Okay, well, good afternoon, everyone. Thanks for joining us. I'm Nick Del Deo with MoffettNathanson, and I'm thrilled to be joined by Marc Montagner, the CFO of SBA Communications. Thanks for joining us, Marc.
Thank you for having me.
Yeah. You know, you're relatively new to SBA, so I think a lot of people in the audience probably don't know you well. But you've been involved in the telecommunications industry for many, many years, in a host of different roles. You've been a senior executive, an investment banker, a director on a number of boards, including one company we're hosting tomorrow. You've been involved with wireless carriers, spectrum owners, wireline operators, satellite companies, and you're most recently an SaaS provider. So I guess, you know, all things considered, what attracted you to the opportunity at SBA, and what talents and skills do you think you bring to bear that are most relevant for SBA at this point in its history?
Yeah, so I think the first thing about SBA, I think it's digital infrastructure. Supporting the wireless industry. And I think I was a banker to the wireless industry in the 1990s, worked at Nextel Communications, Sprint Nextel. And if you look at the growth in wireless in the last 30 years, it has been an unbelievable ride. And I think the world is going wireless. It started with voice and text and data, and now it's video. If you have teenage girls in your family, you can only imagine how much tonnage is going on wireless networks today. And I think the trend is going to keep going. I think the beauty of SBA is like selling a pick and shovel to gold diggers. You have this long-term asset, 30-year-plus useful life, where the carriers are not captive customers, but the switching costs are very high.
You pay for fiber going to the site, you lease a cabinet at the bottom of the site, you put your routers there, you build your fiber going up the site, you put your equipment there. And the key to being successful is really to be in the dialogue, providing a good service, and being there to support them when they deploy a new band of spectrum, they need more coverage, they need more capacity. So I think it's a unique opportunity to participate at a very low risk in the growth of just the wireless industry.
Okay. And obviously, your experiences all tie into that. You've seen the cycles play out.
I've seen the cycle play, listen, from rolling out 2G, 3G, 4G, 5G, and it's going to keep going 6G. I mean, when I was at Nextel, I'll give you an example. We bought the 2.5 GHz spectrum from WorldCom in bankruptcy. That spectrum was awarded by the Canadian administration for fixed wireless for fixed cable, for wireless cable services, 24 channels. Eventually, they all went bankrupt when the cable operators put the coax into the ground. And that was WorldCom bought it, spent $4 billion trying to do fixed wireless internet access, went bankrupt. We bought it for a penny a megahertz pop, went to FCC to change the use from basically one-way video to two-way voice data and video, and eventually sold the company to Sprint. And Sprint was bought by T-Mobile, and now T-Mobile has deployed 2.5 5G.
Look at the cycle from the 1960s to today. But any band of spectrum out there is going to be deployed because you don't make spectrum anymore. Everybody's scrambling for spectrum. And it's a step function. You're a carrier. You get a new band of spectrum. You build coverage. Then you add capacity. Then you do fill-ins. And eventually, it's too expensive to do spectrum splitting or cell splitting, and you go after a new band. So it's really a step function. I think now we're in a maybe quiet period because if you really look, you go back, when I started SBA, I went back 15 years. Take the big three wireless operators. CapEx as a percentage of revenue. Where does it run historically? I know Nextel, we were always running above 20%. And that number has not changed.
You look at the last 15 years, it's about 20% of revenue. 2022, 2023, we're running much higher, 23%-24%, because they rolled out 5G. And today, about, I think, 50% of our sites have been upgraded to 5G. So there's still a long way to go on 5G deployment. But they got an 8-10 turns capacity increase by rolling out 5G. Now they have plenty of extra capacity, and then it's to be filled up. But their industry is still growing. The big three added about 850,000 postpaid net add in the first quarter. The industry added almost 900,000 fixed wireless access customers. Each one of these fixed wireless access customers is using 15x-20x more capacity than a handset.
