss, Raymond James]

You mentioned there is a couple of times that obviously, we are all monitoring this very closely, there is a feeling that this needs a lot more funding to really get the network ramp going. It was a good sign to see Dave Mayo join I think, DISH as Network Deployment Head, but how are you thinking about when DISH might be starting to show up in the process as you look into 2021, 2022, 2023, how – given the funding is not there yet.

[Tom Bartlett, President and Chief Executive Officer]

Well, I mean, they also have network requirements that they need to adhere to. And I think that the 2023 I think is the first commitment that they’ve made. So, I would expect to see them hit market in 2021. I think that's a better question for T-Mobile. I mean, I think it is a good sign. They brought in Dave Mayo. I think he'll do a terrific job there. And time will tell in terms of what it looks like.

But we are there to service them and support them in any way that they feel necessary and we think that we've got a portfolio of assets that really can be helpful to them. And I think they appreciate that as well. So, but I would expect that we’ll start to see them towards the end of this year into 2021. They are not in our forecast.

They are not in our guidance until we really have a more formal arrangement with them and understand what their demands are going to be, we won’t put them into our forecast.

[Ric Prentiss, Raymond James]

Okay. And apologize you might have already answered this, I was on a call this morning. On the AFFO guidance, Slide 11, you talked about a $45 million benefit to AFFO guidance from other components. Could you unpack that what’s in that $45 million that obviously offsets the $45 million negative on cash EBITDA?

[Tom Bartlett, President and Chief Executive Officer]

Yes, I mean, it’s interest. It’s maintenance CapEx. It’s cash access. It’s kind of the typical group of items below EBITDA that impact AFFO that we are seeing some positive benefits from.

[Ric Prentiss, Raymond James]

Okay. And last one for me, the CBRS auction is obviously going on right now. What are your thoughts about what that means, particularly maybe to the indoor states and what the opportunity for you guys?

[Tom Bartlett, President and Chief Executive Officer]

We continue to be very positive on the indoor spot, our indoor space. We think that the unlicensed here access spectrum in the U.S. that’s a potential to really transform, if you will the overall indoor connectivity landscape. It improves the overall TAM clearly, and it reduces the overall total ownership cost. And so, we are very positive - we have the number of trials going on, Ric, as we’ve talked about in the past.

But again, it’s early innings right now in terms of what that opportunity is. We have 400 DAS locations, if you will, around the country with a TAM of probably a couple thousand. But we think that given the cost components of being able to open up, feed the network, exactly TAMs would increase ten-fold.

And so, what we are seeing, what that looks like, we are taking a look at what those relationships are going to look like then with the landlords across the country. But we are energized by what we think we might be able to – and how we might be able to position ourselves.

[Ric Prentiss, Raymond James]

Thanks much.

[Rod Smith]

And Ric, I’ll just give you a couple of numbers there to back up what Tom was saying about the AFFO. So, the $45 million offsets are broken down with $10 million on lower maintenance CapEx. $25 million in lower net cash interest and $10 million in lower cash taxes.

[Operator]

Your next question comes from the line of David Barden, Please go ahead.

[David Barden, Bank of America]

Hey guys. Thanks for taking the questions. Tom, I think in the opening comments, you mentioned that you saw that CPI did bring in some of the international markets affecting the organic growth. I was wondering if you could kind of put some numbers around that. And then, sort of another situation unfolding in Latin America is the Telefonica RAN sharing agreement with AT&T.

I think that there is just been a lack of certainty around what that will ultimately look like and you guys have talked about having some engagement there to maybe try to create a holistic relationship down there. Could you kind of update us on any progress on that front? Thanks a lot.

[Tom Bartlett, President and Chief Executive Officer]

Yes. Sure, Dave. I think on the CPI side, the escalator, I think in the quarter was roughly 3.7% and that really, again the way they work, it works off with the 2019 kind of the inflation number is which drive what the escalator would be. So our escalator is down. And if you think about, even looking at Brazil for example, the growth rates in Brazil, my sense, we are up in the kind of even the 10% range in the last couple of years if I recall.

