American Tower Corp

NYSE:AMT

Earnings Call Transcript 2021-Q3

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the American Tower Third Quarter 2021 Earnings Conference Call. As a reminder, today's conference call is being recorded. Following the prepared remarks, we will open the call for questions. [Operator Instructions]. I would now like to turn the call over to your host, Igor Khislavsky, Vice President of Investor Relations. Please go ahead, sir.

[Igor Khislavsky, Vice President of Investor Relations]

Good morning and thank you for joining American Tower 's third quarter 2021 Earnings Conference Call. We've posted a presentation which we will refer to throughout our prepared remarks under the Investor Relations tab of our website, www. americantower.com. On this morning's call, Tom Bartlett, our President and CEO, will discuss current technology trends and how we're positioned to benefit from continued wireless technology evolution. And then Rob Smith, our Executive Vice President, CFO, and Treasurer, will discuss our Q3 2021 results and revised full-year outlook. After these comments, we will open up the call for your questions. Before we begin, I'll remind you that our comments 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 2021 outlook, capital allocation, and future operating performance. Our expectations regarding the impacts of COVID-19. And any other statements regarding matters that are not historical fact. 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 31st, 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. With that, I will turn the call over to Tom.

[Tom Bartlett, President and CEO]

Thanks, Igor. Good morning, everyone. Consistent with our prior 2, 3 calls, my comments today will center on the key trends driving our business now, and how we think the technological landscape will develop in the future. I'll touch on how we're positioned to benefit, as 5G deployments accelerate in cloud-native applications in the edge of all, particularly in the U.S.. Additionally, I'll spend some time discussing our European markets, where we now have a scaled presence and are poised to create further value as technology evolves there. And then briefly cover what we were seeing in our earlier stage international markets. Finally, I'll outline some of the progress we've made in some of those same emerging markets in the platform expansion side, particularly with respect to our investments to sustainability and renewable energy, as we continue to lead the industry into a greener future.

At a high level, much of my commentary today will sound familiar to those of you who have listened in on prior technology focus calls, and we view that as a positive. Technology is evolving and advancing right in line with our expectations. And the long-term secular trends that have driven and continuing to drive our business remains strong. There are also new developments in the marketplace around the overall digital ecosystem that we're excited about, that our tenants continue to power ahead with their network augmentation and expansion activities. Taken together, this is a backdrop that we expect will lead to sustained attractive growth for us over the long term. Central to this belief is the view that our core global macro tower business will be the foundation of our success, and the main driver of our cash flows for the foreseeable future.

As macro towers should remain the most cost, and technology efficient network deployment solution in most topography worldwide. Our conviction in this regard has only grown stronger over time, supported by our customers' significant investments in new spectrum assets, record levels of wireless capex spending in markets like the U.S., and numerous public statements by them indicating their intention to utilize macro sites to drive aggressive deployments of 5G and other wireless technologies globally. We continue to view mid-band spectrum, which includes the recently auctioned C-band and the 2.5 gig band currently being deployed in the U.S, as the workhorse of the true 5G experience.

And we believe to be the fundamental enabler of the immersive next-generation 5G applications and use cases that are set to emerge. As coverage improves and advanced devices penetrate the market. Importantly, we continue to expect the propagation characteristics of these sub 6-gig frequencies compared to traditionally deployed mobile spectrum, to necessitate significant network densification over the long term, supporting a multiyear period of strong growth on our Tower sides. We're seeing the leading edge of this activity in the U.S. today, generating record services revenues, driven by all of the major carriers as they accelerate the early stages of their respective 5G deployments.

Further, application volumes within our property business are strong, supported by expected wireless CapEx spend in the mid $30 billion range this year. Industry experts anticipate that these elevated levels of capital spending will be sustained for a number of years driven by a mobile data usage growth [Indiscernible] of more than 25% over the next five-years. Amazingly, this follows a more than 25% [Indiscernible] for the last five-years, and cumulative growth of approximately 7500% over the last decade. This compelling demand backdrop, coupled with the long term noncancelable leases that comprise our more than $60 billion global contractual backlog, gives us confidence in our ability to drive organic tenant billings growth in the mid single-digit range on average in the U.S. through 2027, and to drive higher growth rates abroad in that same period.

I will touch on this further in a few minutes, but as a quick reminder, these baseline growth expectations exclude any material contributions from our various platform expansion initiatives. What they do include are expectations for an extended period of solid growth in our European markets, where we are seeing similar network growth trends to U.S, with early-stage 5G deployments set to accelerate in the coming years. We expect that our newly scaled European presence will allow us to drive long-term value creation, as the explosion of mobile data usage across the region continues, and the need for communications infrastructure accelerates as a result.

Across Germany, Spain, and France, where 5G mobile subscriptions currently make up less than 5% of the total user base, we expect mobile data usage per smartphone to grow by more than 25% annually for the next five years, similar to the U.S.. And consequently expect CapEx spend across the three markets to exceed $11 billion annually over a similar time period. And has happened in the U.S. we're already seeing this acceleration in network investment translate into elevated activity. In fact, in the third quarter, normalizing for the impacts of Intelsat deal, collocation and amendment contributions to European organic tenant billings growth rose by around 200 basis points year-over-year.

Although we expect a significant portion of initial 5G investments to be focused in urban locations across our European footprint, or roughly 80% of the population resides, we anticipate urban oriented consumer demand to be complemented by an ongoing push from European regulators to deliver rural connectivity, which will represent another opportunity for us to drive co-location on our tower sites in those areas. We believe our balance of rural and recently expanded urban assets positions us well to capture significant market share of upcoming 5G deployments over the next decade.

Finally, in our earlier stage, markets across Latin America, Asia, and Africa, we continue to see solid demand for our critical infrastructure, largely driven by deployments of legacy network technologies, particularly 4G. Whether looking at Brazil, Mexico, India, or Nigeria, consumers are rapidly increasing their utilization of smartphones, thereby driving mobile data usage growth higher. In many of these regions, existing network infrastructure is insufficient to support this day luge of usage, as cell-side performed is challenged with increased levels of network load. In response to these trends, we are aggressively marketing our existing assets and continue to look for additional acquisition opportunities to bolster our footprint in these markets.

But at the same time, we have significantly ramped up our new build program given the tremendous need for entirely new infrastructure. In fact, if you take the nearly 5,900 sites we built last year and add our expected 7,000 sites at the midpoint of our outlook to be constructed this year, it would represent almost as many sites as the previous 5-years combined. And as we laid out a few quarters ago, we are targeting the construction of up to 40,000 to 50,000 new sites over the next 5 years. With day one NOI yields on these builds continuing to average above 10%, we are excited about deploying significant capital to these initiatives going forward, as we capitalize on the advancement of network technology across the emerging world.

