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SBA Communications Corp  (NASDAQ:SBAC)
Q1 2019 Earnings Call
April 29, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the SBA First Quarter Results Conference Call. At this time everyone joining by phone is in a listen-only mode. Later we will conduct a question-and-answer session, instructions will be given at that time. (Operator Instructions) As a reminder the conference is being recorded.

And I'll now turn the meeting over to our host, Vice President of Finance, Mark DeRussy. Please go ahead, sir.

Mark DeRussy -- Vice President of Finance

Good evening, and thank you for joining us for SBA's First Quarter 2019 Earnings Conference Call. Here with me today are Jeff Stoops, our President and CEO; and Brendan Cavanagh, our CFO.

Some of the information we will discuss on this call is forward-looking, including but not limited to any guidance for 2019 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, April 29, and we have no obligation to update any forward-looking statement we may make.

In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website.

With that, I will turn it over to Brendan to comment on our first quarter results.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Thanks Mark. Good evening. We had a very solid start to the year with strong operating and financial results in both our leasing and services businesses. Total GAAP site leasing revenues for the first quarter were $452.1 million and cash site leasing revenues were $449.5 million. Foreign exchange rates were generally in line with our estimates for the first quarter, which we previously provided with our fourth quarter earnings release, only modestly impacting our results. They were however still a headwind on a year ago comparisons. Same tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis, was 5.9% over the first quarter of 2018, including the impact of 2.1% of churn. On a gross basis, same tower growth was 8%. Domestic same-tower recurring cash leasing revenue growth over the first quarter of last year was 7.5%, on a gross basis; and 5.1%, on a net basis, including 2.4% of churn. A large portion of which continues to be related to Metro, Leap, Clearwire and iDEN terminations. Domestic same-tower recurring cash leasing revenue growth on a gross basis continues to increase, climbing to its highest point in 2.5 years, reflecting our strong operational domestic leasing activity over the last year.

Domestic operational leasing activity representing new revenues signed up during the quarter, was again very solid in the first quarter. This quarter we saw a bit of a shift back in favor of amendments, with newly signed up domestic leasing revenue, coming about 68% from amendments and 32% from new leases. We continue to see contributions from each of the big four carriers. The big four carriers represented 82% of total incremental domestic leasing revenue, that was signed up during the quarter.

We also again had a nice contribution to our domestic operational leasing activity from DISH, who continues to be active executing new lease agreements. While we executed a lot of new business in the quarter, our domestic backlog continues to restock itself, as our customers remain active, giving us confidence for the remainder of the year.

Internationally, on a constant currency basis, same-tower cash leasing revenue growth was 9.8%, including 0.5% of churn or 10.3% on a gross basis. Gross same-tower organic growth in Brazil was 12.2% on a constant currency basis. We had another solid leasing quarter internationally, with Brazil again being one of the largest contributors. In Brazil, we continue to have solid contributions from Claro, Vivo, Oi and TIM. During the first quarter, 86.1% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non U.S. dollar denominated revenue was from Brazil, with Brazil representing 12.3% of all cash site leasing revenues during the quarter, and 8.9% of cash site leasing revenue, excluding revenues from pass through expenses.

With regard to first quarter churn, we continue to see churn from leases with Metro, Leap and Clearwire consistent with our expectations. As of quarter end, we have approximately $9 million of annual recurring run rate revenue from leases with Metro, Leap and Clearwire, that we ultimately expect to turn off over the next two years. Also as mentioned on our last earnings call, in the fourth quarter, we incurred approximately $6 million of annualized churn from certain legacy iDEN-related leases. The impact of which will affect our reported same tower churn results for the first three quarters of 2019.

Domestic churn in the first quarter from all other tenants on an annual same tower basis was 1.3%. Tower cash flow for the first quarter was $362.9 million. Our industry leading domestic tower cash flow margin increased to 83.5% in the quarter. International tower cash flow margin increased to 69.2% and was 90%, excluding the impact of pass-through reimbursable expenses.

Adjusted EBITDA in the first quarter was $345.6 million. Our adjusted EBITDA results in the quarter were again driven by strong performances, in both our leasing and services businesses. Services revenues in the first quarter were $41.1 million, up 48.1% over the first quarter of 2018, driving almost twice as much services gross profit as a year ago period.

Our adjusted EBITDA margin was 70.4% in the quarter, the same as the year earlier period, notwithstanding the larger contribution from our services business. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 74.9%. Approximately 97% of our total adjusted EBITDA was attributable to our tower leasing business in the first quarter.

AFFO in the first quarter was $236.1 million. AFFO per share was $2.07, an increase of 11.9% over the first quarter of 2018 or 14.6%, on a constant currency basis. During the first quarter, in accordance with the Oi reorganization plan approved by the Brazilian courts, we received a payment of BRL11.2 million, which represents a partial recovery of pre-petition obligations owed to SBA from Oi. Net of costs we incurred in connection with this bankruptcy process, the U.S. dollar recovery during the quarter was $2.3 million, which resulted in a partial recovery of our allowance for doubtful accounts. We recorded this amount as an offset to bad debt expense, within selling general and administrative expenses.

