SBA Communications Corporation (NASDAQ:SBAC) Second Quarter 2022 Earnings Conference Call August 1, 2022 5:00 p. m. Eastern Time
Participating companies
Mark DeRussy – Vice President of Finance
Jeffrey Stoops – Executive Director
Brendan Cavanagh – Chief Financial Officer
Conference Call Participants
Michael Rollins – Citi
Batya Levi – UBS
Ric Prentiss-Raymond James
Simon Flannery – Morgan Stanley
Nick Del Deo – Moffett Nathanson
Phil Cusick – JPMorgan
Matt Niknam – Deutsche Bank
Eric Luebchow – Wells Fargo Values
David Guarino – Green Street Advisors
Greg Williams – Cowen
Operator
Ladies and gentlemen, thank you very much for staying here. Welcome to the SBA’s second-quarter earnings conference call. Right now, all participants are in listen-only mode. Later, we will have a question and answer session. given at that time. [Operator Instructions] As a reminder, this convention is being recorded lately.
Now I’d like to speak with our host, Mark DeRussy, Vice President of Finance. Please continue, sir.
marc derussy
Good evening and thank you for joining us on the 2022 earnings convention call from the SBA time. With me is Jeff Stoops, our president and CEO; and Brendan Cavanagh, our chief financial officer.
Some of the data we will talk about in this call are forward-looking and add, among others, any guidance for 2022 and beyond. In today’s press release and in our filings with the SEC, we detail significant dangers that may also cause our long-term effects to differ from our expectations. Our statements are made today, August 1, and we assume no legal responsibility to update any forward-looking statements that we may make.
In addition, our feedback will come with non-GAAP monetary measures and other key operational measures. Reconciliation and data related to those pieces can be found in our Supplemental Financial DataSet, which can be found on the home page of our Investor Relations website. .
With that, I will now give the floor to Brendan to talk about the results of the quarter of our time.
Brendan Cavanagh
Thanks Marc. Bonsoir. SBA continued to build on our strong first quarter with an even greater momentum with overall effects above our expectations and a favorable order book for a similar or even greater half-moment.
Total GAAP site lease revenue for the current quarter was $580. 2 million and monetary site rental revenue was $570. 4 million. quarter of 2021, which had a positive effect on revenue of $3. 4 million annually.
The recurring expansion of rental earnings for the same tower in the current quarter, which is calculated at constant exchange rates, was 4. 4% compared to the current quarter of 2021, adding up to the 3. 7% effect on the abandonment rate. Base, the expansion in comparable towers was 8. 1%. The expansion of recurring money rental profit for comparable domestic towers in the current quarter of last year was 7. 1% on a gross basis and 4. 1% on a net basis, adding 3% abandonment.
Domestic operating rental activity or reserves representing new revenue placed under contract in the current quarter were again very strong and higher than in the first quarter of this year. In addition, our national portfolio of programs for new rentals and modifications also remains very healthy. The combination of our strong point of rental activity in the current quarter and our order books allowed us to build clients for rental revenue from new national sites in 2022 through lease-based leasing.
In the current quarter, replacement activity accounted for 66% of our domestic reserves, with 34% coming from new leases. Top 4 AT Operators
Internationally, at constant exchange rates, the expansion of comparable rental earnings is 5. 6% net, of which 7. 1% by termination or 12. 7% gross. quarter. We continue to see high degrees of activity among our consumers in many of our markets, as well as increased contributions from inflation-driven expansion factors.
In Brazil, our largest foreign market, we had another strong quarter. The biological expansion of the same tower in Brazil was 14. 2% at constant exchange rates. International turnover exceeded the quarter as expected, basically due to operator consolidations and other customer monetary difficulties, basically in Guatemala and Panama.
In the current quarter, 80. 6% of the consolidated source of revenue income from treasury sites was denominated in U. S. dollars. 9. 9% of cash site rental income, excluding revenue from passed-on expenses.
The tower’s cash flow for the current quarter was $459. 6 million. The cash flow margins of our towers remain very strong with a cash flow margin for domestic towers of 84. 9% and a money flow margin for foreign towers of 67. 2% or 90. 3% excluding an effect of the reimbursable expenses passed on. International tower margins were affected year after year by our new and less mature assets in Tanzania.
