What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-03 compared with 2023-05-09 · 270 added, 95 removed, 332 unchanged (52% of the section changed)

2 unchanged sentences

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 97.2% of our total segment operating profit for the three months ended March 31, 2023.

Our primary business line is our site leasing business, which contributed 97.4% of our total segment operating profit for the six months ended June 30, 2023.

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, 2023, we owned 39,362 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, 2023, we owned 39,426 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, 2023, no U.S.

As of June 30, 2023, 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, 2023.

In addition, as of March 31, 2023, approximately 30% of our total towers are located in Brazil and no other international market (each country is considered a market) represented more than 5% of our total towers.

state or territory accounted for more than 10% of our total revenues for the six months ended June 30, 2023.

In addition, as of June 30, 2023, approximately 30% of our total towers are located in Brazil and no other international market (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.

1 unchanged sentence

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.

Our tenant leases typically 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, property taxes, and fuel.

7 unchanged sentences

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 typically either (1) contain specific annual rent escalators or (2) escalate annually in accordance with an inflationary index.

As of March 31, 2023, approximately 70% 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.

Our ground leases either (1) contain specific annual rent escalators or (2) escalate annually in accordance with an inflationary index.

As of June 30, 2023, approximately 70% 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.

10 unchanged sentences

For the three months ended

For the six months ended

Segment operating profit as a percentage of

4 unchanged sentences

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 cessations of specific 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 2023, we expect organic site leasing revenue in both our domestic and international segments to increase over 2022 levels due in part to wireless carriers deploying unused spectrum.

35 unchanged sentences

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 to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

2 unchanged sentences

There can be no assurance that actual results will not differ from those estimates and such differences could be significant.

Reference Rate Reform

The ICE Benchmark Administration Limited ceased publication of the one month LIBOR on June 30, 2023.

On June 21, 2023, we amended our interest rate swap to change from LIBOR as an interest rate benchmark to the replacement benchmark of Term SOFR effective on August 1, 2023.

We have elected the optional expedient which allows companies to change the reference rate and other critical terms related to the reference rate reform in derivative hedge documentation without having to dedesignate the hedging relationship, allowing us to continue applying hedge accounting to our cash flow hedge.

Subsequent to the second quarter, we amended our 2018 Term Loan and our Revolving Credit Facility to use Term SOFR as the benchmark rate.

The transition from LIBOR to Term SOFR did not have a material impact on the consolidated financial statements.

AT&T Master Lease Agreement

On July 30, 2023, we entered into a new 5-year master lease agreement with AT&T, Inc.

The comprehensive MLA will streamline AT&T’s deployment of 5G and other next generation technology across our extensive U.S.

tower portfolio.

RESULTS OF OPERATIONS

2 unchanged sentences

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, 2023 Compared to Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Revenues and Segment Operating Profit:

14 unchanged sentences

Site development

Domestic site leasing revenues increased $21.8 million for the three months ended March 31, 2023, as compared to the prior year, primarily due to (1) 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 and (2) revenues from 63 towers acquired and 14 towers built since January 1, 2022, partially offset by lease non-renewals.

International site leasing revenues increased $36.0 million for the three months ended March 31, 2023, as compared to the prior year.

Domestic site leasing revenues increased $14.7 million for the three months ended June 30, 2023, as compared to the prior year, primarily due to (1) 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 and (2) revenues from 63 towers acquired and 15 towers built since April 1, 2022, partially offset by lease non-renewals.

International site leasing revenues increased $31.2 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $35.5 million.

These changes were primarily due to (1) revenues from 3,296 towers acquired (including 2,632 sites from Grupo TorreSur (“GTS”) in Brazil) and 499 towers built since January 1, 2022, (2) an increase in reimbursable pass-through expenses due primarily to increases in consumer price index escalators on our ground leases, and (3) 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 2,943 towers acquired (including 2,632 sites from Grupo TorreSur (“GTS”) in Brazil) and 476 towers built since April 1, 2022, (2) an increase in reimbursable pass-through expenses due primarily to increases in consumer price index escalators on our ground leases, and (3) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals.