If you add another 4 million fixed wireless customers this year, eventually that free capacity you got by rolling out 5G is going to be used, and the carriers are going to have to finish the 5G deployment. I think where we're sitting, we have a great relationship with our carriers. We're in the business of supporting our carriers. We're going to be there to capitalize on the spending.
Okay. Well, it's great perspective. And I want to turn back to leasing in a bit. But capital allocation and the balance sheet seem to be top of mind for many investors today. And obviously, you play a key role on that front as CFO. So I'd imagine that the board wouldn't have hired you if your views were dramatically different from what SBA had embraced in the decades prior. But that doesn't mean that you don't bring fresh perspectives. So maybe can you elaborate a little bit on your capital allocation and capital structure philosophies, and where your views may be a bit different or additive to what the company's done historically?
Now, obviously, during my interview process, capital allocation discussions were front and center. And what attracted me to the SBA management team is that, first of all, it's a very stable team. One, they have been there for about 25+ years. And historically, this team has been extremely disciplined in terms of capital allocation and created a lot of value by allocating capital wisely. And so looking at our company today, and those are public numbers, they're already in our guidance. It's about $1 billion of EBITDA for 2024. Cash interest expenses are about $360 million. CapEx, discretionary and non-discretionary CapEx, it's about $325 million. You have another about $40 million of cash taxes, all international cash taxes, and a dividend of $425 million. So you left about $750 million, more or less, of capital to be allocated.
Last year, $100 million went to share buyback, about $600 million to pay back debt, and another $100 million to M&A. This year, so far, we've done about $200 million of share buyback. We believe that this is going to be very accretive to our AFFO per share in the long term. Given the fact that interest rates may be higher for longer, I think for the rest of the year, we are probably going to inch towards paying down debt. Because our average cost of debt is about 3.1% today. Raising new debt or refinancing debt in the ABS market will probably be at around 5.75%. So it is very accretive to our AFFO per share to de-lever at this stage.
Okay. I guess, can you expand on that a little bit? What's the process you use to make that sort of debt pay down versus share repurchase decision? Is it as simple as what will help your AFFO the most over the coming years, or is it deeper than that?
I think it's more art than science. I think we're taking a long-term view and trying to, obviously, not run too much risk, but create value. The number one priority is to grow AFFO per share over the long term. There's a balance, and there's always new input. There's always three levers, right? One is M&A. If the right M&A opportunity is there at the right price, and it's accretive to have $1, $2, $4 per share, we're not going to be shy about executing M&A. If the M&A opportunity is not there, M&A allows us to grow the company and be accretive to have $1, $2 per share is always going to be the best outcome and help us extend our footprint, our company, and create value for our shareholders.
Absent attractive M&A at the right price, it's going to be a combination of share buyback or paying down debt.
Okay. Okay. Now, you're the only one of the big three public tower companies that is not rated investment grade. I think historically, the company's view has been that the flexibility that you have to go higher than what an IG rating would require is more beneficial than whatever interest savings you might get. But it seems like the team has been grappling with that a little bit more recently. I guess, how are you thinking about the benefits and the costs of committing to an IG rating versus maintaining the flexibility that you have without it?
Right. And to me, the key driver is not really the leverage. It's what are your cash interest expenses?
Okay.
Right? Because right now, it's about, call it, $360 million, giving us 6.5 turns of leverage. Cost of debt is about 3% now. We're going to have to refinance some of that debt at a higher rate. So I think we'd like to keep interest rate, cash interest payment, as close as possible to that $360 million, $365 million. And so we're probably going to index towards paying down debt. But that being said, being investment grade, you need two things. You need a leverage that's slightly lower to where we are, but also a commitment to stay investment grade. We are not willing to make that commitment because there may be attractive M&A opportunities that we see in the market, and we want to use our capital. The equity market may be disrupted, and we want to basically have extra flexibility to buy back our shares.
