American Tower Corp

NYSE:AMT

Earnings Call Transcript 2019-Q4

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to the American Tower Fourth Quarter and Full Year 2019 Earnings Call. At this time, all participants are in a listen-only mode and later you will have an opportunity to ask questions. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Vice President, Investor Relations, Igor Khislavsky. Please go ahead.

[Igor Khislavsky, VP, IR]

Thanks Karen. Good morning and thank you for joining American Tower's fourth quarter and full year 2019 earnings conference call. We posted a presentation, which we will refer to throughout our prepared remarks, under the Investor Relations tab of our website www.americantower.com.

Our agenda for this morning's call will be as follows: First, I'll quickly summarize our financial results for the quarter and full year; next, Jim Taiclet, our Chairman, President and CEO, will provide a brief update on our Stand and Deliver strategy and our key priorities for 2020; and finally, Tom Bartlett, our Executive Vice President and CFO, will discuss our 2019 results and 2020 outlook.

After these comments, we will open up the call for your questions.

Before I begin, 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 Indian Carrier Consolidation-Driven Churn and 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, 2018, as updated in our Form 10-Q for the quarter ended September 30, 2019, 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.

Additionally, many of our comments around fourth quarter and full year 2019 results will be focused on growth rates normalized for the impacts of the non-recurrence of our Q4 2018 Tata settlement and Carrier Consolidation-Driven Churn in India. We view these normalized results as important indicators of the underlying trends of our business. We have included reconciliations of these normalized metrics to our GAAP results in the back of our earnings presentation, in our press release and in our supplemental package.

Now. please turn to Slide 4 of our presentation, which highlights our reported and normalized financial results for the fourth quarter and full year 2019.

During the quarter, our property revenue declined 9.3% to $1.9 billion, while growing 8.2% on a normalized basis. Our adjusted EBITDA declined by 14.6% to $1.2 billion, while growing 11.3% on a normalized basis. And our consolidated AFFO and consolidated AFFO per share declined by roughly 20% to $859 million and $1.93 respectively, with normalized growth of over 14%. Finally, net income attributable to American Tower Corporation common stockholders increased by roughly 103% to $563 million or $1.26 per diluted common share.

From a full-year perspective, our property revenue grew 2.1% to $7.5 billion or by 9.1% on a normalized basis. Our adjusted EBITDA grew nearly 2% to $4.7 billion or nearly 12% on a normalized basis. And our consolidated AFFO declined by 0.5% to $3.5 billion while consolidated AFFO per share declined by roughly 1% to $7.90. On a normalized basis, consolidated AFFO growth and consolidated AFFO per share growth were 12% and more than 11% respectively. Meanwhile, net income attributable to American Tower Corporation common stockholders increased by 53.9% to nearly $1.9 billion for the year or $4.24 per diluted common share.

Finally, before I hand it over to Jim, I'll note that we are now reporting operating results in six segments, after separating the EMEA property segment into Africa property and Europe property. Historical segment results are included in our supplemental package on the website.

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

[Jim Taiclet, Chairman, President & CEO]

Thanks Igor, and warm welcome to everyone who is joining us on the call this morning. Given recent developments with respect to the T-Mobile, Sprint transaction, I'll begin today's remarks with a few high-level thoughts on the potential effects on American Tower. Since the proposed merger between T-Mobile and Sprint was announced back in April of 2018, we have consistently stated that we expect the merger to be net neutral to net positive for our company over the mid to long-term. This optimistic perspective has been driven by our belief that the combination would speed up the deployment of multiple band spectrum, including a number of mid-band assets and that the accelerated nationwide 5G coverage requirements associated with this transaction will drive further demand for tower space.

In addition, we believe the case for our U.S. business long-term upside is even stronger with Dish's commitment to building a new full nationwide network. We do expect to see some churn associated with network rationalization, but we anticipate that it will be more than offset by incremental industry network investments in coverage, capacity and densification over time. We're excited to partner with all of our tenants, including the new T-Mobile and Dish, to help speed the deployment of fast efficient 5G broadband service to consumers throughout the country.

With that, I'm going to focus the rest of my comments on our progress towards our Stand and Deliver strategy overall, as well as our specific priorities for 2020. I'm confident that executing on this strategy will position ATC even better to support the deployment of 5G networks in the U.S. and advance mobile broadband networks in all of our markets worldwide.

As Igor noted a few minutes ago, we had another great year in 2019 and we expect to build on our current position of strength by continuing to focus on our Stand and Deliver strategies four key pillars. The first of these is to drive operational efficiencies throughout our own business, as well as the wider mobile industry. We believe that optimizing application cycle times, improving the tenant experience and driving operational efficiencies throughout our internal regions and functions will lead not only to faster and more efficient deployments for our tenants, but also higher margins and better returns for our company over time.

We're making tangible progress on a number of dimensions and efficiency. For example, we've invested around $100 million in green energy solutions, such as advanced batteries, solar installations and other initiatives, primarily in our African and Indian markets as part of our commitment to reduce our fossil fuel usage. These advanced energy management solutions may also reduce the pass-through fuel cost to our tenants over time while enhancing their network reliability. Meanwhile, in the U.S., we've worked closely with our tenants to optimize service levels to support their ongoing 4G and accelerating 5G investments, leading to reduced cycle times and more efficient network deployments for them.

Among the contributors to this are our master lease agreements that provide for more streamlined administrative processes for site applications and our highly capable in-house zoning and permitting and structural engineering teams. And throughout our global footprint, we continue to drive down our run rate SG&A expense as a percent of revenue, while we add scale, grow revenues and improve business processes.