And we are now down in kind of that 7%, 8% range. And so, it has a significant impact, if you will kind of going forward. And as you know it’s very volatile on a year-to-year basis, but it can impact the overall organic growth rate by a couple 100 basis points one way or another.

With regards to Mexico, a fair question in terms of Telefonica and their interest in the marketplace. We have a terrific relationship with AT&T in the market and we are working closely with both Telefonica and AT&T right now on that transition and what that might look like over the next several years. And so, it’s a TBD. We are in the middle of it. And as I said, I think we are really well positioned to be able to support both our customers as they transition their network.

[David Barden, Bank of America]

Great. Thanks so much.

[Operator]

Your next question comes from the line of Tim Horan. Please go ahead.

[Tim Horan]

Thanks. Tom, regarding the – do you think there is an opportunity longer term for you guys to deploy more equipment as we kind of virtualize the networks more and the carriers can kind of share the equipment, particularly the cable companies are kind of entering the market are going to want capacity, but maybe not trying to deploy their own equipment.

I know you've done some of this in past and well in each segments, but just any thoughts around that?

[Tom Bartlett, President and Chief Executive Officer]

Tim, are you talking about O-RAN or?

[Tim Horan]

Yes, yes.

[Tom Bartlett, President and Chief Executive Officer]

Yes. It’s very interesting. I mean, I do think the whole O-RAN opportunity which we’ve seen in other markets, by the way, we’ve seen in other parts of the world is definitely starting to take hold here in the United States and ultimately we could see even the large carriers looking to take certain segments of their spectrum, certain segments of their technology and really opening it up. It kind of ties to my thoughts before in terms of kind of that cloud even becoming closer and closer to the edge.

Now, keep in mind that, that’s kind of what happens behind the curtain. So, that’s happening back on the RAN side away from the impact on the towercos. So, my intent is that any opportunity for the carriers, wireless carriers and potential new players in the marketplace to be able to bring down their total cost of ownership will then allow them to have more capital available to spend on the RAN, which is really where we come in, right?

And so, we don’t expect any of the kind of the O-RAN implications to impact at all what’s happening from the site out to the device. And as I said, it’s in fact the total cost of ownership comes down as a result of the kind of the open nature of the infrastructure that might allow more capital to be able to spent on where we come in, which is from the tower out to the device.

And so, we are cautiously optimistic on the opportunity for O-RAN in the United State, as well as many of our international markets.

[Tim Horan]

And kind of related on the technology front, do you think carriers are still favoring macros over small cells or if you are talking to the carriers, how are they feeling on small cell deployments at this point over the next couple of years?

[Tom Bartlett, President and Chief Executive Officer]

It all comes down to band, it all comes down to densification. We don’t see any change. I mean, the economics are still clearly that the macro tower can be able to support much more efficiently their customer base.

Now there are going to be certain locations, there may be certain technologies, certain band that can be better utilized and supportive at a small cell than in those dense urban markets. But we don’t see it any different right now. Those dense urban markets, the New York City kind of things, just because of interference, talking about high bands, just like what Verizon is doing today.

So, I don’t expect really any change to that. It’s going to be a function of band. It’s going to be a function of the densification of the markets that they are trying to serve, really the topography of what they are trying to serve. But we don’t see any change at all and they use the small cells versus macro.

[Tim Horan]

Thank you.

[Operator]

And your final question today comes from the line of Colby Synesael. Please go ahead.

[Colby Synesael, Cowen & Company]

Great. Two if I may. There has been some press reports of late that Vodafone Idea may have skipped out on its June payments to lease some of the tower operators and I am curious if you are one of those, or if everything you are doing is, I think, just cautionary and being trying to get ahead of that.

And to the extent that they haven’t actually made their June or perhaps July payment, do you think that, that's going to last until the AGR situation is settled? Or is this maybe just a month or two?

And then secondly, I am just curious, what do you think your exit velocity is in terms of U.S. organic growth in the fourth quarter of this year? And what does that really imply, I guess, for potential growth in 2021?

