What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-02 compared with 2024-05-06 · 248 added, 94 removed, 353 unchanged (49% 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 98.8% of our total segment operating profit for the three months ended March 31, 2024.

Our primary business line is our site leasing business, which contributed 98.7% of our total segment operating profit for the six months ended June 30, 2024.

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, 2024, we owned 39,638 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, 2024, we owned 39,744 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, 2024, no U.S.

As of June 30, 2024, 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, 2024.

In addition, as of

March 31, 2024, 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, 2024.

In addition, as of June 30, 2024, 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 primarily from wireless service provider tenants.

Wireless service providers enter into (1) individual tenant site leases with us, each of which relates to the lease or use of space at an individual site or (2) master lease agreements with us, which provide for the material terms and conditions that will apply to multiple sites;

although, in most cases, each individual site under a master lease agreement is also governed by its own site leasing agreement which sets forth pricing and other site specific terms.

Wireless service providers enter into (1) individual tenant site leases with us, each of which relates to the lease or use of space at an individual site or (2) master lease agreements (“MLA”) with us, which provide for the material terms and conditions that will apply to multiple sites;

although, in most cases, each individual site under a MLA is also governed by its own site leasing agreement which sets forth pricing and other site specific terms.

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

10 unchanged sentences

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

As of March 31, 2024, 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.

As of June 30, 2024, 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.

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

5 unchanged sentences

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 2024, we expect organic site leasing revenue in both our domestic and international segments to increase over 2023 levels due in part to wireless carriers deploying unused spectrum.

We believe our site leasing business is

characterized by stable and long-term recurring revenues, predictable operating costs, and minimal non-discretionary capital expenditures.

During the remainder of 2024, we expect organic site leasing revenue in both our domestic and international segments to increase over 2023 levels, on a currency neutral basis, due in part to wireless carriers deploying unused spectrum.

We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs, and minimal non-discretionary capital expenditures.

Due to the relatively young age and mix of our tower portfolio, we expect future expenditures required to maintain these towers to be minimal.

Consequently, we expect to grow our cash flows by (1) adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications and (2) executing monetary amendments as wireless service providers add or upgrade their equipment.

of tower modifications and (2) executing monetary amendments as wireless service providers add or upgrade their equipment.

Furthermore, because our towers are strategically positioned, we have historically experienced low tenant lease terminations as a percentage of revenue other than in connection with customer consolidation or cessations of a specific technology.

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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, 2023.

Our preparation of our financial statements requires us to make

estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

1 unchanged sentence

During the first quarter of 2024, we completed our assessment on the remaining estimated useful lives of our towers and intangible assets.

We concluded through our assessment that we should modify our current estimates for asset lives based on our historical operating experience and the findings obtained by our independent consultant.

We previously depreciated our towers on a straight-line basis over the shorter of the term of the underlying ground lease (including renewal options) taking into account residual value or the estimated useful life of the tower, which we had historically estimated to be 15 years.

We concluded through our assessment that, for U.S.

GAAP purposes, we should modify our current estimates for asset lives based on our historical operating experience and the findings obtained by our independent consultant.

We previously depreciated our towers on a straight-line basis over the shorter of the (i) term of the underlying ground lease (including renewal options) taking into account residual value or (ii) estimated useful life of a tower, which we had historically estimated to be 15 years.

Based on our assessment, we revised the estimated useful lives of our towers and certain related intangible assets (which are amortized on a similar basis to our tower assets, as their useful lives correlate to the useful life of the towers) from 15 years to 30 years, effective January 1, 2024.

We accounted for the change in estimated useful lives as a change in estimate under ASC 250 “Accounting Changes and Error Corrections.” The impact of the change in estimate was accounted for prospectively effective January 1, 2024, resulting in a reduction in depreciation and amortization expense of approximately $102.7 million ($93.0 million after tax, or an increase of $0.86 per diluted share) for the three months ended March 31, 2024.

The change in useful lives is expected to reduce depreciation expense by approximately $411.5 million ($372.5 million after tax, or an increase of $3.43 per diluted share) for the year ended December 31, 2024.

This change in useful lives is expected to reduce depreciation and amortization expense by approximately $411.5 million ($372.5 million after tax, or an increase of $3.44 per diluted share) for the year ended December 31, 2024.