Growing our portfolio and capabilities across our served markets is the second pillar of Stand and Deliver, and we've added more than 38,000 sites through acquisitions and new builds since we unveiled the strategy in 2018, while expanding into three new markets. In 2019, specifically, this included the acquisition of nearly 5,800 sites through our recent Eaton Towers acquisition, another 2,400 or so sites in Chile and Peru and more than 400 in the U.S.

We continue to see attractive acquisition opportunities globally and are pursuing those within the context of our proven capital allocation strategy. In addition, we've seen demand for new builds accelerate across a number of our markets as incremental network densification becomes a necessity in many more places.

With highly attractive returns on new build towers even on day one, we expect to see our new build program playing an even more prominent role in our Stand and Deliver strategy going forward.

Our focus on innovation, the third pillar of Stand and Deliver is continuing to gather momentum. In 2019, for example, we acquired an interconnect facility in Atlanta to help optimally position ourselves in and better understand the elements in demands for edge computing. We've also made strides in the CBRS space and continue to believe that the market opportunity there is likely to be concentrated in indoor venue-based facilities, at least initially.

In addition, we're in the process of ramping up our own use of drone technology internally, particularly in the U.S., to help us better survey our sites and optimize power maintenance. And as I alluded to earlier, we're also helping lead the way on renewable energy solutions in the African and Indian telecommunications industries, working with technical experts both in the U.S. and abroad as we do so.

Finally, we continue to evaluate a number of other innovative opportunities looking for business models that are either based on or complementary to our existing macro towers. A critical component of these models is that they are secured by owning or controlling local franchise real estate rights, a characteristic that has made our existing business so durable and profitable over the last 20 plus years. Our focus remains on commercially shareable assets supported by long-term contracts with high operating leverage.

Our commitment to enhancing American Tower's industry leadership is the final pillar of Stand and Deliver, and we're pursuing this in numerous ways today. This commitment starts with our dedication to sustainability and being a constructive force in the communities in which we operate. To this end, we continue to enhance our sustainability program, governance practices and our commitment to diversity and inclusion throughout the business.

Further, in August 2019, we signed on to the Business Roundtable statement on the purpose of the corporation, as we believe we have the ability to deliver sustained value across the range of our stakeholders. From an operational perspective, our work with leading universities and academics in the field of distributed power generation continues with the goal being a material reduction in carbon emissions and a corresponding leap and efficiency in our African and Indian operations. And at the same time, we're expanding the presence of our Digital Village initiative and now have installations in five different countries where underserved populations are gaining access to critical broadband connectivity and the resources and opportunities that come along with it.

Most notably, this includes e-learning for both children and adults that enhances their educational opportunities beyond what can be offered by the local village schools. Further, we are members of the Nareit Executive Board, the World Economic Forum, Digital Communication Board of Governors, and I co-chair the US-India CEO Forum, which has the goal of improving economic collaboration and increasing employment in both the U.S. and India.

We're also participants in numerous other industries, government and NGO interactions designed to enhance our understanding of the world around us and position American Tower to continue to make a positive global impact through the transformative nature of access to wireless technology.

These interactions include in-depth dialog with existing tenants and potential new tenants, both in the U.S. and overseas. And in 2020, executing on the key elements of Stand and Deliver across the board will be the priority of our dedicated employees throughout our global operations.

A few specific items stand out to me as some of the biggest opportunities. First, on the operational efficiency front, we continue to explore and identify new and more efficient ways of driving our business forward while enhancing the levels of service we're providing to our tenants. We expect to continue to improve our margin performance in 2020 as we simultaneously integrate newly acquired portfolios in Africa and Latin America. We're also creating shared service centers to support much of the lease extraction and other administrative elements of our business, which we believe will further drive down our SG&A as a percentage of revenues over time.

We expect that our increasing use of drones and continued investment in fuel and power solutions will also help reduce costs, while simultaneously providing the better overall value proposition for our tenants.

Expanding our portfolio is another key focus for 2020 and our new build program is perhaps the biggest point of emphasis. We constructed a record of more than 4,500 sites in 2019 and we expect to exceed that by around an additional 2,000 sites in 2020 at the midpoint of our outlook. Importantly, we expect average day one NOI yields on these new builds to continue to be in the double-digit range.

On the innovation front, we expect to see more near-term momentum in the deployment of commercial 5G in the U.S. As more cell sites, antennas and spectrum bands are optimized for 5G, the surrounding ecosystem should become incrementally more dynamic, which is likely to present us with additional commercial opportunities.

From our vantage point today, the use of CBRS spectrum and edge compute our two areas that maybe especially interesting for us in 2020. We also expect to continue to make meaningful investments in clean energy and fuel innovation this year, concentrated mainly in India and Africa.

Finally, in terms of industry leadership, we expect to augment our current positioning throughout 2020 by building on existing relationships with numerous NGOs and industry groups. At the same time, we set a target to build another 15 to 20 digital villages this year and look forward to publishing an even more comprehensive sustainability report to better reflect the many initiatives we have underway in this area.

In closing, we're excited about what the future holds and we're fortunate to find ourselves in a very solid position as we enter 2020. Our Board of Directors, senior leadership team and dedicated employees around the world are all committed to executing our Stand and Deliver strategy and are energized by the dynamic growth trends in mobile technology.

So with that, let me turn it over to Tom for a review of our 2019 results and our detailed expectations for 2020.

[Tom Bartlett, EVP & CFO]

Hey, thanks, Jim. Good morning, everyone. As you can see, 2019 was another very strong year for American Tower, where we generated double-digit normalized consolidated AFFO per share growth and leading U.S. organic tenant billings growth rates, while building a record number of 4,500 new sites, acquiring over 9,000 more and entering two new markets. We also grew our common stock dividend by 20% again, and drove our average cost of borrowing down while extending our average tenure by over a full year.

