What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-04-29 · 246 added, 105 removed, 320 unchanged (52% of the section changed)

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In addition, we own and operate towers in South America, Central America, Canada, South Africa, the Philippines, and Tanzania.

Our primary business line is our site leasing business, which contributed 96.9% of our total segment operating profit for the three months ended March 31, 2022.

Our primary business line is our site leasing business, which contributed 96.6% of our total segment operating profit for the six months ended June 30, 2022.

In our site leasing business, we (1) lease space to wireless service providers and other customers on assets that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements.

As of March 31, 2022, we owned 36,017 towers, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers.

As of June 30, 2022, we owned 36,297 towers, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers.

Our other business line is our site development business, through which we assist wireless service providers in developing and maintaining their own wireless service networks.

Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts in the United States, South America, Central America, Canada, South Africa, the Philippines, and Tanzania.

As of March 31, 2022, no U.S.

As of June 30, 2022, no U.S.

state or territory accounted for more than 10% of our total tower portfolio by tower count, and no U.S.

state or territory accounted for more than 10% of our total revenues for the three months ended March 31, 2022.

In addition, as of March 31, 2022, approximately 30% of our total towers are located in Brazil and no other international markets (each country is considered a market) represented more than 4% of our total towers.

We derive site leasing revenues primarily from wireless service

provider tenants, including T-Mobile, AT&T, Verizon Wireless, Oi S.A., Telefonica, Claro, DISH Wireless, Tigo, and TIM.

Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an individual site.

In the United States and our international markets, our tenant leases are generally for an initial term of five years to 15 years with multiple renewal periods at the option of the tenant.

In the United States, Canada, and in our Central American markets, tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods.

In our South American markets, South Africa, and the Philippines, tenant leases typically escalate annually in accordance with an inflationary index.

In Tanzania, tenant leases typically escalate using a combination of fixed and inflation adjusted escalators.

Site leases in our South American markets typically provide for a fixed rental amount and a pass-through charge for the underlying rent related to ground leases and other property interests.

In South Africa, our site leases contain pass through charges related to utilities and, in Tanzania, our site leases include components related to utilities and fuel.

The utility and fuel portion of our Tanzanian site leases adjust periodically in accordance with changes in fuel and electricity prices.

In certain markets such as Brazil, tenant leases are typically governed by master lease agreements, which provide for the material terms and conditions that will govern the terms of the use of the site.

state or territory accounted for more than 10% of our total revenues for the six months ended June 30, 2022.

In addition, as of June 30, 2022, approximately 30% of our total towers are located in Brazil and no other international markets (each country is considered a market) represented more than 5% of our total towers.

We derive site leasing revenues from all the major carriers in each of the 16 countries in which we operate.

Our tenant leases are either individual leases by tower site or governed by master lease agreements, which provide for the material terms and conditions that will govern the terms of the use of the site.

Our tenant leases are generally for an initial term of five years to 15 years with multiple renewal periods at the option of the tenant.

Our tenant leases either (1) contain specific annual rent escalators, (2) escalate annually in accordance with an inflationary index, or (3) escalate using a combination of fixed and inflation adjusted escalators.

In addition, our international site leases may include pass-through charges, such as rent related to ground leases and other property interests, utilities, and fuel.

Cost of site leasing revenue primarily consists of:

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 Lease initial direct cost amortization.

In the United States and our international markets, ground leases and other property interests are generally for an initial term of five years or more with multiple renewal periods, which are at our option.

In the United States, Canada, our Central American markets, and the Philippines, ground leases and other property interests provide for fixed rent escalators which typically average 2-3% annually, and in our South American markets and South Africa, ground leases adjust in accordance with an inflationary index.

As of March 31, 2022, approximately 71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years.

Ground leases and other property interests are generally for an initial term of five years or more with multiple renewal periods, which are at our option.

Our ground leases either (1) contain specific annual rent escalators, (2) escalate annually in accordance with an inflationary index or (3) escalate using a combination of fixed and inflation adjusted escalators.