While helping to connect billions of people. In addition, to the core secular growth trends driving our Global Tower business, we're seeing indications, particularly in more mature markets like the U.S., of a broad evolution within the overall wireless ecosystem, as Evolution is closely intertwined with 5G and includes an increased prevalence of cloud native network solutions. More emphasis on the various permutations of the network edge. And an ever-increasing intersection of the wired and wireless portions of today's converged network architecture. As networks virtualize O-RAN or Open RAN, is expected to become a more important option to improve their economics.

We are now starting to see this phenomenon with DISH in the U.S. and in Germany were 1&1 is spoken extensively about its intent to utilize this technology. By utilizing O-RAN, carriers have the potential to optimize network design and drive cost efficiencies, freeing up incremental capital to invest in densification and other network enhancements that help drive growth in site deployments in co-locations. Importantly, the role of the Tower in this evolving network design is as critical as ever. While base station functionality will likely continue to evolve to be cloud native software Agile, the radio equipment that is placed on the tower itself, which has always driven our revenue, will continue to reside on the Tower.

Importantly, we believe we can leverage our extensive global distributed real estate portfolio to not only drive continued strong growth within our core Tower business, but also to take advantage of other emerging opportunities as Networks virtualize. This may include multi-access edge computing, and potential other Edge Cloud permutations of neutral host infrastructure. At the end of the day, modern software driven networks are becoming smarter, faster, more capable, and more dynamic. And we're focused on ensuring that American Tower has a meaningful role to play in this context on the infrastructure and real estate side of the equation. One of the areas we focused on is the development of the network edge. Or more accurately, the development of multiple layers of the network edge, with the need for lower latency expected to become more and more critical over time with applications like AR, VR telemedicine, real-time analytics, autonomous driving, entertainment streaming.

You name it, and many others are beginning to merge. We continue to believe that this can be a meaningful opportunity for American Tower. As we've done more work on the evolution of the Edge, the concept of multiple edge layers has come into better focus. Today, for example, by far the most prevalent layer is the regional Metro edge owned for the most part by the large data center companies where vast amounts of data processing is in centralized. These locations provide access to cloud on-ramps and are absolutely critical within today's networks. We expect this need to be the case for the foreseeable future. In fact, if the volume of data carried across networks continues to explode, we anticipate the demand for these types of large scale facilities will only grow.

The upside of these locations is their size and capacity. The downside, which to this point hasn't been all that relevant, is the fairly significant network transit costs in latency built into reaching the central compute functions. As the data often has to travel hundreds of miles to reach these destinations. These transit costs and latency considerations, which we expect to become more important in the future, will necessitate more edge locations as up linked data increases from IOT use cases and demands for distributed computing advance. The next layer beyond the Metro edge in our view, will be the aggregation edge.

Here you're likely to host Syrian hubs in future MEK applications as network virtualization advances, along with distributed data processing, AI inferencing, and other compute functions, which will need reduced latency. The major hyper-scalars continue to evolve their edge cloud platforms, so that they can extend computing capabilities deeper into the mobile access network at the aggregation edge. The next layer beyond this, which we term the access edge, is where our existing tower sites are located today, offering an opportunity to meaningfully enhance the value of our legacy real estate.

We expect to eventually see V-RAD and O-RAN network functions, AI inferencing, Data Cashing, and a variety of other next-generation AR and VR cloud-native, ultra-low latency applications residing at these locations. Finally, we've also identified the on-premise edge, which would lie beyond even our tower sites and could eventually help support private networks, smart factories, and a host of other applications located at the end-user's site. The end of the day, our 20,000 foot view is that all of these edge elements will need to fit together to provide a cohesive framework for full scale 5G across the network ecosystem. The goal for us is to figure out what the optimal linkages between the layers look like.

Who the key players will be. And what elements of the edge we may want to own in order to further enhance the strong long-term growth we expect from our core existing business. To date, as we seek to connect the dots, we've been active with a number of trial edge compute sites at the access edge, while also operating our COLO-ATL Metro Data Center interconnection facility in Atlanta. Through these investments, we have built relationships with key existing and potential future customers. I've learned a tremendous amount about key demand trends, and I've had a front row seat for the beginning stages of the convergence of wireless and wireline networks that I alluded to earlier.

More recently, we acquired DataSite, a data center Company consisting of two multi-tenant data centers in the Atlanta area and in Orlando. In addition to strengthening our existing position in Atlanta, the addition of a network dense carrier hotel facility in Orlando, provides us with a strong Southeastern presence, with a profile and characteristics that we believe will be critical in the early evolution of the Metro edge, as we evaluate its role in the mobile networks of the future. We expect these facilities, which have 18 megawatts of combined power and additional 4.5 megawatts of expansion capacity, to effectively complement COLO-ATL and enable us to enhance our ability to develop neutral host, multi-operator, multi-cloud data centers to support the broader Quarta Edge connectivity evolution in the U.S..

We continue to believe that while a scaled, application, driven edge oriented business model, is still likely several years away, it has the potential to be a sizable market opportunity with meaningful potential upside. Not only in the U.S., but also on a global basis. Leading global M&O's are now positioning their networks with Release 16, 5G stand-alone core features to explore Edge Cloud opportunities. And with our distributed macro side presence, key markets around the world, we think we're well-positioned to potentially be a provider of choice on the edge, particularly for large multinational M&O's, and other categories of customers who maybe looking for a multi-market solution.

Switching gears a bit, while we believe edge compute will eventually also be relevant in emerging markets, it is unlikely to happen in the immediate future. Consequently, we have focused our platform expansion efforts across our developing regions in other areas, most notably on increasing the sustainability and efficiency of power provisioning in our sites. As we highlighted in our recently published 2020 corporate sustainability report. We've continued to make progress toward our goal of reducing diesel-related greenhouse gas emissions by 60% by 2027, from a 2017 baseline. In 2020, we achieved an additional 8% reduction from 2019 reaching 53% of the 10-year of goal.

We're continuing to make solid progress in 2021 with an expectation to spend an additional $80 million or its energy efficient solutions primarily in lithium, Ion, and solar power across our Africa footprint, which will bring our cumulative spend to nearly $250 million. And as we announced earlier this week, we are furthering our commitment to combat climate change by adopting science-based targets, which we expect to help inform our future investments and sustainability. In addition to the positive environmental benefits from these investments, we are also delivering shareholder value through AFFO per share accretion. Lithium-ion batteries provide significant energy efficiency, density, and lifespan improvements over legacy solutions.

And while to-date, AFFO benefits to American Tower have largely come through fuel savings, we anticipate over time that our yields on these investments will further expand as we are able to lengthen battery and generator replacement cycles. Having already expanded our lithium-ion powered site count from 4500 in 2019 to 6700 in 2020, we are targeting another 8,000 sites by the end of 2022. And recently signed a multi-million dollar bulk battery purchase agreement in Africa in support of this goal. Importantly, we believe that energy efficiency, the use of renewables and sustainability in our broader sense, can represent an important competitive advantage for us.

