American Tower (AMT) Q4 2022 Earnings Call Transcript

American Tower (AMT -0.48%)
Q4 2022 Earnings Call
Feb 23, 2023, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the American Tower fourth quarter and full year 2022 earnings conference call. As a reminder, today's conference call is being recorded. [Operator instructions] I would now like to turn the call over to your host, Adam Smith, senior vice president of investor relations.

Please go ahead, sir.

Adam Smith -- Senior Vice President, Investor Relations

Good morning, and thank you for joining American Tower's fourth quarter and full year 2022 earnings conference call. We have posted a presentation, which we will refer to throughout our prepared remarks, under the Investor Relations tab of our website, www.americantower.com. On this morning's call, Tom Bartlett, our president and CEO, will provide an update on our strategy; and then Rod Smith, our executive vice president, CFO, and treasurer, will discuss our 2022 results and 2023 outlook. After these comments, we will open up the call for your questions.

Before we begin, I'll remind you that our comments will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth, including our 2023 outlook, capital allocation, and future operating performance; our collections expectations associated with Vodafone Idea in India; and any other statements regarding matters that are not historical facts. You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risk factors set forth in this morning's earnings press release, those that will be set forth in our upcoming Form 10-K for the year ended December 31, 2022, and in other filings we make with the SEC.

We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances. With that, I'll turn the call over to Tom.

Tom Bartlett -- President and Chief Executive Officer

Thanks, Adam, and thanks to everyone for joining the call this morning. Five years ago, when we rolled out the Stand and Deliver strategy that would guide us over the following decade, we emphasized driving the business forward through four key pillars: enhancing operational efficiency, growing our assets and capabilities, investing in innovation and platform extensions, and augmenting industry leadership. Since that time, we've seen carriers across our global footprint invest over $300 billion in network assets and methodically deploy next-generation networks to support rapidly increasing data demand in their served markets. Our commitment to execute on each pillar of Stand and Deliver, not only aligns with our customers' needs in this context, but it also enhances American Tower's position to serve as a strategic provider of critical infrastructure for the networks of the future.

So before highlighting the key strategic objectives, we'll focus on in 2023 and over the next several years, I'd like to spend a moment reviewing achievements from the past five years that have driven our success to date. On the operational front, we've signed comprehensive master lease agreements with T-Mobile, AT&T, Dish, and most recently, Verizon in the United States. These agreements represent a commitment to a mutually beneficial, predictable growth path and strategic alignment between American Tower and its customers, while also demonstrating the value and criticality of our nationwide 43,000-plus site portfolio to support 4G, 5G, and future network generations. Such agreements also bring with them efficiency innovations designed to deliver simplicity in leasing processes and accelerated time to market for the carriers.

To extend on these benefits, we've invested in technologies to build a holistic standardized data set, mapping the vast majority of our U.S. assets, which can be leveraged to eventually bring application cycle times down to a matter of hours. We believe this type of capability will be a particularly attractive customer value proposition in the context of a 5G densification cycle and one we believe can be scaled across our global footprint over time. Our focus on operational efficiency has extended throughout our international business as well.

Notably, since the beginning of 2018, we've invested nearly $350 million, primarily in Africa, on improving site level performance through our power as a service program. This includes the installation of lithium-ion batteries and solar arrays for primary and backup power delivery, which has resulted in a sizable reduction in average fuel consumption per site across our African portfolio and has extended the replacement cycles of critical power sources all while providing over a 99.9% average uptime for our customers' networks. At the same time, we've established a centralized procurement organization that aims to drive down material costs. And we've leveraged shared best practices and our scale as a multi-national operator to strengthen our global vendor relationships.

By streamlining these critical operational functions, we've been able to continue to drive solid investment returns on our capital deployments and efficiently meet the infrastructure needs of our customers, all against a challenging backdrop of price volatility and supply chain disruptions. In fact, since the start of 2018, we've added nearly 26,000 sites to our international portfolio through new builds, more than two times the volume of the previous five-year period. Today, these sites are contributing approximately $250 million in tower cash flow and an NOI yield of approximately 21%, demonstrating meaningful expansion from the already attractive low double-digit day one yields we typically see on these new build opportunities. On the M&A front, we've executed a number of transactions that have been transformational in terms of delivering additional critical scale in existing and new markets ahead of major network investment cycle, the benefits of which we are seeing in our results and forward-looking expectations today.

These include InSite in the United States, the in portfolio in Africa as well as Telxius in Europe and Latin America, which augmented our scale in Germany and provided entry to Spain in a leadership position just as 5G investments were beginning to ramp up on the continent. More recently, through our efforts to selectively expand our platform and position American Tower as a market leader in the next generation of network architecture development, we entered the data center space through the acquisition of CoreSite. CoreSite delivers an interconnection and cloud on-ramp rich platform as well as exposure to a resilient high-demand communications infrastructure business, which we believe will deliver strong performance as demonstrated by a record signed new business in 2022 and provide accretive returns on a stand-alone basis over time. As importantly, we believe the combination of CoreSite and American Towers platform of distributed tower real estate positions us to enhance the value of our existing assets as the edge proliferates.

Finally, I'm particularly proud of the steps we've made toward augmenting our leadership in several areas. Organizationally, we've made ESG core to our operations through initiatives such as our commitment to science-based targets, localized DE&I initiatives designed to facilitate an inclusive organization for our employees and stakeholders and through the growth of our digital communities program, which has now reached more than 400 communities and serves more than 335,000 people across 15 countries. As I mentioned on this call last year, we're also a member of the Edison Alliance: 1 Billion Lives Challenge, which provides us the opportunity to contribute to the development of affordable and accessible digital healthcare, finance, and education solutions for communities in need. Over the past year, we've developed partnerships with healthcare providers that have resulted in the launch of several telehealth locations that provide primary, preventative, and specialty teleconsultation services in underserved areas.

While this is just one positive first step, we believe that we've achieved over the last year, clearly demonstrates the value we can create and the communities we serve through a commitment to multi-stakeholder collaboration and partnerships. And we hope more organizations will join us in efforts like these over the coming years, which brings us to today and our focus for 2023 and beyond. We believe we're poised to build on and accelerate the successes of Stand and Deliver that we've achieved thus far. As I mentioned in the opening, our teams are focused on key strategic objectives that will continue to guide our operations and management teams in American Tower over the next several years.