As of June 30, 2022, approximately 72% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years.

For any given tower, costs are relatively fixed over a monthly or an annual time period.

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For the three months ended

For the six months ended

Segment operating profit as a percentage of

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We believe that the site leasing business continues to be attractive due to its long-term contracts, built-in rent escalators, high operating margins, and low customer churn (which refers to when a customer does not renew its lease or cancels its lease prior to the end of its term) other than in connection with customer consolidation or cessation of a particular technology.

We believe that over the

long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements.

We believe that over the long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements.

During the remainder of 2022, we expect organic site leasing revenue in both our domestic and international segments to increase over 2021 levels due in part to wireless carriers deploying unused spectrum.

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In other cases, management is required to exercise judgment in the application of accounting principles with respect to particular transactions.

The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” where such policies affect reported and expected financial results.

The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results.

For a detailed discussion on the application of these and other accounting policies, see Note 2 of our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

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This report presents our financial results and other financial metrics on a GAAP basis and with respect to our international and consolidated results after eliminating the impact of changes in foreign currency exchange rates.

We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations.

We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability

to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations.

We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of realized and unrealized gains and losses on our intercompany loans.

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Revenues and Segment Operating Profit:

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Site development

Domestic site leasing revenues increased $29.4 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to (1) revenues from 824 towers acquired (including wireless tenant licenses on 713 utility transmission structures from the PG&E transaction) and towers built since January 1, 2021 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.

International site leasing revenues increased $24.9 million for the three months ended March 31, 2022, as compared to the prior year.

Domestic site leasing revenues increased $23.3 million for the three months ended June 30, 2022, as compared to the prior year, primarily due to (1) revenues from 143 towers acquired and 9 towers built since April 1, 2021 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.

International site leasing revenues increased $32.9 million for the three months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $29.5 million.

These changes were primarily due to (1) revenues from 1,974 towers acquired (including 1,445 towers under the deal with Airtel Tanzania) and 412 towers built since January 1, 2021 and (2) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals.

These changes were primarily due to (1) revenues from 2,134 towers acquired (including 1,445 towers under the deal with Airtel Tanzania) and 450 towers built since April 1, 2021, (2) organic site leasing growth from new leases, amendments, and contractual escalators, and (3) an increase in reimbursable pass-through expenses due primarily to increases in CPI escalators on our ground leases, partially offset by lease non-renewals.

Site leasing revenue in Brazil represented 12.7% of total site leasing revenue for the period.

No other individual international market represented more than 5% of our total site leasing revenue.

Site development revenues increased $16.7 million for the three months ended March 31, 2022, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH Wireless.

Site development revenues increased $20.3 million for the three months ended June 30, 2022, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon.

Operating Profit

Domestic site leasing segment operating profit increased $28.7 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increased $13.8 million for the three months ended March 31, 2022, as compared to the prior year.

Domestic site leasing segment operating profit increased $21.4 million for the three months ended June 30, 2022, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since April 1, 2021 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increased $18.5 million for the three months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $16.1 million.

These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

Site development segment operating profit increased $5.3 million for the three months ended March 31, 2022, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH Wireless.

These changes were primarily due to additional profit generated by (1) towers acquired and built since April 1, 2021 and organic site

leasing growth as noted above and (2) the positive impact of our ground lease purchase program, partially offset by our increased site leasing cost of revenues largely as a result of our new site additions and expansion into new markets.

Site development segment operating profit increased $6.3 million for the three months ended June 30, 2022, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon.

Selling, General, and Administrative Expenses:

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Site development

Selling, general, and administrative expenses increased $10.5 million for the three months ended March 31, 2022, as compared to the prior year.

Selling, general, and administrative expenses increased $9.3 million for the three months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses increased $9.4 million.

These changes were primarily as a result of an increase in non-cash compensation, personnel, and other support related costs due in part to our entry into new markets.