As a result, this recovery positively impacted adjusted EBITDA and AFFO by $2.3 million and AFFO per share by $0.03. The reorganization plan calls for additional payments of pre-petition receivables to be made by Oi, over the next three years. We will record these payments in a similar manner as they are received. No additional payments are due under this plan during 2019. During the first quarter, we continue to invest in expanding our tower portfolio, acquiring 54 communication sites for $36.1 million and building 72 sites. Most of the added sites were located internationally.

As of today, we have under contract for acquisition and anticipate closing by the end of the third quarter on 256 additional sites at an aggregate price of $123.9 million. We also continue to invest in the land under our sites, which provides both strategic and financial benefits. During the quarter, we spent an aggregate of $15.4 million to buy land and easements and to extend groundlease terms.

At the end of the quarter, we owned or controlled for more than 20 years, the land underneath approximately 71% of our towers, and the average remaining life under our ground leases, including renewal options under our control, is approximately 36 years. In today's earnings press release we included our updated outlook for full year 2019. We have increased our outlook across the Board. We anticipate increases in site leasing, due to both organic and inorganic growth. Increases in organic growth are primarily due to earlier average timing of rental commencements, in large part as a result of a higher concentration of leasing activity coming from amendments versus new leases.

The increase in our anticipated leasing results is being partially offset by incremental negative changes in our foreign currency rate assumptions for the remainder of the year, primarily in Brazil. The changes in these currency assumptions negatively impacted our outlook for site leasing revenue by $4.5 million. Tower cash flow by $3 million and adjusted EBITDA and AFFO by $2.7 million. We also anticipate incremental contributions to our results from our services business, due to our strong Q1 performance and our healthy backlogs. However, our full year 2019 services guidance still contemplates a slowdown in the second half of the year, due to the Sprint, T-Mobile transaction. The balance of our outlook for AFFO has also been improved for anticipated better results in net cash interest expense and non-discretionary CapEx, offset by slightly higher tax expectations.

Finally, our outlook for AFFO per share has also been negatively impacted by about $0.04, due to a change in our assumed weighted average number of diluted common shares for the year, of $114.9 million, which assumption is influenced in part by increases in our current and estimated future share prices. We're very pleased with how the year has started and are optimistic about the rest of 2019.

I'll now turn things over to Mark, who will provide an update on our liquidity position and balance sheet.

Mark DeRussy -- Vice President of Finance

Thank you, Brendan. SBA entered the first quarter with $9.7 billion of net debt. And our net debt to annualized adjusted EBITDA leverage ratio was seven times, at the low end of our targeted range of 7 to 7.5 times. Our first quarter net cash interest coverage ratio of adjusted EBITDA, the net cash interest expense was 3.6 times. The weighted average coupon of our outstanding debt is 3.9%, and our weighted average maturity is approximately four years.

As of today, we have $50 million outstanding under our $1.25 billion committed revolver. As mentioned on our last earnings call, during the first quarter, we entered into a four-year $1.2 billion interest rate swap, effectively fixing the interest expense at 4.49% on approximately half our outstanding 2018 Term Loan B. As a result of this transaction, approximately 88% of our non-revolver debt outstanding is fixed. The Company did not repurchase any shares of our common stock in the two months since our last earnings call. Stock repurchases however are still an integral part of our strategy.

As of today we have $204.5 million of authorization remaining under our $1 billion stock repurchase plan. The Company's shares outstanding at March 31, 2019, are $113.2 million, which is down 2.8% on $116.5 million, at March 31, 2018.

With that, I'll now turn the call over to Jeff.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Thanks Mark, and good evening everyone. Our first quarter was about a simple straightforward and solid as we could have hoped for. We exceeded our expectations across all financial metrics. We continued to see healthy operational leasing activity and our services business again had another very strong quarter. While it has only been two months since our last earnings call, we feel like a lot has happened particularly around improved clarity to the remainder of 2019. As a result, we are able to increase our full year outlook.

Domestically the strong operational leasing activity we saw in the second half of 2018, continued into the first quarter of 2019. All four major U.S. wireless carriers were active during the quarter to varying degrees with particular increases in new technology and capacity related upgrades, pushing our amendment business to the highest quarterly contribution in over a year.

We also saw continued contributions from DISH, who remains busy with their Phase 1 network buildout. Our leasing application backlogs remain very strong, giving us confidence and continued steady lease up results in Q2 and beyond. Internationally, we also had another solid leasing quarter with steady contributions across all of our markets, led once again by Brazil. The contractual revenues signed up during this quarter and our international markets came about 48%, from new leases and 52% from amendments, though continues to be very balanced between coverage builds and technology upgrades. Similar to last quarter we had solid contributions from all four major wireless carriers in Brazil. Although, the currency has continued to weaken a little bit, operationally we remain on target for strong growth in Brazil, once again this year or as Brendan mentioned earlier, but for the weakening of the currency, our 2019 outlook would have been increased even more.