The first of these is to leverage our premier platform of assets to drive strong recurring growth, both organically and through our disciplined capital allocation framework and our investment-grade balance sheet, as we seek to capture new business opportunities against the backdrop of secular demand trends that remain as strong as ever. We refer to this internally as scale the core. To this end, we expect an acceleration in organic growth in 2023, representing an improvement of around 100 basis points relative to our prior five-year average. Beginning with our U.S.

and Canada segment, the benefits of our comprehensive MLAs and ongoing 5G deployments are driving an expectation for organic tenant billings growth of approximately 5% in 2023, including approximately $220 million in year-over-year co-location and amendment growth, which would be a record year for American Tower by a significant margin. We also see a path to solid organic growth in our international segment, led by regions like Europe and Africa, where we're capturing activity from multiple network upgrade and densification cycles and are realizing the benefits of CPI-linked escalators on the vast majority of our leases. This will be complemented by what we expect to be yet another year of solid new build activity, primarily in international markets, where the current 4G and 5G network rollouts continue to drive strong demand for new infrastructure. And in our data centers business, where we're entering 2023 with record backlog, we'll continue to focus on driving increasing growth, both on an organic basis and through high-yield development opportunities that are ongoing today.

Operationally, our teams are working to continue to build on the many efficiency and growth initiatives we've developed in recent years, which hits on another key objective within the organization: being the most trusted strategic partner for our customers. The most concrete example of our efforts on this front, probably the long-term multi-market agreement we recently announced with Airtel in Africa, which includes a meaningful new build pipeline, a joint commitment to build in accordance with new low-carbon emissions guidelines, which we're calling green sights and a partnership framework to enhance the impacts of both companies' digital communities and kiosks programs on the continent. This agreement exemplifies the benefits of our scale, best-in-class operations, and ability to deliver innovative solutions, while advancing both American Tower and our customers' long-term sustainability and fossil fuel consumption reduction targets. Going forward, we'll continue to work on building alignments with our global customers to leverage our scale to execute on opportunities to drive growth and maximize shareholder returns in a sustainable and responsible way.

This includes an effort to accelerate our platform extensions. As I mentioned previously, demand trends in the data center space remain robust driven by digital platforms, leveraging distributed computing, and by the early stages of a sustained enterprise migration from on-prem to hybrid IT and multi-cloud architectures. As a result, we see a long runway of opportunity to drive strong returns by investing in the expansion of our existing CoreSite campuses and leveraging the open cloud exchange to extend their interconnection-rich ecosystem. At the same time, we're working to position our combined platforms for outsized success as demand for the workloads and compute functions are drawn closer to the end users at the mobile edge.

And as we evaluate opportunities to accelerate growth through platform extensions going forward, we'll continue to focus on how we can leverage our core competencies in real estate, power provision, and connectivity to drive incremental value to the ecosystem while delivering increasing shareholder returns. Meanwhile, as a management team, we're laser-focused on positioning our global teams for the future, while growing and maintaining a healthy cultural foundation. These together represent perhaps our most critical key objectives as our world-class team members are the most valuable asset in American Tower. As we position the company to be a market leader in an evolving landscape, we recognize that developing, empowering and retaining diverse and talented team members is fundamental to our success as a company.

Through this lens, we've renewed our focus on management development and institute region-specific programs designed to support a balanced life for our teams among many other initiatives. We also appreciate that facilitating a culture that is inclusive and equitable is not only shown to drive better decision-making in business outcomes, but more importantly, it's the right thing to do for the people who dedicate so much of their time to growing this business and delivering value to our customers and shareholders. In summary, the long-term secular demand trends underpinning growth in our industry remain resilient. We believe we're optimally positioned to capitalize on the successes of our Stand and Deliver strategy to date.

And we're more energized than ever as we look to execute on our initiatives in 2023 and deliver strong, sustainable returns for many years to come. With that, I'll turn the call over to Rod to discuss our 2022 results and expectations for 2023. Rod?

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Thanks Tom. Good morning and thank you for joining today's call. Before I dive into our 2022 results and expectations for 2023, I would like to highlight a few key accomplishments from the past year and provide an update on several developments in India since our last earnings call. First, demand and operational performance across our global portfolio remain as solid as ever.

We closed the year on a positive note with colocation and amendment tenant billings growth contributions of over 4% in Q4. In particular, our U.S. and Canada property segment delivered its strongest quarter since Q1 of 2020, and we have a clear line of sight to continued acceleration into 2023, which I will discuss shortly. Organic growth was complemented by the construction of nearly 7,000 sites, an American Tower record, including over 2,300 sites built in Q4, our highest level over the past eight quarters with an average day one NOI yield of over 12%.

Moreover, during its first full year of ownership by American Tower, CoreSite delivered record new business, selling nearly double the number of megawatts compared to the previous trailing two-year average, demonstrating the value of the company's interconnection and cloud on-ramp rich ecosystem. This robust growth was driven by increased demand from high-quality new logos and expansions from existing customers, driven by secular tailwinds of digital transformation and the demand for hybrid IT solutions. Furthermore, since the announcement of CoreSite acquisition, we successfully executed on our permanent financing plan at attractive terms, including through the issuance of common equity and senior notes, as well as our strategic partnership with Stonepeak. These financing activities reduced our leverage from 6.8 times at the end of 2021 to 5.4 times at the end of 2022 and moved us closer to our target range of three times to five times.

Next, I'd like to take a moment to cover the latest developments in India. As anticipated, Vodafone Idea or VIL continued making partial payments in Q4 of 2022, consistent with our outlook, resulting in total revenue reserves of approximately $38 million for the quarter and around $87 million for the year. Recently, we were pleased to see the completion of the Indian government's conversion of the adjusted gross revenue interest balances to equity in VIL. We view this as a reaffirmation of the government's commitment to support a three-player private carrier telecommunications market and a critical first step toward the possibility of more stabilized collections from VIL.

However, although VIL had committed to pay their billings in full in 2023 and make payments for outstanding balances from prior years in early 2023, they have communicated that they would continue to make partial payments. For that reason, we believe it is prudent to include revenue reserves against their annual billings and other contracted obligations in our 2023 outlook, which we've assumed at $75 million. We will, however, remain focused on collecting what we are contractually owed in full over the course of the year. In the meantime, we have worked to incrementally better position American Tower and our receivables balance, while also demonstrating a level of support for VIL and India's wireless market.

This includes the expectation to convert approximately $200 million in existing VIL receivables into optionally convertible debentures pending Vodafone Idea shareholder approval. Upon closing this agreement, we would have elevated the seniority of our pre-existing receivables balance and established an additional level of liquid collateral at American Tower's option. And finally, as we remain focused on stabilizing our India business, collecting our outstanding and future receivables in full and assessing the positioning of our global portfolio, we are currently exploring various strategic options, including the potential sale of an equity stake in our India business. As always, any decision taken will include careful consideration of the growth opportunity and risk profile in the market going forward, valuation and the optimal portfolio and capital structure mix for American Tower and its stakeholders.

We will certainly keep our investors informed of any developments as we move forward. With that, let's dive into the details of our full year 2022 results. Turning to Slide 6. Full year consolidated property revenue growth was nearly 15% and nearly 18% on an FX-neutral basis, which included a contribution of approximately 11% of growth from Telxius and CoreSite and negative impacts of approximately 2% and 1% from Sprint churn and revenue reserves taken associated with VIL in 2022, respectively.