Site leasing revenue in Brazil represented 15.9% 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 decreased $2.1 million for the three months ended March 31, 2023, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

Site development revenues decreased $19.4 million for the three months ended June 30, 2023, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

Operating Profit

Domestic site leasing segment operating profit increased $17.9 million for the three months ended March 31, 2023, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2022 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 $27.0 million for the three months ended March 31, 2023, as compared to the prior year.

Domestic site leasing segment operating profit increased $16.0 million for the three months ended June 30, 2023, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since April 1, 2022, (2) organic site leasing growth as noted above, and (3) continued control of our site leasing cost of revenue.

International site leasing segment operating profit increased $26.4 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $29.3 million.

These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2022 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.

Site development segment operating profit decreased $0.5 million for the three months ended March 31, 2023, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

These changes were primarily due to (1) additional profit generated by towers acquired and built since April 1, 2022 and (2) organic site leasing growth as noted above, partially offset by our increased site leasing cost of revenues largely as a result of our new site additions.

Site development segment operating profit decreased $4.2 million for the three months ended June 30, 2023, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

Selling, General, and Administrative Expenses:

7 unchanged sentences

Site development

Selling, general, and administrative expenses increased $10.1 million for the three months ended March 31, 2023, as compared to the prior year.

Selling, general, and administrative expenses increased $0.1 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses increased $0.3 million.

These changes were primarily as a result of an increase in non-cash compensation, personnel, and other support related costs.

These changes were primarily as a result of the $3.1 million Oi reserve recorded in the second quarter of 2023 and an increase in personnel and other support related costs, partially offset by a decrease in non-cash compensation expense.

Acquisition and New Business Initiatives Related Adjustments and Expenses:

For the three months ended

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Acquisition and new business initiatives related adjustments and expenses decreased $1.9 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, acquisition and new business initiatives related adjustments and expenses decreased $1.7 million.

These changes were primarily as a result of a decrease in our third party acquisition and integration costs as compared to the prior year .

Asset Impairment and Decommission Costs:

6 unchanged sentences

Total site leasing

Asset impairment and decommission costs increased $17.9 million for the three months ended March 31, 2023, as compared to the prior year.

Asset impairment and decommission costs increased $24.3 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $24.5 million.

These changes were primarily as a result of an 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 Expense:

7 unchanged sentences

Site development

Domestic site leasing depreciation, accretion, and amortization expense decreased $3.6 million for the three months ended March 31, 2023, 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 January 1, 2022.

International site leasing depreciation, accretion, and amortization expense increased $11.5 million for the three months ended March 31, 2023, as compared to the prior year.

Domestic site leasing depreciation, accretion, and amortization expense decreased $5.2 million for the three months ended June 30, 2023, as compared to the prior year.

International site leasing depreciation, accretion, and amortization expense increased $10.3 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense increased $11.7 million.

These changes were primarily due to the increase in the number of towers we acquired and built since January 1, 2022, partially offset by the impact of assets that became fully depreciated since the prior year period.

These changes were primarily due to an increase in the number of towers we acquired and built since April 1, 2022, partially offset by the impact of assets that became fully depreciated since the prior year period.

Operating Income (Expense):

7 unchanged sentences

Site development

Domestic site leasing operating income decreased $0.4 million for the three months ended March 31, 2023, as compared to the prior year, primarily due to increases in asset impairment and decommission costs and selling, general, and administrative expenses, partially offset by higher segment operating profit and a decrease in depreciation, accretion, and amortization expense.

International site leasing operating income increased $11.0 million for the three months ended March 31, 2023, as compared to the prior year.