In addition, as Jim just discussed, we continue to execute on our Stand and Deliver strategy, expanded our normalized margins and made tangible progress with regards to our innovation initiatives.

Before we discuss our 2020 outlook, let me first highlight some of our financial and operating results for Q4 and the full year of 2019.

Turning to Slide 6. You can see that our underlying Q4 growth trend showed continued strength across our operations. We generated consolidated normalized organic tenant billings growth of 6.5%, including 6.2% in the U.S. and nearly 7% in our international markets, led by Africa at 10% and Latin America at 8%. As expected, the U.S. growth rate decelerated from prior quarters as new business commencements continue to pull back from the record levels we generated earlier in the year. This is largely due to the slowdown of new business from Sprint and T-Mobile as they navigated their merger approval process for the quarter. Offsetting a portion of this was an increase in gross new business generated across our international markets, particularly in Brazil and Mexico.

And as we expected, our international operations returned to positive organic tenant billings growth in Q4 as the impacts of India Carrier Consolidation churn largely subsided. For the quarter, our consolidated normalized property revenue growth rate was more than 8%. In addition, and again on a normalized basis, we generated adjusted EBITDA growth of more than 11% in the quarter, expanding our adjusted EBITDA margin by over 200 basis points.

And finally, we converted nearly 90% of that adjusted EBITDA growth to consolidated AFFO, resulting in normalized consolidated AFFO per share growth of 14.5%.

Moving on to Slide 7. For the full year, our overall normalized property revenue growth was over 9%, driven by normalized organic tenant billings growth of 7.4% on a consolidated basis. About that 6% of this was driven by volume growth from gross new colocation and amendment activity, with another 3.4% being generated from escalators. Normalized churn is around 2%.

For the year, we commenced globally over $30 million in new monthly recurring revenue across our tower and gas assets, on par with 2018 for both organic co-lo and amendment activity, as well as newly built sites.

Our reported U.S. property segment revenue growth for the year was nearly 10% supported by organic tenant billings growth of 7.3% and around $167 million in straight line benefits from the U.S. MLA we signed in the third quarter. Volume growth from colocations and amendments contributed 5.7% for the full year growth rate, while pricing escalators contributed just over 3%. This was partially offset by churn of about 1.5% and negative impact of roughly 20 basis points from some other items.

Industry experts suggest wireless carriers again spent upwards of $30 billion in capital during the year to support their wireless network performance, as mobile data usage grew by more than 30%. Our reported international property revenue declined by about 6%, given the non-recurrence of last year's Tata settlement, while growing nearly 9% on a normalized basis.

Normalized international organic tenant billings growth was about 7.7%, driven by significant network spending in key markets like Mexico, Brazil and South Africa. Colocation/amendment revenue grow roughly 6.5% of the growth, while escalators contributed nearly 4%. Other run rate items added 70 basis points, while normalized churn for the year was around 3%.

Finally, the day one revenue associated with the over 38,000 sites we've added over the course of the last two years, contributed more than 2% or $120 million to our global tenant billings growth. These new assets included the construction of more than 4,500 sites in 2019, as well as 9,000 acquired sites in the U.S., Latin America and Africa, roughly 8,000 of which closed in late December, and therefore, do not really have any impact on our 2019 operational results.

Turning to Slide 8. We also generated double-digit normalized adjusted EBITDA and AFFO growth in 2019, driven by strong underlying revenue growth and diligent management of our operating costs. For the year, normalized adjusted EBITDA grew by nearly 12%, with the corresponding adjusted EBITDA margin increasing to roughly 63%, a year-over-year expansion of nearly 200 basis points.

On an FX-neutral basis, we exceeded our initial 2019 outlook for normalized adjusted EBITDA by over $300 million. These adjusted EBITDA results included significant progress in our fuel management operations, particularly in Africa, where we saved over 20 million liters of diesel fuel for our tenants over the last two years. As of the end of the year, we had around 3,600 sites with lithium-ion batteries and more than 800 with solar.

We also grew normalized consolidated AFFO by 12% and the corresponding AFFO per share by over 11% for the year, reflecting our 12 straight year of generating double-digit consolidated AFFO growth. In fact, since 2009, our consolidated AFFO per share has grown in CAGAR of 14%.

As with our adjusted EBITDA performance, we outpaced our initial outlook expectations for normalized consolidated AFFO by around $120 million on an FX-neutral basis or over $0.25 per share.

Moving to Slide 9. Let's now take a look at our expectations for 2020. Before we dig into the numbers, I'd like to summarize a few of the key high-level assumptions we've included in our outlook. First, as expected, and as I mentioned earlier, we saw a deceleration in our U.S. new business commencements and pipeline in the back half of 2019. And that is carried over to the early part of 2020. Much of this deceleration was attributable to lower activity levels from T-Mobile and Sprint, as they progressed through their merger approval process.

Given the recent court affirmation of the deal, we have now assumed that for the purposes of our 2020 outlook, activity levels with the new T-Mobile will reaccelerate but not until the back half of the year. We expect the exact timing of the re-acceleration to depend upon when the merger closes. But at this point, we view it unlikely that a significant rebound in activity will occur in the first half of the year.

And again, as Jim highlighted, we believe the current lower activity levels in the marketplace are temporary, as all of the carriers will need to continually invest in their networks to meet the expanding usage patterns of their customers. In addition, we haven't assumed any new activity from potential new entrants into the market.

Meanwhile, in India, while India Carrier Consolidation-Driven Churn has largely subsided as anticipated, from a planning perspective we've layered in some additional churn for 2020 as a result of the uncertainty created by the recent India Supreme Court ruling on the definition of adjusted gross revenue, and the corresponding incremental liabilities being placed on the legacy wireless carriers.