We continue to be optimistic about the opportunities that exist throughout all of our international markets. During the first quarter we spent limited amounts of discretionary capital on new asset additions, and no capital on share repurchases in the two months since our last earnings call. As a result we saw our leverage quickly drop to the low end of our target leverage range at 7.0 times. This drop in leverage in one quarter demonstrates how quickly we can organically deliver and the flexibility that exists within our capital structure. We do expect investment to increase through the remainder of 2019. We are still committed to growing our portfolio 5% to 10% this year through disciplined acquisitions and new builds.

We of course focus on growing our portfolio throughout our existing markets, but we also regularly explore opportunities in other markets. Our focus has always been and continues to be on finding accretive tower opportunities, to create shareholder value and frankly avoiding those that do not. We believe we are very good at this and we will continue to maintain it as a key component of our strategy. In addition, stock repurchases will also remain an important part for value proposition. We have always been opportunistic around repurchases and did not have any of the market dislocations, we typically look for, in stock repurchases, so we did not repurchase any shares in the last two months. But our desire to repurchase shares under the right circumstances hasn't changed.

I'm confident that we will have a nice mix of both quality portfolio additions and share repurchases throughout 2019. Our capital structure continues to be one of our greatest assets. We have significant liquidity and tremendous access to sizable incremental capital across a diverse set of financing markets. Our capital structure and industry leading AFFO per share affords us great flexibility to use our resources to drive shareholder value in a variety of ways. In addition to tower investments and share repurchases, we continue to explore and pursue new business initiatives related to our existing businesses. These initiatives are not material today, but we are excited about the potential for the opportunities we are currently exploring. We're off to a good start in 2019 and are operationally performing at a very high level. This year we celebrate two anniversaries, 30 years in business; and 20 years as a public company.

We are within striking distance of two important milestones; 30,000 sites and $2 billion in revenue. I'm very excited about what the future holds for SBA.

I'd like to thank our employees and our customers for their contributions to our success. And with that Laurie, we are now ready for questions.

Questions and Answers:

Operator

(Operator Instructions) Our first question from the line of Simon Flannery with Morgan Stanley. Please go ahead.

Simon Flannery -- Morgan Stanley -- Analyst

Great. Thanks very much. Thanks for the commentary on the balance sheet and the buybacks. Where do you draw the line on your leverage? If you didn't have an opportunity to do buybacks or a lot more M&A, would you be prepared to let the leverage drop down into the high sixes? Or would you want to keep it in that 7 to 7.5 range? I mean, if you could just provide a little bit more color on the services strength -- very strong you're talking about it potentially slowing down there. But what was behind that strength this quarter? Thanks.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Well, ideally we do want to keep it in the 7 to 7.5 times range Simon, but we don't want to spend money just for the sake of spending money either. And what we have not yet implemented is kind of a mechanical stock repurchase program, that would be implemented just for the sake of maintaining leverage. We're hesitant to do that, because we haven't had to do that frankly. We've always had the opportunity to be opportunistic around stock repurchases and we'd like to continue to believe that will be afforded to us by the market. In terms of the services business, we do work for all the carriers. But one of the --, including a fair amount of work for Sprint, and as we noted in the press release, as Brendan said in his comments, we had to take a position on Sprint, T-Mobile transaction.

So while we expect to continue to do a lot of work right up through the end of the second quarter, at least with respect to Sprint on the services side, we're taking the position that the deal ends or the deal gets approved rather and that there is no more Sprint as of June 30th. Now whether that happens or not, we of course don't really know, but we had to take a position for purposes of guidance. But, the services business is very, very busy right now and that has rolled into the second quarter, and that of course the combination of what we did in the first quarter and where we see things today in the second quarter was the reason we were able to move the full year outlook up.

Simon Flannery -- Morgan Stanley -- Analyst

I mean, is this related to 5G rollout or talk about -- kind of...

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Well, it's I mean not all the customers that we're doing business for really on the 5G trail. So it's really a mix of everything, it's just a high level of activity, which is really what's also behind our leasing business.

Simon Flannery -- Morgan Stanley -- Analyst

Great. Thank you.

Operator

And we'll go to John Atkin with RBC. Please go ahead.