Organic tenant billings growth for the full year came in at 3.2%, in line with expectations, complemented by solid growth from new builds with actual volumes coming in at the upper end of our prior outlook range for the year. In the United States and Canada, property revenue growth was nearly 2% with organic tenant billings growth of just over 1%, in line with expectations, including approximately $150 million or 3.4% from colocations and amendments. Escalators added another 3%, consistent with historical trends. This growth was partially offset by churn of around 5%, which consisted of roughly 1% in normal course churn with the balance being driven by Sprint.

Our international property revenue grew by nearly 13%. International organic tenant billings growth was 6.6%, led by Europe at 8.4% and followed by Latin America at 7.9%, Africa at 7.7%, and APAC at 2.6%. Overall, colocation and amendment growth for the full year was around 5%, while 6% came from escalators, partially offset by just over 4.5% of churn, the result of decommissioning agreements in Latin America, carrier consolidation in Africa and customer-specific churn in APAC. Finally, our data center segment contributed over $765 million to our total property revenue in 2022, including a record year of new business from CoreSite as I previously mentioned.

Moving on, adjusted EBITDA grew around 11% to over $6.6 billion or around 13% on an FX-neutral basis for the year. Growth was supported by solid contributions from Telxius and CoreSite and strong flow-through of top-line growth achieved through effective cost management. On a consolidated basis, adjusted EBITDA margins were down around 190 basis points as compared to 2021, primarily due to the impacts of the VIL reserves and Sprint churn in the US, higher pass-through revenue due to rising fuel costs and the lower margin profile of newly acquired assets, which we believe are well-positioned to drive meaningful margin expansion over time. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by approximately 5.6% and 3.5%, respectively, including over 11% growth on a per-share basis in Q4.

For the year, both metrics included over 2% in headwinds associated with FX. Attributable AFFO per share of $9.76 exceeded the original 2022 outlook midpoint laid out a year ago by $0.06, despite absorbing the negative impacts of incremental VIL reserves, rate-driven interest costs, and FX relative to our initial assumptions. Now before I discuss the details of our outlook for 2023, I will start by summarizing a few key highlights and assumptions. First, as we've previously communicated, we expect a meaningful step-up in U.S.

and Canada organic tenant billings growth, driven by an acceleration in new business backstopped by the comprehensive MLAs we have signed over the last few years together with the sequential improvement in contracted Sprint churn. Internationally, we expect a strong year of organic tenant billings growth across most of our regions driven by continued strength in organic leasing trends, along with contributions from CPI-based escalators, particularly in Europe and Africa. As we've communicated over the past couple of quarters, growth in Latin America will be moderated by churn headwinds associated with a continuation of Telefonica churn in Mexico and Oi churn in Brazil, where we'll see some staggered impacts over the next several years. Second, and as I mentioned earlier, we have factored into our guide an expectation for a continuation in VIL collections volatility, resulting in an assumption of $75 million in revenue reserves for the year.

Third, given the unprecedented rise in interest rates over the course of 2022, which saw the one-month LIBOR increased by more than 400 basis points and 10-year treasuries increased by around 250 basis points from the beginning to the end of the year, we expect 2023 to have one-time outsized negative growth headwinds associated with financing costs. Key components driving this assumption include elevated costs on our floating rate debt and to a lesser extent, the refinancing of our 2023 senior note maturities as well as the full year impacts of our 2022 equity-related initiatives, including our common equity issuance and the incremental minority interest and preferred distributions associated with our partnership with Stonepeak. Taken together, we have assumed a roughly 8% headwind to attributable AFFO per share growth associated with financing costs in 2023. Next, our initial outlook reflects estimated negative translational FX impacts of approximately $150 million for property revenue, $64 million for adjusted EBITDA, and $47 million for attributable AFFO as compared to 2022.

And finally, looking beyond the challenges I mentioned associated with interest rates, VIL reserves, and FX, our core business continues to demonstrate strong performance and resiliency, representing nearly double-digit year-over-year growth at the attributable AFFO level. While this performance is fueled by the solid organic leasing trends we're seeing across our global portfolio, it's further amplified by exceptional conversion rates through AFFO, achieved through a keen focus on cost management across our business. With that, let's dive into the numbers. Moving on to the details of Slide 7.

At the midpoint of our outlook, we expect total property revenues of nearly $10.8 billion, representing growth of approximately 3% or approximately 4% absent the incremental reserves assumed for VIL in 2023. Our guide includes expected cash revenue growth of around $230 million in the U.S. and Canada, and $245 million of FX neutral growth in our international regions, excluding the 2023 VIL reserves of $75 million. We also expect data centers to contribute roughly $55 million of growth in cash revenue to the property segment in 2023.

Lastly, as I mentioned in my earlier remarks, we anticipate a modest FX headwind of just under 1.5% to consolidated growth. Turning to Slide 8. We expect organic growth to contribute meaningfully to our property revenue growth assumptions. Starting with the U.S.

and Canada, we anticipate organic tenant billings growth of approximately 5% or greater than 6% excluding Sprint churn. This expectation includes record levels of year-over-year co-location and amendment growth of around $220 million, a nearly 50% increase over the levels achieved in 2022 and a 60% increase as compared to the trailing three-year average. Of the $220 million, over 90% is locked in through MLA-driven use right fee commencements and carryover growth. On the churn side of the equation, after incurring the largest impact of Sprint churn last year, we expect churn of around 3% in 2023, including an approximate 1% impact associated with Sprint, which would represent a year-over-year improvement of over 200 basis points in the segment.

Moving to Latin America. We expect organic tenant billings growth of greater than 2% for the year driven by relatively consistent co-location and amendment activity and continued solid contributions from CPI-based escalators of approximately 8%. This escalator rate does represent a step down from 2022 levels, as we saw inflation in markets like Brazil moderate in 2022 as compared to 2021. As we've previously highlighted, higher churn of around 8% is partially offsetting gross growth due to the expected continuation of Telefonica churn in Mexico and the early part of what we expect to be staggered Oi churn in Brazil.

Similar to last year, we do expect to receive some settlement payments from Telefonica over the course of the year, which will be captured outside of the organic tenant billings growth metric. We've assumed approximately $50 million in 2023 payments as compared to the over $80 million we received from Telefonica Mexico and Nextel Brazil in 2022. Turning to Asia Pacific. We are guiding to approximately 4% organic tenant billings growth in 2023, including churn of around 4%, which is around 70 basis points lower than the 2022 churn rate.

We expect co-location and amendment growth contributions to ramp up compared to 2022, coming in around 6%, fueled by the rollout of 5G networks. However, it is important to note that the reserves we've assumed for VIL in our guide reside outside of this metric, consistent with past practices. Turning to Europe. 2023 organic tenant billings growth is expected to be 7% to 8%, which is slightly lower than 2022 due to the mathematical benefits realized last year, given Telxius was only in the prior year base for a partial year.

