Conference Transcript - AMT 2026-03-09

Benjamin Soff, Analyst — Deutsche Bank

Good morning, everyone. My name is Benjamin Soff. I'm an equity analyst here at Deutsche Bank, and I'm very pleased to be joined this morning by Rod Smith, American Tower CFO. Thanks for being here, Rod.

Rod Smith, CFO

Hey, welcome, Ben. Thanks for having me, and welcome. Good morning, everyone.

Benjamin Soff, Analyst — Deutsche Bank

You reported 4Q earnings a couple weeks ago. Looking back to 2025, what were some of the highlights, and what are some of the key areas of focus for American Tower in 2026?

Rod Smith, CFO

Yeah, we had a great 2025. I would say at the outset, we are making a lot of progress on our strategic priorities that we've laid out in the past. I'll highlight a few of the economic accomplishments for the year. You know, most notably, on an as-adjusted basis, we grew AFFO per share by about 8%, so upper single digits there. Very happy with that. We also expanded margins, partly supported by our focus on efficiency and cost controls around the globe, certainly. We invested almost a little less than $2 billion, up in the $1.8 billion range. And we are putting that capital increasingly into the developed markets. That includes towers in the U.S., towers in Europe, and our data center platform in the U.S. Our data center platform continues to perform exceptionally well, growing in the double-digit range. Our tower business globally, as well as in the U.S. and Europe, on an organic tenant billings growth basis, This is in the mid-single digits. It's been kind of solidly there. So things are performing very well from that perspective. Yeah, so we couldn't be more pleased with the way 2025 rolled out. And our focus going forward is continue to maximize the organic growth across the assets we have globally. And we focus on that every day of the week, driving efficiency through the business and continuing to expand margins is a priority for us, certainly. And then being very smart and disciplined when it comes to allocating capital, allocating capital in a risk-adjusted way that gives our investors the highest returns over time. And in the environment that we're in today, we certainly look at that and say putting more capital into the U.S. through towers and data centers is mission critical, maybe priority number one from a capital perspective, and continuing to divest and develop the business we have in Europe.

Benjamin Soff, Analyst — Deutsche Bank

That's a great overview, and we're definitely going to hit on a few of those topics. But starting in the U.S., the big three carriers seem to be reaching their 5G coverage targets after several years of robust activity. What are you seeing the carriers invest in today, and how would you characterize the demand environment in the U.S. as we think about 2026?

Rod Smith, CFO

Yeah, the demand environment is healthy. You saw us come off at 25 with a very robust record-setting level of services. That really underpins the amount of activity that we've seen across our towers, certainly. Yes, the carriers have made great progress in deploying mid-band spectrum across their networks and transitioning to 5G. There's a little bit more work to do there, so we're seeing that kind of play out. Growth in mobile data continues to be in the 30%, 35% range. We expect that to continue. That means carriers will be focused on beyond getting their networks, 5G equipment deployed, they will be focusing on the quality, the coverage, and eventually the density of the network. So we do see a path forward where the carriers will continue to roll out 5G, and then they will come back through and increase the quality of the networks by continuing to invest in it. They'll be investing in it through amendment in order to keep up with growing demand across the networks that they have, and then eventually they'll shift most likely to densifying the network. We're seeing an uptick in co-locations, the number of new installations on new towers that they're not already on. That's a form of expanding coverage but also increasing the density. We think that that effort has to continue over the longer term as more and more their network relies on higher band spectrum. Certainly the C-band spectrum is a higher band spectrum than the traditional spectrum from years back. That means it doesn't propagate quite as far. It can handle more capacity, but it doesn't propagate as far. So they need to fill in the network in order to make it denser. The industry will need more spectrum. And as that spectrum comes, it will be even higher band spectrum over time that the wireless carriers rely on, which means there's more infrastructure needed to make the networks denser in order to operate properly on that higher band spectrum.