Jonathan Atkin -- RBC Capital Markets -- Analyst

Yes. So a couple of questions. One, I was wondering as you look at the international business, how do you think about kind of the longer-term growth rate? And are there any potential needle movers to call out ex-Brazil? And then, secondly was interested in kind of any update on edge computing, any opportunity that you see there perhaps that's tied in with small cells or not? But what are your current thoughts on that? Thank you.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah. Some of the international markets, Jon, are ahead of Brazil, slightly. Now some are lagging, but the issue really is that Brazil is so much bigger than frankly any of our other markets. The thing that gives us confidence around all of the markets is they are well behind the U.S. in terms of their technology upgrades. There is still a lot of 3G work being done in some of these markets, let alone 4G and in some cases no 5G whatsoever. So, we do think that there will be a lot of work in the future coming out of these markets. Obviously, there has to be an economy and an ecosystem to pay for all that and just by carrier expenditures. But, we do think that just as in the U.S. that will, will be the case.

In terms of the mobile edge computing we continue to take the steps to prepare ourselves for the day when there will be material revenue opportunities that come from that, we continue to believe that, that they will come. I can't tell you, when that they will be, we've had some good traction with the one deployment that we working on with packet (ph) about site of Gillette Stadium, the number of folks who have come through packet to deploy in that facility. A lot of discussions going on, but in terms of actual material revenue production, I think we're still, we're still a bit a ways away. It's certainly not going to come in 2019.

Jonathan Atkin -- RBC Capital Markets -- Analyst

Okay. And then you mentioned the Phase 1 build out and the leasing that you continue to see there is equipment actually going up?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Absolutely.

Jonathan Atkin -- RBC Capital Markets -- Analyst

And then lastly the ground buyback activity. Is there any weight, I don't think there is, but I just thought I checked, is there any way to kind of ramp that if you wanted to -- around the ground lease repurchases?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

No, we have plenty of capital to spend in that. That business has always really been governed more by the particular situation of the seller. These are -- these are all individuals who might say, no three different times and then say, yes on the fourth time. So it's, we tried to do that. It's really not -- it's not an operational issue as much as it is, a seller desire issue, Jon. That may sound a little crazy, but after 15-years of pulling all the different levers that's kind of how it goes.

Jonathan Atkin -- RBC Capital Markets -- Analyst

Great. Thank you very much.

Operator

We'll go to Phil Cusick with J.P. Morgan. Please go ahead.

Phil Cusick -- J.P. Morgan -- Analyst

Hey guys. A couple of follow ups and a new one. First on the DISH contribution, should we think of that as a bigger part of the services business today? And is that ramping through the year?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

It's a part of the services business. I don't know if it's a bigger part of the services, but yeah it's been a small part of our services business, it may increase as the year goes on, as a percentage of services. But I don't think it's so big that it makes a huge difference.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Yeah, it's not the reason it went from the fourth quarter number to the first quarter number.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Right.

Phil Cusick -- J.P. Morgan -- Analyst

Okay. And then on the deleverage side, nobody has mentioned a dividend yet, but you've talked about doing that within the next couple of years. If the share stay at this level or somewhere around here, does it make sense to pull that forward as a way to maintain leverage rather than buying back stock?

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

I mean, it could. Be something to -- add to the list of things to look at.

Phil Cusick -- J.P. Morgan -- Analyst

Right. If buybacks aren't as accretive as they used to be, maybe the dividend instead or is that -- does the dividend timing, is it driven more by the size of NOL, you want to maintain over time? Or could that be...

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

We've always only talked about the dividend in terms of when we first had to start paying it.

Phil Cusick -- J.P. Morgan -- Analyst

Right, which is 21 you've talked about?

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Correct.

Phil Cusick -- J.P. Morgan -- Analyst

So pulling that forward especially if the share price isn't accretive?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

That's a must (ph). That is a possibility, that is available to us.

Phil Cusick -- J.P. Morgan -- Analyst

Got it. And then last one, you've talked in the past about a little bit of competitive churn. AT&T and T-Mobile both have, guys who are working on some new builds for them to overbuild you and your peers. Any shift in the pace of that, positive or negative?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

No changes really there.

Phil Cusick -- J.P. Morgan -- Analyst

Okay. Thanks guys.

Operator

We'll go to Michael Rollins with Citi. Please go ahead.

Michael Rollins -- Citigroup -- Analyst

Hi, thanks for taking the questions. First one if I could, on one of the slides you provided an update on return on invested capital which is about 10.3% at the end of the first quarter. How does that compare between the domestic business and the international business? And how do you think about current valuations for assets relative to your return objectives? Thanks.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah, it's higher domestically. Mostly due to just obviously the maturity of that. We've had those assets for so long and we haven't decided to give those numbers out because it's a little bit immature from an international standpoint. But, that's something we'll consider breaking down in the future. But higher domestically, just because the international stuff is less mature.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Although some countries it's higher. There are individual countries where it has the highest return on invested capital.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah.

Michael Rollins -- Citigroup -- Analyst

And is the...

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah, you got to clearly think about those things Mike in terms of current pricing versus price matters, absolutely.