RESULTS OF OPERATIONS

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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, 2024 Compared to Three Months Ended March 31, 2023

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Revenues and Segment Operating Profit:

14 unchanged sentences

Site development

Domestic site leasing revenues increased $6.7 million for the three months ended March 31, 2024, as compared to the prior year, primarily due to (1) organic site leasing growth, primarily from monetary lease amendments (due in part to our 2023 master lease agreement with AT&T) and additional equipment added to our towers as well as new leases and contractual rent escalators and (2) revenues from 81 towers acquired and 17 towers built since January 1, 2023, partially offset by lease non-renewals.

International site leasing revenues increased $4.3 million for the three months ended March 31, 2024, as compared to the prior year.

Domestic site leasing revenues increased $6.5 million for the three months ended June 30, 2024, as compared to the prior year, primarily due to (1) organic site leasing growth, primarily from monetary lease amendments, (due in part to our 2023 MLA with AT&T) and additional equipment added to our towers as well as new leases and contractual rent escalators and (2) revenues from 87 towers acquired and 19 towers built since April 1, 2023, partially offset by lease non-renewals.

International site leasing revenues decreased $6.1 million for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $0.9 million.

These changes were primarily due

to (1) organic site leasing growth from new leases, amendments, and contractual escalators and (2) revenues from 21 towers acquired and 399 towers built since January 1, 2023, partially offset by lease non-renewals and a decrease in reimbursable pass-through expenses.

Site leasing revenue in Brazil represented 15.5% of total site leasing revenue for the period.

These changes were primarily due to (1) organic site leasing growth from new leases, amendments, and contractual escalators and (2) revenues from 118 towers acquired and 445 towers built since April 1, 2023, partially offset by lease non-renewals and a decrease in reimbursable pass-through expenses.

leasing revenue in Brazil represented 14.9% 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 $28.7 million for the three months ended March 31, 2024, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon Wireless.

Site development revenues decreased $18.3 million for the three months ended June 30, 2024, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon Wireless.

Operating Profit

Domestic site leasing segment operating profit increased $10.4 million for the three months ended March 31, 2024, as compared to the prior year, primarily due to additional profit generated by (1) organic site leasing growth as noted above, (2) towers acquired and built since January 1, 2023, and (3) continued control of our site leasing cost of revenue.

International site leasing segment operating profit increased $5.9 million for the three months ended March 31, 2024, as compared to the prior year.

Domestic site leasing segment operating profit increased $5.4 million for the three months ended June 30, 2024, as compared to the prior year, primarily due to additional profit generated by (1) organic site leasing growth as noted above, (2) towers acquired and built since April 1, 2023, and (3) continued control of our site leasing cost of revenue, partially offset by lease non-renewals.

International site leasing segment operating profit decreased $4.2 million for the three months ended June 30, 2024, as compared to the prior year.

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

These changes were primarily due to (1) additional profit generated by towers acquired and built since January 1, 2023, (2) organic site leasing growth as noted above, and (3) continued control of our site leasing cost of revenue, partially offset by lease non-renewals.

Site development segment operating profit decreased $7.7 million for the three months ended March 31, 2024, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile , DISH Wireless, and Verizon Wireless.

These changes were primarily due to additional profit generated by (1) organic site leasing growth as noted above, (2) towers acquired and built since April 1, 2023, and (3) continued control of our site leasing cost of revenue, partially offset by lease non-renewals.

Site development segment operating profit decreased $6.2 million for the three months ended June 30, 2024, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon Wireless.

Selling, General, and Administrative Expenses:

7 unchanged sentences

Site development

Selling, general, and administrative expenses decreased $3.5 million for the three months ended March 31, 2024, as compared to the prior year.

Selling, general, and administrative expenses decreased $1.0 million for the three months ended June 30, 2024, as compared to the prior year.

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

These changes were driven primarily by a decrease in non-cash compensation expense, partially offset by an increase in personnel and other support related costs.

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

Asset Impairment and Decommission Costs:

6 unchanged sentences

Total site leasing

Asset impairment and decommission costs increased $17.3 million for the three months ended March 31, 2024, as compared to the prior year.

Domestic asset impairment and decommission costs decreased $16.6 million for the three months ended June 30, 2024, as compared to the prior year.

This change was primarily as a result of decreased 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, partially offset by an increase in tower and equipment related decommission costs.