Adjusted EBITDA for the current quarter was $437. 8 million. Adjusted EBITDA margin was 68. 2% during the quarter. Excluding the effect of income from passing-on expenses, the adjusted EBITDA margin was 73. 3%. Approximately 96% of our overall adjusted EBITDA was attributable to our tower rental business in the current quarter.
During the current quarter, our business generated record effects for the fifth consecutive quarter with revenue of $71. 8 million and a segment operating revenue stream of $17. 3 million. point higher than last quarter, despite our record effects in the current quarter.
Based on this order book, our strong quarterly momentum and continued upper levels of activity from our customers, we have raised our full-year progressive earnings guidance to $40 million. Consistent with the percentage was $3. 07, an increase of 16. 3% compared to the current quarter of 2021.
During the current quarter, we continued to expand our portfolio through obtaining 210 communications sites and a knowledge center in Brazil, which we disclosed in the past with our first quarter effects for a total monetary attention of $127. 3 million. We also built a hundred new sites the fourth.
After the end of the quarter, we have acquired or are in the process of purchasing approximately two hundred sites in our existing markets for an aggregate value of $85 million. We plan to close those contract sites until the end of the year. In addition, in the quarter, we entered into a contract with Grupo TorreSur or GTS to acquire its approximately 2600 remaining tower sites in Brazil for $725 million.
We expect to complete this acquisition in the fourth quarter of this year and expect those assets to generate approximately $68 million in tower money in the first full year after closing, based on our existing long-term exchange rate estimates. These are assets that we know well in a market that we evidently know well, and this acquisition will be immediately added to AFFO according to the percentage at closing. Jeff will talk a little more about this acquisition in a moment.
In addition to the new tower and other assets, we also continue to invest in our site grounds. During the quarter, we spent a total of $9. 9 million to acquire land and easements and to finalize the term of land leases. During the quarter, we owned or controlled land for approximately 72% of our towers for more than 20 years and the average life remaining from our land leases, adding the renewal features of our control, is approximately 36 years.
Looking now to the rest of the year, this afternoon’s earnings press release includes our updated outlook for the full year 2022. We improved our outlook on all of our key signals based on a mix of outperformance in the current quarter, strengthening activity levels. in both leasing and leasing, lower abandonment expectations and expected contributions from the ongoing acquisition of GTS. These pieces were partially offset by lower exchange rates and higher interest expense compared to the previous outlook provided with our last quarter earnings report.
We are excited about the existing operating environment and satisfied with the way our team has been able to execute to produce greater than expected effects and our customers at a higher point with all their network initiatives.
With that, I will now turn to Mark, who will provide an update on our liquidity and balance sheet scenario.
marc derussy
We ended the quarter with total debt of $12. 6 billion and net debt of $12. 3 billion. Our annualized net debt to annualized adjusted EBITDA ratio is 7. 0 times, which is at the lower end of our target range. Our net monetary interest policy ratio of adjusted EBITDA in net monetary interest expense in the current quarter is 5. 3 times that of the last quarter, the highest in the company’s history.
At the end of the quarter, the weighted average interest rate on our notable debt is 2. 9% with a weighted average age of approximately 4. 3 years and the interest rate of 93% of our notable debt is fixed. And to date, we have $480 million in flow under our $1. 5 billion revolver.
During the current quarter, we did not buy back any non-unusual percentages, as we chose to continue the acquisition in Brazil. Lately we have $504. 7 million in buyback authorization under our $1 billion percentage buyback plan. as of June 30, 2022, 107. 9 million compared to 109. 5 million as of June 30, 2021, a low of 1. 5%.
In addition, in the current quarter, we declared and paid a cash dividend of $76. 6 million or $0. 71 at the constant percentage and announced today that our Board of Directors declared a dividend in the third quarter of $0. 71 at the constant percentage, an accumulation of 22. 4%. about the 3rd quarter. since last year. The dividend will be paid on September 20, 2022 to holders of percentage registered at the close of trading on August 25, 2022.
With that, I will now pass the call on to Jeff.