Michael Rollins -- Citigroup -- Analyst

And in terms of what you're seeing out there is just getting tougher? Or is it getting easier, in terms of the opportunities for asset purchases?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Well, I wouldn't say it's getting easier. I mean it's there is a lot of capital and it is price competitive. You have to be very patient and you have to look hard, and you have to be knowledgeable about the wheat and the chaff.

Michael Rollins -- Citigroup -- Analyst

Thanks.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Laurie, I think we're ready for another question.

Operator

Very good. Thank you. We'll go to Rick Prentiss, Raymond James. Please go ahead.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

Thanks. Good afternoon, guys.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Hi, Rick.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

Hey. Follow-up on a couple of previous questions. Simon, was asking on the leverage side and you talked about the portfolio. It looks like the portfolio growth in the first quarter was probably less than 1%, and even if we add in the sites under contract through end of third quarter, still kind of in the 1 plus percent range. So are you seeing some bigger transactions out there that could get into the target zone of 5% to 10% portfolios given that the answer to Mike there was that, prices are getting tougher?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

We think that there will be some opportunities along those lines. Yes.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

And you kind of alluded to that maybe some new markets might be popping onto the screen?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

No, I don't think I said that. I think we say we'd like to stay in our existing markets, but we'll look, we'll look everywhere that it makes sense to look.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

That's good. And then with Phil's question on the leverage and the dividend. Have you thought about kind of what that payout ratio of AFFO might look like? Crown, when they convert and start paying dividend kind of with the full payment, American Tower has kind of been in that we're going to grow it for a long time, which way should we think about you guys looking at the -- when the dividend day does come what the path might look like?

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Little latter.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

The more like American towers kind of keep it growing?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yes.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

Okay. And then last one for me on the leverage, as we think about '19 and '20 and '21, where does leverage need to go as you start looking to pay a dividend?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Doesn't have to go much lower than it is right now. We've talked about something with a six handle on it.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

All right. I did have one other, I apologize. Amendment versus COLO, you talked about how amendments had gone to about 68% of new revenue and colors with 32%. If you get a customer who comes in, who's already a customer on your tower, and they want to put more equipment on the tower but a different RAD center. Is that a new co-location? Or is that an amendment?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Depends on whether they bring it under their existing contract, in which event it would be an amendment or a brand new contract in which event it would be a lease.

Richard H. Prentiss -- Raymond James & Associates -- Analyst

And just hypothetically, say, a first net type project with AT&T, is that going to be seen more as an amendment activity, I'm just trying to think of how we're gauging what's the base of business coming in. If it's under the existing contract, it's an amendment, if it's a new contract, it's a lease.

Yeah, that helps. Okay. Thanks, Jeff.

Operator

And we'll go to Walter Piecyk, with BTIG. Please go ahead.

Walter Piecyk -- BTIG -- Analyst

Thanks. Domestically your amendment to COLO growth is accelerated for the last five quarters I guess or so, yes, looks like five. Jeff, is that going to happen throughout 2019, just sequential accelerations in that annual growth rate for the amendments of COLOs, and escalations I guess just your gross growth, the 7.5% number you reported this quarter, I don't know what you call it.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Are you talking about the growth rate? Or the rate of amendments to COLOs?

Walter Piecyk -- BTIG -- Analyst

I'm talking about the 7.5%, which I call a growth rate, every company calls it I think something different. So...

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah, the answer is yes. Well, because if you look at the -- if you look at the revenue bridge for the domestic, it implies obviously a higher full year number. And given where we are it has to increase throughout the year. So, we would expect it to increase each quarter.

Walter Piecyk -- BTIG -- Analyst

And then Jeff you had mentioned that your guidance or assumes that the Sprint, T-Mobile deal is approved. So, if it's not approved, does that mean those numbers are higher or lower?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Well, we don't no. I mean we'll have to see what comes. I mean it's hard to -- we don't really know what the what the plan B is, if there is one.

Walter Piecyk -- BTIG -- Analyst

Got you. So it's possible it could be lower than if Plan B is?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Well, I don't know. No, I don't think so, because right now our guidance assumes that basically there is nothing else from Sprint.

Walter Piecyk -- BTIG -- Analyst

Got it.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah, I mean it's really two -- if you look at the two pieces it services where there is an impact. We assume that that's slower in the second half of the year because there is really nothing from Sprint. I don't think that could be lower, question is whether it really would be higher if the deal didn't happen and we're not sure about that. And on the leasing side, there is probably very little impact, because, any slowdown that might occur or increase that might occur if the deal doesn't happen in either case, it's not going to impact this year's numbers too much.

Walter Piecyk -- BTIG -- Analyst

Got it. Last question, I mean I don't know if you're planning on putting up like an 8% dividend yield, but I guess just generally speaking if you're not willing to buy stock, why should investors be buying your stock right now?

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Walt, it's only been two months since our last call. I didn't say they're not willing to buy our stock, I said as we move through the year I'm confident we're going to invest our capital in towers and stock.