However, this does suggest a solid acceleration off our Q4 2022 organic growth rate of around 6%, which represents a more normalized comparison. On the co-location and amendment front, we anticipate 2% to 3% growth, while growth from escalators stand at roughly 6%, reflecting the benefits of CPI-linked escalators across the majority of our European footprint. Churn is expected to decline to around 1%, reaping the benefits of the lower churn profile of our recently acquired Telxius portfolio. Finally, in Africa, we expect a solid acceleration off of 2022, with expected organic tenant billings growth of approximately 9%.

This includes co-location and amendment contributions of around 6%, along with escalators of around 10% and expected 450 basis point increase from 2022 levels. This will be partially offset by an expectation of elevated churn of greater than 6%, as carrier consolidation continues to work its way through the financial metrics. Moving on to Slide 9. At the midpoint of our outlook, we expect adjusted EBITDA growth of approximately 4% and around 5%, absent the incremental reserves assumed for VIL in 2023, while absorbing approximately 1% in FX headwinds.

We expect this growth to be achieved through solid cash conversion rates of 85% to 90%, the result of prudent cost controls across the business, and the expectations for another strong year from our U.S. services business. Turning to Slide 10. We expect attributable AFFO per share to decrease by $0.16 on a reported basis, while remaining flat year-over-year absent the impacts of the 2023 VIL revenue reserves.

As mentioned, we expect growth to be meaningfully impacted by financing costs, which include a rate-driven increase to cash interest expense along with the incremental full year impact of minority interest and preferred distributions associated with our U.S. data center business. Together with the common equity share issuance in 2022, financing costs are expected to provide a significant one-time growth headwinds of approximately 8% in 2023. As I mentioned earlier, absent the impact of financing costs, FX and the 2023 VIL reserves, our business is demonstrating solid growth contributions of around 9%.

Moving on to Slide 11, I'll review our capital plans for 2023 and our balance sheet progress and priorities for the upcoming year. In 2023, we will continue to deliver returns to our shareholders through the growth of our dividend. And subject to Board approval, we expect to distribute approximately $3 billion, representing an approximately 10% year-on-year growth rate on a per-share basis. In addition, we expect to deploy around $1.7 billion in capex, of which 90% will be discretionary.

This will largely be spent continuing the success of our new build program internationally, which assumes the construction of around 4,000 sites at the midpoint. We also expect data center capital to increase modestly as we seek to replenish the record capacity sold in 2022 and maintain appropriate levels of sellable capacity. Moving to the right side of the slide. As you can see, we made tremendous progress toward strengthening our balance sheet over the course of 2022, putting us ahead of the deleveraging path we committed to with the rating agencies, which actually afforded us the flexibility to repurchase a modest number of our shares in Q4.

Throughout 2023, we will continue to be guided by our long-standing financial policies as we execute on our financing plans. This includes the refinancing of maturing debt, while leveraging our strong liquidity position as needed to remain opportunistic as we access the capital markets. Finally, we remain committed to our investment-grade credit rating. And our priorities over the course of 2023 and into 2024 remain on deleveraging our balance sheet back down to the three to five times range.

Consistent with our recent comments, at this time, we do not see any material M&A in our pipeline that would alter these areas of focus. Turning to Slide 12. And in summary, we delivered strong results in 2022, demonstrating the resiliency of our business model in the face of various macro-related and customer-specific challenges. Our global portfolio of assets and operational capabilities continue to prove critical in meeting the growing demands of our customers and the customers they serve.

We saw record new build volumes internationally and record leasing within our CoreSite business and experienced a steady acceleration in colocation and amendment growth as we exited 2022, which we expect to continue into 2023. As we look ahead, we expect to further build on the successes of the recent years and leverage our portfolio to drive strong recurring growth on the back of consistent secular technology trends for many years to come. With that, operator, we can open up the line for questions.

Questions & Answers:

Operator

OK. [Operator instructions] Your first question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.

Simon Flannery -- Morgan Stanley -- Analyst

Great. Thank you very much. Good morning. Tom, you talked about scaling the core, and Rod just talked about no material M&A in the pipeline, thanks for that.

Just give us a little bit more color, if you could, on how you see the portfolio today. And is this the mix of assets that you want? You've obviously talked about potentially monetizing some of India. But any kind of areas where you feel like you're overexposed or underexposed? And how long is this sort of approach of not doing large deals likely to last? And then you talked about the strong results in CoreSite. You did buy some land there.

I've noticed your future development pipeline potential goes up quite significantly, probably as a result of that. Just give us some color as how you think about beyond just incremental capacity, something larger, given the opportunities you see there? Thanks.

Tom Bartlett -- President and Chief Executive Officer

Yeah. Sure, Simon. You got a lot going on in that question. But let me try to peel it back and then remind me if I left anything out.

With regards to scale of the core, it really comes down to really three pieces. One is to just do what we do every day, that's servicing our customers and driving that organic growth. And we've really been very focused on that in the U.S. as you saw our expectations for 2023 and beyond, because those large-scale relationships that we put in place with our -- the critical carriers in the United States are long-term in nature.

And so we now have a very predictable growth path in the US. And the U.S. is the foundation really of our entire business. And what I've always said is that we enjoy the benefits of diversification, because there are going to be some markets that are going to grow significantly, others that are going to grow less so simply because the methodology that all of our customers use for build are different.

And they all form those different sign waves as we've talked about in the past. And we can -- if you can layer on all those sign paths, you're able to get some predictable rates of growth. And so we're excited about coming out of 2022 strongly. We expect higher rates of growth in 2023 and in particular, within the United States.

From a total portfolio perspective, we're constantly looking at where we can maximize value. And we are in 26 countries today, and there could be certain markets there where it may just make sense for us from a number of different perspectives for us to peel back some of those assets. Don't have anything in mind as we speak. We're constantly evaluating it.

That's kind of what we do. And with regards to India, India is a market where they're going to have a higher population than China, if not now, very soon. They have huge penetration, huge data usage. And it's a market that we would like to be able to continue to keep our toe in because we continue to believe that there is significant growth there.

To the extent that we can bring in a third-party player to monetize the particular part of the asset and reallocate some of that capital in some other parts of the market, we'll look at that. It's purely opportunistic, and we look at every kind of available opportunity as we speak. With regards to our data center business, of course, I had a terrific 2022 record sales in 2022. And they're replenishing capacity where they needed.

We've added land in Denver and New Jersey, where we needed some additional runway. But we've got a good amount of capacity in the hopper. We're building out another 30 megawatts of capacity under construction. We actually got one-third of that already pre-leased, and we have 224 megawatts for future development.

So there's an incredible demand, as you well know, as we've heard from other competitors in the market for interconnection hubs. And that's what I really refer to as core side. It's not a co-location facility. It's an interconnection hub creating opportunities for new logos.