Otherwise, we just pay down debt.
Okay. So that flexibility remains very.
That flexibility is number one at this stage.
Okay. I guess a question I oftentimes get relates to your debt maturity profile relative to your peers as well. Your average maturity tends to be shorter than what you see at others. And sometimes people observe that it's perhaps a little given the long asset lives you have and the contracts you have, it may make sense to extend that debt maturity profile. So how do you think about that issue?
To me, the real key driver is having access to capital, having liquidity, and, on average, having the lowest cost of debt possible. So we just refinanced our term loan, extended the maturity to 2031, extended and increased the size of our revolver to $2 billion. It's going to be undrawn by the third quarter of this year. I think the drawn balance was $195 million at the end of the quarter. That's a $2 billion facility, maturity of January 2029. We have very few upcoming maturities, $620 million of an ABS in October and another $1 billion or $2 billion in January of ABS. And about $7 billion out of our $12 billion of debt is in the ABS market because it's secure, and it allows us to really lower the cost of debt. So the average maturity is, I mean, doing ABS, it's a 5-year security.
So given our exposure to the ABS market, that's a reason we probably have a four-year maturity across basically our balance sheet. But to me, the maturity is not the key driver. I think it's having liquidity. So we have a $2 billion revolver we could tap, access to capital. The ABS market is wide open. We could tap the ABS market. We could use our revolver to address any maturity coming up in case the rates that are being offered to us are not attractive. So having access to capital, having liquidity is the key driver.
Okay. Okay. Now, I thought so obviously, Brendan Cavanagh became CEO earlier this year, long-time CFO. One of his initiatives has been to kind of double down on the idea of having a portfolio of high-quality assets and producing stable, growing results. On your earnings call a couple of weeks ago, Brendan emphasized that his strong preference would be to add to or otherwise enhance assets that may not currently fit that criteria rather than dispose of them. Do you feel like that sort of path is available for most of the markets or assets that, again, kind of might fall into that bucket that they're not performing at the standard you want?
Yeah. So we operate in about 14 international markets overall. Our biggest one is Brazil, where we have a very significant scale. And then we have some markets where we are subscale. All of these markets are free cash flow positive. And then the question, I think the number one priority would be to get scale in order to have more leverage and a better dialogue with some of the operators in the market we are subscale. If there's a way to get scale, that's the preferred strategy. If there's no way to get to being number one, number two, number three, or having a significant scale, obviously, we would rather monetize. But we would only monetize at the very attractive multiple. Those markets are free cash flow positive. So we don't feel like we need to exit those markets, really. We'll just be very opportunistic.
Okay. Okay. Now, I know if I remember correctly, the team used to talk about kind of a 30% portfolio limit on the share of assets from non-USD generating towers. Is that still the case, or are you thinking of adjusting that ratio in light of the focus on stability?
Right now, I think about 78% of our leasing revenue are U.S. dollar denominated, about 80% of our EBITDA are U.S. dollar denominated, all of our Central American markets are U.S.-based contracts. We may tweak that up on the upside, but I think 25%-35%. I don't think there's a hard limit, but we are comfortable to where we are now. We may increase it a little bit, but I think there's a preference to stay to a U.S.-denominated market.
Okay. Okay. Now, Mark, you just talked a little bit about the benefits of scale and the importance of scale. I think most investors probably understand that scale matters in tower leasing since you can leverage a lot of your overhead. There's a lot of operating leverage there. Most probably also understand that bigger Tower Cos are probably more likely to win build-to-suit deals from carriers if those arise. But I oftentimes get questions around the idea that if you have a handful of great locations that carriers need and for which they don't have alternatives, you should still be in a pretty strong negotiating position, even if your portfolio is smaller than others.
Maybe can you expand a bit more on why scale is so important and why the idea of having a smaller number of great locations may not be as defined in an attribute, as some folks may think?