The decrease in Domestic site leasing and corresponding increases in International site leasing and Other selling, general, and administrative expenses are primarily due to changes in our internal cost allocations.

The decrease in Domestic site leasing (which has been allocated to International site leasing and Other selling, general, and administrative expenses) was primarily due to changes in our internal cost allocations.

Asset Impairment and Decommission Costs:

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International site leasing

Asset impairment and decommission costs increased $3.6 million for the three months ended March 31, 2022, as compared to the prior year.

Total site leasing

Asset impairment and decommission costs increased $4.7 million for the three months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $4.9 million.

These changes were primarily as a result of an increase in impairment charges resulting from our regular analysis of whether the anticipated future discounted cash flows from certain towers are sufficient to recover the carrying value of the investment in those towers, partially offset by a decrease in costs related to sites decommissioned in the first quarter of 2022 compared to the prior year period.

Depreciation, Accretion, and Amortization Expense:

7 unchanged sentences

Site development

Depreciation, accretion, and amortization expense decreased $9.6 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense decreased $10.4 million.

These changes were primarily due to the impact of assets that became fully depreciated since the prior year period, partially offset by an increase in the number of towers we acquired and built since January 1, 2021.

Domestic site leasing depreciation, accretion, and amortization expense decreased $5.5 million for the three months ended June 30, 2022, as compared to the prior year.

This change was primarily due to the impact of assets that became fully depreciated since the prior year period, partially offset by an increase in the number of towers we acquired and built since April 1, 2021.

International site leasing depreciation, accretion, and amortization expense increased $6.9 million for the three months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense increased $5.6 million.

These changes were primarily due to the increase in the number of towers we acquired and built since April 1, 2021, partially offset by the impact of assets that became fully depreciated since the prior year period.

Operating Income (Expense):

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Site development

Domestic site leasing operating income increased $45.4 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to higher segment operating profit, decreases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses, partially offset by an increase in asset impairment and decommission costs.

International site leasing operating income decreased $1.5 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, international site leasing operating income decreased $2.2 million.

These changes were primarily due to increases in selling, general, and administrative expenses, depreciation, accretion, and amortization expense, and asset impairment and decommission costs, partially offset by higher segment operating profit.

Site development operating income increased $7.1 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile and DISH Wireless .

Domestic site leasing operating income increased $27.3 million for the three months ended June 30, 2022, as compared to the prior year, primarily due to higher segment operating profit and decreases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses, partially offset by increases in asset impairment and decommission costs.

International site leasing operating income increased $3.8 million for the three months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $2.6 million.

These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses.

Site development operating income increased $5.4 million for the three months ended June 30, 2022, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile, DISH Wireless, and Verizon .

Other Income (Expense):

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Loss from extinguishment of debt, net

Other income (expense), net

Interest income increased $1.9 million for the three months ended March 31, 2022, as compared to the prior year.

This change was primarily due to a higher amount of interest-bearing deposits held in Brazil and higher effective interest rates on those deposits as compared to the prior year.

Interest expense decreased $7.8 million for the three months ended March 31, 2022, as compared to the prior year.

Other (expense) income, net

Interest expense decreased $6.2 million for the three months ended June 30, 2022, as compared to the prior year.

This change was primarily due to a lower weighted average interest rate, partially offset by a higher average principal amount of cash-interest bearing debt outstanding.

Loss from extinguishment of debt was $11.7 million for the three months ended March 31, 2021 representing the payment of a $7.5 million call premium and the write-off of $4.2 million of unamortized financing fees related to the repayment of the 2017 Senior Notes in February 2021.

Other expense, net includes a $109.6 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended March 31, 2022, while the prior year period included a $86.3 million loss.

(Provision) Benefit for Income Taxes:

Loss from extinguishment of debt was $2.0 million for the three months ended June 30, 2021 representing the write-off of unamortized financing fees related to the repayment of the 2017-1C Tower Securities in May 2021.