Not only from the flow through to AFFO, but also the differentiation and service quality for our customers. We continue to view sustainability as a critical component of our Company culture and will be highlighting our continued progress in future sustainability reports, which I encourage all of you to read by the way. In closing, our excitement around 5G on a global basis continues to grow. Consumers and enterprises are using more advanced devices for more things, resulting in consistent elevated growth in mobile data usage, which in turn strains existing wireless networks and necessitates incremental densification and network improvement. Considerable new spectrum is being deployed, new entrants and select markets are building Greenfield networks.

And our macro Tower oriented portfolio remains well-positioned to capture a significant portion of wireless investment activity. In addition, through our platform expansion strategy, we are focused on ensuring that the Company benefits from the ongoing convergence of wireless and wireline and the associated expansion of virtualization in cloud native applications throughout the network ecosystem. Importantly, as we optimize our core business, and look for ways to further enhance our growth path in the broader digital infrastructure world. We are as committed as ever to driving profitability, sustainability, and recurring growth. We're energized by the future and are excited to be in a vibrant industry that is helping to connect the world. With that, let me turn the call over to Rod to go through our third quarter results and updated full-year 2021 outlook. Rod.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Thanks, Tom and thank you, everyone for joining today's call. I hope you and your families are well. Q3 was another quarter of strong performance for us. And as you heard from Tom, we are as encouraged as ever by the technological trends that underpin our long-term growth potential. Before digging into the details of our results and raised outlook, I'd like to touch on a few highlights from the quarter. First, we closed on our strategic partnership agreements with CDPQ and Allianz, through which they purchased an aggregate of 48% of our ATC Europe business for total consideration of around EUR 2.6 billion. In addition, we closed the remaining 4,000 Telsey's communication sites in Germany back in August. With the transaction now fully closed and funded, our teams are working to rapidly integrate the assets and we're already seeing encouraging activity on the portfolio.

Second, we continued to strengthen our Balance Sheet, raising roughly $3 billion in senior unsecured notes, including our euro offering earlier this month. Through our financing transactions, we've been able to maintain an attractive weighted average cost of debt while also continuing to extend our maturities. As a result of this activity, along with the benefit from a non-recurring advanced payment received from a tenant during the quarter, we finished Q3 with net leverage of 4.9 times. While we expect net leverage to increase back into the low 5 times range in the fourth quarter, we are right on track with our overall post healthiest delevering path. And lastly, we saw another quarter of record services activity in the U.S. as carriers accelerated 5G related projects. We view this as a leading indicator of strong levels of gross leasing in our property segment as we head into 2022 and beyond.

And with that, please turn to slide six and I'll review our Q3 property revenue in organic tenant billings, growth. As you can see, our consolidated property revenue grew by over 19% year-over-year or over 18% on an FX -neutral basis to nearly $2.4 billion. This included U.S. and Canada property revenue growth of around 10% and international property revenue growth of over 31% or 13% when excluding the impacts of the Telxius acquisition. This strong performance is indicative of a continuation of the long-term secular trends driving demand for our infrastructure, assets across the globe. Moving to the right side of the slide, we also had a solid quarter of organic tenant billings growth throughout the business.

On a consolidated basis, organic tenant billings growth was nearly 5% for a second consecutive quarter. As expected, U.S. 5G investments from the major carriers drove healthy activity levels, leading to organic tenant billings growth in our U.S. and Canada segment of over 4%. Contributions from co-location and amendments were more than 3%, escalators came in at 3.2%, and churn was just over 2%. Moving to our international operations, we drove organic tenant billings growth of nearly 6%, reflecting a sequential acceleration of around 60 basis points. Africa was our fastest-growing region in the quarter, posting organic tenant billings growth of well over 9%, led by Nigeria, where we continue to see 4G investment driving both co-location activity and new site construction.

We also saw a consistent quarter in Latin America, where organic tenant billings growth was right around 7%, driven by solid new business and higher escalators, primarily in Brazil. Meanwhile, European organic tenant billings growth accelerated by around 100 basis points sequentially to nearly 5.5% as expected. Excluding impacts from the Telxius acquisition, organic tenant billings growth in the region would've been over 4.5% in the quarter, more than 200 basis points higher than the year-ago period, driven primarily by new business contributions. This positive trend reflects both ongoing 4G activity and early 5G investments, leading to solid growth from both co-locations and amendments.

Looking to Germany, in particular, we saw a more than 300 basis point increase in co-location and amendment contributions in our legacy business as compared to the prior year period, resulting in organic tenant billings growth of over 5.5% up from 5.2% in the second quarter. Finally, in Asia-Pacific, we saw organic tenant billings growth of 0.7% up roughly 200 basis points as compared to Q2. This reflects a modest acceleration in gross new business activity coupled with a more than 2% sequential decline in churn, which was in line with our expectations.

Turning to Slide 7, our third quarter adjusted EBITDA grew more than 19% or over 18% on an FX neutral basis to nearly $1.6 billion. Adjusted EBITDA margin was 63.2%, which was down compared to Q3 2020. As a result of adding new lower initial tenancy assets to our portfolio, which we believe will drive strong organic growth and therefore margin expansion in the future. Cash SG&A as a percent of total property revenue was around 7.3%, a roughly 40 basis points sequential improvement. Moving to the right side of the slide, consolidated AFFO growth was over 13%, with consolidated AFFO per share of $2.53, reflecting a per-share growth of nearly 11%.

This was driven by strong performance in our core business, contributions from new assets and around $13 million in year-over-year FX favorability. Our performance also reflected the benefits of our commitment to driving efficiency throughout our operations and minimizing financing costs, despite growing the portfolio by nearly 38,000 sites over the last year. And finally, AFFO per share attributable to AMT common stockholders, was $2.49, reflecting a year-over-year growth rate of nearly 12%. Let's now turn to our updated outlook for the full year. I'll start by reviewing a few of the key updated assumptions. First, our expectations for organic growth across the business are consistent with our prior outlook.

Carriers continued to deploy meaningful capital as they invest in network quality. And we're seeing numerous bands of spectrum being deployed for both 4G and 5G. We are also slightly increasing our expectations for services revenue for the year to around $235 million as a result of an out-sized third quarter. Although this implies that services volumes will moderate somewhat in Q4. Second, as a result of our focus on operational efficiency and cost controls, along with some one-time benefits, we expect to be able to take some costs out of the business as compared to our prior expectations.