Walter Piecyk -- BTIG -- Analyst

Got you. I just -- see my -- I think the response to Phil's question was like, you think the stock you're not getting accretion. I mean those are Phil's words not yours but whatever, that the stock is at a level that your dividends are preferential, but -- I mean, I'm just not sure...

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Those were -- do you want?

Walter Piecyk -- BTIG -- Analyst

Okay.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

You have Phil's phone number, give him a call.

Walter Piecyk -- BTIG -- Analyst

Absolutely. All right. Thanks.

Operator

We'll go to Nick Del Deo with MoffettNathanson. Please go ahead.

Nicholas Del Deo -- MoffettNathanson -- Analyst

Hey, thanks for taking my question. Would you consider a one-time dividend, rejigger a leverage in between now and when your NOLs run out? Or would you only pay a dividend if it was the start of a recurring one?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

I don't see the wisdom of a one timer Nick. But if I'm missing something help us figure it out. But I don't see any benefit in that.

Nicholas Del Deo -- MoffettNathanson -- Analyst

No, that's certainly fair. You're going back to the issue of land, how much higher do you think you can push it from the current 71%. Where does that top out? And what's the split between land that you own or control under perpetual easement versus the long-term lease?

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

We own roughly 30%, 35% of the land, either in the form of a long-term or perpetual easement or have outright ownership. In terms of it going higher, the interesting thing about that it can certainly continue to move higher and we have moved it higher over the years. But as you bring in some of the international stuff, sometimes it comes in with lower numbers, so it kind of resets it. And that's statistic is controlling for at least 20-years. The funny thing is you always have those that are on the border of that. Every year that goes by, it's a year less for some of those. Some of them fall below it. So you're constantly having to kind of extend your way out of it. So, that's a long way of saying. It can go a little bit higher but you know it's hard to move that number materially when you got 30,000 sites.

Nicholas Del Deo -- MoffettNathanson -- Analyst

You find, you find their repurchase overseas to be interesting. Brazil, you typically have the (inaudible) around that makes it less appealing?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

We do, whether it's a purchase or an extension or an easement or some other type of longer-term entitlement. The concept still applies and we do find it interesting and beneficial. It's little more difficult because the real estate laws are not in every case as clear as they are in the US.

Nicholas Del Deo -- MoffettNathanson -- Analyst

Okay. Got it. Thanks guys.

Operator

And we'll go next to David Barden with Bank of America. Please go ahead.

David Barden -- Bank of America Merrill Lynch -- Analyst

Hey guys, thanks for your squeezing me in. The two questions, one was, the kind of core domestic churn, non-iDEN, non-Metro, Leap and Clear is about 1.3%, it's almost double over the last year.

I know you talked about this a little bit, Brendan I think last quarter, but it's up another 20 bps, I wanted if you could kind of speak to like where is this going? The shape of it, the drivers of it and does it kind of normalize it at some point in time? And then the second question was, if I'm reading it right, it looks like the -- and I'm sorry to ask such a detailed question. But the guide appears to have like a $10 million improvement in other costs, which is helping kind of drive the income line of the margins. I was wondering if you can kind of just speak to that please? Thanks.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Okay. On the first one, which is the churn, it has increased a little bit. Some of that is non-Big 4 related. We have certain customers that we've had churn off, it's also a trailing 12 month number. My expectation is that, it probably will be slightly higher, later in the year. But I think it'll probably come down then slightly thereafter. But our range as we've talked about historically is 1% to 1.5% for that kind of base churn, and I think longer-term that's the right range for that number, we're sort of right in the middle of it right now.

On a second question, David, frame a little bit, I'm not 100% sure, which $10 million you're referring to.

David Barden -- Bank of America Merrill Lynch -- Analyst

So, I'm sorry. It's in the...

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

You want me, we're happy to get on the phone with you afterwards, so we can get, if there is a specific number we can...

David Barden -- Bank of America Merrill Lynch -- Analyst

No, it just went from $10 to $15 to $1 to $6 million and that was the question. But we can take it offline. Appreciate it. Thank you.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Okay.

We'll go to Spencer Kurn with New Street Research. Your line is open.

Spencer Kurn -- New Street Research -- Analyst

Hey guys, thanks. So I just wanted to follow up on the question around organic growth and domestically accelerating for the rest of the year, as implied in your guidance. You just provide a little bit more color on the cadence. I know you've got, you posted really high growth in the fourth quarter of 2018. But it also sounds like you expected growth to increase every quarter throughout the year. So, any color you can provide on that would be really helpful.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Yeah, I mean, I can't say exactly what the number will be each quarter obviously, because there is certain uncertainties as you move through the year. But, based on the backlog what we've signed up to date and what we expect to sign up, we make certain assumptions around timing and most of the stuff that's been signed up we already know the timing. So we're pretty confident when we look out at what's scheduled to commence that will have an increase in those numbers as we move through the year. And as you as you noted, the full year number that's on the bridge sort of suggests that the number at the end of the year or for the full year I should say is 7.9%. So if we're 7.5%, in the first quarter, we get to close to 7.9% as an average obviously, it's got to step up 20, 30 basis points each quarter roughly.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

On average.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

On average.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Not necessarily each once.