Jeffrey hunched over
Thank you Marc and happy evening to all. As you heard, we had wonderful functionality in the current quarter. All the spaces of our operations were very busy and executed at a very high level, generating monetary effects better than expected and preparing well for the current part of the year. Despite higher interest rates and declining exchange rates, we are particularly improving our full-year outlook across all spaces, adding a $64 million accumulation in expected overall revenue. .
Although the point of activity of each of our consumers around the world varies, together they generate very high levels of demand, which we believe will keep us busy for a long time for the rest of this year and until 2023. As at present, we are not seeing any significant negative effects on our business levels due to the supply chain workforce or COVID-19 issues.
In the United States, each of our operator’s consumers remains busy during the quarter signing new leases and modifications basically related to the structure of their networks through the deployment of new frequencies. T-Mobile was very active during the quarter and continued its national deployment of 2. 5 gigahertz spectrum and six hundred megahertz.
Verizon and AT
Internationally, we also had one of our most productive biological rental quarters in some time, along with an accumulation of CPI-based indexations in several of our markets. however, we also recorded significant executions in several of our other markets, adding South Africa and El Salvador.
In the current quarter, we signed 51% of new earnings abroad through new rentals and 49% through modifications of existing rentals; so almost balanced. The combined profit from new rentals in the U. S. and signed in the current quarter was the most productive we have produced in approximately seven years.
In addition to those exceptional leasing effects, our facilities business had its most productive quarter in corporate history, generating record service revenue and margin effects for the fifth consecutive quarter. Our service order book ended the quarter at an all-time high, expanding our confidence in U. S. airline activity. The U. S. service outlook for the remainder of the year allows us to increase our service outlook by 33% compared to the initial direction we provided in February. this critical moment.
In addition to our strong operating functionality in the current quarter, we maintained our disciplined and opportunistic technique for capital allocation. This quarter, we pursued a very active portfolio expansion opportunity, as evidenced by our agreement to acquire the remaining 2600 towers maintained through GTS in Brazil. GTS is one of the oldest independent excursion corporations in Brazil, led by industry veterans we know and reputable for many years, other people who know how to run a tower company very well.
Most of those sites are located in the state of Sao Paul and the maximum is located in urban or suburban areas. The sites have 2. 1 tenants consistent with the tower, and there are opportunities for growth, especially with the recent features of 5G spectrum in Brazil as the engine. This will be our time to acquire GTS towers. We greatly appreciate the momentum in Brazil and are pleased to integrate those high-quality assets into our portfolio at a very attractive price.
Of this portfolio, legacy rentals from O8 and Nextel make up 17% of the business. So, while those rounds have some variability around long-term churn outcomes, we are uniquely placed to maximize the long-term of those assets. This acquisition will build up the SBA’s overall portfolio in Brazil through more than 25% to more than 12,500 locations and we expect the towers to be incorporated with little or no additional SG cost.
This increased length and scale will be an asset in upcoming discussions on IoT consolidation and will also position us well to capture more of the additional network investment needed that will be required from the 3Ms.
Finally, we will absorb this transaction while keeping leverage at our target diversity of 7 to 7. 5 times. We expect this to be a very complementary value-added investment in a market we know very well.
In terms of our balance sheet, we remain in a smart position. We have a debt tool that represents 5% of our notable debt maturing over the next two years. 93% of our debt is fixed rate and our weighted average interest rate is still very high. low by 2. 9%. With respect to this tool, which expires in March 2023, our plan is to refinance it over the next six months, while we continue and remain opportunistic in the credit markets.
While additional interest rates are higher, our access to capital remains very strong and we remain an appreciating issuer in the debt markets we have used in the past. In fact, we are well placed to deal with the complicated and broader macroeconomic environment. Due to our strong balance sheet, AFFO’s growth, and the strong and developing or consistent environment of our industry, most of our significant peak prices are constant or increase our limit. However, we can continue to increase our AFFOs consistently with participation, creating a higher price for our shareholders.