We added over hundred logos last year. And we're really excited about the opportunity and the demand that we see in the market for activity relative to our data center business in the United States. Did I miss anything, Simon?

Simon Flannery -- Morgan Stanley -- Analyst

Well, I guess, just in terms of the scale M&A, you've obviously done a lot of deals over the years. If you get back down into that three times to five times leverage, is that when we think about you're potentially looking at larger deals again?

Tom Bartlett -- President and Chief Executive Officer

Interesting, Simon. We have a lot of different ways of being able to secure M&A. We demonstrated that really with what we've done in Europe, with our capital, even in the United States with Stonepeak in terms of private capital. So I think the capital is there.

For us, yeah, it is a function that our objective is to delever. I really do want to get down to that five times kind of leverage. And so that remains a top priority for the business. But on top of that, we want to continue to feed our build program.

We had record build last year. We have a strong build program this year. With regards to the M&A, there's just still a significant difference between the valuations, the bid and the ask. And there's nothing out there that's compelling as we see it today.

And so our focus continues to be on, as I said, what we do every day, driving organic growth, driving efficiency. You see we expect margin improvement in 2023 versus 2022 and supporting our build program. Our customers are very active around the world from a build perspective. And I think in the last several years, we brought in like -- we built like 25,000 sites.

And so there's a significant opportunity there, and the returns are incredibly compelling on that new build program. So as I said, there's just nothing at this point in time that we see out there that's interesting really from an M&A perspective. And we continue to just keep our head down in terms of funding our build program and delevering our business.

Simon Flannery -- Morgan Stanley -- Analyst

Great. Thanks a lot.

Tom Bartlett -- President and Chief Executive Officer

You bet.

Operator

Your next question comes from the line of Ric Prentiss from Raymond James. Please go ahead.

Ric Prentiss -- Raymond James -- Analyst

Thanks, Good morning, everyone.

Tom Bartlett -- President and Chief Executive Officer

Hey Rick.

Ric Prentiss -- Raymond James -- Analyst

A couple of questions. I'll give it to you part by part. First, as we think about the guidance, and thanks for all the color there, how should we think about in US, Canada the pacing throughout the year? Is it going to ramp through the year? Does it start high and come down? Is it balanced? But opening question everybody is trying to figure out what is happening with the pacing in 2023 in U.S., Canada?

Tom Bartlett -- President and Chief Executive Officer

Actually, Rick, it's going to be very consistent, very linear throughout the year. And so largely, it's a function of the relationships and the agreements that we have in place. But we would expect it to be very consistent in the U.S. throughout the year.

Ric Prentiss -- Raymond James -- Analyst

OK. And the related question to extrapolate from that is last year at this time, you laid out some thoughts on longer-term leasing activity in the US, Canada 2023 through 2027 being above 5% and then extraordinarily above -- equal or above 6%. How are you feeling about that exiting 2023, looking at 2024, 2025, 2026, 2027 as you gave us a year ago?

Tom Bartlett -- President and Chief Executive Officer

Yeah. Exactly the same. I mean, it's -- as we have said, as we have predicted, as we have thought, and again, it comes down to largely the relationships that we have with our customers. We see strong demand coming out.

I still think we're in the early innings really with 5G. Our customers on average are probably on about half of our sites. So there is a significant amount of opportunity there. But it also comes down to the types of relationships and the arrangements that we have with regards to our MLAs.

So we are underscoring really what we had said a year ago relative to growth coming out of 2023 through 2027.

Ric Prentiss -- Raymond James -- Analyst

OK. And the last one for me, taking that to the bottom line, attributable AFFO per share last year at this time mentioned that 21 to 27 maybe above -- at or above 10%. We've had a couple of tough years here with Sprint churn. 2023, we've got financing costs, still some Indian reserves.

How do we think throw away 2021 to 2027 and just say, hey, as we look at 2023 as a new base point, how are you feeling about that ability to grow attributable FFO per share, dividend per share from this point onwards?

Tom Bartlett -- President and Chief Executive Officer

Well, I mean, you've got a couple of questions in there. We're not going to -- we're not focused on rolling out a long-term guide at this point, as you would expect. But there have been some significant macro environment changes that happened around the world that we use to underwrite kind of that double-digit expectation, which I think is what you're referring to. But I'm not letting the foot off the gas in the business, OK? We're not changing anything at this point in time.

Our core growth, as Rod just walked through, really remains really, really strong. And we don't have any expectations for that kind of growth diminishing. We see kind of 4G, 5G being rolled out across all of our footprints, which really gives us a lot of comfort in terms of being able to suggest that, that growth is going to continue. Now, also having the types of relationships that we do with our customers in the United States helps underpin a lot of that growth.

The interest rates, Rod walked through the impact of rates. It's kind of a reset in 2023. I believe it to be kind of more of a one-off, if you will, in 2023. So we remain really bullish on going forward.

As I said, I'm not going to talk about long-term guide, but I'm not letting the gas -- letting the foot off the gas at all within the business. With regards to -- of our dividend program, as you all know, you're a REIT expert. Our policy is just followed our REIT TI. And it's been very consistent.

We've been able to enjoy double-digit rates of growth on our dividend for the better part of the last 10 years actually, which has been very supportive. And we continue to be -- we continue to feel that our dividend is an important part of our total shareholder return. So we're looking at 10% dividend, as Rod talked about this year. It's difficult really to predict what that might be.

It depends upon what we bring into the REIT, what's not in the REIT, obviously, what kind of M&A exists out there. It could drop a little bit to high single digits. But again, we continue to expect it to grow significantly. And as I said, it's an important piece of our overall total shareholder return.

Ric Prentiss -- Raymond James -- Analyst

Great. Thank you so much. Everybody stay well.

Tom Bartlett -- President and Chief Executive Officer

You bet.

Operator

Your next question comes from the line of Michael Rollins from Citi. Please go ahead.

Michael Rollins -- Citi -- Analyst

Thanks and good morning. Just a couple of follow-ups. So first, and maybe this is a slightly different question on the U.S. leasing environment.

But you outlined the percentage of revenue tied to comprehensive deals. I'm just curious if you can unpack where the flex could be in U.S. performance, both in 2023 and maybe going forward as you think about the organic leasing growth potential of the U.S. business.

And then thinking a little bit more about the percent of revenue that you have tied to comprehensive deals. You shared a lot over the last couple of years on how the U.S. has been shaping up on that front. Can you share with us how other regions fit in terms of the percent of revenue tied to comprehensive deals? And as you work with your customers, are there aspirations that you have in different markets to get that to certain levels over time? Thanks.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Hey, Michael. Good morning. This is Rod. I'll start here, and Tom can certainly join in.

So -- but in the US, the leasing activity is really strong. And our revenue in the U.S. is underpinned through what we refer to as the holistic agreements, which I think everyone is very familiar with. But we've seen contributions from colocations and amendments rise from about $150 million in 2022, up to $220 million in 2023.