Combined with current services gross marginal performance, this will drive our adjusted EBITDA margin expectations higher for the balance of the year. Third, in India, we are encouraged by recent regulatory reforms, which we believe can provide some much needed breathing room for capital constraint carriers in the marketplace and improve the telecom environment overall. While we believe this is a clear positive first step towards market recovery, we continue to expect flat 2021 organic tenant billings growth in the region as we further evaluate the long-term impacts of these developments on the sector. Finally, incorporating the latest FX projections, our current outlook reflects negative FX impacts of $30 million for property revenue, $20 million for adjusted EBITDA, and $15 million for consolidated AFFO as compared to our prior expectations. With that, let's move to the details of our revised full-year outlook.

Looking at Slide 8, as expected, leasing trends remain strong across our global business. And as a result of an increase in pass-through together with some modest core property revenue out-performance, we are raising our property revenue outlook by $10 million. This represents 14% year-over-year growth at the midpoint and includes $30 million in unfavorable trans - lational FX impacts as compared to our prior outlook. Moving to slide 9, you'll see that we are reiterating our organic tenant billings growth expectations of approximately 4% on a consolidated basis. This includes roughly 3% growth in our U.S. and Canada segment where 5G deployments are driving solid activity levels as we exit the year.

As a reminder, we expect the 1st and largest tranche of contractual sprint churn to hit our run rate in the fourth quarter of this year. And while we expect gross activity to remain solid, our guide implies a Q4 U.S organic tenant billings growth rate of -1% as we communicated previously. On the international side, we continue to anticipate organic tenant billings growth in the range of 5% to 6% as carriers continue to focus their efforts on enhancing indensifying wireless networks in the face of ever-rising mobile data demand. Moving to Slide 10, we are raising our adjusted EBITDA outlook by approximately $50 million and now expect year-over-year growth of nearly 16%.

This increase reflects continued strength in our services segment, where we now expect to see roughly $145 million in services gross margin for the year up from the $123 million implied in our prior guidance with year-over-year growth of more than 180%. On the cost side of the equation, we continue to maintain cost discipline globally, helping to drive adjusted EBITDA margins up by around 40 basis points for the full year as compared to prior expectations. Turning to slide 11, we are also raising our full-year AFFO expectations, and now expect year-over-year growth in consolidated AFFO of roughly 15%, with an implied outlook midpoint of $9.64 per share.

The flow-through of incremental cash adjusted EBITDA, coupled with the continued cash tax and net cash interest benefits as compared to the prior expectations, are being partially offset by around $15 million in negative translational FX impacts. on a per-share basis, we now expect growth of approximately 14% for the year consistent with our long-term growth ambitions that we highlighted at the start of the year. Finally, AFFO, attributable to ATC common stockholders per share is expected to grow by nearly 12% versus 2020, incorporating the minority interest impacts of our strategic partnership with CDPQ and Allianz in Europe.

Moving onto slide 12, let's review our capital deployment expectations for 2021. As you can see, we remain focused on deploying capital towards assets that drive strong sustainable growth in AFFO per share, coupled with a growing dividend providing our investors with a compelling combination of growth plus yields. Working our way through the specific categories. Our first priority remains our dividend. For the full year, we continue to expect to distribute $2.3 billion subject to board approval, which implies a roughly 15% year-over-year per-share growth rate. As a reminder, our dividend growth will continue to be driven by underlying growth in our re-taxable income, incorporating the impacts of MLA, and other moving pieces in the business.

Consistent with our prior comments, we anticipate growing our dividend by at least 10% annually in the coming years. Moving on to CapEx, we reiterate our expectations of spending nearly $1.6 billion at the midpoint with nearly 90% being discretionary in nature. Driving a good portion of this discretionary CapEx is our continued expectation to construct 7,000 sites at the midpoint this year, with the vast majority in our international markets. Turning to acquisitions, including contributions from minority partners, we have deployed around $10 billion so far this year, primarily for the Telxius transaction.

As well as for smaller transactions including data site. In total of our nearly $14 billion in expected capital deployments for the year, we expect over 80% to be composed of discretionary growth CapEx and MLA. Moving to the center of the slide, you can see the composition of our $35 billion in cumulative capital deployments since the start of 2017, including our 2021 full-year expectations. We continue to augment our developed market presence, which we believe positions us optimally to drive value from accelerating 5G deployments and next-generation technology evolutions as Tom laid out earlier.

We are also allocating capital towards higher growth, earlier stage markets that are typically at least 5 years behind the U.S. and Europe in their network deployments. Taken together, we believe that our global footprint positions us to capture multiple waves of investments across the globe over a sustained period of time. Finally, you can see that more than a quarter or around $9.5 billion of our deployed capital in the last 5 years has been distributed to shareholders in the form of dividends and share repurchases.

We continue to view these components as critical to total shareholder returns. Moving to the right side of the chart, supporting this phase of significant investment and growth has been our investment-grade Balance Sheet. We believe that our access to low-cost diversified sources of financing has been a key differentiator and are proactively working to extend this critical competitive advantage into the future. In fact, incorporating our latest financing efforts, we now have a weighted average cost of debt of around 2.4%. A weighted average tenor of debt of approximately seven years, and over 85% of our Balance Sheet locked into fixed rate instruments.

Finally, on Slide 13, and in summary, in Q3, we continue to capitalize on a strong global demand backdrop, delivering our highest quarter of consolidated AFFO per share on record. This was driven by solid organic growth, record-setting services volumes, disciplined cost controls, strategic balance sheet management, and a creative portfolio expansion. As we look ahead, we believe our existing global real estate portfolio is well positioned to drive long-term recurring growth as carriers augment and extend their networks.

And with the strength of our investment-grade Balance Sheet and diversified pool of funding sources, we expect to continue to deploy capital towards creative investments that can enhance our growth path, and enable us to create additional value. Given our positioning at the intersection of real estate and technology, in an ever more interconnected world, we are excited to continue to deliver connectivity to billions of people worldwide in a sustainable way, while driving compelling total returns for our shareholders. With that, I'll turn the call back over to the operator for Q&A.

[Operator]

[Operator Instructions] And we have a question from Michael Rollins with Citi, please go ahead.

[Michael Rollins, Citi]

Thanks and good morning. My questions if I could. The first question is on the domestic environment. Just curious if you can give us an update on U.S leasing, how it compared to your prior expectations entering into this year? And what that means for the average of organic tenant billings growth guidance that you provided? I think the average for '21 and '22 was about 2% on a reported basis and about 5% on a normalized basis. And then just, Tom to follow up on your comments on the edge in data centers, is it inevitable that American Tower needs to either partner with the larger data center portfolio or directly owned a larger data center portfolio? Thanks.

[Tom Bartlett, President and CEO]

Thanks, Michael. Maybe, Rod, why don't you take the first part of the question.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Yeah.