Other expense, net includes a $63.7 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended June 30, 2022, while the prior year period included a $111.3 million gain.

Benefit (Provision) for Income Taxes:

For the three months ended

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(in thousands)

(Provision) benefit for income taxes

Provision for income taxes increased $61.4 million for the three months ended March 31, 2022, as compared to the prior year primarily due to fluctuations in foreign currency exchange rates, partially offset by a decrease in deferred foreign taxes.

Net Income (Loss):

Benefit (provision) for income taxes

Provision for income taxes decreased $50.8 million for the three months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, provision for income taxes increased $7.5 million primarily due to increases in deferred foreign taxes and current state taxes offset by a decrease in deferred withholding taxes.

For the three months ended

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(in thousands)

Net income decreased $83.5 million for the three months ended June 30, 2022, as compared to the prior year.

This change was primarily due to fluctuations in foreign currency exchange rates related to the remeasurement of the U.S.

dollar denominated intercompany loans with foreign subsidiaries.

On a constant currency basis, net income increased $33.3 million due to an increase in operating income and decreases in interest expense and loss from the extinguishment of debt, partially offset by an increase in provision for income taxes.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Revenues and Segment Operating Profit:

For the six months ended

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Site development

Cost of Revenues

Domestic site leasing

International site leasing

Site development

Operating Profit

Domestic site leasing

International site leasing

Site development

Domestic site leasing revenues increased $52.7 million for the six months ended June 30, 2022, as compared to the prior year, primarily due to (1) revenues from 855 towers acquired (including wireless tenant licenses on 715 utility transmission structures from the PG&E transaction) and 11 towers built since January 1, 2021 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.

International site leasing revenues increased $57.8 million for the six months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $52.1 million.

These changes were primarily due to (1) revenues from 2,153 towers acquired (including 1,445 towers under the deal with Airtel Tanzania) and 510 towers built since

January 1, 2021, (2) organic site leasing growth from new leases, amendments, and contractual escalators, and (3) an increase in reimbursable pass-through expenses due primarily to increases in CPI escalators on our ground leases, partially offset by lease non-renewals.

Site leasing revenue in Brazil represented 12.2% of total site leasing revenue for the period.

No other individual international market represented more than 5% of our total site leasing revenue.

Site development revenues increased $37.0 million for the six months ended June 30, 2022, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon.

Operating Profit

Domestic site leasing segment operating profit increased $50.2 million for the six months ended June 30, 2022, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increased $32.4 million for the six months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $28.5 million.

These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 and organic site leasing growth as noted above and (2) the positive impact of our ground lease purchase program, partially offset by our increased site leasing cost of revenues largely as a result of our new site additions and expansion into new markets.

Site development segment operating profit increased $11.6 million for the six months ended June 30, 2022, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon.

Selling, General, and Administrative Expenses:

For the six months ended

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Site development

Selling, general, and administrative expenses increased $19.9 million for the six months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses increased $20.1 million.

These changes were primarily as a result of an increase in non-cash compensation, personnel, and other support related costs due in part to our entry into new markets .

Asset Impairment and Decommission Costs:

For the six months ended

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Asset impairment and decommission costs increased $8.3 million, on an actual and constant currency basis, for the six months ended June 30, 2022, as compared to the prior year.

These changes were primarily as a result of a increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers due in part to increased churn from Sprint.

Depreciation, Accretion, and Amortization Expenses:

For the six months ended

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Site development

Domestic site leasing depreciation, accretion, and amortization expense decreased $21.3 million for the six months ended June 30, 2022, as compared to the prior year.

International site leasing depreciation, accretion, and amortization expense increased $12.6 million for the six months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense increased $10.5 million.

These changes were primarily due to the increase in the number of towers we acquired and built since January 1, 2021, partially offset by the impact of assets that became fully depreciated since the prior year period.