That drives about a 5% contribution to our organic tenant billings growth. And as Tom mentioned in his previous answer, we see about 90% of that locked in for 2023. And the long-term guidance that Rick asked about, we are continuing to target equal to or greater than 5% between 2023 out to 2027. And a fair amount of that activity, both the underlying revenue and the revenue growth, is locked in as part of the holistic deals.

Now of course, as we move beyond 2023, that 90% will come down maybe to about two-thirds or so by the time you get in the outer years. And that's just a function of getting closer to the end of some of the agreements, and chances are some agreements will be rewritten sort of along the way. So we feel really good about the visibility we have into the U.S. leasing market and the strength that we're seeing in the U.S.

market, particularly because of our assets and the way that we drive these agreements. Now your question kind of refers to flex. And I think what you mean there is where is the potential upside? And of course, there is a potential upside to the extent that there's faster uptake on 5G utilization in the US. And if that requires carriers to densify the networks a little bit quicker, and we see a faster conversion for colocations and fewer amendments going forward, that could certainly provide some upside.

And then depending on just the build of some of the carriers. And certainly, Dish comes to mind as they build a greenfield network to the extent that they go beyond their minimum commitments with us, that could certainly be some upside as well. So I would really kind of watch -- certainly watch Dish. I would watch the other carriers and see the 5G utilization.

And some of these new applications come out for 5G, we'll see what kind of bandwidth constraints that puts on networks and when network densification may end up happening. But it's a pretty exciting time in the U.S. market, particularly when you look at the 5G networks and potential applications coming down the pike. So I think that kind of covers off the points around the U.S.

leasing. When you think about our international business, we don't have holistic deals in the same way in a material fashion outside the US. They are much more traditional green, more of an a la carte, kind of pay as you go around the globe. So that's what I would say about that point, Michael.

Michael Rollins -- Citi -- Analyst

Thanks very much.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

You're welcome.

Operator

Your next question comes from the line of David Barden from Bank of America. Please go ahead.

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

Hey, guys. Thanks very much for taking the questions. So I guess the first one would be, Tom, thank you for your commentary around kind of the commitment to deleveraging. And I think you said 'there's nothing compelling out there,' significant differences between bid and ask on the buy side of that equation.

So to the extent that, that is true, is that what's informing your openness now to looking at an equity sale of the India market? Meaning that if things are too expensive to buy, maybe now is the right time to sell. And is that exclusive to the India market, or as you look across the portfolio, could you make the same argument that maybe it's an interesting time to monetize Latin America or other pieces of that? Part two of that would be is now the right time to think about this given the situation with VIL, or should we wait until that situation maybe resolve itself and then we think about an equity sale? And then, Rod, if I could -- so you went out of your way to mention that the financing impact on the AFFO -- attributable AFFO per your calculation is going to be about 8% for the year. Absent that and absent the provisions for VIL, we might be seeing an underlying 8% to 9% AFFO growth per share. Is that our takeaway for how we think about 2024, that obviously, other things aside and the fundamentals across the world that our starting point for thinking about 2024 is an 8% to 9% FFO growth business.

Thanks.

Tom Bartlett -- President and Chief Executive Officer

OK. Dave, you got a bunch of stuff packed in there. Let me start to -- no. Relative to the M&A in India, there's not a direct connect between the two.

They are somewhat mutually exclusive types of decisions. And it really becomes, again, part of a broader portfolio kind of conversation relative to what we think may make sense for the portfolio in terms of driving further value over time. India is really just kind of an opportunistic at this point in time. And really, it's -- we're in kind of the exploration mode at this point.

A number of things going on there. And to the extent that there is, again, a value creation opportunity for us, we can continue to enjoy the growth of the market and utilize that capital in other parts of the world, including using it to further de-lever, perhaps more -- even more quickly than we would have otherwise thought is not a bad thing. So there -- I understand the kind of the connection that you're drawing there, but I'm not really looking them in that way. And I really do believe the paths are separate.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Good morning David I'll take the next one here on the AFFO per share growth. So you can see in the chart that we laid out, we have FFO per share going from $9.76 to really down to $9.60 on an attributable basis. As we mentioned, the financing costs, you can see on the chart there, the $315 million represents about $0.68 of that or about an 8% headwind. The 405 is what's coming from our regional businesses, including our corporate cost centers.

And that 405 represents about a 9% growth. So that's kind of a core growth rate that we're generating from our operating. The FX headwind is about 1%. And then VIL represents about 2% headwind.

And when you put it all together, you get to a negative 2% growth. But to the extent that the financing impacts here really are one-time, which we expect, we expect interest to kind of peak this year and then -- in the middle of this year and maybe trend down toward next year, assuming they stay flat or even decline and become a tailwind next year. That certainly would be a good fact. But that could remove that 8% headwind on us.

FX and the VIL situation in India, both are somewhat unpredictable. But if you put those aside, we feel really good about our global operating business in that upper single-digit growth rate in this environment. And of course, with these uncertainties around FX and maybe recessions in the U.S. and other places, we'll watch and see how that unfolds.

But absent the volatility in India, absent the FX and the financing headwinds, we feel very good about an upper single-digit sort of a growth rate from our operating units. And that's all driven and underpinned by growth in mobile data consumption around the globe and the need for tower space. And our portfolio is just really well-positioned to benefit from that.

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

OK. Great. Thank you, guys. Appreciate it.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Yes. Thanks. David.

Tom Bartlett -- President and Chief Executive Officer

Thanks.

Operator

Your next question comes from the line of Phil Cusick from J.P. Morgan. Please go ahead.

Richard Choe -- JPMorgan Chase and Company -- Analyst

Hi. This is Richard for Phil. Just wanted to follow up on the builds. So what do you see as the most attractive markets right now internationally?

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

When it comes to our build program, Richard, I mean, we're going to build about 4,000 sites this year. That's the expectation. The biggest chunks here really come from Africa and India in the range of 1,600, 1,700 sites each in those areas. In Europe, we're going to drive just over 400.

In Latin America, maybe just under 300 sites. So there's an opportunity to build in all of these markets. And we get really good NOI yields in these markets kind of across the board. So it's not just about the volume of sites.

Certainly, we like the idea of increasing our footprint Europe, in particular, driving more builds there with very highly credit quality customers in really attractive economies. So the 400 plus, 400 to 500 sites we'll build there are very attractive to us. But as Tom talked about with scaling the core, anywhere where we have management teams and assets and customers, to the extent we can add assets through an internal capex program with high NOI yields, it creates a lot of value for our shareholders long-term. It's good for our customers as well.

So we think all of these markets are attractive in terms of our ability to build new assets.

Tom Bartlett -- President and Chief Executive Officer

Just adding on to that, one of the really interesting, I think, parts of the build is what we're doing in Africa, because we're really focused on building green sites in Africa with Airtel and really leveraging a lot of the power and fuel competencies that we've created in that market. We brought in solar to over 15,000 sites. We brought over lithium-ion in over 19,000 sites. We've reduced 5 million liters of diesel over the last several years.