Benjamin Soff, Analyst — Deutsche Bank

So one of the things you mentioned was that really the key driver of leasing activity over the long run is mobile data traffic growth. In your view, what are some of the key drivers of data traffic and, by extension, tower leasing in the U.S.?

Rod Smith, CFO

Yeah, it really is just more and more handsets being out in the marketplace, higher level handsets, 5G capable handsets are really, you know, getting to a point where lots of people have them. And we've seen that transition over a couple of years, right? When you have a new 5G capable phone, not everyone has it. It takes a while for people to get it. when they get at the adoption of applications that are more data intense, that require more capacity, use up more capacity, those applications grow on the handsets and people use them more and more. As more and more people have the handsets, more and more people develop applications that will run on the phones and other wireless devices that will drive traffic across the globe. That's the cycle that we are certainly seeing today. So 5G is out there, well and good. Handsets are ubiquitous across the market. Applications are going up. That's driving the growth in mobile data consumption, which kind of is the backdrop for the continued capital investments that our customers make in the networks. Going forward, we expect that you will see AI-type applications eventually hitting the wireless networks. These large language models that people are building, everyone's developing applications that'll be AI generated. The idea of having AI applications require uplink and downlink speeds and capabilities that are similar is a different type of a structure for the wireless network, so we think investments will be required in order to keep up with that. And then 6Gs are on the corner, and then that will come. That will be another wave of network components that will be added to the networks. And it all is activity that underpins kind of that growth in mobile data consumption, which we expect to just continue in that 30%, 35% range for a little bit here.

Benjamin Soff, Analyst — Deutsche Bank

What about fixed wireless, where your customers are increasingly leaning into that as a driver of growth? obviously those users consume a lot more data than mobile users so how are you

Rod Smith, CFO

thinking about that as a driver yeah it's a driver of mobile data consumption even though it's fixed wireless today's running on the mobile network so it's coming let's say coming off of you know landline networks and now being provided through wireless networks that means it's part of the growth in the in the data consumption going across mobile networks it's using up capacity on the wireless networks. From everything I hear, the carriers like where it's headed. They like their success, their positioning on it. They like the economics of it. So if that continues to grow, it just takes up more capacity on the wireless network, which means more capacity needs to be built into the wireless networks. And we're here to help customers do that. So I think it's a very exciting part of the wireless network it it's one of the one of the few instances where you really see an incremental revenue opportunity bringing revenue that was satisfied in some other way a service that was satisfied in a totally different way on a different network now transitioning in to the wireless networks I think it it's an interesting development and I think it's good for the wireless carriers and it could be good for the infrastructure providers

Benjamin Soff, Analyst — Deutsche Bank

too. You mentioned spectrum before. One of the priorities in this administration has been trying to find new bands of spectrum to put into use for wireless. How do you view the spectrum pipeline in the U.S., and what could that mean for leasing activity in the future? Yeah, I think, I mean,

Rod Smith, CFO

it is a priority for the administration to have new spectrum released. The big, beautiful bill, or the One Big Beautiful Bill has some requirements in there for the FCC to release more spectrum, so we do expect some more spectrum to come in. It's clear the industry needs more spectrum to satisfy that growth in mobile data consumption, but maybe I'll take a minute and just explain the two different paths. If the carriers bring in more spectrum, they're able to put more spectrum into the network, and then they can handle more capacity within the network. In order for that spectrum to work, they need to pair it with antennas and lines and radios, so that's all equipment that they would put on the tower sites, and we would benefit from that. If the spectrum doesn't come, which we think some will, and certainly over the next three to five years and then five to ten years, there should be more spectrum being allocated. Higher band spectrum, I would remind you. If the spectrum doesn't come and the growth in mobile data kind of gets to the point where the networks run into capacity issues and the carriers will deploy more equipment and reuse the spectrum they have more frequently, which kind of accelerates that density. And again, it's them putting more equipment, towers, cables, antennas on the towers in order to reuse that spectrum. So either path, new spectrum reusing existing spectrum requires more equipment on the towers.