Operating Income (Expense):

For the six months ended

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Site development

Domestic site leasing operating income increased $74.7 million for the six months ended June 30, 2022, as compared to the prior year, primarily due to higher segment operating profit and decreases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses, partially offset by an increase in asset impairment and decommission costs.

International site leasing operating income increased $2.3 million for the six months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $0.4 million.

These changes were primarily due to higher segment operating profit partially offset by increases in selling, general, and administrative expenses, depreciation, accretion, and amortization expense, and asset impairment and decommission costs.

Site development operating income increased $10.6 million for the six months ended June 30, 2022, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile, DISH Wireless, and Verizon.

Other Income (Expense):

For the six months ended

Currency Impact

Currency Change

(in thousands)

Interest income

Interest expense

Non-cash interest expense

Amortization of deferred financing fees

Loss from extinguishment of debt, net

Other income, net

Interest income increased $2.8 million for the six months ended June 30, 2022, as compared to the prior year.

This change was primarily due to a higher amount of interest-bearing deposits held as well as higher effective interest rates on those deposits as compared to the prior year.

Interest expense decreased $14.1 million for the six months ended June 30, 2022, as compared to the prior year primarily due to a lower weighted-average interest rate, partially offset by a higher average principal amount of cash interest bearing debt outstanding.

Loss from extinguishment of debt was $13.7 million for the six months ended June 30, 2021 representing the payment of a $7.5 million call premium and the write-off of $4.2 million of the unamortized financing fees related to the redemption of the 2017 Senior Notes in February 2021, as well as the write-off of $2.0 million of unamortized financing fees related to the repayment of the 2017-1C in May 2021.

Other income, net includes a $45.9 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the six months ended June 30, 2022, while the prior year period included a $25.0 million gain.

Provision for Income Taxes:

For the six months ended

Currency Impact

Currency Change

(in thousands)

Provision for income taxes

Provision for income taxes increased $10.6 million for the six months ended June 30, 2022, as compared to the prior year.

On a constant currency basis, provision for income taxes decreased $0.2 million.

These changes were primarily due to an increase in state taxes offset by a decrease in deferred foreign taxes.

Net Income (Loss):

Net income increased $200.1 million for the three months ended March 31, 2022, as compared to the prior year.

For the six months ended

Currency Impact

Currency Change

(in thousands)

Net income increased $116.5 million for the six months ended June 30, 2022.

On a constant currency basis, net income increased $105.2 million.

These changes were primarily due to an increase in operating income and decreases in loss from extinguishment of debt and cash interest expense, partially offset by an increase in provision for income taxes.

These changes were primarily due to an increase in operating income and decreases in interest expense, and loss from the extinguishment of debt.

NON-GAAP FINANCIAL MEASURES

This report contains information regarding Adjusted EBITDA, a non-GAAP measure.

We have provided below a description of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to why management utilizes this measure.

We have provided below a description of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to

why management utilizes this measure.

As discussed above, this report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates.

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Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations.

Management believes

that Adjusted EBITDA helps investors or other interested parties to meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results.

Management believes that Adjusted EBITDA helps investors or other interested parties to meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results.

Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of REITs.

5 unchanged sentences

(in thousands)

Net income (loss)

Non-cash straight-line leasing revenue

2 unchanged sentences

Loss from extinguishment of debt, net

Other (income) expense, net

Other expense (income), net

Acquisition and new business initiatives

4 unchanged sentences

Depreciation, accretion, and amortization

Provision (benefit) for income taxes (2)

(Benefit) provision for income taxes (2)

Adjusted EBITDA

For the six months ended

Currency Impact

Currency Change

(in thousands)

Non-cash straight-line leasing revenue

Non-cash straight-line ground lease expense

Non-cash compensation

Loss from extinguishment of debt, net

Other income, net

Acquisition and new business initiatives

related adjustments and expenses

Asset impairment and decommission costs

Interest income

Interest expense (1)

Depreciation, accretion, and amortization

Provision for income taxes (2)

Adjusted EBITDA

(1) Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

(2) Provision (benefit) for taxes includes $1,234 and $220 of franchise taxes for the three months ended March 31, 2022 and 2021, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $33.7 million for the three months ended March 31, 2022, as compared to the prior year period.