International asset impairment and decommission costs increased $15.1 for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $15.4 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 carrier related churn and an increase in costs related to sites decommissioned in the first quarter of 2024 compared to the prior year period.

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 and an increase in tower decommission costs.

Depreciation, Accretion, and Amortization Expense:

7 unchanged sentences

Site development

Depreciation, accretion, and amortization expense decreased $105.7 million for the three months ended March 31, 2024, as compared to the prior year.

Depreciation, accretion, and amortization expense decreased $117.6 million for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense decreased $116.5 million.

These changes were primarily due to the change in estimated useful lives of our towers and certain related intangible assets from our historical estimate of 15 years to a revised estimate of 30 years and 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, 2023.

Operating Income (Expense):

7 unchanged sentences

Site development

Domestic site leasing operating income increased $74.4 million for the three months ended March 31, 2024, as compared to the prior year, primarily due to a decrease in depreciation, accretion, and amortization expense and higher segment operating profit, partially offset by increases in asset impairment and decommission costs and selling, general, and administrative expenses.

International site leasing operating income increased $25.3 million for the three months ended March 31, 2024, as compared to the prior year.

Domestic site leasing operating income increased $99.8 million for the three months ended June 30, 2024, as compared to the prior year, primarily due to decreases in depreciation, accretion, and amortization expense and asset impairment and decommission costs and higher segment operating profit, partially offset by an increase in selling, general, and administrative expenses.

International site leasing operating income increased $16.7 million for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $18.9 million.

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

Site development operating income decreased $5.9 million for the three months ended March 31, 2024, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T -Mobile, DISH Wireless, and Verizon Wireless.

Other operating expense decreased by $5.4 million for the three months ended March 31, 2024, as compared to the prior year, primarily due to decreases in selling, general, and administrative expenses and asset impairment and decommission costs.

These changes were primarily due to decreases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses, partially offset by an increase in asset impairment and decommission costs.

Site development operating income decreased $4.8 million for the three months ended June 30, 2024, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T-Mobile, DISH Wireless, and Verizon Wireless .

Other Income (Expense):

7 unchanged sentences

Amortization of deferred financing fees

Loss from extinguishment of debt, net

Other (expense) income, net

Interest income increased $4.5 million for the three months ended March 31, 2024, as compared to the prior year.

Interest income increased $2.4 million for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, interest income increased $2.5 million.

These changes were primarily due to interest received on a loan to an unconsolidated joint venture and 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 $4.8 million for the three months ended March 31, 2024, as compared to the prior year.

These changes were 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 $3.8 million for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, interest expense decreased $3.7 million.

This change was primarily due to a lower average principal amount of cash-interest bearing debt outstanding accruing interest, partially offset by a higher interest rate on said debt as compared to the prior year.

Non-cash interest expense decreased $5.8 million for the three months ended March 31, 2024, as compared to the prior year.

Other (expense) income, net includes a $100.9 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended June 30, 2024, while the prior year period included a $43.3 million gain.

Benefit for Income Taxes:

For the three months ended

Currency Impact

Currency Change

(in thousands)

Benefit for income taxes

Benefit for income taxes decreased $16.8 million for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, provision for income taxes increased $67.7 million primarily due to an increase 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 in the prior year.

For the three months ended

Currency Impact

Currency Change

(in thousands)

Net income decreased $42.5 million for the three months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, net income increased $53.4 million.

These changes were primarily due to increases in site leasing operating income (inclusive of a $93.0 million benefit related to our revision of the estimated useful lives of our towers and certain intangible assets), interest income, and other (expense) income, net, and a decrease in interest expense, partially offset by an increase in provision for income taxes and a decrease in site development operating income.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

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 $13.1 million for the six months ended June 30, 2024, as compared to the prior year, primarily due to (1) organic site leasing growth, primarily from monetary lease amendments ( due in part to our 2023 MLA with AT&T) and additional equipment added to our towers as well as new leases and contractual rent escalators and (2) revenues from 92 towers acquired and 22 towers built since January 1, 2023 , partially offset by lease non-renewals.

International site leasing revenues decreased $1.8 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $3.3 million.

These changes were primarily due to (1) organic site leasing growth from new leases, amendments, and contractual escalators and (2) revenues from 127 towers acquired and 494 towers built since January 1, 2023, partially offset by lease non-renewals and a decrease in reimbursable pass-through expenses.