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

Site development operating income decreased $1.4 million for the three months ended March 31, 2023, as compared to the prior year, primarily due to higher selling, general, and administrative expenses and lower segment operating profit driven by less activity from T -Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

Domestic site leasing operating income decreased $4.2 million for the three months ended June 30, 2023, as compared to the prior year, primarily due to increases in asset impairment and decommission costs and selling, general, and administrative expenses, partially offset by higher segment operating profit and a decrease in depreciation, accretion, and amortization expense.

International site leasing operating income increased $13.6 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $14.7 million.

These changes were primarily due to higher segment operating profit and a decrease in acquisition and new business initiatives related adjustments and expenses, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, and asset impairment and decommission costs.

Site development operating income decreased $3.7 million for the three months ended June 30, 2023, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T -Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

Other operating expense decreased $4.5 million for the three months ended June 30, 2023, as compared to the prior year, primarily due to a decrease in non-cash compensation expense.

Other Income (Expense):

7 unchanged sentences

Amortization of deferred financing fees

Other income (expense), net

Interest income increased $3.2 million for the three months ended June 30, 2023, as compared to the prior year.

This change was primarily due to interest received on a loan to an unconsolidated joint venture, 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 increased $17.0 million for the three months ended June 30, 2023, as compared to the prior year.

This change was primarily due to a higher weighted-average interest rate on a higher average principal amount of cash-interest bearing debt outstanding.

Based on the current rising interest rate environment, we expect interest expense will increase in future periods.

Non-cash interest expense decreased $4.0 million for the three months ended June 30, 2023, as compared to the prior year.

This change was primarily due to lower amortization of accumulated losses related to our interest rate swaps de-designated as cash flow hedges which reached their term end date in 2023.

Other expense, net includes a $43.3 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended June 30, 2023, while the prior year period included a $63.7 million loss.

Benefit for Income Taxes:

For the three months ended

Currency Impact

Currency Change

(in thousands)

Benefit for income taxes

Benefit for income taxes increased $25.6 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, benefit for income taxes increased $62.2 million primarily due to a decrease in domestic deferred taxes related to the release of the full valuation allowance on the net deferred tax assets of the U.S.

taxable REIT subsidiary ("TRS").

For the three months ended

Currency Impact

Currency Change

(in thousands)

Net income increased $132.8 million for the three months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, net income increased $64.4 million.

These changes were primarily due to increases in benefit for income taxes, international site leasing operating income, interest income, and other income (expense), net and a decrease in non-cash interest expense, partially offset by an increase in interest expense and decreases in domestic site leasing operating income and site development operating income.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

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 $36.5 million for the six months ended June 30, 2023, as compared to the prior year, primarily due to (1) 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 and (2) revenues from 72 towers acquired and 16 towers built since January 1, 2022 , partially offset by lease non-renewals.

International site leasing revenues increased $67.2 million for the six months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $74.0 million.

These changes were primarily due to (1) revenues from 3,296 towers acquired (including 2,632 sites from GTS) and 561 towers built since January 1, 2022, (2) an increase in reimbursable pass-through expenses due primarily to increases in consumer price index escalators on our ground leases, and (3) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals.

leasing revenue in Brazil represented 15.6% 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 decreased $21.5 million for the six months ended June 30, 2023, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

Operating Profit

Domestic site leasing segment operating profit increased $33.9 million for the six months ended June 30, 2023, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2022, (2) organic site leasing growth as noted above, and (3) continued control of our site leasing cost of revenue.

International site leasing segment operating profit increased $53.4 million for the six months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $57.9 million.

These changes were primarily due to (1) additional profit generated by towers acquired and built since January 1, 2022 and (2) organic site leasing growth as noted above, partially offset by our increased site leasing cost of revenues largely as a result of our new site additions.

Site development segment operating profit decreased $4.7 million for the six months ended June 30, 2023, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

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 $10.2 million for the six months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses increased $10.9 million.

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 $42.2 million for the six months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $42.5 million.

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 $8.9 million for the six months ended June 30, 2023, as compared to the prior year.

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, 2022.

International site leasing depreciation, accretion, and amortization expense increased $21.8 million for the six months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense increased $24.2 million.