(2) Provision for taxes includes $261 and $235 of franchise taxes for the three months ended June 30, 2022 and 2021, respectively, and $1,495 and $455 of franchise taxes for the six months ended June 30, 2022 and 2021, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $37.6 million for the three months ended June 30, 2022, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $35.2 million.

These changes were primarily due to an increase in segment operating profit, partially offset by an increase in cash selling, general, and administrative expenses.

These changes were primarily due to an increase in segment operating profit in each of our three segments, partially offset by an increase in cash selling, general, and administrative expenses.

Adjusted EBITDA increased $71.2 million for the six months ended June 30, 2022, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $67.2 million.

These changes were primarily due to an increase in segment operating profit in each of our three segments, partially offset by an increase in cash selling, general, and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

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A summary of our cash flows is as follows:

For the three months ended March 31,

For the six months ended June 30,

(in thousands)

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Operating Activities

Cash provided by operating activities was $292.5 million for the three months ended March 31, 2022 as compared to $285.5 million for the three months ended March 31, 2021.

Cash provided by operating activities was $664.6 million for the six months ended June 30, 2022 as compared to $638.3 million for the six months ended June 30, 2021.

The increase was primarily due to an increase in operating profit, partially offset by an increase in cash outflows associated with working capital changes.

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A detail of our cash capital expenditures is as follows:

For the three months ended March 31,

For the six months ended June 30,

(in thousands)

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Net cash used in investing activities

(1) During the three months ended March 31, 2022, we closed on 1,445 sites under the previously announced deal with Airtel Tanzania for $176.1 million.

Legal title was fully transferred at closing for 963 of the towers.

The remaining 482 towers are pending post-closing site level documentation and due diligence and were initially accounted for as acquired and other right-of-use assets, net on the consolidated balance sheet until transfer of title for these towers is completed, which we anticipate to be in tranches through the end of the second quarter of 2023.

(1) During the six months ended June 30, 2022, we closed on 1,445 sites from Airtel Tanzania for $176.1 million.

Legal title has been fully transferred for 1,105 of the towers.

The remaining 340 towers are pending post-closing site level documentation and due diligence and continue to be accounted for as acquired and other right-of-use assets, net on the consolidated balance sheet until transfer of title for these towers is completed, which we anticipate to be in tranches through the end of the second quarter of 2023.

Upon legal transfer, these assets will be reclassified to tower related assets.

During this period of time, we have all the economic rights and obligations related to these towers.

(2) During the three months ended March 31, 2021, we acquired the exclusive right to lease and operate 697 utility transmission structures, which included existing wireless tenant licenses from PG&E for $954.0 million .

(2) The six months ended June 30, 2021 includes $77.1 million of acquisitions completed during the fourth quarter of 2020 which were not funded until the first quarter of 2021.

(3) During the six months ended June 30, 2021, we acquired the exclusive right to lease and operate utility transmission structures, which included existing wireless tenant licenses from PG&E for $955.8 million .

The difference between the purchase price and the cash acquisition amount is due to working capital adjustments.

(3) Excludes $3.8 million and $2.8 million spent to extend ground lease terms for the three months ended March 31, 2022 and 2021, respectively.

Subsequent to March 31, 2022, we purchased, or are under contract to purchase, 358 communication sites and one data center for an aggregate consideration of $177.1 million in cash.

(4) Excludes $6.5 million and $6.4 million spent to extend ground lease terms for the six months ended June 30, 2022 and 2021, respectively.

(5) Includes amounts paid related to the acquisition of a data center in Brazil during the second quarter of 2022.

(6) Includes amounts paid for the purchase of and received from the sale of short-term investments during the six months ended June 30, 2022.

Subsequent to June 30, 2022, we purchased or are under contract to purchase approximately 200 communication sites for an aggregate consideration of $85.0 million in cash.