Benjamin Soff, Analyst — Deutsche Bank

In a filing earlier this year, you noted that DISH had stopped meeting its obligations under your agreement, and you're now pursuing legal action. Can you remind us what you expect the impact from that could be, and how should investors think about the potential next steps in that process?

Rod Smith, CFO

Yeah, that pretty much summarizes kind of where we're at. I won't say too much more than that, other than highlighting the fact that we took DISH out of our outlook completely for 2026. So our 2026 outlook is completely de-risked from a DISH perspective. Any future collections or settlement with DISH could be a tailwind to the P&L outlook and or the balance sheet if there's some sort of a settlement. But within our outlook, there is zero revenue from DISH, zero economic benefit from any kind of a settlement. So there's only upside. And with that said, I would say it is a litigation. Some of that will be made public, and everyone here that's interested can certainly follow that. But we won't be commenting along the way in terms of what stage we're in or what's happening in the litigation. Makes sense.

Benjamin Soff, Analyst — Deutsche Bank

When we put all these factors together, how are you thinking about organic growth in the U.S. tower business this year and longer term?

Rod Smith, CFO

Yeah, so this year the, you know, the dish, removing dish and having all the dish churn at 26 affects the outlook. I would say when you ignore the dish or before the dish churn, you know, we're up in the mid-single digits in the 4.5 range. One of the key elements of that 4.5% organic tenant billings growth in the U.S. excluding DISH is that we're seeing about 250 basis points of growth there from new leasing activity, new co-locations and amendments. That is very similar to almost the same number we saw in the prior year if you exclude DISH altogether, right? No revenue contribution and no churn. So we are seeing kind of a consistent 2.5% growth on our key net new business, co-locations and amendments, not including any churn, just co-locations and amendments in there. So that's good. And with all the things that I've said earlier, that feels like a pretty good range for us to be in, given the 35% mobile data consumption and the growth that's coming. We haven't yet seen AI applications run through wireless networks. That could happen in the future, and that could be an inflection point one way or another. I wouldn't talk too much long-term, but I would say where we sit, that 2.5%, looking forward, we don't see any reason why that level of activity shouldn't be somewhat consistent.

Benjamin Soff, Analyst — Deutsche Bank

I wanted to pivot to the international business. You've been seeing strong growth in your European business recently. What are some of the main factors driving that performance?

Rod Smith, CFO

Yeah, we have a great business in Europe, underpinned by our acquisition of the Telefonica assets. And there's really just a couple of factors. One is we're seeing organic tenant buildings growth over the last several years that's exceeded the U.S. growth. Now it's coming more back in line, but I think it's still slightly above the U.S. growth, which is good. The underpinnings there is we're seeing healthy new business activity across the carriers that we have. That's amendments. It's co-location on towers. It's new rooftop development. It's existing customers just increasing their network components, and it's also somewhat supported by Drillish 101, which is a new carrier in Germany kind of building out a greenfield network. We're getting contributions from them. as well. So the new business activity is solid. And the way that our contracts work is our escalation is basically local CPI uncapped with a 0% floor. So that's a good place to be in an international contract. And we've seen higher levels of inflation in the last few years. That's moderated down a little below where the U.S. is. That's what's making its way into our organic tenant billings number that is still slightly higher than the U.S., but we have that organic tenant billings growth number, that CPI escalation piece of it tied to local inflation. Again, it's uncapped and it has a zero score for the most part. In France, there's a little difference since we have a 2% escalator. In France, it's a smaller business compared to Germany and Spain. And then we're in a good position with churn in Europe where the vast majority of the revenues come from Telefonica on long-term contracts as part of the lease back transaction we did when we bought the assets. So churn is very much controllable. It's running in a little higher than 1% now or so, but certainly staying within that 1% to 2%, even at the lower end of that, it's clear that we're in a good position in Europe. So to summarize, it's solid new business activity kind of across the market, an escalator that's tied to CPI that's uncapped, which is very good, and kind of a modest lower level of churn expected based on the contracts that we have.