These changes were primarily due to an increase in the number of towers we acquired and built since January 1, 2022, 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 decreased $4.6 million for the six months ended June 30, 2023, as compared to the prior year, primarily due to increases in asset impairment and decommission costs and selling, general, and administrative expenses, partially offset by higher segment operating profit and a decrease in depreciation, accretion, and amortization expense.

International site leasing operating income increased $24.6 million for the six months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $25.7 million.

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

Site development operating income decreased $5.1 million for the six months ended June 30, 2023, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T -Mobile and DISH Wireless, partially offset by an increase in Verizon Wireless activity.

Other operating expense decreased $2.6 million for the six months ended June 30, 2023, as compared to the prior year, primarily due to a decrease in non-cash compensation expense.

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

Other income, net

Interest expense increased $19.0 million for the three months ended March 31, 2023, as compared to the prior year.

Interest income increased $3.5 million for the six months ended June 30, 2023, as compared to the prior year.

Interest expense increased $35.9 million for the six months ended June 30, 2023, as compared to the prior year.

This change was primarily due to a higher weighted-average interest rate on a higher average principal amount of cash-interest bearing debt outstanding.

Based on the current rising interest rate environment, we expect interest expense will increase in future periods.

Other income, net includes a $41.9 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended March 31, 2023, while the prior year period included a $109.6 million gain.

Other income, net includes an $85.3 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the six months ended June 30, 2023, while the prior year period included a $45.9 million gain.

Provision for Income Taxes:

For the three months ended

For the six months ended

Currency Impact

2 unchanged sentences

Provision for income taxes

Provision for income taxes increased $3.0 million for the three months ended March 31, 2023, as compared to the prior year.

On a constant currency basis, provision for income taxes increased $27.2 million primarily due to increases in current and deferred foreign taxes.

For the three months ended

Provision for income taxes decreased $22.6 million for the six months ended June 30, 2023, as compared to the prior year.

On a constant currency basis, provision for income taxes decreased $35.0 million.

These changes were primarily due to a decrease in domestic deferred taxes related to the release of the full valuation allowance on the net deferred tax assets of the TRS, partially offset by an increase in current and deferred foreign taxes.

Net Income (Loss):

For the six months ended

Currency Impact

1 unchanged sentence

(in thousands)

Net income decreased $87.8 million for the three months ended March 31, 2023, as compared to the prior year.

On a constant currency basis, net income decreased $43.0 million due to increases in provision for income taxes, interest expense, and non-cash interest expense and a decrease in other income, net, partially offset by an increase in operating income.

Net income increased $45.1 million for the six months ended June 30, 2023.

On a constant currency basis, net income increased $21.4 million.

These changes were primarily due to increases in international site leasing operating income and interest income and a decrease in provision for income taxes, partially offset by an increase in interest expense and decreases in site development operating income and domestic site leasing operating income.

NON-GAAP FINANCIAL MEASURES

2 unchanged sentences

This report also presents our financial results and other financial metrics 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 the remeasurement of our intercompany loans.

Adjusted EBITDA

13 unchanged sentences

Non-cash compensation

Other (income) expense, net

Acquisition and new business initiatives

related adjustments and expenses

Asset impairment and decommission costs

Interest income

Interest expense (1)

Depreciation, accretion, and amortization

Benefit 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

Other income, net

8 unchanged sentences

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

(2) Provision for taxes includes $257 and $1,234 of franchise taxes for the three months ended March 31, 2023 and 2022, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $35.6 million for the three months ended March 31, 2023, as compared to the prior year period.

(2) Taxes includes $241 and $261 of franchise taxes for the three months ended June 30, 2023 and 2022, respectively, and $498 and $1,495 of franchise taxes for the six months ended June 30, 2023 and 2022, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $34.0 million for the three months ended June 30, 2023, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $36.8 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 domestic and international site leasing segment operating profit, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses.