And so there is an incredible competency that we're building with regards to Power as a Service in that marketplace. And we're able to bring that then on to those green sites that we're building in conjunction with our -- with the agreement with Airtel. So that's a particular interest that we're really excited about over the next couple of years.

Richard Choe -- JPMorgan Chase and Company -- Analyst

And coming back to the US, you said about the carriers are about 50% of your sites are 5G. When can we see, I guess, more densification activity? Do you think that's coming at the end of this year or into next year?

Tom Bartlett -- President and Chief Executive Officer

I'm certain that there are certain pockets of the United States where we're already seeing some densification going on in the marketplace. And so I would expect that to continue as penetration continues with 5G sets. Keep in mind, it's in the carrier's best interest to deploy out 5G, because it's going to lower their overall cost of providing service. And so as activity continues to drive and as applications continue to develop and get deployed, you'll start to see that densification.

But -- so I think it is already going on. And I would expect that over the next two to three years, we'll see an increase even in the densification within the market. Also, keep in mind that carriers are using slightly higher spectrum bands. And so given the propagation characteristics, they're going to be requiring higher levels of densification as a result of that as well.

Richard Choe -- JPMorgan Chase and Company -- Analyst

Thank you.

Operator

Your next question comes from the line of Eric Luebchow from Wells Fargo. Please go ahead.

Eric Luebchow -- Wells Fargo Securities -- Analyst

Great. Thanks for squeezing me in. So I just wanted to check in on the LATAM business. Obviously, as you mentioned, some churn impacts this year.

Maybe you could break out the impact from Telefonica and Oi in your guide? And what type of visibility you have on churn beyond 2023 when some of these events may resolve and we could see organic growth go back to historical upper single-digit ranges? And then secondly, just a balance sheet question for Rod, obviously, a big increase in interest expense. Maybe you can talk about how you're thinking about managing the balance sheet this year in terms of fixed floating mix, whether there's the possibility of terming out some additional floating rate debt given the inverted yield curve or accessing the secured market or anything else you're looking at to help drive that down? Thank you.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Yeah. Sounds good, Eric. So when it comes to Latin America, I guess what I would point to is our guide on organic tenant billings growth is a little bit higher than 2%. That comes in a few pieces.

The gross new business is going to be in the mid-single digits, let's call it, around 3% or so. We're also seeing higher escalators at around 8%. And we do have a headwind of churn of about 8% as well. That's the bits and pieces in terms of getting into that growth rate.

So you can see the churn number is fairly high. We do think it's temporary, and we do think it will work through it over the next couple of years and get back to a more compelling overall growth in the market. And when it comes to the churn pieces in our guide specifically, when you look out here in 2023, Telefonica is really the biggest piece. And I don't want to get too detailed in terms of customers.

But I think everyone knows what's happening in Mexico with Telefonica and then joining AT&T as an MVNO there. So that's driving a fair amount of the churn. We're also seeing some churn remaining from American Movil really through the Nextel assets that were purchased down in Brazil. Those are the two things other than smaller churn, smaller customers throughout the region.

But it's really the Nextel and the Telefonica in the bigger piece. And then the Oi piece really is going to be out over time. So there's a couple of things that I would say about Oi. Oi in total is about $100 million of revenue for us.

It represents about 1% of our overall business. About one-third of that is tied in with their landline business, which we fully expect that the landline business of Oi will keep those sites over time. The other two-thirds, we have, on average, five to six years remaining on the length there. So that will be -- kind of over time, we'll see Oi is not a significant impact today that we're seeing, but that may start unfolding this year and into next as we negotiate with the three players who kind of carved up the Oi.

It will probably extend into a multiyear period in terms of getting through Oi. So that's kind of what's happening in Latin America relative to the churn issues. Yes. On the balance sheet, a couple of things that I would say.

I mean, we have long-standing percentage policies when it comes to fixed and floating. We run 80-20. We're pretty much there at the end of 2022. We expect to stay in and around that range.

I mean, we can be opportunistic. I think you saw it at the very end of 2021 just before interest rates began to rise. We were fairly aggressive in terms of terming out floating rate balances. We got our floating rate percentage down to closer to 10%.

With about 90% or just over 90% on fixed, we did that very purposefully to take advantage of the low rates, both in the U.S. bond market and the euro market. And that was just ahead of purchasing the data center business on December 28th, 2021. So we can be flexible there.

In terms of managing the balance sheet going forward, we have about $3 billion in bonds that we'll refinance this year. We'll look at a variety of opportunities to do that. That could come in the form of getting into the U.S. capital markets that we can do that or parts of that in the European markets.

And of course, we'll be balancing short-term and long-term rates. We could stay on the shorter end of the curve and with the expectation that rates may come down in the next couple of years, and then we go out longer when the rates are more attractive. We can also secure some of the debt that's on the balance sheet to the extent we refinance it and maybe carve off some savings from that perspective as well. So there are a lot of opportunities in terms of looking at the market.

There's a lot to consider in terms of where we expect rates to head. But as I said earlier in one of my last comments, we do expect that rates will probably peak here in the U.S. this year, maybe even drift down later in the year. And we'll continue to watch the markets and interest rates and economy to see what we expect to be happening next year.

But we'll be looking at the full curve and all the different capital opportunities that we have in front of us to make the very best decisions going forward.

Eric Luebchow -- Wells Fargo Securities -- Analyst

Great. Thanks, Rod.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

You're welcome.

Operator

Your next question comes from the line of Batya Levi from UBS. Please go ahead.

Batya Levi -- UBS -- Analyst

Great. Thank you. Just following up on India and specifically for Vodafone. Can you size the partial payments that they're making right now, if there's been a change in the pacing? And if there are any adjustments to the pricing of their contract with you? And just going back to evaluating strategic options for India.

It's been a challenging market, but potentially there is some improvement. How do you sort of underwrite what valuation you would take versus the -- your long-term growth assumptions in that region? Thank you.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Hey, Batya, I'll take the India reserve question. So you can see in our outlook for 2023, we are calling out a specific reserve for VIL of about $75 million. That's up against on a revenue reserve basis from 2022, we reserved close to $100 million for really the last two quarters in 2022. What I can tell you is, the percentage -- I don't want to get into percentages of revenue that they're paying and those sorts of things.

But I will highlight that in January, they're paying us a little bit more than they were paying us in the end of 2022. So we are seeing some improvement in terms of the collections through VIL. And we do expect that that improvement will kind of continue, and we'll collect even a little bit more from a variety of their commitments to us as we look out over the balance of 2023. We do expect them to be getting back closer to and increasing their payments to us toward the end of the year.

So we do expect to see some improvements going in that direction. That's kind of what I would say. In terms of the contracts, we haven't really written any MLAs or leasing contracts with them. We have entered into the $200 million convertible debenture, which also have some terms and conditions embedded in it that call out specific time periods in terms of when payments are due.