Benjamin Soff, Analyst — Deutsche Bank

It seems like you're doing more new builds in Europe than in the U.S. What are the factors that make these markets attractive to build in?

Rod Smith, CFO

Yeah, so again, I would just highlight the fact that the organic revenue growth has been higher than the U.S. for a couple of years. The markets certainly are high-quality markets, some of the highest economic quality that you would find we like that. We like the developed markets, as we've talked about for many years. We do think that's the best place to drive consistent long-term economic growth and returns. So that is all good. We have a skill set that transfers to Europe pretty well in developing towers and rooftops. The carriers that are in those markets need new assets. And we, I would say, hey, we perform better than other infrastructure providers. That's been our experience. And therefore, they come to us, and we're able to drive terms and conditions that we are happy with. And therefore, we put capital to work, and we build up more components in very high-quality markets for the right customers. So we're doing that. We'll continue to do that. Some of that is with Telefonica. Some of those built-to-suits came with the lease-back arrangement we had. I think we signed up 3,000 new tower bills over a 10-year period as part of the acquisition contract. We're building sites for Orange, and we're also building sites for Drillish 101.

Benjamin Soff, Analyst — Deutsche Bank

In Africa and in APAC, you're guiding to an acceleration in new leasing activity this year. On the other hand, your Latin America business is experiencing some headwinds related to carrier consolidation. How should investors view the fundamental outlook across these different regions?

Rod Smith, CFO

Yeah, I mean, they are different regions, and within the regions, the countries are all different. So, you know, there is some uniquenesses there that really should be explored if you want to get into a lot of detail there. I would say the differences between Africa and Latin America, I'll start with Africa. The new business growth there has been solid, upper single digits kind of consistently over time. So we're seeing 6%, 7%, 8%, 9% growth from new co-locations and amendments. We expect that activity to continue. So in local currency, that business performs really well because the demand for new infrastructure and the carrier's willingness to pay kind of matches up, and it works pretty good. There is also an element of escalations that are tied to CPI. The inflation was much higher a few years ago, double digits, even 20%, 30%. That's come way down. So now that the inflation is generally in the upper single-digit or even mid-single-digit kind of range. And then we're seeing 4% or 5% churn across the market there. And then, of course, FX is a concern when you're in Africa and in Nigeria and Ghana and other places, Uganda, where we are at. But if you look at, on a local currency basis, those businesses perform very well. Our contracts are solid. Our teams perform exceptionally well. The infrastructure is important. And it's really the monetary policy, the FX issues that create challenges in those markets. And for that reason, we have pulled back our investments. That does not mean that the invested capital we have in the towers we have can't perform exceptionally well in some years when FX behaves itself. In some years, there may be some FX headwinds. We are looking to minimize the impact that those FX headwinds can have on our overall business. That's why you've heard us talking about shrinking the exposure to Africa relative to our other places. We can do that by growing and developed markets, or we can shrink Africa from time to time here and there when it makes sense for us and for the investors. So that is Africa. It could do very well over the long term. The economic risk around FX and some other things have caused us to not want to put more development capex there. But we will ride that bet that we have and I think it will be constructive many years and some years we'll have some FX headwinds certainly. Latin America is a little bit different. It's a more mature market, some of the backdrop in terms of the number of carriers in the competition is different. We've seen more carriers kind of in the market there, and now we're working through consolidation. And that's kind of a major event in Brazil and in a few other places. So we're seeing significant consolidation churn. And in some cases, as the market works through the consolidation churn, they've also slowed down on their new business activity, their They're really focused on absorbing the carriers that are being consolidated and integrating things in. And so the new business has slowed. The churn has gone up. And we generally have inflation-based escalators in there as well. You put all that together, and we've been projecting low single-digit OTBG for a number of years. we've kind of been in that cycle. We delayed some churn from 25 to 26. We've also accelerated some expected churn from 27 into 26. That puts us in a negative position relative to organic tenant billings growth. But that'll pull us out of this quicker, too. So we'll accelerate the recovery, and we say accelerating growth. We expect that growth to go from negative to begin to accelerate to a more normal organic tenant buildings growth across the region over the next couple of years. And we are really very excited about the backdrop in Brazil. You know, they've worked their way through to three primary carriers, pretty good distribution of market share, pretty healthy across the board. It's a big market, and it's one that we think we could do very well in over time.