Adjusted EBITDA increased $69.5 million for the six months ended June 30, 2023, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $73.7 million.

These changes were primarily due to an increase in domestic and international site leasing segment operating profit, partially offset by a decrease site development segment operating profit and an increase in cash selling, general, and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

2 unchanged sentences

We conduct all of our business operations through Telecommunications’ subsidiaries.

Accordingly, our only source of cash to

pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries.

Accordingly, our only source of cash to pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries.

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)

7 unchanged sentences

Operating Activities

Cash provided by operating activities was $311.2 million for the three months ended March 31, 2023 as compared to $292.5 million for the three months ended March 31, 2022.

The increase was primarily due to an increase in operating profit partially offset by an increase in cash interest expense and cash selling, general, and administrative expenses.

Cash provided by operating activities was $798.1 million for the six months ended June 30, 2023 as compared to $664.6 million for the six months ended June 30, 2022.

The increase was primarily due to increases in domestic and international site leasing segment operating profit, cash inflows associated with working capital changes related to the timing of customer payments, and interest income, partially offset by increases in cash interest expense, cash selling, general, and administrative expenses, and cash asset impairment and decommission costs as well as a decrease in site development segment operating profit.

Investing Activities

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)

8 unchanged sentences

Net cash used in investing activities

(1) The three months ended March 31, 2022 includes $176.1 million of acquisitions related to our purchase of sites from Airtel Tanzania.

(2) Excludes $5.1 million and $3.8 million spent to extend ground lease terms for the three months ended March 31, 2023 and 2022, respectively.

(3) The three months ended March 31, 2023 includes a $78.0 million loan to an unconsolidated joint venture.

Additionally, subsequent to March 31, 2023, we purchased or are under contract to purchase 66 communication sites for an aggregate consideration of $63.7 million in cash.

We anticipate that these acquisitions will be consummated by the end of the fourth quarter of 2023.

(1) The six months ended June 30, 2022 includes $176.1 million of acquisitions related to our purchase of sites from Airtel Tanzania.

(2) Excludes $7.9 million and $6.5 million spent to extend ground lease terms for the six months ended June 30, 2023 and 2022, respectively.

(3) The six months ended June 30, 2022 includes amounts paid related to the acquisition of a data center.

(4) Includes amounts paid for the purchase of and received from the sale of short-term investments during the six months ended June 30, 2023 and 2022.

(5) The six months ended June 30, 2023 includes an $83.0 million loan to an unconsolidated joint venture.

Additionally, subsequent to June 30, 2023, we purchased or are under contract to purchase 134 communication sites for an aggregate consideration of $72.9 million in cash.

We anticipate that these acquisitions will be consummated by the end of 2023.

For 2023, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $52.0 million to $62.0 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 $335.0 million to $355.0 million.

3 unchanged sentences

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)

8 unchanged sentences

(2) As of the date of this filing, we had $504.7 million remaining under the current authorized share repurchase plan.

For the three months ended March 31, 2023, we paid the following cash dividends:

For the six months ended June 30, 2023, we paid the following cash dividends:

Payable to Shareholders

7 unchanged sentences

March 24, 2023

April 30, 2023

$92.1 million

June 21, 2023

Dividends paid in 2023 were ordinary taxable dividends.

Subsequent to March 31, 2023, we declared the following cash dividends:

Subsequent to June 30, 2023, we declared the following cash dividends:

Payable to Shareholders

3 unchanged sentences

Date to be Paid

June 21, 2023

July 30, 2023

August 24, 2023

September 20, 2023

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.

2 unchanged sentences

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, 2023, we did not issue any shares of Class A common stock under this registration statement.

As of March 31, 2023, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

During the six months ended June 30, 2023, we did not issue any shares of Class A common stock under this registration statement.

As of June 30, 2023, 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.