Additionally, we are under contract to purchase approximately 2,600 sites from Grupo TorreSur in Brazil for $725.0 million.

We anticipate that these acquisitions will be consummated by the end of the fourth quarter of 2022.

For 2022, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $46.0 million to $56.0 million and discretionary cash capital expenditures, based on current or potential acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of $1,410.0 million to $1,430.0 million.

We expect to fund these cash capital expenditures from, among other sources, cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new financings.

The exact amount of our future cash

capital expenditures will depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.

The exact amount of our future cash capital expenditures will depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.

Financing Activities

A detail of our financing activities is as follows:

For the three months ended March 31,

For the six months ended June 30,

(in thousands)

Net borrowings under Revolving Credit Facility (1)

Net borrowings (repayments) under Revolving Credit Facility (1)

Proceeds from issuance of Senior Notes, net of fees (1)

Repayment of Senior Notes (1)

Proceeds from issuance of Tower Securities, net of fees (1)

Repayment of Tower Securities (1)

Repurchase and retirement of common stock (2)

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Issuer Purchases of Equity Securities.

For the three months ended March 31, 2022, we paid the following cash dividends:

For the six months ended June 30, 2022, we paid the following cash dividends:

Payable to Shareholders

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March 25, 2022

April 24, 2022

$76.6 million

June 14, 2022

Dividends paid in 2022 were ordinary taxable dividends.

Subsequent to March 31, 2022, we declared the following cash dividends:

Subsequent to June 30, 2022, we declared the following cash dividends:

Payable to Shareholders

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Date to be Paid

April 24, 2022

June 14, 2022

July 31, 2022

August 25, 2022

September 20, 2022

The amount of future distributions will be determined, from time to time, by our Board of Directors to balance our goal of increasing long-term shareholder value and retaining sufficient cash to implement our current capital allocation policy, which prioritizes investment in quality assets that meet our return criteria, and then stock repurchases when we believe our stock price is below its intrinsic value.

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We have on file with the Securities and Exchange Commission (the “Commission”) a shelf registration statement on Form S-4 registering shares of Class A common stock that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or companies who own wireless communication towers, antenna sites, or related assets.

During the three months ended March 31, 2022, we did not issue any shares of Class A common stock under this registration statement.

As of March 31, 2022, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

We have on file with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR, which enables us to issue shares of our Class A common stock, preferred stock, debt securities, warrants, or depositary shares

as well as units that include any of these securities.

During the six months ended June 30, 2022, we did not issue any shares of Class A common stock under this registration statement.

As of June 30, 2022, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

We will file a prospectus supplement containing the amount and type of securities each time we issue securities under our automatic shelf registration statement on Form S-3ASR.

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Consequently, the amount outstanding under the Revolving Credit Facility at the end of the period may not be reflective of the total amounts outstanding during such period.

Subsequent to March 31, 2022, the Company received a 0.05% reduction in the applicable spread and a 0.01% reduction in the commitment fee as a result of meeting certain sustainability-linked targets as of December 31, 2021.

During the three months ended March 31, 2022, we borrowed $330.0 million of the outstanding balance under the Revolving Credit Facility.

As of March 31, 2022, there was $680.0 million outstanding under the Revolving Credit Facility accruing interest at 1.619%.

We received a 0.05% reduction in the applicable spread and a 0.01% reduction in the commitment fee as a result of meeting certain sustainability-linked targets as of December 31, 2021.

During the three months ended June 30, 2022, we repaid $150.0 million of the outstanding balance under the Revolving Credit Facility.

During the six months ended June 30, 2022, we borrowed $330.0 million and repaid $150.0 million of the outstanding balance under the Revolving Credit Facility.

As of June 30, 2022, there was $530.0 million outstanding under the Revolving Credit Facility accruing interest at 3.050%.

In addition, SBA Senior Finance II was required to pay a commitment fee of 0.19% per annum on the amount of the unused commitment.