[Tom Bartlett, President and CEO]

And then I'll fill in on the second piece.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Okay. Great. Good morning, Michael. Thanks for the question. In terms of the U.S. leasing environment, we're seeing a very strong environment. Certainly all the major carriers have been active. You've seen that show up most notably in our services environment. We've seen a tick up in the contribution from collocation and amendment activity into our organic tenant billings growth, so that's been accelerating through each of the last 3 quarters, just as we expected from the outset in the year. So in terms of our expectations, everything really is right in line with what we expected. I don't want to get too deep into the second part of your question around growth and activity when it comes to 2022, but I will just reiterate a couple of points that we've already made, so directionally, your comments are correct.

We guided to an average organic tenant billings growth in the U.S. for '21 and '22 of around 2%. So you can see we are coming in here in '21 at around 3%. That suggests around 1% organic tenant billings growth for 2022 in the U.S. So that's where we would expect to be. And again, I'm not providing guidance for next year, just reiterating the components of our long-term plan and maybe one thing that I will highlight here just briefly is that Sprint churn hit us in Q4 for the first time, that first tranche, as you heard in my comments, so Sprint churn, now that it's active. I will just give you the numbers there.

Again, 2021 we are rolling off a 195 million of annual Sprint revenue in churn, in 2022, we'll roll off an additional 60, 2023 we'll roll off another 50 million in 2024, we'll roll-off another 70 million. So that's Sprint churn it, that's what's really causing the lower organic growth rates in our U.S. business. Next year, the gross growth, we see the environment being very strong, accelerating through 2021 and we expect that to continue going and just to give you a couple of the piece parts in terms of the impact it will have on the fourth quarter, you will see organic tenant billings growth rates in the U.S. around a negative -1% that will include churn for the quarter about 6.6%, and embedded within that is about 4.5% just from the Sprint churn.

And of course, all of this will have an impact on AFFO in terms of going forward into future years. So we've guided that our goal is to hit double-digit AFFO growth on average from 2021 all through 2027. And of course, some years it will be higher, some years it will be lower. The goal really is an average. And when you think about 2022 and this first tranche of Sprint churn rolling through, that's a year that I would say that would be challenging to get to 10%. I'll also say, Michael, we haven't given up on it. There are certain levers that we can pull and things that we can do with the business to maximize AFFO and AFFO per share growth. And we're doing all of those -- all of those things. So that kind of puts a little bit of context around the U.S. activity for this year and rolling into next year.

[Tom Bartlett, President and CEO]

And Michael, relative to your second question, you can tell that we're obviously energized and excited about the opportunity at the Edge. The impetus right now is really 5G and driving all of these lower latency types of applications and needs out further into the market closer and closer to the end-user. We've always said from a digital transformation perspective, it's going be cloud-based, it's going to be connected, and it's going to be distributed. And we think we're in a very good competitive position given the vast amount of distribution that we have in the 25 markets that were for servicing.

So we're trying to position ourselves and this broader market to be able to take advantage of the opportunity. We're going to do it intelligently. Our execution strategy continues to evolve. We think we've done it intelligently in terms of picking up some of the Metro sites, building out our own sites. We have some market agreements in place to drive access into those sites, and this is going to evolve. This is not going to happen overnight as you well know. And so we've got partnerships in place to be able to look at this. We're going to be able to hopefully average some of those partnerships. And we'll just continue to monitor the best approach in terms of being able to best position ourselves, to be able to take advantage of this opportunity.

We've done that in the past in terms of being smart, in terms of how we allocate capital to these types of investments. Will it take the form of partnerships owning -- further owning more metro sites? Unclear at this point in time. That will continue to evolve as the market continues to evolve, but we do think we're in a really good position in terms of being able to leverage our real estate -- our exclusive real estate and to be able to take advantage of that neutral host model.

[Michael Rollins, Citi]

Thanks.

[Tom Bartlett, President and CEO]

You bet.

[Operator]

Next we move on to the line of Simon Flannery with Morgan Stanley. Please go ahead. [Operator Instructions]

[Simon Flannery, Morgan Stanley]

Thank you. Good morning. First, Rod, I wonder if you could give us a little bit more color on the advanced payment looks like close to a billion dollars. What's going on there? Is that something that we will see again? And then there's been a lot of talk about supply chain. We're seeing higher inflation, particularly in markets like Brazil. Are you seeing any pressure on your customers in terms of their ability to source radios, to source Tower crews, and the cost of that, that might impact some of the installs and do your MLA's protect you from any delayed installs, any color around that would be great.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Great. Thanks for the question and good morning. And thanks for being on this call. So with advanced prepayment, I'm not going to provide details around that. I will say it was a little over $1 billion from one of our customers. It really is just a prepayment for lease payments going out over, let's say the next 12 months, so it will kind of run through our financial statements pretty quickly. And there's nothing more to it than just a prepayment of the next 12 months, kind of leasing fees. So from our perspective is it's not a big deal that helps with liquidity, brought our leverage down a little bit. You thought we ended a little bit below five times in terms of leverage. So it wasn't a bad thing for us to do, but it's a pretty simple transaction and I wouldn't want you to read any more into it than that.

In terms of supply chain, Tom may want to add a few comments here, but from a supply chain, we see no major impacts at this point, certainly across our business. As you can see in our services business, we continue to hit higher and higher levels of activity and bringing our outlook up again for another consecutive quarter here. We've got access to the cruise. You've also seen our margins expanding in the services business in particular, and in the U.S. we're not building a tremendous amount of Tower, so we certainly don't have any restrictions or challenges from that perspective.

One place I would say going into 2022, we will be keeping our eye on crew availability and labor and things like that. If the environment stays the way it is, we should be fine if things get worse, we'll need to keep our eye on it. We do buy a lot of generators. We have generated orders out that are already in place. That brings us out into the beginning to the middle of 2022. So from that perspective, we know we're going to get some materials we need or we expect to get the materials we need and feel pretty good about that.

But in the second half of 2022, again, we'll continue to watch the supply chain issues. And to the extent that there are any issues that get worse, we'll continue. to keep an eye on it and kind of pull the levers, but from where we sit now, we don't think we'll -- we don't see anything hitting us right now. We don't expect any challenges through the middle of 2022, and beyond that, it's too early to comment. We'll just keep our eye on it.

[Simon Flannery, Morgan Stanley]

Great. Thank you.

[Operator]

And our next question is from Matt Niknam with Deutsche Bank. Please go ahead.

[Matt Niknam, Deutsche Bank]

Hey. Thanks for taking the question. One on India, I guess there's some better organic growth this quarter return to positive growth, I think for the first time since 2Q '20. So can you maybe talk a little bit more about the overall demand backdrop across your carrier customers and whether -- I guess maybe to drill in a little bit more, churn was about a couple million lower than what we've seen in terms of recent run rate. And so I'm wondering if the $14 million we saw this quarter is maybe a better run rate to now think about and start modeling going forward. Thanks.