Benjamin Soff, Analyst — Deutsche Bank

I wanted to ask next about your data center business. Coresight, as you mentioned earlier, has posted consistent double-digit growth the past few years, and you're now guiding to low-teens revenue growth again in 2026. What's driving that performance, and are you starting to see a greater contribution from AI related to that?

Rod Smith, CFO

Yeah, so our data center business, Coresight, has been and continues to perform exceptionally well. That great performance has been accelerating, going up from you know upper single digits to higher to getting into double digits and now staying in the double digit economic growth that's what we were projecting and and that's where it is I would remind people that that's well above the range we under wrote when we did the acquisition just as a reminder we were in the six to eight percent range when we under wrote it we've been above that almost the whole time and now we're in the double digit growth. I mean, what's driving the double-digit growth really is the new business, you know, the demand side of the equation, not just for our assets, but kind of across the board. It is a time when more and more of the world's greatest companies and networks, they all want to get into cloud on-ramps. They all want to interconnect with each other. They all want space where they can build up their business to grow their own business. They require that interconnection and the ecosystem that Coresight offers to grow their own business. So we've seen the demand strengthen. We've had three or four years of record sales repeatedly. Not only does that drive, in our case, double-digit revenue growth that can translate down into overall economic growth, but it also predicts it out over a couple of years because you're delivering capacity that you've already sold. So we feel really good about the next few years in terms of where that business is going to go in keeping revenue up. We're investing more capital because we need to do that in order to satisfy the growing demand. The returns on the incremental capital has been really good. We're looking at mid-teens to better than mid-teens on a stabilized basis for the incremental capital that we're putting in place. A couple years ago, we would talk about how before we even started building a building, it would be 55%, 60%, 65% pre-lease. That's come back just a little bit because we're accelerating some builds. And much of the building that we're doing is connected to campuses we already own. It's not out speculative building. It is just expanding the campuses because our existing customers within those campuses want more space. They want more compute power so the business is performing exceptionally well we are seeing AI use cases show up in our pipeline we're leasing space to folks that will use it for AI inferencing but in 2025 it was very early not a not a meaningful impact at all in terms of the the P&L we think that'll grow a little bit in 26, but over the next couple of years, we do see AI inferencing, you know, tipping into these interconnection data centers with cloud on-ramps. Our centers have the ability to be very dense from a GPU basis, so you can get a lot of compute power in the small spaces. We think that AI inferencing is going to go up. It could be a wave of demand on top of already very strong demand.

Benjamin Soff, Analyst — Deutsche Bank

One of the major themes recently in the data center space has been the imbalance between demand and supply of capacity, in part because it's so hard to get access to power. Are you seeing that play out? And if so, what does that mean for pricing power across your business?

Rod Smith, CFO

Yeah, I think, I mean, a lot of it comes back down to the chipsets that are out, faster, more powerful chipsets. Companies can do more with that and to help grow their own business. If they're going to do that, they need a place to do that. They need power to do that. They need a place where that power and the heat generated can also be cooled. And that's where you get into these great ecosystems that we have with liquid cooling in most of our facilities across the U.S. We can put the GPU density is going up in our facilities, and we're able to do that for our customers, and they can compute more and do more. So, again, we've had great performance in CoreSight. It is even before AI really kind of hits in there. That is causing a lot of demand for our sites specifically, and I would highlight the fact that we believe our sites are differentiated from others. The fact that our sites have multiple cloud on-ramps in each of our facilities, each of our campuses, that is key. We've got over 400 networks terminating within our campuses across the U.S. Our customers rely on interconnection. They interconnect with each other. We're seeing high single-digit, even transitioning to double-digit growth in the interconnection world. So companies that are interconnected with one another, that works so well for them in terms of growing their own business. They want more of it, and their interconnection grows. That is kind of the demand profile. And that's why you've seen us increase our CapEx to increase capacity to stay ahead of that. We are building in order to provide two years' worth of absorption. Typically, we've pre-leased a lot of that two years, so it's a low-risk capital. And that's why we're able to drive these high, you know, mid-teens or better returns on a stabilized basis.