Site leasing revenue in Brazil represented 15.2% 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 decreased $47.0 million for the six months ended June 30, 2024, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon Wireless.

Operating Profit

Domestic site leasing segment operating profit increased $15.8 million for the six months ended June 30, 2024, as compared to the prior year, primarily due to additional profit generated by (1) organic site leasing growth as noted above, (2) towers acquired and built since January 1, 2023, and (3) continued control of our site leasing cost of revenue, partially offset by lease non-renewals.

International site leasing segment operating profit increased $1.7 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $4.3 million.

These changes were primarily due to additional profit generated by (1) organic site leasing growth as noted above, (2) towers acquired and built since January 1, 2023, and (3) continued control of our site leasing cost of revenue, partially offset by lease non-renewals.

Site development segment operating profit decreased $13.9 million for the six months ended June 30, 2024, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile, DISH Wireless, and Verizon Wireless.

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 decreased $4.5 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses decreased $3.9 million.

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

Acquisition and New Business Initiatives Related Adjustments and Expenses :

For the six months ended

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Acquisition and new business initiatives related adjustments and expenses increased $3.0 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $3.2 million.

These changes were primarily as a result of an increase in our third party acquisition and integration costs as well as higher new business initiative activity as compared to the prior year .

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

Domestic asset impairment and decommission costs decreased $6.2 million for the six months ended June 30, 2024, as compared to the prior year.

This change was primarily as a result of a decrease 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, partially offset by an increase in tower and equipment related decommission costs.

International asset impairment and decommission costs increased $24.0 for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $24.3 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 and an increase in tower decommission costs.

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

Depreciation, accretion, and amortization expense decreased $223.3 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense decreased $222.5 million.

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 $174.3 million for the six months ended June 30, 2024, as compared to the prior year, primarily due to decreases in depreciation, accretion, and amortization expense and asset impairment and decommission costs and higher segment operating profit, partially offset by increases in selling, general, and administrative expenses and acquisition and new business initiatives related adjustments and expenses.

International site leasing operating income increased $42.0 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $42.7 million.

Site development operating income decreased $10.7 million for the six months ended June 30, 2024, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T-Mobile, DISH Wireless, and Verizon Wireless.

Other operating expense decreased $6.9 million for the six months ended June 30, 2024, as compared to the prior year, primarily due to decreases in selling, general, and administrative expenses and asset impairment and decommission costs.

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 (expense) income, net

Interest income increased $6.9 million for the six months ended June 30, 2024, as compared to the prior year.

This change was primarily due to interest received on a loan to an unconsolidated joint venture and 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 $8.6 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, interest expense decreased $8.4 million.

Non-cash interest expense decreased $6.2 million for the six months ended June 30, 2024, 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.

Loss from extinguishment of debt, net was $4.4 million for the three months ended March 31, 2024 due to the write-off of the original issuance discount and unamortized financing fees associated with the repayment of the 2018 Term Loan in January 2024.

Loss from extinguishment of debt, net was $4.4 million for the six months ended June 30, 2024 due to the write-off of the original issuance discount and unamortized financing fees associated with the repayment of the 2018 Term Loan in January 2024.

Other (expense) income, net includes a $143.3 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended March 31, 2024, while the prior year period included a $41.9 million gain.

dollar denominated intercompany loans with foreign subsidiaries for the six months ended June 30, 2024, while the prior year period included an $85.3 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 decreased $26.6 million for the three months ended March 31, 2024, as compared to the prior year primarily due to fluctuations in foreign currency exchange rates and a decrease in foreign current taxes.

For the three months ended

Provision for income taxes decreased $9.7 million for the six months ended June 30, 2024, as compared to the prior year.

On a constant currency basis, provision for income taxes increased $69.2 million.

These changes were primarily due to an increase 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 in the prior year.

For the six months ended

Currency Impact

1 unchanged sentence

(in thousands)

Net income increased $54.0 million for the three months ended March 31, 2024, as compared to the prior year.

Net income increased $11.5 million for the six months ended June 30, 2024 , as compared to the prior year.

On a constant currency basis, net income increased $161.4 million.

These changes were primarily due to increases in site leasing operating income (inclusive of a $93.0 million benefit related to our revision of the estimated useful lives of our towers and certain intangible assets), interest income, and other (expense) income, net and decreases in non-cash interest expense and interest expense, partially offset by increases in loss from extinguishment of debt and provision for income taxes.