[Tom Bartlett, President and CEO]

Yes, thanks for the question and good morning. So we did see organic tenant billings in Asia kind of turned a corner here and gets a positive. So we posted a 0.7% positive growth rate. We're still looking for the full year to be right around 0. And as we look at the market, we remain optimistic in terms of the gross activity. So the way that even that 0.7 organic tenant billings for the quarter, I will give you a little bit of the breakdown there. So we're seeing high single-digits, nearly double-digit organic new business that's been pretty consistent for at least 6 to 8 consecutive quarters. And based on where they are in their development kind of transitioning from 3G to 4G networks. We expect that that gross demand should continue, the escalators are locked in right around 2 to 2.2% or so we have that to count on.

We have seen a moderation and a pretty sharp decline here year-over-year in terms of the churn rate. So a year ago, Q3 churn in India was about 13.5%, it's down now about 7.5%. We think that's certainly a very favorable sign and one that we expected to see, and we hope to continue to see that going forward. In terms of the -- we did see that there was some good news from the government in terms of regulatory support for the industry. And we think that that will help the market in general, the whole sector as well as the carriers, particularly the ones with the AGR dues.

But all the carriers, even with just spectrum fees, strengthen their own Balance Sheet, kind of regroup and gear up for competition in this sector there and to invest in their networks. So we are optimistic about going forward growth rates there, but we would expect, let's call it high single-digit organic growth with churn levels there, in the mid-single-digits and hopefully moderating down over time.

[Matt Niknam, Deutsche Bank]

Rod, can I just follow-up, 1 other question I wanted to sneak in is on capital improvement CapEx. It's been trending lower, I think year-to-date. You've already done around 100 million, but I think the guide is for about a 185 million for the year. I'm just wondering what's been driving the lower capital improving CapEx year-to-date and then was it was it fair to assume then a much larger step-up that could weigh on AFFO in 4Q? Thanks.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Yeah, so the cap maintenance there is going to pop up in Q4. I think you see that you just mentioned in terms of our guide. It really is just timing, and it's a timing issue that we've seen in prior years. So if you look back at our last year, spread and maintenance CapEx, you'll see kind of the same sort of cycle. It is a Cash CapEx number, so it does lag a little bit in terms of the activity. So you see this kind of spike in leasing activity that's going -- that's running through our services revenue. And then you kind of see following on from that, you'll see an uptick in the maintenance CapEx that we run through to support the towers and maintain everything out of the tower sites. So it really is just a timing issue, Matt.

[Matt Niknam, Deutsche Bank]

Great. Thank you.

[Operator]

And next we have a question from Eric Lukow with Wells Fargo Please go ahead.

[Eric Lukow, Wells Fargo]

Great. Thanks for taking the question. Perhaps you could talk about Verizon real quickly. I think your holistic pricing structure with them expires at the end of this year. So wondering if you could update us on the nature of conversations with them around that aspect of the MLA. And then secondly, on the European side, is nice to see the improvement in organic tenant billings growth. Could you just talk about how the outperformance is coming from, whether that's churn from Telefonica versus new bookings, and then on the new bookings front? Any update on conversations with one-by-one as they contemplate the new build and how you think your position there. Thanks.

[Tom Bartlett, President and CEO]

Yes, thanks for the question. I'll take the first part there and so from when you look at our business over in Europe, we are very pleased with the trajectory of the growth rates over they you've seen a couple of sequential quarters of increased organic growth rates, just as we expected to see now that the market has seen a reduction in churn, they're gearing up for 5G deployments, so that's been really good to see. In terms of the piece parts of the organic tenant billings, certainly the Telefonica, additional sites plays a role in there. One of the biggest ways that it plays in early on, it's still very early in terms of bringing those assets in, but I think we've talked before about the assets there in Europe that they basically have a long-term contract and there on other tenant material, other tenants on there.

So there's really very little churn that will -- that's possible on that portfolio. So we have very low turn expectations on that portfolio and it's a big chunk of revenue, that certainly helps inflect the growth rates to go up higher. And then in terms of the question with drilage one-on-one, we really don't want to comment on ongoing negotiations, but negotiations continue there I can assure you.

[Operator]

And we will move on to the line of David Barden with Bank of America. Please go ahead.

[David Barden, Bank of America]

Hey guys. Thanks so much for taking the questions. First, Rod, just to follow-up on the Europe situation at our conference last month, you kind of talked a little bit about how you perceive the European marketplace being right for incremental consolidation. I was wondering if you or Tom could elaborate a little bit on how you see the European market evolving as it matures from a Tower third-party infrastructure provider perspective. And then second, if you could elaborate a little bit on what is going on now with Telefonica in Mexico, and its network sharing agreement with AT&T and how that relationship between the two of them is evolving for them.

[Tom Bartlett, President and CEO]

Hey David, if Tom, I can start and Rod can add in. With regards to Europe, we think we have a really solid position in them. And a few of the critical markets, we've got good scale in the markets we've got a great relationship, obviously with Telefonic and O-RAN in particular, and so we're, energized by the type of growth that we are now seeing in the marketplace. But we continue to look at opportunities to further build scale, not just in the 3 markets that we're in, but also if there are other opportunities, but only if it makes sense, like everything else that we do. And so there are, I think, a lot of opportunities in the region, and we're evaluating them as you would expect. And to the extent that there's some opportunities there to secure some of that portfolio to gain further scale even in the markets that we're in.

And relationships with key customers, we'll clearly look to do that. And so Europe is -- as we've said, an area or part of the world that we look to continue to further develop if it makes sense. With regards to Telefonica, again, we've got a great global relationship with them. They are positioning to an MVNO as you all know, and they're going to have some time for that to be able to -- for that to occur. There will be some churn over time, but the contract that we have with them, I think goes out for several years at this point in time. And so we'll continue to monitor that and we've managed these types of events. I think quite well over -- over our history. And I'm sure we will do that here.

[David Barden, Bank of America]

Thanks, Tom.

[Tom Bartlett, President and CEO]

Sure, Dave.

[Operator]

And our next question is from Ric Prentiss with Raymond James. Please go ahead.

[Ric Prentiss, Raymond James]

Good morning.

[Tom Bartlett, President and CEO]

Hi, Ric.

[Ric Prentiss, Raymond James]

Hey. Couple questions, you guys. First, appreciate you guys breaking out the attributable AFFO I think that is important to focus investors on cash to comment, and you continue to exclude non-cash amortization on your organic ratio, so I appreciate that, accounting stuff. First question, we get a lot on interest rates and inflation. Can you talk a little bit about how you guys are viewing the interest rate environment and inflation environment? How it affects your financials, any potential deals like David was just asking about, and just the fundamentals of the business? So little bit primmer on interest rates and inflation as you see it.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Yeah. Sure, Ric. I'll -- good morning. Thanks for the question. I'll take that one. So let's say the interest rates are -- so you've seen us, Ric, over the last several quarters, even the last couple of years, very active in the capital markets, very active in terms of our debt structure, capital structure, and in different things like that. We've been focused on strengthening our balance sheet in a very proactive way. We now have our average maturities out over about 7 years with an average cost of debt down to about 2.4% or so. And 85% of our debt is now fixed out over the long term. So that's a heavier weighting towards fixed to variable compared to our kind of standard financial policy.