Finally, we are very happy with our first part of 2022. Our team performed well in a high-demand environment. I expect more of the same this year and in 2023. I would like to thank our customers and team members for their help and contributions to our success. I also need to take a brief moment to acknowledge and thank Kurt Bagwell, our President of the International and Tom Hunt, our General Council for their decades of service to the SBA. Both will retire at the end of this year, however, each has left an indelible mark on the SBA and the industry. I appreciate their sacrifices and contributions and wish them a perfect retirement.
And with this Moses, we are now in position for the questions.
Q&A session
Operator
[Operator Instructions] And first, we move on to Michael Rollins’ line with Citi. Continue.
michel rollin
Thank you and afternoon. First, it is curious if you give us an update on the domestic rental environment and, in particular, if you see an update on THE activity of AT.
Brendan Cavanagh
Well, clearly, I’ll take the last Mike first. Obviously, 10. 5 times is an incredibly horny value that takes just that into account. In reality, we don’t know that long-term revenues will be sustained and we have also drastically reduced oil revenues. in our subscription. So yes, all of this was taken into account when we got to the value.
With respect to AT
So we still have, in our opinion, a lot, a lot of time to spend with AT.
Operator
Then we will move on to the Batya Levi’s line with UBS. Continue.
Batya Levi
With rental activity increasing towards the end of the year, do you think it bodes well for the business we expect for the 23rd?I know he will provide a formal recommendation later, but in terms of track record, some feedback would be helpful in thinking about next year’s bets and catches.
And some other query about the dropout rate has decreased than expected. Is it postponed to next year or are you seeing a decrease in decommissioning than you expected before?Thank you.
Jeffrey hunched over
Yes, I think Batya, all we can say about the trajectory is that the fourth quarter of this year, in our opinion, will be the expansion rate of the year and we will let you extrapolate what that means in the future. And obviously, we will give a complete review when we give our forecasts for 2023.
Brendan, I’ll leave you the question to unsubscribe.
Brendan Cavanagh
Yes, the dropout rate is: most commonly it deserves it and extends into the next year or the year to come, it’s largely time-like rather than being under our expectations. It’s just the time basically around the Sprint, the decommissioning of T-Mobile is a bit further behind the estimates we had made, but we don’t expect the overall result to be really different.
Batya Levi
Maybe just to stick to that, Brendan, I think you originally said maybe $30 million in $22 million. If we assumed it’s closer to $27 million now, and if you could give us hints for 23, that would be great.
Brendan Cavanagh
Yes, it was fine, last quarter we cut it by about $3 million and we cut it by another $3 million this quarter. So this year it’s probably closer to 24, that’s what our numbers right now mean for 22, for 2022. And next year, we’ll probably be between $15 million and $25 million. It’s a pretty wide range, however, there’s a lot of uncertainty about the exact timing, but somewhere at that $20 million level.
Operator
And then we’re moving on to the Ric Prentiss line with Raymond James. Please continue.
eric prentiss
Want to stay on top of some of Michael’s questions?Was it worth closing the deal with GTS and helping us perceive that we might deserve to think about the overall exposure to Nextel and when Nextel will have its operations overseas and I have a commitment?
Brendan Cavanagh
Yes, it was the right time because the opportunity presented itself at a time and in situations where we thought it was too hot for our long-term price creation. What’s happening in Brazil right now is that they have an aggressive central bank. ‘Go – I think they’re a little bit ahead of the U. S. In terms of the U. S. economy, dancing around a recession.
Demand, in addition to mobile telephony and 5G, continues to proliferate in Brazil. You know, this rationalization is underway with the oil deal for three operators who have now bought a lot of new spectrum that you want to implement and are in a larger percentage of the market. position to do all this. So we like the dynamics, Rick and we know those assets well and we know the distributors well, and it all came together in the right way.
Jeffrey hunched over
Yes, Rick, we’ve been a bit tough with our portfolio of around US$20 million to US$30 million over the next few years. This portfolio reduces our oil exposure on a percentage basis in Brazil, but will most likely rise in our existing estimate would be $3 million of additional oil turnover.
eric prentiss
It is ok. And you all know me. I’m talking about all this depreciation of prepaid income. I don’t like it. I know you have to account for it. That’s right, it’s not money. Yours was very small. I’m thinking about $25 million. Crown stated and provided a graph, this earnings season where its point was $560 million, the drop to maybe $450 million and the decline of the U. S. tower. The U. S. Treasury said his was perhaps $140 million falling to $110 million.