I think we really need both. I think we're lucky and fortunate that we have both. But scale is important because if you really look at, especially in the U.S., the three large operators, we have MLAs now in place. I think if you're a technical team working for a carrier, and I've been on the other side at Nextel, you always want to do it fast and do it cheaply. If you have an MLA with an operator, you have been vetted by the legal team, you have been vetted by the finance team, there's a rate card, you have a job to do build capacity, build coverage, you go through the preferred vendor, and we want to make sure we get the call.
We have a fantastic reputation in terms of doing a great job for the carrier, delivering fast, delivering good quality work, having high-quality sites in great locations. So you want to be on that first call list when they look at capacity and coverage. And I think to that extent, the industry has changed. I mean, 10 years ago, you had MetroPCS, you had Leap, you had Nextel Partners, Sprint Affiliate, UScellular, you had a multitude of carriers. Your environment is three carriers now, three large tower companies and oligopoly. And I think you want to have a seat at the table being a preferred supplier to those very massive. Look at the market cap. I mean, $150 billion for Verizon and AT&T, $200 billion for T-Mobile. Those are your customers. You want to support your customer. You want to make it easy for them to work with you.
I think that's where we're going.
Okay. Okay. That makes sense. Let's go back to the leasing outlook. You've talked about this a little bit in your opening remarks. Obviously, domestic leasing has slowed quite noticeably over the past year or so. The carriers have kind of wrapped up their initial phases of their 5G deployments and are kind of moving towards what seems like a longer tail of infill and more rural sites. Do you think we're looking at a multiyear period of subdued leasing, or is there a reasonable case to be made that leasing moves up to some higher level of activity in the next couple of years? And I guess if you believe that's plausible, what do you think the most likely kind of stimulant is to get us there?
I know it's going to come back. I just don't know when. We haven't seen an inflection point. I think the anecdote is that there's more dialogue, there's more application. But it's not. An application is not really a good metric. It's a very, I think, misleading metric because it could be an application to swap a piece of equipment. It could be an application to add a piece of equipment. You don't know if it's going to generate $0, $100 per site, $1,000 per site. All we see is more dialogue, more activity. But we haven't seen an inflection point in terms of more leases being signed. It's going to come. I don't have a crystal ball, so I can't tell you when.
Okay. Do you think it's, I mean, in terms of what might prompt it to happen, do you think it's just the passage of time and networks get more loaded, or do you think there's something else that might?
I think it's a passage of time, right? Look, CapEx, as a percentage of revenue for the big three, were historically high in 2022 and 2023. So they need to take a breather, fill up that capacity. But between fixed wireless access, adding like $850,000 net add on a postpaid for the big three, that's going to generate another $3.5 million subs. The broadband is going to generate the fixed wireless access is going to generate a ton of tonnage on those networks. So it's just a question of time. And if you take a long-term view, less than about 50% of midband spectrum has been upgraded to 5G from what we can see, T-Mobile has not deployed in a C block yet. They've mostly done 2.5 GHz. Eventually, they're going to have to do that as well. So there will be more leasing activity. But we're still growing.
We're free cash flow positive. We're paying down debt, buying back shares. So I think we'll be there, and we'll be ready to support them when they're ready.
Okay. You noted that about half the sites that you host have been upgraded for mid-band 5G spectrum. Do you have a view as to how long it will take to do the next, the remaining 50%, or is that TBD?
I don't. It's TBD, right?
Okay. Okay. DISH is sort of another swing factor in the leasing market. They were obviously a nice contributor to growth over the past couple of years, but have slowed down considerably in light of everything that's going on there. Can you help us understand the degree to which DISH contributed to your growth before the slowdown and kind of the share of revenue that it represents today?
Sure. So DISH bookings were about $20 million in 2022, about $20 million in 2023. And today, it's about 45% of revenue. And I think our goal is our customer. And we want to support them, and we want them to be successful. So we'll be working with them and deploying wherever they want us to deploy.