2 unchanged sentences

Debt Instruments and Debt Service Requirements

Terms of the Senior Credit Agreement

On July 3, 2023, we, through our wholly owned subsidiary, SBA Senior Finance II LLC (“SBA Senior Finance II”), amended our Revolving Credit Facility to (1) replace LIBOR with Term SOFR as the benchmark interest rate and (2) amend certain other terms and conditions under the Senior Credit Agreement.

Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility consists of a revolving loan under which up to $1.5 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing.

Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (1) the Eurodollar Rate plus a margin that ranges from 112.5 basis points to 150.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 50.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement.

In addition, SBA Senior Finance II LLC, our wholly owned subsidiary (“SBA Senior Finance II”) is required to pay a commitment fee of between 0.15% and 0.25% per annum on the amount of unused commitment.

Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (1) the Eurodollar Rate (or Term SOFR as amended July 3, 2023) plus a margin that ranges from 112.5 basis points to 150.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 50.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement.

In addition, SBA Senior Finance II, is required to pay a commitment fee of between 0.15% and 0.25% per annum on the amount of unused commitment.

If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, July 7, 2026.

Furthermore, the Revolving Credit Facility provides mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate and incorporates sustainability-linked targets which will adjust the Facility’s applicable interest and commitment fee rates upward or downward based on how the Company performs against those targets.

Furthermore, the Revolving Credit Facility incorporates sustainability-linked targets which will adjust the Revolving Credit Facility’s applicable interest and commitment fee rates upward or

downward based on how we perform against those targets.

Borrowings under the Revolving Credit Facility may be used for general corporate purposes.

4 unchanged sentences

Interest Rate

March 31, 2023 (1)

March 31, 2023 (2)

March 31, 2023

June 30, 2023 (1)

June 30, 2023 (2)

June 30, 2023

Revolving Credit Facility

2 unchanged sentences

(2) The rate reflected includes a 0.010% reduction in the applicable commitment fee as a result of meeting certain sustainability-linked targets as of December 31, 2022 .

The table below summarizes the Company’s Revolving Credit Facility activity during the three months ended March 31, 2023 and 2022 (in thousands):

For the three

ended March 31,

The table below summarizes our Revolving Credit Facility activity during the three and six months ended June 30, 2023 and 2022 (in thousands):

For the three months

For the six months

ended June 30,

Beginning outstanding balance

Ending outstanding balance

Subsequent to March 31, 2023, we repaid $80.0 million under the Revolving Credit Facility, and as of the date of this filing, $595.0 million was outstanding.

Subsequent to June 30, 2023, we repaid $90.0 million under the Revolving Credit Facility, and as of the date of this filing, $360.0 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 LLC, 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, 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.

1 unchanged sentence

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

As of March 31, 2023, the 2018 Term Loan was accruing interest at 6.600% per annum.

During the three months ended March 31, 2023, we repaid an aggregate of $6.0 million of principal on the 2018 Term Loan.

As of March 31, 2023, the 2018 Term Loan had a principal balance of $2.3 billion.

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.

The 2018 Term Loan has a blended interest rate of 2.569% which includes the impact of the interest rate swap.

The ICE Benchmark Administration Limited (“IBA”) ceased the publication of USD LIBOR for the 1 week and 2 month tenors on December 31, 2021 and intends to cease all other tenors on June 30, 2023.

Since LIBOR will be ceasing, we will need to amend our credit facility to transition the 2018 Term Loan and the interest rate swap to an alternative benchmark rate before June 30, 2023.

As of June 30, 2023, the 2018 Term Loan was accruing interest at 6.950% per annum.

On July 3, 2023, SBA Senior Finance II, amended our 2018 Term Loan to replace LIBOR with Term SOFR as the benchmark interest rate.

The amendment to Term SOFR includes a CSA of 0.10% which we include as part of interest expense.

On June 21, 2023, SBA Senior Finance II, amended our interest rate swap agreement for $1.95 billion of notional value to accrue interest at Term SOFR plus 175 basis points for an all-in fixed rate of 1.900% from August 1, 2023 through the maturity date of the 2018 Term Loan.