So we've been preparing for an environment where interest rates may tick up so we think from an interest rate perspective, our Balance Sheet is very solid and ready for it. There's nothing we can do about preventing interest rates from rising. We do think they may rise over time modestly, but we're very well prepared for it. The other thing I would add is in terms of global capital allocation, and looking to invest capital, the strength of our Balance Sheet really does represent a competitive advantage for us, particularly in a time when interest rates may be rising. So we'll keep an eye on that and look to be very opportunistic as we go forward from that perspective.

And then when you think about inflation rates, one of the ways you will see that run through our businesses is many of our contracts internationally, particularly in Africa and Latin America, are all geared towards inflation rates and the escalator is adjusted based on inflation rate. So as and when we see higher levels of inflation in the international markets, we'll see higher levels of growth as well in the U.S. And remind you that our escalators are fixed at around 3%. That's been consistent for a long time. So we're pretty well insulated from interest rates rising in the U.S. from a balance sheet perspective, but we still lock in that revenue growth of 3% on the U.S. escalator.

[Ric Prentiss, Raymond James]

I think in your prepared remarks, you talked a little bit about acquisition opportunities, even outside of Europe. David was asking about Europe. As you think about how you view the potential opportunities in Africa, Latin America or other markets as far as portfolio is coming up, and what makes for attractive intelligent decisions as you kind of alluded to?

[Tom Bartlett, President and CEO]

Ric, it comes back to the same model that we've been executing for the last decade. It's looking to build up scale, looking at the counter party, looking at the market itself, and then looking at the transaction itself, what additional capital has got to go into the portfolio to be able to ensure it, so we can support a second or third 10, and what is the growth profile look like. They're probably a dozen different elements of that evaluation that go into deciding whether in fact we would be interested, and then driving what that price is.

We've used the same 10-year discounted cash flow approach and continue to use it. Obviously, the variables change but largely -- I meant the actual numbers, but largely the variables themselves from a qualification perspective are the same. And so we'll look at those and look at all of those opportunities, we think about globally how to allocate capital.

[Ric Prentiss, Raymond James]

Is there any change in the pipeline as far as deals going on and what might be changing that pipeline as far as potential deals?

[Tom Bartlett, President and CEO]

You talked about the pipeline of transactions?

[Ric Prentiss, Raymond James]

Yes.

[Tom Bartlett, President and CEO]

Yes. I mean, it's been very consistent. I mean, the pipeline itself there are -- there's more activity as you've seen, and as you report on in Western Europe. And, but in terms of the pipeline, in terms of the opportunities, they remain relatively consistent. Overall, if you look at our total portfolio, the last count I did we owned about a third of the inventory and all of the markets. And so there's still a lot of opportunity in the markets that we're in. Given how carriers, our existing customers, carriers are looking at continually looking at trying to monetize their portfolio. Smaller tower co's are looking for opportunities to exit. There was private capital involved in some of those smaller tower co's.

And so, they're looking to monetize some of their funds. Some increased opportunity in Southeast Asia that's going on as we speak, as you've well seen. But it's been -- the pipeline has been very consistent. I would say where it's a little bit out sized is probably the all of the noise is going on in Western Europe. And there just seems to be a lot of activity going on there as you've seen, as we've seen in the -- all of the public comments. And so it's probably a bit of an out-sized pipeline in that region, but other than that, it's been very consistent.

[Ric Prentiss, Raymond James]

[Indiscernible] never dull [Indiscernible]

[Tom Bartlett, President and CEO]

Great.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Hey, Ric, you mentioned attributable. Maybe I'll just give you a couple of data points there because we have -- you've seen over the last quarter or so, we've had a few moving pieces with closing the Telxius transaction in numerous tranches. We also brought in private capital. It may be a good time to just level set that. So for the full year, we're looking -- you can see in our presentation, in terms of AFFO attributable to our minority, shareholders is about 100 million, and that breaks down 75 million roughly for the European business and about 25 million for the India business. The way our partners breakdown is, you know CDPQ owns 30% of our European business and Aliansce owns about 18% of that business.

PGGM holds about 17% in Germany, and about 13% in Spain. We have Macquarie as a partner over in India, they own about 8%. Now is a good time to kind of think about the run rate aspect of that minority interest. When you look at Q4, now that all the dust has settled, we think the run rate -- a good ballpark run rate is about 40 million for Q4. So if you annualize that, you get a range of 150 to 160, that would be attributable to the minority interest partners. The one word, actually I would say is, we will -- we did receive the put from a core where you've seen that in our filings. So we will eventually close on that and that'll be an adjustment to the numbers at that -- at that time.

[Ric Prentiss, Raymond James]

That really helps. Thanks, Rod. I really think it's important to focus on that. Thank you.

[Operator]

And next we will go to the line of Jon Atkin with RBC. Please go ahead.

[Jon Atkin, RBC]

Thanks very much. I wanted to ask about Latin America. I'm hearing an echo here. The churn has ticked up in recent quarters, and I imagine some of that might be Telefonica. But I wonder if you can provide some color on what's driving that?

[Tom Bartlett, President and CEO]

Yeah, Jonathan. Good morning. Thanks for the question. I don't want to go through the churn carrier-by-carrier. But I think you do know that there are a few customers in Latin America that are exiting the businesses or that have been consolidated. So we do have the next exit down in the Brazil area. We do have Telefonica transitioning to the MVNO in that -- in the Mexico market and moving onto the AT&T site. Some of that churns began. You've seen a bump up in our non-run rate activity in Latin America for some decommissioning in Brazil that is related to the next cell sites coming down that will continue into next year.

So you'll see a bump up in churn, and then you will also see a bump up in that non-run rate as well. And then there are -- you will see some benefits to some of the churn that come through a settlement payment. And there are a few other smaller customers, but that probably gives you a flavor of who's there, and what's happening in Latin America from a churn perspective.

[Jon Atkin, RBC]

And then on Nigeria, I just was hoping that you could give us a little bit about qualitative view as to the tailwinds and headwinds to expect as it pertains to organic growth, you obviously have a little bit of a different portfolio than IHS given how you entered the market. But how do you think about -- what are the factors to keep in mind around organic growth in Nigeria going forward?

[Tom Bartlett, President and CEO]

I think in Nigeria, we've seen very strong growth for the last several quarters here. We expect that to continue. We've got a great portfolio in Nigeria was a solid anchor tenant with MTN in there as a partner of ours. So that's been really good. I would say that as long as the economy, and the economy in Nigeria is largely driven by fuel prices, as long as that's good, I think we're in really good shape because we've got a great portfolio in the country. and the carriers will continue to invest capital and build out sites. We've got a pretty robust build program there, so you've seen the guide with 7,000 thousand sites that we expect to build as a good chunk of those in Africa. And in Africa, a lot of them they're in Nigeria.