Okay. And you said 4%-5% of revenue? That's of U.S. revenue?
It's $45 million in revenue.
Oh, $45 million.
$45 million total. No, no.
$45 million.
Yeah. $45 million in total revenue this year.
Okay. Okay. Yeah. It seemed high, so I wanted to clarify that. I guess thinking about DISH prospectively, is there anything contractual that we should be aware of, or has DISH basically fulfilled all the commitments they made to you?
They've fulfilled the commitment to us. I just don't know if they're going to meet the June 2025 minimum coverage requirement that they have. You would have to ask the questions.
Yeah. Okay. Another topic that we think about is sort of the propagation attributes of the different bands that the carriers are using for 5G. 2.5 GHz, C-band, the DoD spectrum, they all have propagation attributes that aren't as strong as what we've historically seen from more traditional mid-band spectrum. Obviously, very wide swaths of spectrum. So they have their advantages, but propagation may not be their strength. I guess, do you think that over time, this could create sort of a greater-than-normal opportunity for density-driven lease-up or new construction in more rural markets that may have historically been served with kind of lower band spectrum?
Yeah. So I mean, it's clear that it's physics, right? And when I was at Nextel, we always said we had 450 spectrum, 850, 1.7 GHz, 2.5 GHz. We said the 450 is going to go through the second basement through 2 concrete slabs. And the 850 is going to go through one concrete slab. And the 1.7 GHz is going to go through the inside conference room. And the 2.5 GHz is going to go through the office in the window, but probably not through the conference room in the mirror. And it's just physics.
So if you want to use the C-band in rural areas, your spectrum is going to your signal is not going to go 50 mi. It's going to go a few miles. So you're probably going to need more towers. But I just don't know how much capacity they're going to need in rural areas.
Right. Right.
But in urban areas, I think, yeah, they're going to use small cell or rooftops or whatever they need in order to get that coverage.
Okay. Okay. I think, Marc, you also noted earlier that the carriers are pretty capacity-rich today with all the spectrum they deployed with a much more efficient technology. But thinking about how they augment capacity going forward, historically, they've relied on a mix of new sites, technology upgrades, and new spectrum. 5G is still relatively new. There's no spectrum in the FCC's pipeline. Could you make the case that at some point, we're going to see an uptick in the number of new cell sites that are being deployed, and that could benefit you guys?
The carriers are not going to have any options. If there's no more spectrum coming to market, and I don't see any more spectrum coming to market this decade, the only way to add more capacity is really cell splitting, right? I think you're right.
Okay. That'd be good for SBA.
It would be good for us.
Now, to play devil's advocate, you could also make the case that a lot of their capacity today is being dedicated towards fixed wireless and that if they reach that point, it could be less expensive for them to generate capacity by, call it, raising prices on fixed wireless or otherwise getting rid of some of those fixed wireless subs and reallocating capacity to mobile. Do you see that as a likely outcome?
It's always tough to lose customers, I think, because you spend marketing dollars. You probably spend fulfillment dollars. Some of those fixed wireless access could be bundled with a handset. So I think it's going to be very difficult for them to get rid of those. Raising prices is always very, very tough. But I think that would be probably their number one alternative: raise prices on the fixed wireless access customers. But it may be the only growth opportunity they have going forward. Everybody has a handset. A lot of people have a tablet. Where is the growth going to come from? And everybody is on an unlimited plan for voice, text, data. So the only way really to generate more revenue and grow their top line is maybe fixed wireless access, which would be good for us.
Okay. Okay. I think one of the more interesting developments in the wireless space in recent years has been the growth of cable. I think what they've done is pretty interesting. You see both Comcast and Charter experimenting with offloading technologies using CBRS. I think Comcast has built out Philadelphia. Charter has done Charlotte. I would imagine that the amount of activity you saw from that was pretty limited.