I'll note, however, that to the extent, an incrementally positive solution is reached with respect to the AGR issue, it is possible that this included churn will not materialize. Additionally, for the same reason, we've assumed lower levels of gross new business in India for 2020, as we expect that carriers may be less able to make near term network investments.

Taking these assumptions into account at the midpoint of our outlook, we expect consolidated property revenue to grow by 7.8% or 9% on an FX-neutral basis, supported by solid overall levels of new business, lower churn and contributions from new assets, both acquired and built.

Our U.S. property revenue is expected to grow in the mid-5% range, while we expect our international property revenue growth to be more than 11% despite an anticipated 3% or $85 million negative impact from FX translation.

Turning to Slide 10. We expect organic new business to again be a critical component of our overall growth in 2020, driven by significant network investments being made by our large multinational tenants. In the U.S., we're projecting organic tenant billings growth of around 5% as carrier spending on 4G continues and 5G related activity picks up. There are few principal factors driving our U.S. organic tenant billings lower than we have seen over the last few years.

First, as I alluded to earlier, and as we expected, our new business commencements and pipeline trading down in Q4 of 2019, attributable primarily to T-Mobile and Sprint's activity levels. Given that trend and similarly slower activity levels expected in the first part of this year, our U.S. organic tenant billings growth rate is expected to be lower than last year. Also impacting the growth rate is the fact that our base of business is now significantly larger, creating overall drag on 2020 growth rates.

And finally, churn in 2020 is expected to be 1.8%, or around 30 basis points higher than in 2019, although still well within our historical 1% to 2% range. For the year, total monthly commenced organic new business in the U.S. is expected to be a bit lower in '20 than 2019. As I mentioned, the timing of the new business in 2020 is expected to be more back-end loaded in the year.

With all that said, we remain incredibly constructive on the long-term demand trends for tower space in the U.S., and anticipate the new business activity will ramp up to higher levels in the back half of this year and into '20 and '21 given the forecasted demand growth, anticipated spectrum deployments and opportunities associated with 5G.

Moving on to Latin America, we expect organic tenant billings growth of around 7% for the year, broadly consistent with what we saw in 2019. Demand trends are solid with carriers increasingly focused on improving and expanding 4G networks as mobile data usage accelerates. After incurring some iDEN decommissioning in Brazil last year that elevated churn in the region, we expect our LatAm churn to decline to around 1.7% in 2020, partially offsetting this positive trend. Our initial gross new business expectations for the year is slightly lower as compared to 2019.

Escalators are also expected to be down nearly 1%, given lower inflation rates. Over the longer term, we believe we'll have excellent opportunities to grow our Latin American business as carrier investments continue.

In that regard, we continue to see strength in our new build program in the region as network densification initiatives take hold and consequently expect to build between 400 and 500 sites in 2020. Overall, we expect LatAm tenant billings to grow by close to 12% in 2020.

Switching to Africa. 2020 organic tenant billings growth is expected to be around 11%, up from 9% in 2019. This is being driven primarily by our expectation that given our significantly expanded regional portfolio, gross new business contributions to growth will be up substantially as compared to 2019.

In addition, escalators are expected to be slightly higher at around 6% while churn is projected to remain steady at around 1.8%. On the new build side, given continued strong demand, we expect to construct up to 1,000 sites in the region in 2020 as compared to around 700 in 2019. This would represent a record level of new builds for us in Africa.

Meanwhile, in Europe, we expect organic tenant billings growth of between 1% to 2%, down slightly from 2019 based primarily on higher levels of churn due to some Carrier Consolidation in Germany. Over the longer term, particularly in France, where we recently signed a deal with Orange to acquire up to 2,000 sites over the next few years, we would anticipate higher levels of activity as 4G and 5G coverage initiatives accelerate and the corresponding necessary spectrum is allocated.

Finally, in India, we expect organic tenant billings growth to be essentially zero in 2020 versus a roughly 20% decline in 2019. This includes churn assumptions of around 12% for the year as compared to 33% in 2019 given that the impacts of the Carrier Consolidation process are largely over.

With that said, we still anticipate churn in India to be quite a bit higher this year than historical levels and what we would expect in future years. As a result, a few legacy ICC impacts provisions we've made for the potential impacts of the recent AGR decision, as I mentioned earlier, and the last tranche of contractual churn associated with our 2018 acquisition of the Vodafone and Idea sites.

Gross new business activity is expected to be quite strong at about 9% and, in fact, would be the highest of all of our international markets, although not quite at historical levels, again, given some of the likely funding challenges facing certain carriers due to the supreme court AGR decision.

Longer term, we continue to expect India mobile network operators to deploy significant levels of capital into their networks, as 4 G penetration grows and mobile data usage continues to expand. And again to the extent a more favorable resolution to the AGR issue is breached, it is possible that we may outperform our current expectation.

Overall, on a consolidated basis, our outlook assumes commencing more than $27 million in new monthly recurring business across our tower index assets, of which between $404 million will be from newly constructed sites with the balance coming from more traditional organic collocation/amendment activity.

So, while our organic tenant billings growth in certain regions may be under pressure due primarily to broader industry events and timing issues, we have the ability to supplement that growth through our global build-to-suit growth engine.

Moving on to Slide 11. At the midpoint of our outlook, we expect adjusted EBITDA to grow by $390 million or 8.2%. This includes continued high margin flow through of organic growth, as well as the impacts of accretive M&A transactions, build-to-suit activity and a full year of our new MLA agreement with AT&T. We expect to target areas in our business where we can take additional efficiencies, including power and fuel, where we're continuing to invest in more efficient equipment and renewable energy solutions.