Spencer Kurn -- New Street Research -- Analyst

Well that's sort of my question. Are you will -- we like thinking -- like the end of the year you actually got a higher rate than the average? Or some sort of a bell curve? Overall, like trend that we should expect?

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Yeah, I would expect it will be above the average by the end of the year.

Spencer Kurn -- New Street Research -- Analyst

Awesome. And then just one quick follow-up I may. Your first net is over 50% done and the company is expecting to be -- they expecting to be around 60% by the third quarter. Are you seeing a similar progress of work being done on your sides? Or is there sort of a lag or any difference from your perspective of what you're seeing? Thanks.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

You know that's hard to answer Spencer, because not every amendment that comes out of AT&T is FirstNet. They're doing a variety of all kinds of different work, involving all kinds of different pieces of their spectrum. And in some cases doing first -- work and then coming back and do another work. So, I mean that sounds about right, it could be a little bit less, I would doubt it's any more than that.

Spencer Kurn -- New Street Research -- Analyst

Got it. Thanks so much.

Operator

We'll go to Brett Feldman with Goldman Sachs. Please go ahead.

Brett Feldman -- Goldman Sachs -- Analyst

Yeah, two questions. The first one is pretty quick. The Oi recovery you received in the quarter, was that factored into your original outlook? Or is that among the reasons why you increased your outlook for the year? And then, more interesting and maybe I didn't hear it, right. But I think you said 82% of your domestic leasing activity was Big Four. So I guess that would mean 18% was non-Big Four, which seems like a big number. And I'm curious of that, if I heard it correctly was that predominantly DISH driven? Or is there more interesting story in there?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah, on the first one, the Oi recovery was not in our original outlook. So, that was part of the increase specifically to EBITDA and AFFO, it didn't affect the lines above that. And the 82%, yeah, a big -- the biggest component of the non-Big Four piece was DISH.

Brett Feldman -- Goldman Sachs -- Analyst

Is there anything else in there of the non-DISH part that's ramping and you've got NASH (ph) in the past about non-traditional (inaudible) eclectic mix you've normally had?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Same eclectic mix and that story was the set was the same as last quarter.

Brett Feldman -- Goldman Sachs -- Analyst

Got it. Thank you, I appreciate it.

Operator

We have a question from Colby Synesael with Cowen and Company. Please go ahead.

Colby Synesael -- Cowen and Company -- Analyst

Great. Thanks. Two if I may. When you think of the big four U.S. carriers, I think the view has then that the predominant amount of growth has been coming, not just for SBA but for the sector from the T-Mobile, as part of the 600 build out and then also AT&T with FirstNet, and then Verizon has slowed its pacing although still material in terms of contributing to growth. Net Sprint really has -- for the most part gone away, I'm just curious if you agree with how I just characterized it?

And then secondly, I guess more of a modeling question for Brandon. You raised your AFFO guidance by what is it $0.7 on the low end and $0.3 on the high end. I guess just what is it on the high end that didn't allow you to take it up by the same amount. I thought I heard on the call you mentioned something about the price of the stock being higher and that having an impact. And I'm just curious how? How we might try to think about that? Thanks.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

On a second one, it's really more about taxes. It's just about where we range the taxes. The share count piece affects both ends of the range the same, because we're using the same number of shares as our assumption, it just negatively impacted the overall number, because we assumed a higher diluted share count. But, it's really we kind of moved our own thoughts about where our taxes will be more on the low end. So that's the only difference.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah. And on the on the activity levels I mean there is activity from all Big Four, Colby, so I don't think we agree with that description, particularly as it relates to Sprint, not doing anything right now. I mean that's just not true, as it relates to us, on both the leasing and the services side.

Colby Synesael -- Cowen and Company -- Analyst

Yeah. Thank you.

Operator

And next we go to Matthew Niknam with Deutsche Bank. Please go ahead.

Matthew Niknam -- with Deutsche Bank. -- Analyst

Hey guys, thank you for taking the question. Brendan, I think, there was a mention of the guidance increase for this year being tied to more amendments relative to COLO or maybe an earlier sort of commencement. Was that the entirety of the guidance increase? Or is there sort of a broader core increase underlying that beyond just sort of timing? And then just on the amendments, any color you can provide in terms of the pricing on these amendments? Thanks.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

On the guidance that the leasing revenue increase the organic piece of it, and the best way to kind of look at it Matt, is to look at the bridge that's in the supplemental package, and you can look at the changes relative to last time that we provided, you'll see that the lease up number went up about $3 million, most of that was due to faster timing which is due to a little bit heavier concentration of amendments. There were other reasons that our revenue guidance went up though those included some non-organic contributions as we put some additional sites under contract, that will help contribute in a couple of other minor changes, but those are the two biggest pieces.