It is very limited. They have a very attractive roaming agreement with Verizon. This is just failing. We don't see cable, at least it's not a plan we underwrote, we don't see cable as being a meaningful contributor or a material contributor to our industry.
Okay. Are there any other potential up-and-coming tenants that you're thinking of in that bucket or not really?
I think satellite is growing. You looked at Starlink in order to minimize latency and terminate some of that traffic. They are going to need some uplink to the satellite. So they may be opportunities. I think probably if you were to ask me which one is going to generate more revenue opportunity for your industry, is it satellite or cable? I would probably say it's satellite because they need to terminate that traffic on the ground. They need to have antennas pointing at the sky. And to minimize latency, they're going to need some level of coverage on the ground.
Okay. Okay. Now, another interesting development in the space is how to think about churn. Set Sprint aside, there hasn't been any real M&A in the space for a decade, call it. And I think all else equal that would point to declining churn rates structurally. If we take your churn rate and we strip out churn, you've probably been still towards the closer end of the 1%-2% kind of range that we typically think about. I know at least one of your public peers is closer to 1% today. I guess, is it reasonable to think that in the coming years, your churn excluding Sprint is going to trend towards the lower end of the 1%-2% range? And I guess, why aren't you there now?
I think we're going to get there. I mean, non-Sprint churn last year was $30 million. This year it's going to be about $25 million on a $2.7 billion company. It's trending down. It's going to go to that level. Just a question of time.
Okay. As we think about the drivers of churn, is there anything to call out in there beyond past M&A that?
It's really past M&A. Still some paging company. You still have a lot of some public safety, Motorola, police station that's going to be replaced by FirstNet. So you have some legacy businesses churning off, but we are the taking end of it. So I think the whole industry is probably going to be rationalized to about the 1% non-Sprint churn.
Okay. Okay. That's good to hear. What about UScellular? They've been in the news. They're running a strategic review. Can you help us dimension your exposure there and how we should think about that as a potential churn risk?
I don't see any churn risk there, really, because they have their own towers. And that portfolio is probably going to come to market. So we'll take a look. But right now, it's way too early to say.
Okay. But is it fair to say that UScellular's contribution to your revenue is pretty minimal?
Yes. I don't know the number. It's not something we focused on because it was not material, right?
Okay. Okay. Now, on your last kind of switching gears a little bit, thinking about the expense side of the house, I think you're forecasting some expense reductions as a result of decommissioning naked towers due to churn both in the U.S. and overseas. I assume that's mostly ground rent, maybe some property taxes you could save. I guess, can you give us a sense of the number of towers you expect to decommission over time, kind of how that shakes out U.S. versus international, and how you're thinking about the potential savings per site?
Right. So right now, to be honest with you, we don't know the answer. We're going through the process. We have Sprint churn in the U.S. or wireless churn in Brazil. I think we are more advanced in Brazil, where for each site, you look at the site. You look at your competitors. You look at the demand from the wireless operators. And you make a decision. Is this site ever going to have another tenant or not? First step is you try to get an abatement on the ground lease so you don't have to, you have zero costs associated with that tower. And that tower is basically your free options in the future.
If you can't get the ground lease canceled all the time where you don't have a tenant, the right thing to do is to take down that tower if you don't think you could lease it. And so in Brazil, I think we have identified a number of towers that will be taken down this year. So we've moved to below the line the ground lease associated with those towers. And so it's below the EBITDA line. It's still impacted free cash flow negatively. It's just a timing issue. But we're talking a few million dollars. This is really, in a scheme of things, very immaterial, which is going to be transparent with our investors on what is it that we're doing. And in the U.S., we're just starting the process. And a lot of these towers still have options for, I think, a new tenant.
We're just going through the exercise. The number one priority is really to cancel or get an abatement on the ground lease so that you save money, basically. The savings are going to be very minimum. We're not expecting a huge impact on the bottom line.
Okay. Just to make sure I understand the accounting you mentioned before properly, so basically, when you determine that a site is coming down, you take a charge for the remaining rent.