In fact, we expect to save upwards of 40 million liters of fuel utilized by our tenants in 2020, leading to reduced emissions and costs. Our cash SG&A expense as a percentage of revenue is expected to be around 7.6%, down for over 8% in 2019. We anticipate being able to further reduce that metric over time. And finally, our adjusted EBITDA expectations include an estimated negative impact of around $45 million from unfavorable FX translation effects.

Turning to Slide 12. We expect to convert our adjusted EBITDA growth and the strong consolidated AFFO growth as well. Before taking into account the one-time previously disclosed $65 million cash interest expense impact of purchasing MTN stake in our Ghana and Uganda joint ventures, consolidated AFFO is expected to grow by 9.5% or 9.4% per share basis.

Including that one-time MTN related cash interest expense payment, at the midpoint of our outlook, we expect consolidated AFFO to grow by a total of nearly $270 million or roughly 7.6%. As compared to 2019, this includes a contribution of $413 million of FX-neutral cash adjusted EBITDA.

Offsetting this increase is $23 million or so in higher cash taxes of roughly $41 million drag from unfavorable FX translation and $15 million in other items. On a per share basis, we expect consolidated AFFO growth to be over 7% for the year and are projecting AFFO attributable to American Tower common stockholders per share to grow by over 8% into mid-point. This per share growth rate would be over 10% without the one-time $65 million cash interest expense impact triggered by the MTN buyout.

Looking at Slide 13. We remain committed to our consistent diverse return-based capital allocation strategy. In 2019, we deployed over $1.7 billion for our growing common stock dividend, while spending over $1 billion on capex with nearly 85% of that spending being discretionary in nature. Around $367 million of that discretionary spend was to fund the construction of more than 4,500 sites throughout our global footprint, a new record for American Tower.

Finally, we spent around $3.3 billion, including the assumption of debt to acquire new assets, and another $426 million on the first set of puts in India earlier in the year. Total, we deployed more than $6 billion throughout the year while staying well within our leverage targets and simultaneously strengthening the balance sheet. We expect to deploy capital in a consistent balanced manner in 2020, including allocating just over $1.1 billion at the midpoint of our outlook for capital expenditures with roughly 85% of the spend again being discretionary.

Approximately $200 million of net capex is planned to be spent investing in our business on innovation related initiatives, including further additions of lithium-ion batteries and solar in certain international markets, as well as selective expansion of our fiber infrastructure largely in Latin America.

Once again, we expect to grow our common stock dividend by 20% or so to more than $2 billion, subject to Board discretion. In addition, we've allocated roughly $523 million to buy MTN's minority stakes in our joint ventures in Ghana and Uganda in the first half of the year and also expect to spend roughly $348 million at year-end 2019 exchange rates to pay for the final Tata put in India.

Our latest expectation is that the Tata put will be completed in the first half of 2020, but the process remains subject to regulatory approval. Pro forma for these transactions, we will own roughly 92% of our India operations, and a 100% in both Ghana and Uganda.

What this will mean going forward is that in the absence of any additional transactions impacting our minority interest, the gap between our consolidated AFFO and AFFO attributable to American Tower common stockholders will shrink.

As you can see on this slide, our comprehensive asset base, investment discipline and ability to deploy capital to attractive opportunities around the world has helped us drive compelling mid-teens growth in consolidated AFFO per share over the last decade.

Further, despite adding more than 150,000 sites to our portfolio since 2009, we've also been able to increase our return on invested capital over that time period to 10.6% as of year-end 2019. We continue to believe the growth across the combination of consolidated AFFO per share and ROIC is critical to our creation of long-term sustainable stockholder value.

Turning to Slide 14. I want to spend a few minutes in our international build-to-suit program, which as I alluded to earlier, had a record year in 2019. We expect to raise the bar to an even higher level of activity in 2020. Most of our new build sites continues to be focused in our international markets. And as you can see, we've ramped the program from building around 2,000 sites back in 2017 to an expected 6,500 sites in the midpoint of our outlook for 2020.

We have purpose-built this global engine to support significant tenant driven inorganic growth. Importantly, not only are we building more sites, but we're also maintaining the attractive day one economics that we've generated historically. With one tenant, our initial average NOI yield on international new builds over the last 3 years has been around 11%, increasing further over time as we generate additional collocations.

To give you a sense of our historical colocation success, we've added roughly 0.5 tenant on average to sites built in 2015, 0.4 to sites built in 2016, and around 0.3 to sites built in 2017. Given this growth profile, we continue to deploy significant capital towards our new build initiatives and expect to spend almost $400 million at the midpoint of our 2020 outlook on development capex.

Finally, as you can see in the chart on the right side of page, newly constructed sites are contributing meaningfully to our overall book of monthly run rate additions over the last 3 years, with a total of nearly $7 million added. We expect another $4 million or so in 2020 as our new build equity accelerates.

Turning to Slide 15. And in summary, 2019 was another strong year for American Tower with solid organic growth, accelerating new-build activity, meaningfully accretive M&A, continued strides and increasing margins by driving operational efficiencies throughout the business. The underlying secular growth trends in mobile on a global basis, continue to act as a catalyst for consistent sustainable growth in our revenues and cash flows, and we are dedicating resources to ensure that we are optimally positioned to take advantage of those trends.

Looking to 2020, we expect another solid year of revenue and cash flow generation fueled by new business growth and margin expansion across our portfolio, complemented by a record year of new builds with a consistent growth in our common stock dividend and our continuing capacity to fund opportunistic accretive M&A.

In the U.S., we are well positioned to benefit from a revised wireless industry structure and look forward to working with our existing, potentially new tenants to accelerate the deployment of 5G throughout the country. In our international markets, underlying trends are solid with increasing smartphone penetration in mobile data usage continuing to drive strong demand for our tower's business.