Should we your kind of $25 million a year as a smart number, because again, we actually believe that cash, AFOs, and the budget available for distribution are the right way to make valuations?
Jeffrey hunched over
Sí. Es. . . obviously, the trend is downward. Part of the explanation for Rick’s downward trend is that because we made adjustments and extended the term of some of our tenants’ rents, you’re amortizing it over a longer period of time. Therefore, it had a reducing effect. So, it depends on how many augmentation paintings we do that we are reimbursed for and what rents relate to the time they have.
But I think, based on the trend, that figure you just discussed of about $25 million is probably a moderate estimate, yet it’s been higher in the afterlife and it’s been lower. So, let’s see how it goes, I still think it’s a moderate estimate.
Brendan Cavanagh
We’re going to reveal it very precisely, Rick, but that’s not necessarily a bad thing. Is. . .
eric prentiss
I love getting paid, don’t I?
Jeffrey hunched over
Understand it for what it is. So, it’s not something we’re looking to discourage, but you can count on us to keep it clear.
eric prentiss
It is wonderful for the return to capital. I just like to think of it as a net return on capital, as opposed to an AFFO figure. I don’t like an AFFO.
Brendan Cavanagh
Yes, no, I hear you.
Operator
Then we will move on to the line of Simon Flannery – Morgan Stanley. Please continue.
Simon Flannery
Great. Thank you. Good evening. In the M&A market, obviously, the transaction multiple, you said it’s cumulative. or do you feel that it would possibly be less difficult to be a customer in the personal markets than it has been in the last two years?Everything that fits there, whether in towers or for land leasing, etc.
And then with leverage, it went down to seven points, rates went up noticeably, you have a wonderful liquidity profile, but all the updates you need to stay lower or are you still satisfied at 7 to 7. 5 in the long run in this price environment?
Brendan Cavanagh
Yes, I think as long as we can continue to produce Simon’s biological growth, we will be fine within 7 to 7. 5 times. But if we don’t locate smart things to buy, the trend will obviously be downward. Regarding your first question, I think there are breaks in margins that are declining around the world in terms of bringing the expectations of distributors and buyers closer together. But in this specific case, it was more about a scenario of specific assets, our familiarity with them. , the fact that it was the last stretch of towers that the merchant owned and had to sell to essentially liquidate a certain budget and do certain things that personal justice has to do. It would characterize this transaction more than a radical replacement in the purchasing environment. Although I think it’s getting better.
Simon Flannery
And what kind of clarity can you give us about. . . or what did you assume about when the next oil rotation will be for those assets?
Jeffrey hunched over
That’s for years to come. Some of them are express to the terms of those agreements, Simon and all are spread over other dates, but it is assumed that in the next 3 years or so on average, but it would possibly not be the same, it is Estare sure of the amount of each.
Simon Flannery
So, the $68 million will most likely include some abandonment rate for the next 12 months after closing.
Jeffrey hunched over
A little. Yes.
Operator
Then we’ll move on to Nick Del Deo’s line with MoffettNathanson. Please continue.
Nick Del Deo
Thank you for answering my questions. First, two clarifications first for Brendan. Brendan said he expected about $3 million in beaten oil from the GTS towers. Can you percentage of your expectations for the next rotation?
Brendan Cavanagh
Yes, I don’t need to give the exact number, however, oil, well, as Jeff said, we assume that all the next revenue will disappear. The total oil and the next figure is about 17%. of that. Then you can do the calculations from there.
Nick Del Deo
It is ok. It’s great. Thank you. And then, their expectations of other earnings in the U. S. in 22 they went from 0 in the last quarter to $5 million this quarter, what does that mean and what was achieved this quarter?
Jeffrey hunched over
Yes, it was done this quarter. Basically, there are a few other elements there, however, that’s essentially what we consider cash-based income, which is anything we gather in some way. Sometimes there are additional fees that are paid or a retention fee, things that are not part of the existing recurring lease. So we put it in the other category, but the construction is that they gave us more than we expected.
So, to the max all of these are things we did in the current quarter. There could be a small amount projected for the current part of the year, but the maximum has been realized.
Brendan Cavanagh
Things that don’t have compatibility in the $66 million cube. Just because we need to be careful about the way other people think about this year after year after year.
Nick Del Deo
That bien. me’s great, and then some other substantive consultation and any replacement in habit on your part, call it non-traditional consumers like cable who might be worth calling, which would suggest they’re more likely or less likely to be a significant visitor for years to come.
Jeffrey hunched over
Not genuine Array Nick. No genuine that comes to mind.
Operator
We will follow in Phil Cusick’s footsteps with JPMorgan. Continue.
Phil Cusick
Hi, guys. Just to go back to the United States for a second, can you tell us, is there some kind of flatness and stability from here, or is there some kind of acceleration that occurred in that one?I’m just looking to get an idea of what drives the strength and durability of the rear there. Jeff, it’s interesting what you mentioned, the strength continues at 23 and maybe at 24. So anything you can get us up there?
And then, what drives earnings expansion and everything else that can help us if it moves toward margins. Thanks a lot.
Jeffrey hunched over
Well, the income from the facilities is simple. It’s just more activity, more things happening and our service activities are acquired almost entirely through our own tours. So Phil. Et it’s just a lot of activity in terms of: don’t forget that we reported those expansion rates on a 12-month basis. So a lot of what you’ll see in our monetary reports for the time being or the third and fourth quarters, we know, is already somewhat written in the books.
So that component is much less threatening, so to speak, than the previous ones and, as we spend the year as a calendar year business, the threat is transmitted down and down and decreases. So here we are in August, our year is rarely over yet, but it’s pretty close. Yes. And so, for your inquiry about the dish that is part of it, they are definitely part of it because they have been a big component of the past fortune of our rental business over the last year. So when the rentals start, it’s a matter of figuring it out. And that’s definitely something that contributes to the developing expansion that we expect in the third and fourth quarters.
Phil Cusick
Jeff, Jeff, we were warned that we were opposed to taking that exit rate from the fourth quarter of this year and extrapolating it to next year each quarter. Do you think it starts to sound more moderate as you approach 23??
Jeffrey hunched over
I think I’d like to keep all that until my 2023 Phil tips.
Operator
Next. We will move on to Matt Niknam’s line with Deutsche Bank. Continue.
matt niknam
I have a follow-up and some other query. Tracking is just about the last query about services, no matter what color you may share, just in terms of the extent of operator contributions among the big 4 in terms of what drives services. And then secondly, in terms of the state of the art strategy, reflections, updates on how you think about it, a lot of differences in terms of how you think compared to all instances of use internationally?Thank you.
Jeffrey hunched over
Well, internationally, let’s talk about this last quarter, the knowledge center we bought in Brazil. We’re having more complex discussions about CRAN[ph] and other operator implementations that we’re going to associate with knowledge center ownership and knowledge. average expertise.
So it’s encouraging, however, as far as the edge itself is concerned, we’re adding about three, four, five, in line with maybe up to 10 new installations in line with the fourth part, but we’re not yet in a position to say that the edge is there and it’s on the tower site. Everything is going in the right direction, but it still takes time, in fact, it is still far from material.
Now, in terms of contributions to services, I think in our 10-Q, we reveal who our top consumers of services are. So I’m going to speed that up for you, and T-Mobile, Verizon and Dish will be the three most sensible, right. Brendane. yes, for this quarter Tmobile, definitely number one. Yes.
matt niknam
Super. Okay, that. Thanks guys.
Operator
Then we’ll move on to Eric Luebchow’s line with Wells Farpass. Continue.
Eric Luebchow
I searched after checking very quickly. He discussed the 2. 5 gigahertz auction that is taking place lately. Overall, most people think T-Mobile will be the only significant bidder, but I wonder if it has any concepts and a type of service that overlaps with some of the licenses being auctioned. What if you think you can be a significant contributor to yourself in the next year or two?
Jeffrey hunched over
Well, several other people besides T-Mobile have signed up, I agree with you just based on what I’ve read, most people expect T-Mobile to be the big winner and any kind of spectrum for us. is a new spectrum is going to prove useful to one degree or another. Now, if those are other people who don’t have a 2. 5 gigahertz spectrum to implement, that means regularly new radios and antennas. So, it can have a little bit more, have an effect on it not, however, having more spectrum and more densification to allow it is a smart thing to do.