That's right. That's right.
Okay. So it stops affecting EBITDA, but the cash goes out the door until the ground rent.
That's right. So it's just a timing issue. But it's really, it's like a few million dollars.
Okay. Now, one of the things that I've always appreciated about SBA is that you seem to run a pretty tight ship from a cost perspective, generally. But there are always opportunities to do better. What else are you looking at from an expense savings perspective?
It's really hard to see because it's really a tight ship. Our SG&A costs are very low. So I think you need to be very careful. We have a team that is buying land outright under our tower. That initiative started a few years ago and are still active. We see good return. And that's obvious, but those are really marginal cost savings. We don't see massive cost savings opportunities at this stage.
Okay. I know I've read from industry trade rags or from private operators, people may be looking at drone inspections rather than sending up a climber to inspect a tower, maybe use AI for legal, basic contracting stuff or whatnot. I assume you'd be.
We're using drones. We're definitely using drones. We have cameras on our sides. We do remote monitoring. We do all of this. So it's incremental. We changed the light bulb to LED so that our energy costs are lower. A lot of our international sites have solar panels, especially in Africa or Latin America, to save on energy costs. We've refreshed our generator because the new batch of generators is more energy efficient. So we keep improving every year our operation. That's why I really think they all have no massive opportunities because the team has been very disciplined and very driven in terms of taking costs out over the years. So it's continuous improvement at the margin as opposed to finding a massive cost-saving opportunity.
All right. Makes sense. Now, a minute ago, we talked about the churn outlook in the U.S. Obviously, you've got some churn in Latin America as well. I think you've done a pretty good job laying out what your churn exposure is in Brazil. Can you help us understand what the churn outlook is in your other international markets and when we should expect that to abate?
Right. So for this year, we said that international churn is going to be about $24 million. All wireless, all wireline, is going to be about $9 million. Non-Oi churn is going to be about $15 million. And a lot of these international markets, I've seen carrier consolidation. Just like I guess you've seen that in Chile, for example, the number four operator, WOM, filed for bankruptcy. So they filed for bankruptcy in Chile and Colombia, where we have an operation. DirecTV lost their license in Colombia. So you have a number of one-off events. But we think that eventually, as those markets are getting more rational and more stable, churn is going to come down. Central America is basically a two-carrier market now with Claro and Millicom. It's a very stable market. So I think international churn, non-Brazil churn, is going to come down as well.
Okay. Is it something you can help put a time frame around or?
We don't have a number around it, but we feel pretty good about the direction of it.
Okay. Earlier, you mentioned that you thought the U.S. would kind of trend down to a 1% range excluding Sprint over time. As we think about your overseas markets, is that a reasonable target too? Or are they structurally different such that the terminal churn rate will be different too?
I don't think they are that different. I mean, they are just a different cycle in a business cycle. But remember, for 10 years, we almost saw zero churn in Latin America. So I think it's probably a few years' event that eventually is going to get back to a more stabilized market.
Okay. You talked about how you allocate between debt reduction, M&A, dividends, I think, are increasingly important. But new construction is also something you guys undertake, mostly outside of the U.S. at this point. I guess, can you share anything about your build plans over the coming years, what we should expect?
Yes. I don't remember the numbers exactly, but I think you just spend time looking at the build plan for Africa. Obviously, a very attractive growth was in Tanzania and South Africa, where we provide security and we provide power as a service. All those sites are extremely sticky. We have a generator. We have solar panels. And carriers are buying the security package, the power, and the site, the space on the site. So those are very attractive sites. We're very pleased. Brazil is still growing. Chile is growing. Central America, those are good markets. So I think most of the build is going to be outside of the U.S. The U.S. is more advanced and more mature. But we're still building towers in the U.S. as well.
Okay. Have you seen the development yields on overseas towers change at all with the broader increase in the cost of capital?