Looking slightly longer term, we are fully committed to our Stand and Deliver strategy and are confident that we are on the right path to deliver attractive, sustainable, long-term total returns to our stockholders for years to come.

With that, I'll turn the call over to the operator, so we can take some questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Michael Rollins from Citi. Please go ahead.

[Michael Rollins, Citi]

Thanks, and good morning. I'm curious if you could talk about the significance of segmenting the European business from the African business and based on your historical aspirations to be a leader in each of the regions that you serve, how does the segmentation play into the goals of what you might want to achieve in Europe versus Asia -- sorry, Europe versus the Africa? And then, just secondarily, if you could talk a little bit more about how we should think about the flow of growth over the year in the domestic business given the commentary for the activity to be back half weighted and the annual growth goal that you provided? Thanks.

[Jim Taiclet, Chairman, President & CEO]

Mike, good morning, it's Jim. I'll take the first one and Tom can speak to the trend on the second. As far as Europe and Africa separating, we essentially took the opportunity with the Eaton transaction to really focus more transparency on both markets given the significant differences that they have. And then secondly, as I suggested, with Eaton coming on Africa, it's actually a sizable region in and of itself now. So, it was just high time to separate them just for those reasons. There is really nothing else behind it. As far as leadership aspirations, they take sometimes years or many years to achieve. And for us, it has to do with the discipline of our investment program. Right now and for the last couple few years, I'd say that the match of asset pricing and growth rates has not met our investment criteria. And so, we haven't felt the need or really the attractiveness to buy large asset portfolios in Europe with those prices. But things change and whether the growth rate surges or the asset pricing moderates, those are the times you'll see us act more decisively, but we think it's really important to have the beachhead in that part of the world in France, in Germany, the two largest continental economies.

And so, we think that it's important business for us, but just asset pricing and growth need to come better into line for us to act more decisively.

[Tom Bartlett, EVP & CFO]

And Michael, in the U.S., on the second one, versus kind of last year, I probably see kind of a 40 plus percentage in the first half of the year and kind of a 60% in this second half of the year. With the new MLAs that we have in place, there could be -- the organic tenant billings growth rate might be a bit higher in Q1, actually. But overall, we would expect kind of the new T-Mobile was roughly the same that we had generated last year. But this year it all, kind of, second half of the year driven, which will prove to be positive actually heading into 2021 we believe. I'll also remind you that we haven't assumed any activity from any new entrants, including Dish, into the outlook for the year.

[Michael Rollins, Citi]

Thanks very much.

[Operator]

Our next question comes from the line of David Barden from Bank of America Merrill Lynch. Please go ahead.

[Unidentified Analyst]

Hey, guys. It's Josh [ph] in for Dave, thanks for taking the questions. Two if I could. Can you just provide any additional commentary on the Indian Supreme Court ruling, and when you think this will all be behind us? And any thoughts you have on reports, the government has been intervening in the market to raise prices? And then secondly, what are your expectations for the gross-related impact related to the AT&T Telefonica deal? And do you think there are other markets where this type relationship could evolve? Thanks.

[Jim Taiclet, Chairman, President & CEO]

Sure, Josh. It's Jim again. And I'll go ahead and start, and Tom can add additional commentary. So, as far as India, the Supreme Court there in that country is taking its independent action as independent judiciaries tend to do. For us to predict what those actions are going to be and how they'd rollout is something we're not going to do. But I will tell you that part of the history of this company is to adapt to changing conditions and it's not by accident. We've built the company that way through our portfolio diversification, our long-term contracts, our comprehensive MLAs and the four-dimensional strategy that we sort of call Stand and Deliver in the current timeframe. So, we'll adapt to this as it unfolds. And so to predict how it will unfold, I can't offer much in the way of content. But our adaptability, I can assure you will be put into play however it evolves.

As far as the government intervening, we just see what happens in the market. We're not involved in those discussions or internal government decision-making processes in India. But the pricing rationalization I would call it was long due. There is no way to continue to provide the kind of gigabit, multi-gigabit service per month the kind of prices that were being charged. And now that some common sense is come into the market, that was just overdue.

Secondly, in Mexico, with AT&T and Telefonica under new arrangement, we've got a significant amount of Telefonica leases with long-term lease commitments that will -- we expect will be honored. And we are also having about four years on average with those leases. And as far as AT&T, it's a large and well-integrated customer with us in Mexico as well as the U.S. And whatever traffic moves from the Telefonica network over time into the AT&T network is going to have to be served. And I think we're in a great position as a partner with AT&T in Mexico to meet that demand with them. So, we don't expect this to be materially adverse scenario to our Mexico business.

[Unidentified Analyst]

Got it. Thanks for taking the questions.

[Operator]

Our next question comes from the line of Batya Levi from UBS. Please go ahead.

[Batya Levi, UBS]

Great, thank you. Question on India, can you provide more color on the 12% churn assumption you have? Is that based on some early notification from the carrier or you're just assumption that as the year progresses that they could take-off some equipment? And on the gross activity side, it looks like it was still strong throughout the end of last year. Have you seen a slowdown since then? And does the 9% assume activity from all players? And maybe just finally, in the event that there is a restructuring there, can you talk about what kind of protection, you have? Thank you.

[Tom Bartlett, EVP & CFO]

Sure, Batya. The first couple of questions, we had a little bit higher churn in Q4, which is -- I consider India Carrier Consolidation churn, which is kind of kicking in into 2020. It's a couple of percent. The kind of the overarching planning provision that I put in place relative to the AGR decision is probably another 4% or so. So, when you kind of back out this and kind of look at the kind of the normalized churn rate, it's probably in that 4% rate for the year. It's still a little bit higher than I would expect longer term. But that kind of gives you a sense of what we think as being the kind of a normalized rate. Relative to the kind of the gross new business, yes, it's around 9%. And again, because of the AGR decision, we've kind of scoped that back a little bit for 2020 planning purposes. The carriers continue to work through a lot of these AGR decisions we thought that it might slow down a bit the overall rate of growth.