So I would say that we are very bullish on Nigeria in terms of the growth rates we're seeing high single-digit, if not double-digit, organic growth rates in Nigeria. As long as the economy there continues to roll forward I think we're in really good shape and that's largely, I believe, based on fuel pricing.

[Jon Atkin, RBC]

Lastly, I think you were asked about realizing the holistic MLA and I wondered if you had any kind of response to that.

[Tom Bartlett, President and CEO]

Hey, John. It's consistent with what we've said in the past. We've got I think a terrific relationship with Verizon. I can't comment on anything specifically relative to negotiations or those types of things. But we want to be able to service our customers and be strategic to them, as makes sense for them. And so we'll look to continue dialog if they're looking for more of our card type of pricing we'll go in that direction. If they're looking for renewal for realistic will go in that direction. More to come, but they're very active in the marketplace. They're very aggressive in terms of building out their network, and I think we've seen it. They talked about it. And they are doing a terrific job, and we're here to support them however best we can.

[Jon Atkin, RBC]

Thank you.

[Operator]

Next we go to Nick Del Deo with Moffett Nathanson, please go ahead.

[Nick Del Deo, Moffett Nathanson]

Hey, thanks for taking my questions. One on Telxius and then one on domestic spectrum deployment. So first, how long does it take you to typically get acquired, carrier-owned sites or I guess in the case of Telxius quasi carrier-owned sites, kind of plugged into your systems and effectively marketed so that you really see the lease improvements from being independently-owned flow-through. And will it happen faster than normal for Telxius since again, they were kind of quasi-independent before you pick them up? And then second in the U.S., we often times talked about urban markets seen activity first, with spectrum deployments, especially for like the upper mid-band spectrum that the carriers at a point today enforce. Are you seeing that play out in practice, across your portfolio or is it more even than we might suspect?

[Tom Bartlett, President and CEO]

On Telxius I can tell you day one, we were marketing those sites.

[Tom Bartlett, President and CEO]

Okay. So we're as aggressively as we possibly can in terms of providing those sites out to our customers. The integration has gone really well. And it takes time from a system perspective and getting that organized, getting them into systems and integrating systems and things like that, that can I can take 6 months to a year. but that doesn't prevent us from marketing those sides to our customers and making them available to all of our customers will be aggressive from a capital perspective, to the extent that there are some sites that we need to attend to, from a structural perspective, to be able to support them. But I've said all along, and this was a really terrifically built portfolio, and that was one of the attractions to the portfolio to begin with.

So we're being as aggressively as we can to really be able to take advantage of these sites, particularly markets like Germany and Spain, where 5G is really picking up. From a U.S. perspective, you're right. If you go back to even old analog days, the markets were generally built up from your urban markets, because that's where you're able to get the best bang for the buck when you're rolling out capital. This one though, I would say, with 5G is broader. It is a goal to get nationwide coverage for all the customers.

And then to continue to fill it in as demand and as capacity requirements are required. What's not a surprise to us, and I reiterated in my comments, the macro towers is the main asset that our customers are deploying 5G on. And I never had any doubts of that, simply because I've been involved in the industry for 30 years. So the macro tower is just the best way for our customers to get that signal out to their customers. And so we're seeing that, but we are seeing it more across the entire country. Again, as customers are really trying to be able to get to that nationwide coverage.

[Nick Del Deo, Moffett Nathanson]

Got it. Thanks, Tom.

[Tom Bartlett, President and CEO]

You bet.

[Operator]

And ladies and gentlemen, we have time for one final question. That's tom -- excuse me. Tim Horan with Oppenheimer, please go ahead.

[Tim Horan, Oppenheimer]

Thanks, guys. Just a clarification and one question. Do companies pay when they install the equipment? Or with MLA, do you have to pay regardless of whether or not being installed equipment one? Secondly, come on -- you've been able to kind of raise prices in the U.S. about double the inflation rate, historically now, right now it's almost half the inflation rate. Do you think over time you would have the ability to kind of increase prices faster than inflation? And then lastly, I know you mentioned a lot of new technologies out there, are any of that you think are a risk to the business model that you're concerned about at watching. Thanks.

[Tom Bartlett, President and CEO]

Sure, Tim. Go ahead, Rod, you take that first.

[Rod Smith, Executive Vice President, CFO, and Treasure]

Yeah, I'll get the first one, Tom, around the payment cycle and equipment installation. Tim, I would say that it really works in a variety of ways depending on which contracts you're talking about and how it's structured. Certainly on a pay by the drink type of in all our contract, carriers would pay us lease by lease as and when they install the equipment, or probably better, more precisely said, when the contract gets executed and the commencement date is triggered, and that's typically when the building permit is pulled and construction starts or certainly by the time that the equipment is installed, if you looking at more of a holistic transaction, then there is a disconnection between fees and exactly when equipment is put on.

You've heard us say it before, and the holistic type of environment we price out activity over a multiyear period. We know exactly what the carriers want to do and what they are willing to pay for. We give them those rights and we put a payment cycle to it as well, which we spread out over time and a little bit more of a consistent manner so it's not as volatile as the activity. So in that context, you may see payments hit before equipment is installed and you can also see payments that after the equipment is installed. It really depends on the payment timeline that's in the holistic deal.

[Tom Bartlett, President and CEO]

Yeah, and Tim on the other two questions, relative to technology, we have a number of technology consultants that we can -- we use, that I talk with weekly, as well as all of our own internal. We continue as I said before, I believe that macro site is the most efficient way for customers worldwide to be able to deploy their, networks and continue to be so, and as I just mentioned, is what you've seen from our customers talking about rolling out 5G. It's all on the macro sites. So the answer to the question on the, on the technology side is, no, we don't see any competing technologies that we'll get in our way there. From an inflation perspective, 95% of our contracts in the U.S. are on a fixed escalator.

And my sense is that that's it's a very important element of our agreements and that's going to continue to stay. There are going to be some years when it may be a bit higher, although it hasn't been for many, many years. And so generally it's underneath it, but it's also consistent with how we look at our land in terms of the landlords as well. So it's a balance as well between the land -- landlords as well as our customers. So I don't think that there's any unique opportunity to be able to really change that as you well know. We were really -- priced our contracts where it makes sense for our customers to want to be on our sites. And so we continue to look at our pricing along those lines.

[Tim Horan, Oppenheimer]

Thank you.

[Operator]

And I'll turn this back to the speakers for any final closing comments.

[Tom Bartlett, President and CEO]

Great. Thanks, Leah. And thank you, everyone for joining the call. Have a good rest of your day. Thanks everyone.

[Operator]

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