As of March 31, 2022, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Subsequent to March 31, 2022, we repaid an additional $110.0 million under the Revolving Credit Facility, and as of the date of this filing, $570.0 million was outstanding.

As of June 30, 2022, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Subsequent to June 30, 2022, we repaid an additional $50.0 million under the Revolving Credit Facility, and as of the date of this filing, $480.0 million was outstanding.

Term Loan under the Senior Credit Agreement

2018 Term Loan

On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II, obtained a term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement.

On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement.

The 2018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $2.4 billion that matures on April 11, 2025.

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The 2018 Term Loan was issued at 99.75% of par value.

As of March 31, 2022, the 2018 Term Loan was accruing interest at 2.210% per annum.

As of June 30, 2022, the 2018 Term Loan was accruing interest at 3.420% per annum.

On August 4, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II, entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.

During the three months ended March 31, 2022, we repaid an aggregate of $6.0 million of principal on the 2018 Term Loan.

As of March 31, 2022, the 2018 Term Loan had a principal balance of $2.3 billion.

During the three and six months ended June 30, 2022, we repaid an aggregate of $6.0 million and $12.0 million of principal on the 2018 Term Loan, respectively.

As of June 30, 2022, the 2018 Term Loan had a principal balance of $2.3 billion.

Secured Tower Revenue Securities

Tower Revenue Securities Terms

As of March 31, 2022, we, through the Trust, had issued and outstanding an aggregate of $6.7 billion of Secured Tower Revenue Securities (“Tower Securities”).

As of June 30, 2022, we, through the Trust, had issued and outstanding an aggregate of $6.7 billion of Secured Tower Revenue Securities (“Tower Securities”).

The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of certain of our subsidiaries that are borrowers on the mortgage loan (the “Borrowers”) under which there is a loan tranche for each Tower Security outstanding with the same interest rate and maturity date as the corresponding Tower Security.

The mortgage loan will be paid from the operating cash flows from the aggregate 9,903 tower sites owned by the Borrowers as of March 31, 2022.

The mortgage loan will be paid from the operating cash flows from the aggregate 9,903 tower sites owned by the Borrowers as of June 30, 2022.

The mortgage loan is secured by (1) mortgages, deeds of trust, and deeds to secure debt on a substantial portion of the tower sites, (2) a security interest in the tower sites and substantially all of the Borrowers’ personal property and fixtures, (3) the Borrowers’ rights under certain tenant leases, and (4) all of the proceeds of the foregoing.

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Principal and interest payments made on the 2018-1R Tower Securities, 2019-1R Tower Securities, 2020-2R Tower Securities, 2021-1R Tower Securities, and 2021-3R Tower Securities eliminate in consolidation.

As of March 31, 2022, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

The table below sets forth the material terms of our outstanding senior notes as of March 31, 2022:

As of June 30, 2022, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

The table below sets forth the material terms of our outstanding senior notes as of June 30, 2022:

Amount Outstanding

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We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures.

As of March 31, 2022, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months.

The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as of March 31, 2022 and the interest rates accruing on those amounts on such date (in thousands):

As of June 30, 2022, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months.

The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as of June 30, 2022 and the interest rates accruing on those amounts on such date (in thousands):

Revolving Credit Facility (1)

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Total debt service for the next 12 months

(1) As of March 31, 2022, $680.0 million was outstanding under the Revolving Credit Facility.

Subsequent to March 31, 2022, we repaid an additional $110.0 million under the Revolving Credit Facility, and as of the date of this filing, $570.0 million was outstanding.

(1) As of June 30, 2022, $530.0 million was outstanding under the Revolving Credit Facility.

Subsequent to June 30, 2022, we repaid an additional $50.0 million under the Revolving Credit Facility, and as of the date of this filing, $480.0 million was outstanding.

(2) Total debt service on the 2018 Term Loan includes the impact of the interest rate swap entered into on August 4, 2020, which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis