Well, good morning and, welcome to Citi's 2023 Communications, Media, and Entertainment Conference. For those of you I have not had an opportunity to meet, I'm Mike Rollins, and I cover communication services and infrastructure for Citi.
Everyone knows you.
You never know. Before we get started, I'd like to mention that we have disclosures available at the registration desk and on the Citi Velocity page, from which we're streaming the audio. It's a real pleasure to welcome back Tom Bartlett, President and CEO of American Tower. Thank you so much for being with us today.
It's great to be here, Mike, as always. Great way to start off the year.
It is. Looking forward to, you know, hearing what's new with American Tower. Before we get started, though, I do wanna just share a couple of thoughts. We're gonna look to incorporate all of our audience's questions into today's discussion. For those of us around the table that have microphones, if you light it up with a button, we'll try to get you included into this discussion live. If you're streaming the connection, there should be a question box on the page for you to ask questions. Continuing on this tradition of using live surveys, they're completely anonymous, by the way. We are not tracking who you are, we're just aggregating responses. It can be accessed, through these QR codes that are here on the table, also on the streaming portion of the site.
You can use your connected devices, whether it's here or online, to enter in your responses. With all of that out of the way, Tom, it's a real pleasure to have an opportunity to just delve in and maybe start with an update on the strategic and operating priorities for American Tower this year, and how they might be a little bit different than where we were at this time last year.
Oh, fair, fair question, Mike. I think that, you know, just kinda stepping back a moment, we're really looking to build on the successes and the strategy that we have been able to execute over the last several years. You know, to kinda take a step back and look over the last two to three years, we've built, you know, just under 20,000 sites globally. We've acquired probably in the 35,000-40,000 sites globally. We've built out a significant presence in Europe, which is really a new beachfront really for us to be able to further develop. Even over the last couple of years, you know, we've entered into or amended, you know, close to 75 master lease agreements with our customers around the world.
We've clearly built out a new class of infrastructure in the U.S. in the data center business with CoreSite. We've built on our management team that we've have in place over the last couple of years, built on our strong culture. It's really building on, you know, the successes that we have been able to initiate over the last several years. I think we're in a really good spot, you know, given the beginning of 2023 in terms of being able to do that. The broadest category that we're looking to do is continue to scale the core. Those are common words within the American Tower family. We're doing that through organic growth. Wanna take advantage of everything that's going on in the 4G and 5G world.
You know, our customers are in our markets gonna be probably spending north of $60 billion on their networks. They've spent over $150 billion on spectrum. They wanna put, you know, that spectrum to use, and so we really wanna position ourselves and be able to take advantage of that on the organic side. Inorganically, we wanna continue with our build program. You know, through kinda life to date on our build program, we probably are generating upwards of $700 million-$800 million of revenue. Generates a significant day one yield for us. In 2022, we're coming off building, you know, 6,000-6,500 sites. I've got my sights on building, you know, 40,000-50,000 sites over the next several years.
We do that, we don't do that on spec. You know, we do that underneath a formal master lease agreement program with our carriers. As more and more spectrum gets deployed and as higher and higher bands of spectrum gets deployed, we're gonna see that need for further densification and colocation in our marketplace. That's the number one, is being able to take advantage of the organic world, being able to build out our sites around the world. Then lastly, within kind of scale the core is make ourselves more efficient. You know, we're a really good international business. We're not yet a global business.
While we have capability and assets in 27 markets around the world, you know, I think that the opportunity for us is to be able to provide that global value proposition, particularly as the edge more fully gets developed. I think we would be able to take advantage of that value proposition, particularly with the cloud players. Nobody around the world has the kind of coverage, the kind of scope that we have, in the kinds of markets that we're in, with the types of customers that we have. I think that that's a real opportunity for us, and one that we really need to get after and take advantage of. We'll continue to, you know, further operationalize our business, make ourselves more efficient, drive more margin performance and those types of things.
That's everything I kinda talk about when I say scale the core.
Mm-hmm.
The second major initiative for us is what we call platform extensions. We really have two platforms now within our business. Clearly, the tower platform, which is the principal platform within our business, and we really want to extend the capabilities that we're providing at the site level. We were just talking a few minutes ago. You know, the fundamental competitive advantage we have in our business is our exclusive pieces of real estate. You know, we've got a longitude and latitude on every one of those pieces of real estate. They're strategically positioned within all of the markets that we're in to be able to support our customer base. In essence, we have a moat really around it. For us, it's to drive as much activity as we can in that site and to produce as much activity from within that site.
You think of things like power and fuel, which in many of our markets is a critical element to the service we provide, particularly in markets in Africa, India, even to a certain % down in Latin America. I think it's gonna become even more important here within the United States. We've invested probably $300 million-$400 million over the last several years in terms of really developing our power and fuel capability. It's not just those things that are really behind the meter, which are the things that we're doing within the site that aren't metered, that we provide for our customers and pass through to our customers, but it's also things that are looking in front of the meter and what other opportunities might be there for us.
It's not only the right thing to do for our customers, it's the right thing to do for us, but it's clearly the right thing to do for the environment itself. The edge also fits within. I know we'll, I'm sure, talk a bit more about the edge and how that fits into our overall plans. That also gets encompassed within the platform extension, kind of the strategic initiative that we have. I think the third one is really becoming more strategic with our customers. As I mentioned, we've entered into, you know, 75 kind of new or improved master lease agreements around the world. We wanna become closer and closer to them in terms of being able to help them. They've spent an awful lot on spectrum, as I mentioned.
They're committed to an awful lot of capital in our markets. I think that's a real opportunity for us to be able to provide higher levels of service for them. As part and parcel to that are kind of the holistic arrangements that we've entered into in the United States with the big carriers. You know, those are ways for us to become more strategically aligned with them so that we're not, you know, bickering about, okay, what's gonna be the cost to go on this particular site.
Mm-hmm.
That's really played out really well for us. We kinda led the market in terms of deploying those kinds of pricing schemes, and we've really been able to, I think, take it to the next level, and I think our customers have really appreciated that, particularly when time to market is so important for them. Getting on air is so important for them. To the extent you can take out the kind of the bickering on pricing as a typical landlord does, you know, it really does help the overall relationship, if you will. The other elements, I think, of what we're trying to really focus on is continue to develop our team. You know, we're getting into some new lines of business.
We wanna make sure that we've got the capabilities and the skill sets within the business to be able to extend the kinda leadership position that we have. Foundational to that is our culture, and really building on that kinda that leading ESG platform that we have, making our business really purposeful. I've found that over the years that I've been in business is that to the extent that our employee body can really find purpose in what they're doing, the ownership and the accountability and the drive to provide higher levels of customer service, it just comes together so much better. Not that compensation and all the other elements and opportunities for growth aren't important, because they are, but finding purpose in what they're doing on an individual basis is incredibly important.
Those are kind of the broad categories. There's nothing significantly new in there, as I said, in terms of kind of building on the successes that we've had over the last, you know, two-three years. But it's more of an emphasis in acceleration, and we're continually looking at driving a strong dividend growth, which is what we've done over the past several years. We're looking to find ways to continue to delever within our business. You know, we're kind of at the 5.5 x. We're looking to get down to the 5 x level. I think that's probably a more appropriate place for us. We're continually looking at. These are all tactical. You know, we're continually looking at other forms of capital.
You know, we've over the last two years, with some of the transactions that we've done, have brought in third-party capital, which has worked really well for us, particularly in Europe as well as now in the United States. We continue to try to uncover other forms of capital that we can continue to look at and deploy. We'll also look at, you know, even some of the markets that we're in that are of less scale to deal with in the markets, whether those markets make sense or whether there is capital there that we might look to monetize and deploy in other areas. That's not different. We've done that for our, you know, over the last 12 years.
We've gotten out of some business, certain asset classes, here in the United States as well as internationally. We'll continue to look at, you know, different areas of our business and are there more optimal ways of being able to utilize that capital.
Great. This gives us a lot to drill into.
Okay.
First, we'll tease out the first survey question and get people involved. The first question that we're gonna throw out to our audience, you can use the QR codes to log in here at the table, is what is the biggest risk to future consensus AFFO per share growth for American Tower? The choices are Customer consolidation or rationalization, including T-Mobile churn, rising rates, currency, slower domestic growth, and slower international growth. We'll see what the audience comes back with. Before we get to that, you know, maybe starting in the domestic business, you talked about the MLA progression that you've been making, and you had an announcement this past year as well in regards to those holistic deals. Where does American Tower sit today in terms of that visibility?
You've given that long-term trajectory of average organic growth. I believe it's 5% including T-Mobile churn, 6% without T-Mobile churn.
Right. Right.
Where are you on that visibility path? And what are the things that are not in these agreements, you know, that could add some potential upside or downside to, you know, the aspirations of American Tower?
Yeah. Well, you know, first of all, I mean, our business, I think what I like, and I think what investors have always liked is kind of the predictability, you know, of our, of our revenue streams. We enter into long-term leasing arrangements with our customers, with escalators, some fixed, internationally, as you well know, based upon kind of CPI. That gives a good baseline of revenue. On top of that, there's a layer of the pricing mechanisms that you were just referring to. With all of the major carriers here in the United States, we have these long-term, holistic, comprehensive type of pricing schemes, which are the ones that I was talking about before in terms of our ability to work even more closely with our customers.
You know, they have a pricing scheme which they can budget more appropriately, and they can then come back and amend the sites that are part of that agreement, which gives them some predictability in terms of their own budgeting, and gives us then predictability in terms of what that revenue growth will look like, right? They are committed just to paying us at those levels. In the United States, it's probably, you know, 70%-80% of our revenue growth is tied to one of those revenue schemes. That gives us good comfort in terms of what that growth is.
I think that's why we can come out and say with, you know, with certainty that, you know, we're at the 5% without the Sprint churn, and we're with the 6% with it. We have that visibility going forward because those pricing schemes that we put in place are multi-year. With the arrangement that then we just negotiated with Verizon, that kind of, you know, put the bow around, okay, all of the carriers now in the United States, the major carriers are under that kind of pricing scheme. We have the other 20%.
Mm-hmm.
Keep in mind that we do probably have 1,500 customers in the United States. The big carriers probably represents, you know, 80% of that, but there are a number of customers that make up that 20%. We have good visibility in terms of where they are in their own life cycles, what kinds of renewals we would expect. We have that on a site-by-site, customer-by-customer basis. As I said, we have, I think, really good visibility and comfort into that underlying U.S. growth rate. What could change that? Well, in the big carriers, you know, the way those schemes, I don't want to get into the particulars on each one of them, but they're largely based on space on the tower. They're largely in place for amendment type of activity.
To the extent that, you know, 5G continues to take off and evolve, and there's more of a need for further densification, there could be an opportunity for more co-location going on within the business. That generally is not an element of that because we're really talking about coming back to an existing site, given a certain space that the customer has available to them and filling out that space.
Mm-hmm.
You know, what we found out early on when we put the first holistic in place back with a carrier was that candidly, they underestimated the amount of space that was gonna be required. That we actually were able to enjoy growth over and above kind of that holistic arrangement. Not certain whether that's gonna happen now. My guess is that further along in the 5G cycle, it has a higher potential for that as more densification is then required. You might see that. In terms of the other, you know, 20%, again, it comes back to 5G demand, what their own use cases would look like and what their own underlying requirements might be.
I think the 80% that we have that kind of real good visibility into, I think gives us comfort that that kind of a 5% is really a baseline of revenue growth going forward. You know, on top of that, if you start to think about some of the other players that might come into the marketplace, you start to take a look at some of the cable players, whether they might be looking. For them, it's math-based, you know, the certain customer level that they might be enjoying at an MVNO level. Where does it make sense for them to want to start to build out some of their own networks, if you will.
As I say, we're really comfortable with that U.S. growth rate, and particularly over the last couple of years, you know, coming off of a 1% kinda growth rate with the Sprint churn, it's nice to get back into these kinds of levels. Candidly, I would expect that the colo amendment activity to really start to increase even further than we enjoyed in 2022. That's just not a phenomenon in the United States. It's a phenomenon that I would expect to see globally. We feel good about that U.S. growth.
I was gonna ask you about that because, you know, we're getting through this mid-band spectrum build cycle where the focus by the national carriers in the U.S. particularly was just, as you were describing, using more space on the tower and putting up more antennas and radios and things of that nature. You know, in your pipeline and in the search rings that you get, are you starting to see more densification requests and interest to kind of on top of the amendment type of activity you've enjoyed, start to see more colo?
A bit. You know, a bit. I think we're still a little bit early...
Mm-hmm.
For that. You know, kinda going back to the 3G life cycle and the 4G life cycle, really didn't start to see that kind of colocation requirement until kind of at the middle. They were using, at the time, kind of more lower band spectrum, right? I would expect that as more of the C-band spectrum starts to get deployed, we should start to see that a little bit more quickly.
Mm-hmm.
As I said, haven't necessarily seen it yet, Mike, but I would expect to see that going forward. One of the interesting phenomenons is with the kind of the 5G cycle is even the carrier success that they're having with fixed wireless. You know, that could also be another element of growth that, you know, three or four years ago when I was starting to think about the kind of the 5G opportunity that I didn't consider. Perhaps there is an opportunity on that fixed wireless side that the customers are enjoying that will largely fall on the site. I mean, there can be, you know, smaller sites that you might find to be able to support that kind of activity going forward. Right now, the carriers are really supporting that fixed wireless component or element value proposition with additional infrastructure on our sites.
Maybe we'll turn to the survey and, again, if you wanna ask a question, by the way, just turn the light on your microphone. Let's see what investors are thinking about in terms of the risk to the future AFFO per share. 2%, 12% not concerned. 12% customer consolidation or rationalization. 41% rising rates. 18% slower domestic growth, and 18% slower international growth. You know, you've laid out this, the multiyear AFFO target. Is I believe the average over the next number of years is 10%+-
Okay.
Is the goal that you've laid out?
That's what we've enjoyed over the last dozen years or so.
How do you think about, you know, some of these issues that, you know, kinda came back, you know, the rising rates, the risk of carrier consolidation-?
Right.
Slower international growth. Like, what are the things that investors should be mindful of in 2023 as they think about the opportunity for American Tower to continue to grow that AFFO per share?
Well, I mean, those risks are real, you know, we deal with them. That's what we do. I mean, we deal with them each and every day. On the carrier consolidation, we've had carrier consolidation back, you know, over the last 20 years. The most significant one being the Sprint and T-Mobile carrier consolidation, we've had it in Latin America. We'll continue to have it in Latin America. We've had it in Africa, particularly in South Africa. You know, the way to be able to deal with that is to enter into long-term relationships, to be able to enter into markets where there's a good rule of law, where you're able to monetize those relationships.
If that carrier leaves the market, that you're able to be able to have some type of a settlement to be able to take advantage of that. As that carrier does get consolidated, that customer that is being consolidated into, again, has the wherewithal and the ability to satisfy the obligation that that underlying customer may have. We've been dealing with carrier consolidation from day one, Mike. Sure, it does bring in relative levels of risk within the business. We do a significant market scan to be able to look at that before we even get into a market. Diversification, I think, has been very helpful. There are certain markets that we might be suffering a little bit from a carrier consolidation, but with diversification and other markets being able to step up.
You know, and those cycles, you know, happen year in and year out. I think from a carrier consolidation perspective, we've been able to manage that risk-.
Mm-hmm.
That exposure, from a number of perspectives, pretty well. I think in terms of the growth that you also had in the survey, if I remember the.
Mm-hmm.
Survey questions. I mean, we've talked about the U.S. growth. We haven't really talked about the international top line growth, we're bullish on that growth. Again, it comes back to building out the 4G and the 5G technology and using multiple spectrum bands to be able to do that. That always works well for a tower company when companies are using multiple bands of spectrum because it's still very difficult to integrate multiple bands. Generally, when you're doing that, you're bringing it down to the lowest common denominator. It's gonna require further densification going forward. If I think you guys also produce these, you know, the growth rates for broadband data going forward isn't slowing down.
The use cases for 5G have really yet to be developed. You know, we haven't been able to even see the benefits of 5G. We've seen speed, some latency benefits, but the use cases haven't even really been developed. I think that's gonna drive that incremental demand. We see, you know, growth over prior years in terms of new colocation and amendment activity. I'm not concerned at all about the growth rate. I think it's there.
Mm-hmm.
I think we're well-positioned to be able to realize it. The one nuance, particularly over the last several months going in this year, are interest rates. That's a fact. I mean, you can take a look at our balance sheet. You can see what their that side of the balance sheet looks like, and we have a sizable amount of floating rate debt out there in terms of our overall fixed floating types of relationships. We've got a fair amount of fixed that needs to be refinanced over the next, you know, 12 months, you know, $3 billion worth. That absolutely is gonna provide, you know, some headwinds, if you will, in terms of our overall AFFO per share growth. Obviously not at the revenue or the EBITDA line.
I think we're gonna see strong growth there, and the business model being intact. I think we're gonna be able to see that support. That's, you know, I'm not, I'm not sure what the percentage was relative to picking that one, but that's probably the single largest headwind that we have in front of us.
Mm-hmm. Let me throw up our second survey question, and this will be a preview where we're going in a few minutes. When will AMT begin to recognize material synergies and financial benefits from its data centers?
It already has. We generated $700 million-$800 million of revenue last year. I'd say we already have. I think if you're thinking about the opportunity at the edge, I still think that's a few years away. You know, when we think about the data center business. First of all, I think it's just a great infrastructure class. I mean, I had a fair amount of experience being on the board of a very large data center company. I had that visibility in terms of what kind of margin performance, what kind of growth could be for a certain type of data center company, which both Equinix and CoreSite are.
Mm-hmm.
You know, we're really looking to leverage the kind of that interconnection capability to really drive more value at that tower site that I talked about before, that we have that exclusive right to be able to utilize. In the meantime, you know, we're able to enjoy the kind of that interconnection cloud on-ramp rich marketplace. CoreSite, you know, they're we talked about this on the third call. You know, they set record levels of growth, of sales in 2022, and I expect to grow on that in 2023. You know, their model is selling to the cloud, selling to the enterprise, as well as selling to the MNOs.
Mm-hmm.
They're doing a terrific job in terms of being able to accomplish that. They have a core set of assets that are really premier in the marketplace, and they're very tactical in terms of looking at where are those next opportunities for growth. What we've been able to enjoy over the last 12 months is while those kinda edge applications are in the formation stage, you know, the relationships that we've been able to build out with cloud players over the last 12 months has been significant. We have an edge advisory board that are made up of industry experts.
We have a lab that we've set up to be able to trial new types of applications and work with different entities to be able to explore what the opportunities would look like out at the edge. I'm at WEF in a couple of weeks. We have, you know, the significant number of meetings with cloud players. Those conversations, if there's a synergy, now those conversations would not have existed without having CoreSite as a base. As CoreSite continues to move its capabilities from, you know, the core NFL cities out, you know, we continually looking at, you know, what are those 1,000 sites that we have where we can bring in 1 megawatt of power.
I would expect to see those types of those synergies, if you will, develop, you know, over the next several years. I couldn't be more excited about the opportunity of bringing these two asset classes together to really build something very unique and something that I think will have a significant amount of say in terms of how that network architecture gets developed.
Right. For the survey, that's exactly what we were asking in terms of, you know, when that edge might come through and be a synergy. We asked, is it gonna be 2023, 2024, 2025, or unlikely to happen in the next three to five years? You know, it was very mixed in terms of results. 17% 2023, 17% 2024, and then a third 2025, and a third unlikely to happen in the next three to five years. It sounds like your timeframe is still over the next few years for these edge synergies to really emerge.
It is. Believe so.
Moving over to the macro side. Can you take us through the regions?
Mm-hmm
... and help us understand how inflation can impact your escalators and your revenue growth in 2023, how it impacts the cost of your real estate? I think what investors are trying to figure out is, does American Tower benefit from inflation? Does some of this inflation that you might be able to get in some of your markets drop to the bottom line? Or should investors think about this really as kind of a net neutral activity or zero calorie, you know, cash flow benefit relative to the revenue?
Yeah. I think it probably at the, at the headline is probably, you know, zero calorie. But if you look at the markets themselves, I mean, you look at the U.S. market, you know, we have 95% of our contracts have a 3% kind of escalator, right? We also have a 3% escalator on our largest cost, which is our land. They're pretty well insulated, from a zero calorie perspective as you kinda look at it. Internationally, it's a bit different because we are triple net and we do have a significant amount of pass-through. Broadly speaking, our inflation or our escalators are a function of inflation in the marketplace, and we underwrote those contracts based upon that. We'll enjoy that on the top line.
What's interesting on the bottom line or at the EBITDA level, again, our land costs are the significant piece as well as our fuel costs. While you'll, you know, you'll increase those costs as a result of inflation, we pass through those costs, you know, to the tune of about 70% or 80%. By our ability to pass those costs through, even though they've gotten more expensive, we don't necessarily feel the brunt of it.
Mm.
The reason I say zero calorie is that I don't like inflation. You know, I don't think inflation is good for anything. From a consumer level, from a customer level, inflation is not a good thing. You know, we need to be able to get that in track. From an operational perspective, I think we are very well protected in terms of the impacts of that kind of an event. We have been, Mike, you know, I mean, if we take a look at some of the growth rates that we've had and, you know, over the last several years where we've had more inflationary driven economies, whether it's Brazil, whether it's certain markets in Africa, you know, we've seen our ability to capture that type of impact.
Keep in mind that largely the rationale for those CPI-based escalators was really to look at the impact of FX.
Mm-hmm.
Trying to look at the correlation between, you know, FX exposure and rising currency was how could we mitigate that? The escalator helps us to mitigate that in a pretty significant way.
In our next few minutes, just to give a preview of where we're going, I'm gonna just get our last survey question out there. We'll come back to this topic, which is capital allocation. Before we hit that, maybe just jumping into a couple of the market-specific details. The survey question that we're gonna ask our audience is, what is the best priority for capital allocation after internal development and the build-to-suits that you have over the next 12 - 24 months? We're gonna offer the responses of repurchasing shares, accretive acquisitions measured by AFFO per share or acquisitions measured by tower gross profit, capital recycling, and net debt leverage reductions. We'll see what our audience comes back with.
Before we get there, you know, maybe in some of the markets, can you talk to us just a little bit about India, like where you are in terms of collections and how that market evolves from a financial contribution perspective in 2023?
Well, I mean, we're right where we said we were going to be. In the second half of the year, our customer, Vodafone, said that they're only gonna be able to pay us $0.60 on $1 for what was contractually committed, and that's what they've done. They've said that at the beginning of 2023, they're gonna start coming back at 100%. We'll see. Don't know that for certain yet. I do know that they paid us $0.60 on the dollar. They're in the process of trying to figure out exactly how the government is going to kinda influence the growth of their business.
As you well know, the government had agreed to pay a, take a piece of kind of the interest on some of the tax levies that they've been imposed on them and convert them to equity, and that is yet to happen. I think the linchpin for Vodafone Idea is for that to happen. I think that they're all working on making that a reality. I can't say for certain that that's gonna happen or not or what the timing might be, but that's gonna be a critical element, I think, in terms of their ongoing success. We'll, you know, continue to monitor closely as we've been doing, and see how that lands in the first quarter in the next month or so.
In the meantime, you know, they continue to do as much as they possibly can with the capital that they have. Airtel and Jio are formidable competitors. They're well capitalized. They're investing in 5G. Collectively, the carriers spend about $20 billion on 5G spectrum, just last year. They're all trying to monetize that in a significant way. India is a, is a very unique market. You know, we've been there for a decade. They're just about ready to, I think, take over China in terms of total population. Significant commitment from the government in terms of, becoming more digital. The government, I think, has done a fair amount over the last 12 - 18 months in terms of, positioning the marketplace from a regulatory perspective so that the customers there can be successful.
They've, you know, continued to reiterate it's a three-player market. I think that's one of the impetuses for them to be able to one, support Vodafone, as, you know, as they being one of those players. Time will tell. This kind of comes into the play of, you know, we have very diversified portfolio. This was a market that, you know, for the first seven, eight years of our ownership, was kinda high single-digit, double-digit growth, and has hit a number of headwinds over the last several years in terms of consolidation, in terms of tax levies and, trying to manage their way through this best they possibly, best they can.
We have a terrific management team in place, and we spend a significant amount of time with them in terms of trying to figure this through. More, more to come on kind of their payment schemes for 2023, but we haven't heard different from them paying it $1.00 on the dollar.
Before we get to capital allocation, which will probably be our last topic, any international markets that you think investors may underappreciate the growth potential in 2023? Are there things that you're seeing in certain international markets where, you know, maybe you're incrementally excited?
Well, I'll change that to the global market.
Please.
From one of your surveys, I don't think the people appreciate it. The investors understand the U.S. market, you know, and so maybe that's an underappreciated market. I think Europe is probably an underappreciated market. I get it. We're new in really into the marketplace. You know, with the long-term relationships that we have with companies like Telefónica and even Vodafone and Orange, now with 1&1, you know, we're really excited about the opportunity for growth. It's built on the fundamental escalators that we see in the marketplace. I think there's certain markets in Africa that we will probably be able to enjoy kind of outsized growth. I think Latin America is gonna be the one where we do have some incremental churn.
It comes back to the carrier consolidation risk churn that we need to manage through, in Latin America, where we've enjoyed some high single-digit growth rates. It's probably in the lower single-digit kind of growth rate category in 2023. We'll get through that, to be able to, you know, hopefully get back to enjoying some of those higher rates of growth going forward.
On the subject of capital allocation, I'll share with you the results, and then we'll get into, you know, maybe how American Tower is gonna approach capital allocation this year and next year. 16% repurchase shares was the best priority. 5% accretive acquisitions by AFFO. Zero acquisitions that are accretive on tower gross profit. 16% on capital recycling, and 63% on net debt leverage reductions. How is American Tower approaching capital allocation potentially differently in 2023 and 2024, and how are you thinking about the current environment?
I think versus 2021 and 2022, and then more so 2021, I think on the M&A front. You know, we've been pretty vocal about saying there's a significant dislocation between public and private valuations out there. That's probably not an area of high priority. We'll always be around the hoop, you know, to the extent that there's some opportunities there that just kinda fall into our lap, you know. To the extent that they make sense for us, we'll take advantage of it. I think you had zero down on the survey there. My sense is it's gonna be probably pretty low. You know, there could be a couple portfolios, smaller portfolios. We're always rumored to be part of the huge portfolio and that's just because of our size. That shouldn't spook investors.
You know, as I said, we're always around the hoop, but because of the dislocation, I wouldn't expect that to be a significant place where we'll be allocating capital. I think the other areas that you have on in the survey there, I think are fair. I think de-levering, you know, is an area, particularly with rising interest rates where they are. We're at around 5.5 x. Our sweet spot is in the 4x- 5 x. You know, we'll be looking to delever to the extent that we will. We've also got commitments to the rating agencies.
As a result of the deals that we've done over the last few years, our leverage got up a bit, like it had done back in the 2014, 2015 timeframe when we acquired the GTP portfolio, as you may recall, and the Verizon portfolio. We're clearly committed to being able to de-lever and to get that element of our balance sheet down and lower those costs. Buying back equity. You know, we, you know, we talked about that on the third quarter call. I think our equity is, I guess any CEO could say it, but I think our equity is undervalued.
You know, I look at the long-term value of our business. That to me is a pretty attractive place to be able to invest. It also needs to be in concert with being able to de-lever, right? There's no 100% here or a 100% there. It's a bit of a mix, I think. Underlying that is the ability to invest in those discretionary parts of our business like you identified. It was kind of a given, I think, in the survey question, to be able to generate a good, solid growth for us going forward. Really be able to position ourselves to be able to drive that 40,000-50,000 built-to-suit capability, you know, over the next several years.
Just one quick follow-up. On the earnings call, I think you were describing that there was like a window, a timeframe where you were anticipating getting back to that 5 x or less net debt leverage target. Can you remind us like what the period or year is that you're, you know, you wanna get to that point so we can think about the flexibility over that horizon?
I think we said what? 18 - 24 months. A couple years. Yeah, a couple of years.
Right.
Hopefully, we can accelerate, that, Mike, but that's what we're committed to.
Great. Well, Tom, thank you for joining us today.
Hey, great, Mike. Great to be here and thank you everyone for being here. Appreciate it.
Thank you.
Great. Did you answer all of your survey questions? We did. Okay.