The build program continues to be very, very strong and its -- 70%, 80% of our total build program will be in India. You have seen the kind of -- the really terrific NOI yields that we've had in that marketplace. So, again, as I mentioned, while the overall growth is a bit slower than last year, it's still our highest across our international footprint with that 9%. So, we're really positive, constructed longer term on it. We just need to kind of get through kind of this AGR processing.

[Jim Taiclet, Chairman, President & CEO]

And Batya, it's Jim. Just to add to that in the larger context, we're going through in India, in the mobile industry, a reordering of that industry. It was long overdue, that's why the consolidation came in. And now the actions of certain government agencies and courts and the impact of those, which will be, we hope, fairly short-lived. But at the end of the day, we look at the long-term technical demand for tower space in every market that we're in. And if you just step back and look at India, the market for mobile service, there's 1.3 billion people plus there. At the end of this decade, if not sooner, they'll be using probably 10 gigabits a month on 4G, if not 5G, across that population. The network infrastructure that's there today is woefully inadequate to do that.

So, there's a reordering of the industry and some shaking out has happened. But at the end of the day, no matter what carriers are serving that population, they're going to have to have a significant amount of equipment added to sites in that country and a significant amount of sites added over time, and we'll be there for that. And again, we'll adapt to the industry structure, who the customers are, who the customers ownerships are, who the competition is, to get our fair share of that and monetize it in the way we've typically done.

[Batya Levi, UBS]

Okay. Thank you.

[Operator]

Next question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.

[Simon Flannery, Morgan Stanley]

Thank you very much. Just coming back to the Sprint, T-Mobile, is it your hope to sign a holistic MLA here to sort of flatten out some of the churn on the Sprint network? And how long do you think that would take to execute? And then just on the new builds, perhaps you could just give us a little bit more color about the key markets that you're targeting in 2020?

[Jim Taiclet, Chairman, President & CEO]

Hey, Simon, it's Jim. Good morning. I'll take the T-Mobile, Sprint and Tom can talk to the build program. As far as our negotiations with T-Mobile or other carriers, they're ongoing constantly at various levels. We've found ways with all of our major customers, that towards the end of the day, come to an arrangement with them whether it's retail or wholesale, you could characterize. That allows us to have a strong growth rate and them to feel like they have an efficient way to deploy their network. I am extremely confident that we'll continue to have those kinds of interactions with the T-Mobile management. And at the end of the day, if it's a holistic or a wholesale type agreement, that is best for both parties, we'll enter into that as we've done with others. And if it's a more retail establishment with more flexibility, we'll work within that as well. The remaining term is two years. So, that gives us time on the Sprint leases to work with T-Mobile, Sprint closely to figure out what the best answer is for all of us. So, I'm very confident that we're going to find an arrangement that works for both.

[Tom Bartlett, EVP & CFO]

Yes, I guess in terms of the split of the 6,500 sites, probably looking at upwards of 1,000 in Africa, 600 plus in Latin America, and about 5,000 in India.

[Simon Flannery, Morgan Stanley]

Great. Thanks so much.

[Operator]

Our next question comes from the line of Colby Synesael from Cowen. Please go ahead.

[Colby Synesael, Cowen & Company]

Great. Two questions. Jim, you mentioned in your prepared remarks as part of your strategy you guys will focus more on CBRS and edge in 2020. I'm wondering if you could expand on that. And then just Tom, one question as it relates to just I guess the numbers a bit. U.S. straight line, your assumption now for 2020, the $185 million last quarter and your supplemental for 2020, it was $103 million. The AT&T MLA happened in early September. So, I assume that was already reflected. Just curious what the explanation is for that delta versus what you guys are guiding for last quarter? Thank you.

[Tom Bartlett, EVP & CFO]

Sure, Colby. On the innovation initiatives, they are in early stages. We actually hope to be a pioneer in both of these in our industry, but unclear how they're going to develop and at what rate. But we're out in front, we think, with the right partners. So, as far as CBRS goes, we expect that in the next few years that will be mainly indoor small cell solution that will reduce the cost of delivery of service inside of venues and that would therefore widen dramatically the number of venues that DAS system, if you will, makes economic sense. So, that's the path we're on there. As far as edge compute, my vision long-term is that there is incredible sense and there'll be a lot of value and being able to interconnect at the cell site at the tower site, multiple mobile operators and multiple cloud providers to really enhance the latency improvements and the throughput and responsiveness of 5G in the future.

And again, we're working, we think, with some of the very best partners in trialing this. We've set up really a lab, if you will, with Colo Atl in Atlanta, and we have six sites up and running at Tower locations in the Southeast U.S. this year, to go ahead and test this out with a few very well regarded parties in those fields that I discussed. So, I think that we're, again, in the front of this. We hope to lead the infrastructure definition of what is going to take to do these kinds of edge compute solutions, and we'll keep updating you all as we go forward.

[Jim Taiclet, Chairman, President & CEO]

Colby, on the second piece, you're right. I mean, we had some adjustments that we made in the straight-line colocs on the MLA. And then we just have, we have natural extensions in our other kind of non-related leases right across the portfolio.

[Colby Synesael, Cowen & Company]

And is there anything specific? I mean, it seemed like a fairly large jump versus last quarter. I was wondering if there's anything to point out?