These changes were primarily due to increases in site leasing operating income (inclusive of a $186.0 million benefit related to our revision of the estimated useful lives of our towers and certain intangible assets), interest income, and other (expense) income, net, and decreases in interest expense and non-cash interest expense, partially offset by increases in provision for income taxes and loss from extinguishment of debt, net and a decrease in site development operating income.

NON-GAAP FINANCIAL MEASURES

27 unchanged sentences

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

Loss from extinguishment of debt, net

Other expense (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)

1 unchanged sentence

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

(2) Provision for income taxes includes $0.2 million and $0.3 million of franchise taxes for the three months ended March 31, 2024 and 2023, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $6.1 million for the three months ended March 31, 2024, as compared to the prior year period.

(2) (Benefit) provision for income taxes includes $0.1 million and $0.2 million of franchise taxes for the three months ended June 30, 2024 and 2023, respectively, and $0.3 million and $0.5 million of franchise taxes for the six months ended June 30, 2024 and 2023, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA decreased $4.7 million for the three months ended June 30, 2024, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA decreased $0.6 million.

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

Adjusted EBITDA increased $1.4 million for the six months ended June 30, 2024, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $3.6 million.

These changes were primarily due to an increase in 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.

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

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 $294.5 million for the three months ended March 31, 2024 as compared to $311.2 million for the three months ended March 31, 2023.

Cash provided by operating activities was $720.0 million for the six months ended June 30, 2024 as compared to $798.1 million for the six months ended June 30, 2023.

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

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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) Excludes $4.6 million and $5.1 million spent to extend ground lease terms for the three months ended March 31, 2024 and 2023, respectively.

(2) Includes amounts paid for the purchase of and received from the sale of short-term investments during the three months ended March 31, 2024 and 2023.

(3) The three months ended March 31, 2024 and 2023 includes a $5.5 million and $78.0 million loan to an unconsolidated joint venture, respectively.

Additionally, subsequent to March 31, 2024, we purchased or are under contract to purchase 271 communication sites for an aggregate consideration of $84.5 million in cash.

We anticipate that these acquisitions will be consummated by the end of the third quarter of 2024.

(1) Excludes $9.3 million and $7.9 million spent to extend ground lease terms for the six months ended June 30, 2024 and 2023, respectively.

(2) Includes amounts paid for the purchase of and received from the sale of short-term investments during the six months ended June 30, 2024 and 2023.

(3) The six months ended June 30, 2024 and 2023 includes $5.5 million and $83.0 million of loans to an unconsolidated joint venture, respectively.

Additionally, subsequent to June 30, 2024, we purchased or are under contract to purchase 106 communication sites which are expected to close prior to year-end at the time of this report for an aggregate consideration of $49.3 million in cash.

For 2024, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $51.0 million to $61.0 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.

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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 (repayments) under Revolving Credit Facility (1)

Net repayments under Revolving Credit Facility (1)

Proceeds from issuance of Term Loans, net of fees (1)

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(2) For additional information regarding our share repurchase activity, refer to Part II Item 2 under “Issuer Purchases of Equity Securities” below.

For the three months ended March 31, 2024, we paid the following cash dividends:

For the six months ended June 30, 2024, we paid the following cash dividends:

Payable to Shareholders

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March 28, 2024

April 29, 2024

$105.3 million

June 18, 2024

Dividends paid in 2024 were ordinary taxable dividends.

Subsequent to March 31, 2024, we declared the following cash dividends:

Subsequent to June 30, 2024, we declared the following cash dividends:

Payable to Shareholders

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Date to be Paid

April 29, 2024

June 19, 2024

July 28, 2024

August 22, 2024

September 18, 2024

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, 2024, we did not issue any shares of Class A common stock under this registration statement.

As of March 31, 2024, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

On February 29, 2024, we filed with the Securities and Exchange Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR, which enables us to issue shares of its 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, 2024, we did not issue any shares of Class A common stock under this registration statement.

As of June 30, 2024, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

On February 29, 2024, we filed with the Securities and Exchange 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.

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.

During the three months ended March 31, 2024, we did not issue any securities under this automatic shelf registration statement.

During the six months ended June 30, 2024, we did not issue any securities under this automatic shelf registration statement.