Matthew Niknam -- with Deutsche Bank. -- Analyst

I'm sorry what was the second one?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Just in terms of pricing on amendment, yeah.

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Amendment pricing continues to hold in very firmly. We're certainly not seeing any weakening there.

Matthew Niknam -- with Deutsche Bank. -- Analyst

Thank you.

Operator

We'll go next to Batya Levi with UBS. Please go ahead.

Batya Levi -- UBS -- Analyst

Great. Thank you. Was the increase in discretionary CapEx all related to the acquisitions you have announced? Or are you finding more opportunities to build incremental sites? And also as a carrier start to gradually build some of their sites on their own? What do you think is driving that? And can you allude some of that activity back to your portfolio?

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

On the CapEx, it's basically all M&A related, there is a couple of minor little things. But it's not -- there is really been no change in the overall expectations around new builds for the year.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Yeah, on the carrier building sites on their own, we have seen that in some very limited circumstances. I think some of that is for sites that the carriers view is very strategic as opposed to capital driven because there is plenty of capital chase in that. And I don't know about it, will ever be able to move that back given what we see is some very uneconomic new build terms, which actually is the explanation why we just don't build as many towers in the US as we used to.

Batya Levi -- UBS -- Analyst

Okay. Thanks.

Operator

And a question from Amy Yong with Macquarie. Please go ahead.

Amy Yong -- Macquarie -- Analyst

Thanks. I was wondering if you can update us on the customer activity in Brazil? And with the spectrum -- auction happening, I think in the back half of this year or 2020? Should we anticipate an increased activity on acceleration in the region? Thank you.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Well the customers are -- be similar story to the U.S., they're all active but to varying degrees. And certainly with new spectrum there will come new opportunities for us in the form certainly of amendments. And hopefully new co-locations as well, so we always welcome new spectrum. It's not millimeter wave spectrum, which of course has a much different use. This will be macro tower oriented spectrum. So we hope it goes through as planned, and we would expect certainly to benefit from that.

Amy Yong -- Macquarie -- Analyst

Thank you.

Operator

(Operator Instructions) We'll go to Robert Gutman with Guggenheim. Please go ahead.

Robert Gutman -- Guggenheim Securities -- Analyst

Hi. Thanks for taking the question. Looking at it sort of a bigger picture view, the drivers that are underlying the current acceleration. In leasing activity, how far out do you think these carry, in terms of -- now looking for next year's guidance? But does the current strong pace of activity sort of -- dry it out looking next year, is the reason we believe that it's still early in terms of where the carriers are in terms of what they're doing?

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Well, it seems early in the sense that there is still a lot to do in terms of building out the 4G. And then if you believe the (inaudible) and the technicians for everyone to have a truly vibrant 5G product, they're all going to need to deploy some kind of massive MIMO architecture and that hasn't even really started yet. So they've got a long way to go.

Robert Gutman -- Guggenheim Securities -- Analyst

Okay. Thank you.

Operator

We have no additional questions at this time, so please continue.

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

I want to thank everyone for listening into our call, and we look forward to our next one when we release the second quarter results. Thank you.

Operator

Thank you. And ladies and gentlemen, this conference call will be made available for replay, that replay begins today April 29, at 8 PM Eastern Time. The replay will run for two weeks, until May 13th, at midnight Eastern. You can access the AT&T teleconference replay system by dialing 1-800-475-6701 and entering access code 465875. That replay number again 1-800-475-6701, replay access code 465875. And that will conclude our teleconference for today. We thank you for using AT&T Executive Teleconference Service and you may now disconnect.

Duration: 54 minutes

Call participants:

Mark DeRussy -- Vice President of Finance

Brendan T. Cavanagh -- Executive Vice President and Chief Financial Officer

Jeffrey A. Stoops -- Director, President and Chief Executive Officer

Simon Flannery -- Morgan Stanley -- Analyst

Jonathan Atkin -- RBC Capital Markets -- Analyst

Phil Cusick -- J.P. Morgan -- Analyst

Michael Rollins -- Citigroup -- Analyst

Richard H. Prentiss -- Raymond James & Associates -- Analyst

Walter Piecyk -- BTIG -- Analyst

Nicholas Del Deo -- MoffettNathanson -- Analyst

David Barden -- Bank of America Merrill Lynch -- Analyst

Spencer Kurn -- New Street Research -- Analyst

Brett Feldman -- Goldman Sachs -- Analyst

Colby Synesael -- Cowen and Company -- Analyst

Matthew Niknam -- with Deutsche Bank. -- Analyst

Batya Levi -- UBS -- Analyst

Amy Yong -- Macquarie -- Analyst

Robert Gutman -- Guggenheim Securities -- Analyst

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