[Jim Taiclet, Chairman, President & CEO]

Nothing, nothing specific. And I'd just point out, yes, it's really a true up. In 2020, I'll just remind you that we do expect again another pickup of around $30 million straight-line in our outlook. But relative to Q4 and finishing up the year, nothing specific, just kind of further landing in that calculation.

[Colby Synesael, Cowen & Company]

Okay. Thank you.

[Operator]

Our next question comes from the line of Brett Feldman with Goldman Sachs. Please go ahead.

[Brett Feldman, Goldman Sachs]

Thanks. And firstly, I just want to follow-up on the question about your outlook for India. If I heard Tom's answer correctly, it sounds like your pipeline for gross new activity may indeed be better than the 9% growth. But in light of the uncertainty market, you're choosing to take a degree of conservatism. And it sounded like that's also the way you're thinking about churn. So, I just wanted to clarify whether it's what you're actually seeing, your funnel for both of those metrics that caused you to guide as you did, or if it was also heavily influenced by an appropriate degree of conservatism?

And then, just secondly, we're starting to see the C-band process move ahead and we might get an FCC authorization on that reasonably soon. What's your latest updated thinking in terms of the impact you would expect that to have in your business? I mean, are you mostly assuming this could be a huge amendment cycle from your existing customers, or do you think that this could be a catalyst for a significant amount of new site deployments owing to the propagation differences and the frequency? Thank you.

[Tom Bartlett, EVP & CFO]

Hey, Brett. I'll take the first one and then Jim will take the second one. Your question on India, I think that to the extent that the AGR decision is, if resolved quickly and appropriately, the pipeline could increase. But relative to my comments on the conservatism, it's more largely in the churn side. And so, I don't -- I wouldn't expect, I don't know that we'd have significant increases on the growth side, but there very well could be possibly benefits on the churn side.

[Jim Taiclet, Chairman, President & CEO]

And Brett on the C-band spectrum availability, first of all, just as a reminder to everyone, it's probably going to be a few years to allocate through auction or otherwise and then clear that spectrum and really get it ready to deploy. So, we're looking forward to that, because as you sort of suggested that certainly for our existing customers, if that spectrum is available and you want to have the same sort of signal strength using that spectrum as you have in 600, 700, the sites absolutely have to be closer together, which requires densification.

The other issue is that that spectrum won't go through obstructions such as walls as foliage and things like that quite as well. So, that's going to kind of add to the densification requirement. And for new customers, we're working with a number of industries in a preliminary fashion. The fact that this spectrum might be available and if you see the impact of an options, I think we're in well -- very good position to carry that forward, but it's hard to predict right now. But the existing customer base, we expect is going to need to use the spectrum and we'll deploy it in a denser fashion over the next number of years.

[Brett Feldman, Goldman Sachs]

Thank you.

[Operator]

Last question comes from the line of Ric Prentiss with Raymond James. Please go ahead.

[Ric Prentiss, Raymond James]

Thanks. Good morning, guys. Hey, a couple of follow-up questions on the CBRS spectrum side, Jim, would you imagine yourself participating in the spectrum auction or just acting as the host of spectrum?

[Jim Taiclet, Chairman, President & CEO]

We expect Ric, to act as a host of spectrum and allow our customers and other industries to secure the spectrum and go ahead and deploy it if they're within their plans. Now, there is some general access spectrum that's out there too and that's a kind of bands that anyone can use, and in low density venues might make a lot of sense to use because the availability of the spectrum for large significant quantities of volume is not going to be required, but just having enough availability of spectrum to augment the outdoor network would be valuable. So, the generals available to all and some of our customers and other clients may come with the more prioritized spectrum, but we don't intend to necessarily bid in options.

[Ric Prentiss, Raymond James]

Makes sense. And Jim, you mentioned or Tom, you mentioned 5,000 of the new builds in India, who is your anchor tenant there? Just so we can understand, kind of, as the industry rationalizes there, what you might be exposing yourself with?

[Jim Taiclet, Chairman, President & CEO]

It's -- Ric, it's largely Airtel.

[Ric Prentiss, Raymond James]

Okay. And a couple of -- obviously, quick ones here. In the AT&T, new MLA, what was it that got addressed in that one? Was it FirstNet project, was it preparing -- just when I think that was a fairly large one. What drove the new MLA there with AT&T?

[Jim Taiclet, Chairman, President & CEO]

Ric, it's Jim. Our practice is we don't speak to specifics of any customer agreement. But what I can say is that, look, we've been working with AT&T and its predecessor since SpectraSite bought the SBC towers in the late 1990s, I believe. So, this is just another cycle in the pattern of collaborative agreements with that executive team as its evolved over time. And we're the largest tower company in the country and they're one of the largest mobile operators in the country and it's just a natural cycle evolution of how we do business together.

[Ric Prentiss, Raymond James]

And last one from me is, obviously, you mentioned that no new ones like Dish in the guidance. What would it take if Dish wanted to take over some of the decommissioned Sprint sites if they found that as Dish said on their earnings call that some of the RAD centers are at good height? What would be involved in Dish taking a look at the some decommissioned Sprint sites?

[Jim Taiclet, Chairman, President & CEO]

Ric, it's Jim. Broadly, their obligations on the part of T-Mobile, Sprint on those sites already, varying terms. We try to work closely with both Dish and T-Mobile, Sprint to figure out what makes the most sense really for the industry and for the companies to put each site in the proper hands so that this deployment can be successful for really all -- both of those customers. So, we've sorted out, but it'd be a very detailed negotiation based on the facts and the volumes and the locations.

[Ric Prentiss, Raymond James]

Makes sense. Thanks guys.

[Tom Bartlett, EVP & CFO]

Thanks, Ric.

[Igor Khislavsky, VP, IR]

Great. Well, thank you everybody for joining this morning and have a great day.

[Operator]

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