Debt Instruments and Debt Service Requirements

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On February 23, 2024, we, through our wholly owned subsidiary, SBA Senior Finance II, further increased the total commitments under the Revolving Credit Facility from $1.75 billion to $2.0 billion.

As of March 31, 2024, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

As of June 30, 2024, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Revolving Credit Facility under the Senior Credit Agreement

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Interest Rate

March 31, 2024 (1)

March 31, 2024 (2)

June 30, 2024 (1)

June 30, 2024 (2)

Revolving Credit Facility

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(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, 2023 .

The table below summarizes our Revolving Credit Facility activity during the three months ended March 31, 2024 and 2023 (in thousands):

The table below summarizes our Revolving Credit Facility activity during the three and six months ended June 30, 2024 and 2023 (in thousands):

For the three months

ended March 31,

For the six months

ended June 30,

Beginning outstanding balance

Ending outstanding balance

Subsequent to March 31, 2024, we repaid $50.0 million and borrowed $50.0 million under the Revolving Credit Facility, and as of the date of this filing, $195.0 million was outstanding.

Subsequent to June 30, 2024, we repaid $90.0 million and borrowed $20.0 million under the Revolving Credit Facility, and as of the date of this filing, $50.0 million was outstanding.

Term Loan under the Senior Credit Agreement

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In connection with the repayment, we expensed $3.3 million of net deferred financing fees and $1.2 million of discount related to the debt.

As of March 31, 2024, the 2024 Term Loan was accruing interest at 7.340% per annum.

As of June 30, 2024, the 2024 Term Loan was accruing interest at 7.350% per annum.

Principal payments on the 2024 Term Loan will be made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $5.75 million beginning on June 30, 2024.

We incurred financing fees of approximately $19.4 million in relation to this transaction, which are being amortized through the maturity date.

During the three and six months ended June 30, 2024, we repaid an aggregate of $5.75 million of principal on the 2024 Term Loan.

As of June 30, 2024, the 2024 Term Loan had a principal balance of $2.3 billion.

Secured Tower Revenue Securities

Tower Revenue Securities Terms

As of March 31, 2024, we, through a New York common law trust (the “Trust”), had issued and outstanding an aggregate of $6.9 billion of Secured Tower Revenue Securities (“Tower Securities”).

As of June 30, 2024, we, through a New York common law trust (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 9,889 tower sites owned by the Borrowers as of March 31, 2024.

The mortgage loan will be paid from the operating cash flows from the aggregate 9,877 tower sites owned by the Borrowers as of June 30, 2024.

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, 2024:

The table below sets forth the material terms of our outstanding Tower Securities as of June 30, 2024:

Amount Outstanding

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Risk Retention Tower Securities

The table below sets forth the material terms of our outstanding Risk Retention Tower Securities as of March 31, 2024:

The table below sets forth the material terms of our outstanding Risk Retention Tower Securities as of June 30, 2024:

Amount Outstanding

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Debt Covenants

As of March 31, 2024, 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, 2024:

As of June 30, 2024, 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, 2024:

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, 2024, 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, 2025 based on the amounts outstanding as of March 31, 2024 and the interest rates accruing on those amounts on such date (in thousands):

As of June 30, 2024, 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, 2025 based on the amounts outstanding as of June 30, 2024 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, 2024, $195.0 million was outstanding under the Revolving Credit Facility.

Subsequent to March 31, 2024, we repaid $50.0 million and borrowed $50.0 million under the Revolving Credit Facility, and as of the date of this filing, $195.0 million was outstanding.

(1) As of June 30, 2024, $120.0 million was outstanding under the Revolving Credit Facility.

Subsequent to June 30, 2024, we repaid $90.0 million and borrowed $20.0 million under the Revolving Credit Facility, and as of the date of this filing, $50.0 million was outstanding.

(2) Total debt service on the 2024 Term Loan includes the impact of the interest rate swap which swaps $1.95 billion of notional value accruing interest at Term SOFR plus 200 basis points for an all-in fixed rate of 2.050% per annum through March 31, 2025 and the forward-starting interest rate swap, which will swap $1.0 billion of notional value accruing interest at Term SOFR plus 200 basis points for an all-in fixed rate of 5.830% per annum beginning March 31, 2025 through April 11, 2028.

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

4 unchanged sentences

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