We concluded that the amendment to the interest rate swap qualifies for the relief provided by Accounting Standards Update (“ASU”) 2021-01 and ASU 2022-06 and as such, have not dedesignated our cash flow hedge.

During the three and six months ended June 30, 2023, we repaid an aggregate of $6.0 million and $12.0 million, respectively, of principal on the 2018 Term Loan.

As of June 30, 2023, the 2018 Term Loan had a principal balance of $2.3 billion.

Secured Tower Revenue Securities

Tower Revenue Securities Terms

As of March 31, 2023, we, through the Trust, had issued and outstanding an aggregate of $6.9 billion of Secured Tower Revenue Securities (“Tower Securities”).

As of June 30, 2023, we, through the Trust, had issued and outstanding an aggregate of $6.9 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 9,892 tower sites owned by the Borrowers as of March 31, 2023.

The mortgage loan will be paid from the operating cash flows from the aggregate 9,893 tower sites owned by the Borrowers as of June 30, 2023.

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.

For each calendar month, SBA Network Management, Inc., an indirect subsidiary (“Network Management”), is entitled to receive a management fee equal to 4.5% of the Borrowers’ operating revenues for the immediately preceding calendar month.

The table below sets forth the material terms of our outstanding Tower Securities as of March 31, 2023:

The table below sets forth the material terms of our outstanding Tower Securities as of June 30, 2023:

Amount Outstanding

12 unchanged sentences

Risk Retention Tower Securities

The table below sets forth the material terms of our outstanding Risk Retention Tower Securities as of March 31, 2023:

The table below sets forth the material terms of our outstanding Risk Retention Tower Securities as of June 30, 2023:

Amount Outstanding

11 unchanged sentences

Debt Covenants

As of March 31, 2023, 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, 2023:

As of June 30, 2023, 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, 2023:

Amount Outstanding

8 unchanged sentences

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, 2023, 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 ended March 31, 2024 based on the amounts outstanding as of March 31, 2023 and the interest rates accruing on those amounts on such date (in thousands):

As of June 30, 2023, 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 ended June 30, 2024 based on the amounts outstanding as of June 30, 2023 and the interest rates accruing on those amounts on such date (in thousands):

Revolving Credit Facility (1)

11 unchanged sentences

Total debt service for the next 12 months

(1) As of March 31, 2023, $675.0 million was outstanding under the Revolving Credit Facility.

Subsequent to March 31, 2023, we repaid an additional $80.0 million under the Revolving Credit Facility, and as of the date of this filing, $595.0 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.

(1) As of June 30, 2023, $450.0 million was outstanding under the Revolving Credit Facility.

Subsequent to June 30, 2023, we repaid an additional $90.0 million under the Revolving Credit Facility, and as of the date of this filing, $360.0 million was outstanding.

(2) Total debt service on the 2018 Term Loan includes the impact of the interest rate swaps entered into on August 4, 2020, and amended on June 21, 2023, 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 July 31, 2023 and then at Term SOFR plus 185 basis points (inclusive of a credit spread adjustment (“CSA”) of 0.10%) for an all-in fixed rate of 1.900% per annum through the maturity date of the 2018 Term Loan.

The impact of inflation on our operations has not been significant to date.

However, to the extent the Federal Reserve continues to increase interest rates to combat inflation, this may impact our operating results.

We cannot assure you that a high rate of

inflation in the future will not adversely affect our operating results particularly in light of the fact that our site leasing revenues are governed by long-term contracts with pre-determined pricing that we will not be able to increase in response to increases in inflation other than our contracts in South America, South Africa, the Philippines, and Tanzania which have inflationary index based rent escalators.

We cannot assure you that a high rate of inflation in the future will not adversely affect our operating results particularly in light of the fact that our site leasing revenues are governed by long-term contracts with pre-determined pricing that we will not be able to increase in response to increases in inflation other than our contracts in South America, South Africa, the Philippines, and Tanzania which have inflationary index based rent escalators.

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