Benjamin Soff, Analyst — Deutsche Bank

You recently unveiled a new cost-saving initiative with the goal to generate 200 to 300 basis points of margin expansion over the next five years. Tell us a bit more about this initiative. What areas of the cost structure are you planning to focus on, and why did this make sense to roll out now?

Rod Smith, CFO

Yeah, I would say, you know, first off, the idea of being efficient and managing costs, we've been focused on that for quite a while. Of course, I think anyone that knows us knows we grew materially over a number of years through M&A. That M&A activity post-Coresight has slowed down. Our last three acquisitions was the Coresight acquisition in the U.S. We bought Telefonica Towers in Europe, and then we bought another good-sized tower company in the U.S. So, you know, our last three acquisitions were all centered around the U.S. and Europe in high-quality economies and assets. Since then, the M&A activity has slowed a little bit. We've been focused on integrating everything fully and making our operations very efficient. You've seen us reduce SG&A year over year, even in light of and working against 7%, 8%, 9% inflation. That's not an easy thing to do. And we did that even though our SGNA as a percent of revenue was already kind of industry-leading and our margins have been industry-leading as well. Now we're transitioning with the appointment of Bud Knoll as the chief operating officer globally to bring some global standards, lessons learned, and efficiency that comes out of systems and approaches around the globe to really make sure that we're very efficient. He'll be focused on things like managing our land expense and land renewals. There's a lot of things there that the U.S. has learned over a long period of time that can be more fully integrated outside of the U.S., unifying supply chains around the globe and really driving contracts where we maximize the benefit that we can see in our procurement areas across IT and systems and really trying to use the best practices from systems perspective and get them in the right places and make the service better for the customers and reduce the cost. So we think we've got a nice outlook there, and the way we describe it is that those efforts over the next three years, four years, will contribute to margin expansion, along with our general business and growth in revenue. So we're projecting that our margins will expand to about 300 basis points out to 2030.

Benjamin Soff, Analyst — Deutsche Bank

It sounds like you're starting to do some efficiency work using AI that's separate from these initiatives? Can you discuss some of the things you're looking at with that?

Rod Smith, CFO

Yeah, AI is rapidly developing. We're on it and looking at it. We've been for a little while, for a year or so. We certainly think there will be applications that will make our business more efficient. And as and when, you know, we completely analyze the opportunities and build things in, we'll let people know. But I would say that even above the 300 basis point expected margin expansion, AI could have another wave of kind of dramatic results there, you know, in areas like, you know, lease processing, lease abstraction and some financial reporting and some of the accounting areas, you know, predicting where sites may be needed and other things, It's doing analysis on towers through drone footage, having AI review that to make it much quicker and instantaneous in terms of figuring out what's on the towers. Is it actually the equipment that's listed out in the agreements? Is there any equipment differences? So it's an exciting time. I think it could be important to the way our business operates, and it could be in addition to the 300 basis point expansion that we expect.

Benjamin Soff, Analyst — Deutsche Bank

You've been delevering your balance sheet over the past few years, and you're now back within your target range of three to five times. How is American Tower thinking about capital allocation in general, and what does it mean for the company to now be within your leverage target? Yeah, so we are back within our target.