So I’m not going to speculate on who else is going to make donations that will eventually win. We are pleased that there is another auction, a very valuable mid-band spectrum that we know is despite everything that is being deployed.
Eric Luebchow
Fair enough, and just when it comes to T-Mobile, it turns out that they’ve been running at a pretty fast pace, however, from what they’ve said, it seems like the most common thing is for them to end up with their 2. 5. and six hundred overlaps at some point, maybe until the middle of next year. So, do you wonder if you see a sign that they can also moderate activity, or if you think there is possibly still an opportunity, especially with C-band licenses and 3. 45 that they want to implement?
Jeffrey hunched over
Yes, I think there will be opportunities. And I think when all of our clients communicate when that spectrum will be implemented, they communicate about the policy and that’s really, the end of the policy is the beginning of densification and all the stuffing and other things that will eventually take place. customer adoption of 5G applications and products.
So when we think about those periods of increased investment, they’ve gone far beyond the dates when other people communicate about the achievement of their pops, the desired pop coverage, because then you come, then it’s about densification, which is very different. .
Operator
Then we will move on to the David Guarino line with Green Street. Please continue.
David Guarino
Just a quick consultation on my part about the financing market. Did you mention how you plan to fund the GTS transaction, and perhaps for Brendan, if you can comment on the relative attractiveness of safe markets compared to today’s unsafe markets?
Brendan Cavanagh
At GTS, right now, we plan to be opportunistic in the investment markets. We have been explicit about this investment. We have the capacity in our revolver and with the cash we generate operations to manage it if necessary, but we intend to be opportunistic.
We have maturity. Our next deadline will come in March next year and will therefore be refinanced sometime until then, and there is an ability within our ABS design to raise more money. Therefore, you can be just a contributor. So let’s see how it goes. In the general sense of safe rather than unsafe, I don’t think everyone is clearly in position right now in terms of price. For us, there is availability and all markets. we use regularly.
So it’s not an access query, it’s just a value query and then we intend to take our time and be opportunistic. 5% of our remarkable debt. We have had no deadlines for more than two years. So we have the opportunity to be a little patient with that. But I think it deserves to be expected that we will continue to use safe markets as we have. made in the past. But a combination of the two will probably be the way for us.
Jeffrey hunched over
Ouais. Et even if we can be opportunistic David and collect the coins, plus for the purposes of our perspectives, it’s about coins in coins and a revolver draw.
Operator
Then we’re going to move on to the Greg Williams line with Cowen. Please. To find.
Greg Williams
Super. Thank you for answering my questions. The first is only about the combination of colo and amendments. I think you have noticed that it is at the highest levels, like a third of the United States, this new colo and two thirds of the amendments and I think International is a 51-49 divided. Curiosity to hear your mind about where it could happen from here. We had some kind of pish-ish levels. Jeff, you discussed that we’re moving from politics to densification. I think you would see more amendments that way. It’s funny to hear your opinion there.
Second query only about the margin of the service. If you look at this record five consecutive quarters and move more into a structure phase, would that mean the service margin is minimized a bit as you move from game and design to structure?Thank you.
Jeffrey hunched over
Well, the short answer to your last question is yes. So that may very well happen and I’m sorry, what is the color in relation to the amendments and the combination in terms of change, if you write back, the Colo aspect in the US?So since it has a slightly less consistent contribution with the dish, you see that the consistent percentage moves more towards the amendments and I think with that, and the combination towards the filling, as we talked about. on the amendments, it will probably tend to accumulate in line with the percentage.
Brendan Cavanagh
When you know how this is going to work, and of course there will be exceptions to that, but for the most part, deployments through T-Mobilem, Verizon, and AT.
Operator
[Operator Instructions] And at this time, there is no one in the queue.
Jeffrey hunched over
It is ok. Well, I want to thank you all for joining us. We had a wonderful quarter and looked towards our next report. Thank you.
Operator
This concludes our convention today. Thank you for participating and the AT convention service.