No. Our yield is still very good and very attractive. We're being obviously very disciplined on capital allocation.
Okay. As we think about longer-term AFFO per share growth, obviously, a lot of moving pieces there: interest rates, Sprint churn, potential changes in leverage, your dividend payout ratio, and so on. If you were to kind of distill it down and maybe kind of take assume things kind of remain where they are from a macro perspective, how should we be thinking about a reasonable long-term AFFO per share growth target for SBA?
Right. I think if you start at the top line, I think revenue is pretty comfortable at mid-single digit, EBITDA mid-single digit. And then so either share buyback or debt reduction getting FFO per share growing at high single digit in an environment where interest rates are, I think, neutral. So if interest rates don't come down, we're going to keep delivering and cutting down our cash interest expenses in order to keep growing FFO per share.
Okay. Those are good piece parts to think about. And again, kind of the dividends, I think, an increasingly important component of your return over time. You've been growing it at a double-digit rate, still fairly low as a percent of AFFO. At what sort of payout ratio should we expect your dividend growth rate to start to slow down some?
Yeah. So our payout ratio is about, it's less than 30% today. We increased the dividend by 15% this year. I think by the time we get to a dividend payout ratio at around 50%, I think the two may converge. But that's probably four or five years out.
Okay. That's helpful. The management team has suggested for a couple of years now, I think, that there isn't the same sort of volume of attractive M&A opportunities out there as there used to be. You've been a lot more selective, less to do. Some of your peers have made similar comments. I guess, how would you judge the odds of the M&A market kind of returning to a state where you find it consistently appealing from an acquisition perspective such that it's a consistent contributor to your portfolio growth?
That's a very good question. Let's take an example, right? It was a very public deal. Shentel sold their wireless towers. And it was a very attractive tower, very attractive territories: West Virginia, Virginia, Ohio, Pennsylvania, national, I mean, park services area, mountains. Very difficult to replicate that portfolio. Very attractive portfolio. So I've obviously looked at it. And then you build a 10-year or 15-year model. And then it's okay. What assumptions do you put in the model? So it used to be a used Sprint affiliate. So you have all Sprint leases. What is the churn going to be? How long are those Sprint equipments staying on? Are they going to stay on forever? Are they going to come off? Do you underwrite a 4G market or a 3G market? When is DISH going to hit that part of the country?
And then you say, what is a lease-up opportunity where AT&T or FirstNet needs to expand there? And then it's okay. What is my cost of capital? What discount rate should I use knowing that interest rates are not going to stay at this elevated level forever? And this is a sturdy asset that you're buying. So why penalize yourself and take a high cost of capital? And you have all these leverages. You run the model. You bid on the asset. And then you increase your bid. Then you give them the best final. I'm not going to give you a penny more. And you lose. And you said, yeah, this is a really attractive asset. I wish I could have won it. But I'm not sure you're willing to pay for it.
I just hope that the buyer is right and we are wrong because it means that our public company is grossly undervalued. I just don't know when public and private valuations are going to converge. I think that public valuations are going to go up because we're in a period where lease-up is very limited right now because there's so much capacity out there. Interest rates are scheduled to be higher for longer. And I think that creates an overhang on public tower valuations. So we like the stock at this level. That's why we're buying such a stock. And I feel personally very bullish over the next few years. And I think this company is going to do very well. And we have free cash flow positive, access to liquidity, able to refinance our debt, extend maturity.
This is not a I wouldn't take a 1-year or 2-year view on this asset. I'd take a 30-year or 50-year view on this asset. This company is 30 years old. The return since inception is like in the thousands of %. There's no reason why it's not going to keep growing because wireless is such a part of our life. If you have a teenage daughter at home, I'm sure you could see the TikTok traffic and why you're going to need more equipment on those towers.
Okay. Well, great. Well, we can keep going, but we're just about out of time. So maybe we'll end it there.
Okay.