Rod Smith, CFO

We're below five times, which is a nice place for us to be. You know, we've enjoyed two credit rating expansions or upgrades. We're at BBB plus now across two of the three. firms, which, again, is a place that we like to be because we're focused on quality of earnings, we're focused on quality of balance sheets. The way we allocate capital really has not changed in terms of the way we approach it. Maybe our focus areas certainly are different, so that's absolutely the case. But first and foremost, we provide a dividend, over $3 billion this year, about $3 billion last year, over $3 billion this year, grew up 5% last year, probably in the same similar way this year. That dividend-in-dividend growth is paramount to us. It will continue. We will protect it and really be focused on it. After that, we go back and we invest capital. We think that's the highest return possible. We're investing more of it. 80% of the growth capital now is going into the developed markets, which, again, is the highest quality markets in the world with the highest quality customers in the world we think that is a really good thing so we typically invest anywhere between one and a half and two billion dollars a year in capital programs you know then beyond that we look for M&A opportunities where we can you know leverage scale increase assets in places we already are get an outsized benefit than someone else might be able to value in. And we'll continue to be very selective. Just highlighting again our last few acquisitions were in a big tower portfolio in Europe, a good-sized tower portfolio in the U.S., and then the core site business in the U.S., all which are working out very well for us. And so we'll continue on that disciplined, developed markets kind of approach, really trying to figure out the infrastructure that the networks of the future are going to need in the highest quality markets, that's really where we're focused. And then beyond that, we will and always do put up M&A up against share buybacks. We'll do the math and make the right decision there when we can. We saw us invest over $365 million at the end of last year in a relatively short time buying back shares. We announced we continued to do that as we turned the corner into 2026, So we bought back more shares in 2026. Not making any prediction going forward, but that is in our toolbox. We'll be looking at that and putting it up against any M&A. We'll be balancing that with the benefits of just paying down debt and preserving capital for future deployment. So our approach hasn't changed materially at all.

Benjamin Soff, Analyst — Deutsche Bank

One of the questions investors have been asking recently is whether satellite broadband could end up competing with terrestrial wireless infrastructure, or it will mainly be a complement to towers. I know you have a relationship with AST Space Mobile, who's building out satellite broadband. I'm curious to hear your perspective on that.

Rod Smith, CFO

Yeah, we view it as a complementary, an important complementary technology to terrestrial networks. It is built and designed for certain purposes, like extending coverage into rural areas, hard-to-reach areas. Those hard-to-reach areas can be in places like the U.S. and also over in Africa, LATAM, throughout Asia. So it really is a very important service, but it's complementary to terrestrial land-based networks. It also provides immediate coverage support in disaster recovery and extreme weather events and those sorts of things, so that's clear. There are fundamental challenges with trying to have a satellite wireless service compete with the terrestrial network there are capacity issues in terms of the spectrum that is available for satellites and how much capacity you can actually run through that and it is nowhere near sufficient to compete with terrestrial networks in in places where people live and work and travel and I think that's kind of broadly and and widely known so we we do view it as an important complement so that the terrestrial networks not a competitor

Benjamin Soff, Analyst — Deutsche Bank

Maybe just to wrap up, it's still fairly early, but the industry is starting to discuss 6G. Do you have any initial thoughts on what spectrum could you use for 6G and when you'd expect that activity to start picking up more meaningfully?

Rod Smith, CFO

Yeah, people are talking about 6G. We're just getting 5G deployed and the discussion already leapfrogs to the next technology. New technology is always good for tower companies and infrastructure players. Those new technologies allow new applications, which often are higher bandwidth. And in an AI setting, again, it's going to be an uplink and a downlink. It's going to fundamentally change the way the networks need to operate, and it's going to require new infrastructure. I would expect that there will be additional spectrum coming along for 6G. It won't be for a few years yet, so it's very too early to talk too much about that. But it'll be higher band spectrum. maybe significantly higher band spectrum which means the capacity will be there but the propagation won't be there and that again is another kind of fundamental driver for network densification

Benjamin Soff, Analyst — Deutsche Bank

well that seems like a pretty good place to wrap it up thanks Rod

Rod Smith, CFO

excellent thanks Ben thanks everyone for joining