And I am sure you can appreciate a lot of investors are trying to get a sense of what is that magnitude of acceleration we could potentially think. And when we start to balance that out from the comments, Rod that you mentioned about trying to flatten out the churn. Just trying to start to frame out how to think about what that could look like? I appreciate you don’t want to give guidance, but clearly a big focus for investors.

[Tom Bartlett, President and Chief Executive Officer]

Yes, So, Colby, let me try to address a couple and Rod can add a few comments as well. On the whole, Vodafone India situation, I mean, I don’t want to get into specifics there. I think if you step back and if you take a look at where the government is, I mean the government has definitely advocated for having three strong players in the marketplace.

They are currently working through as the other carriers are with the Supreme Court in terms of where that final AGR issue is going to land. We are hopeful that there will be some resolution to this even over the next 30 to 45 days or so. There is a hearing I think in mid-August for the carriers that are no longer and providing service.

But we hope that that will provide some guidance for how the payments – the extended payments will be made – have to be made by the carriers themselves. I mean, they’ve made some sizable good base installments, as best I can tell in terms of what is owed in the marketplace. And they are aggressively trying to restructure to save cost and compete in the marketplace. And so, yes, I mean, there is some slow paying going on in the marketplace. We are working very closely with them as we would be working with any customer who is going through a similar situation. So more to come. You saw what some of our expectations were relative to how we looked at outlook for the balance of the year. But kind of given the direction of the government, given what we are seeing in the marketplace, again we remain optimistic and cautiously optimistic about their ability to continue and to grow.

I am sorry, Colby your question on the U.S. side was, the exit rate. It will largely be a – candidly a function of the kind of growth that we are going to be seeing later in the year by the various carriers in terms of their overall investments in their network. You heard Rod talked about that we are talking about an overall growth rate based upon what we are seeing right now and kind of that 4.5-ish range. So, it’s down a little bit, again, largely tied – almost exclusively tied to the timing of T-Mobile. So, we are optimistic that T-Mobile will pickup pace and we’ll see that increase in activity. And I think that will bode well foregoing into 2021. And the whole notion of the churn relative to Sprint, as we talked about before, that's a TBD in terms of where does the math sets aligned for us and where can we best service our customers in terms of whether that will be over an extended period of time or whether that would be taken more upfront. So, more to come on that one.

[Rod Smith]

And Colby, maybe I’ll just add a couple of comments on the accounts receivable issue. Not specific to Vodafone, but Tom covered that up. But just to put it into context, Q1 rolling into Q2, our accounts receivable has been very stable. So we didn’t see any increase in our overall accounts receivable across the globe. Our DSO numbers are still in the mid to upper 30s. That’s consistent Q2 over Q1.

So we’ve been very pleased that not only in India, but also in terms of the COVID-19 impacts around the globe, we’ve had very stable accounts receivable balances from Q1 to Q2 where our net receivables on the books at the end of Q1 was about $620 million. It's actually about $585 million at the end of Q2. With that said, you will see in our numbers that we took a bad debt reserve charge in Q2 of about $25 million.

And then, we also built into the back half of the forecast an additional $75 million. Those are both reserves at this point. So, we do expect that much of that will be collected. It just may – it may take us a little bit longer. So, we are trying to be cautious for the back half of the year. I’d also let you know that we have the balances in our accounts receivable ledger that are over 90 days are 100% reserves coming out of Q2.

So, again, we look that as a pretty comfortable position. Maybe it’s conservative position. Their reserves are not actually bad debt write-offs yet. So we do expect to collect a lot of that. It’s just a matter of when. And of course, Vodafone is tied to AGR and we'll see how that gets resolved here soon.

[Colby Synesael, Cowen & Company]

Great. Thank you.

[Operator]

And there are no further questions.

[Tom Bartlett, President and Chief Executive Officer]

Thanks everybody for joining. Have a great day and stay healthy and safe.

[Operator]

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconferencing. You may now disconnect.