It also has some additional terms and conditions around staying current with leasing fees within the MLAs and those sorts of things. So there's that additional agreement, which gives us a few additional kind of safety nets or safety belts here. But the situation there is volatile. We're focused on trying to support VIL through this period.

We were very encouraged by the government conversion. We think that could be the beginning of better things for VIL in terms of raising additional capital going forward. And we're focused on long-term value creation and having VIL as a partner in India over the long term. And maybe on your second question, can you remind me what it was?

Batya Levi -- UBS -- Analyst

Yeah. With improvement in India, why is this the right time to look for strategic options in the region?

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Yeah. I would say, it's really just being opportunistic, kind of, looking at the market. Certainly, India has been volatile over the last few years and maybe even a little bit longer than that. But as we said in the prepared remarks, we look at all of our portfolio assets around the globe kind of on a constant basis and evaluate growth opportunities, valuations, and other things.

So we are in the process of looking at strategic options in India. We haven't made any decisions at this point, but we are kind of going through a process in evaluating things. And it's really around being opportunistic. We do believe that the Indian market is an interesting market and does hold some upside, but there's also a fair amount of volatility that we have experienced.

So we'll be looking at a number of things. And when and if we conclude and make any decisions, we'll certainly let everybody know.

Batya Levi -- UBS -- Analyst

OK. Thank you.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

You're welcome.

Operator

Your next question comes from the line of Nick Del Deo from SVB MoffettNathanson. Please, go ahead.

Nick Del Deo -- MoffettNathanson -- Analyst

Hey. Good morning, guys. Thanks for taking my questions. First, just a follow-up on the India question.

Tom, you've emphasized how important new site builds are to your growth outlook and the returns you get with them. Obviously, there's a step down in your build plan in 2023 versus 2022, and it looks like the driver is primarily India. So I guess, does that explicitly tie into your view that India is more volatile, potentially less appealing market than you once believed, or is something else driving that downshift?

Tom Bartlett -- President and Chief Executive Officer

No. It's really not. As a matter of fact, if you saw the numbers coming in from the field in terms of what they expected to build, it's significantly higher, candidly. And what I -- what we do is, we ratchet that back and look at the opportunity and look at where we can drive the most value there.

So there's nothing going on there with regards to the pullback on sites. By the way, we will see different levels of site build in each one of the countries, just like we see different levels of colos, amendments depending upon what densification looks like and what the carriers are looking like. But now I wouldn't read in anything in terms of the pullback on India new builds for 2023.

Nick Del Deo -- MoffettNathanson -- Analyst

OK. OK. That's helpful. And then maybe turning to CoreSite, since you've had it for a little more than a year.

It seems like things are going consistent with your underwriting, maybe even a bit better. I guess bigger picture, any key learnings you'd highlight now that you've had a chance to have deep discussions with CoreSite's customers and your tower customers about the vision for how you could integrate those assets or have them work together? And I guess, more generally, any adaptations or refinements of your plan versus a year ago that you'd want to highlight?

Tom Bartlett -- President and Chief Executive Officer

Yeah. No, nothing specific. I mean, I -- we have a fair amount of history in the kind of in that particular part of the infrastructure business. We knew what the model was that CoreSite was delivering on with their customers and how significant interconnection was in terms of driving value for their customers as well as for the cloud and service operators, and that demand continues.

And it's a significant barrier to entry for others to be able to compete against them. I'm continually incredibly impressed with the team and how they think about returns and how they think about the relationships with the customers. So -- but that wasn't surprise, because I thought that candidly through the entire due diligence process. So I knew the quality of the group.

We did enjoy significant growth in 2022, which I think just goes to the strength of the team and strength of the value proposition that they're offering their customers. And we believe that 2023 is going to be another strong year. We still have, as you would expect, a significant amount of energy around what the edge will ultimately look like. We have created an advisory board.

We have a lab set up. We have plans to start to look at building out some of that capacity. We've identified about 1,000 sites within the United States that can handle up to over a meg of capacity. And through the relationships that we've been able to develop really through CoreSite with the cloud, we remain really optimistic about what that opportunity is going to look like and how we're going to be able to drive incremental business to our tower site, which is in and of itself has a strong competitive barrier given the ownership that we have of the land and of the site.

And so we're very excited about it. There's nothing in our guide relative to performance coming from that activity. And as we've said, it's going to be a multi-year rollout. But we think that as a result of the CoreSite assets as well as our tower assets, we're really uniquely positioned to be a meaningful part of the puzzle as the edge continues to develop.

So as I said, I think we would just continue to underscore what we originally had thought, and we're continually working very methodically in terms of trying to become that linchpin for rolling out that kind of capability.

Nick Del Deo -- MoffettNathanson -- Analyst

OK. Thank you, Tom.

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

And Nick, maybe I'll just add -- complement on to what Tom said here. As we wait for the edge or work for the edge to develop, the CoreSite business is performing exceptionally well and right in line with our expectations. You heard us talk earlier about the record new business that we achieved in 2022. We see strong demand from enterprise customers on those core data center assets that we have around the country.

A few of the key metrics here. We are seeing escalations right around 3% on our rental space, which is right in our target range. We see cash mark-to-market adjustments for 2023 go up beyond where they were in 2022. So they've gone from about 2% up to maybe 3% to 3.5%.

So that's certainly a good factor. Churn continues to be in and around 6.5%, which is on the low end of our range. Interconnection growth we expect in 2023 to be in the 6% to 8% range, kind of right in line with where we would expect it to be. And our development capex is coming in at around $360 million for 2023.

And much of that is to replace capacity that we sold in 2022 through those record new business numbers that we will be deploying in 2023 and 2024. Replacing that capacity is really where the capex is being deployed. So we're seeing very good results and really demand from that CoreSite business, again, as we look to work to develop the edge.

Nick Del Deo -- MoffettNathanson -- Analyst

That's great color. Thank you, both.

Operator

And that's all the time we have for questions today. I would now like to turn the conference back to your speakers for any closing remarks.

Adam Smith -- Senior Vice President, Investor Relations

I appreciate everybody joining the call. If you have any questions, please feel free to reach out to myself or the Investor Relations team. Thanks, everyone.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Adam Smith -- Senior Vice President, Investor Relations

Tom Bartlett -- President and Chief Executive Officer

Rod Smith -- Executive Vice President, Chief Financial Officer, and Treasurer

Simon Flannery -- Morgan Stanley -- Analyst

Ric Prentiss -- Raymond James -- Analyst

Michael Rollins -- Citi -- Analyst

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

Richard Choe -- JPMorgan Chase and Company -- Analyst

Eric Luebchow -- Wells Fargo Securities -- Analyst

Batya Levi -- UBS -- Analyst

Nick Del Deo -- MoffettNathanson -- Analyst

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