RBC Capital Markets, LLC Jonathan Atkin (Analyst) Kutgun Maral, CFA (Analyst) (415) 633-8589 (212) 437-9151 [email protected] [email protected] Bora Lee (Analyst) Michael J. Tang (Associate) (212) 618-7823 (646) 618-6772 [email protected] [email protected] December 24, 2020 Cable/Telecom & Communications Infrastructure 2020.12.24 Weekly news roundup C-Band auction update. C-band auction bids have reached $69.83B in gross proceeds after 45 rounds of bidding. Bidding is set to resume January 4 after taking a break for the holidays. After 45 rounds, EQUITY RESEARCH the nationwide price for A block licenses per MHz Pop was $1.21, while BC prices were $1.11 per MHz PoP according to BitPath COO Sasha Javid. New York has commanded the highest total price, standing at around $515M for category A and BC. “Gross proceeds have been driven by surprisingly robust and persistent demand,” wrote Javid. “In Round 36, I suspect that a large bidder pulled back significantly in the largest markets given that all the top 10 markets experienced a drop in demand.” There are 57 participants in the clock phase, though winners won’t be disclosed until the auction ends. T-Mobile, AT&T, Verizon and Dish are all among registered bidders. (Fierce Wireless) FCC update. Outgoing Chairman Ajit Pai will use his last FCC meeting on Jan. 13 to showcase the commission’s work over the past four years. “Serving as chairman of the FCC has been the honor of a lifetime,” Pai wrote in a blog post. “And soon, my time in this position will conclude.” Pai expressed pride in his efforts to increase transparency, and in the agency “show[ing] its work” by sharing ahead of time what the FCC would be voting on. “It’s now routine for the agency to publish the exact text of commission meeting items three weeks in advance of any votes being cast; to include a one-page fact sheet describing in plain English what each item does; and to post a monthly blog from yours truly introducing the agenda in a hopefully engaging way.” For the January meeting, Pai said he has invited FCC bureaus, offices, and task forces to prepare presentations highlighting their accomplishments over the past four years. (Radio World) Verizon update. Verizon is expanding its "Food for Frontline Workers" program to doctors, nurses, first responders and healthcare workers in six cities experiencing high volumes of COVID-19 cases. An estimated 50,000 meals will be delivered during the 2020 holiday season and in January 2021. This program is the continuation of Verizon's initiative that kicked off in April, delivering more than 150,000 meals to frontline workers in cities across the U.S. including New York City. Verizon's expanded initiative will provide meals to healthcare workers and first responders in Milwaukee, Omaha, Minneapolis and Chicago, with additional markets to include Sioux Falls and Los Angeles. "Our 'Food for Frontline Workers' program is a way for us to deliver gratitude and support for first responders, healthcare workers, and to the local business restaurants who have been hit hardest by the pandemic," said Patty Roze, Vice President, Verizon Public Sector. "By putting themselves on the front lines of the response to COVID-19, first responders and healthcare workers have sacrificed their own comfort to care for others. We see the best part of humanity in their selfless acts of heroism." (Company release) AT&T update. AT&T announced that AT&T Mobility and the Communications Workers of America have reached agreements on one-year extensions of two Mobility contracts. The extended Mobility Orange contract covers over 14,000 AT&T Mobility employees in 36 states and the District of Columbia. It goes into effect on February 13, 2021, and expires on February 11, 2022. The extended Mobility Southeast (or Mobility Black) contract covers nearly 10,000 AT&T Mobility employees in CWA District 3 – the Southeast Region, which includes Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and St. Croix, USVI. It goes into effect on February 12, 2022, and expires on February 10, 2023. Until the extended contracts take effect, employees are continuing to work under their current contracts. (Company release) Priced as of prior trading day's market close, EST (unless otherwise noted). Disseminated: Dec 24, 2020 22:00ET; Produced: Dec 24, 2020 17:52ET All values in USD unless otherwise noted. For Required Conflicts Disclosures, see Page 84. Cable/Telecom & Communications Infrastructure 2020.12.24 Exhibit 1: RBC Cable/Telecom and Communications Infrastructure Comps Sheet Telco & Wireless 2021 EV/EBITDA Price 2W YTD Mkt. Cap. LT Debt Cash Ent. Val. Net Debt/ Revenue (MM) EBITDA (MM) Div EV/EBITDA P/FCF P/E EV/uFCF / 2021 EBITDA Company Symbol 12/24/20 % Chg. % Chg. (mil.) (mil.) (mil.) (mil.) LQA EBITDA CY20E CY21E CY20E CY21E Yield CY20E CY21E CY20E CY21E CY20E CY21E CY20E CY21E growth AT&T T $28.70 (6.5%) (26.6%) $205,865 $158,878 $9,758 $374,488 2.6x $170,743 $174,266 $54,959 $56,853 7.2% 6.7x 6.4x 7.9x 8.4x 9.1x 9.0x 9.6x 9.3x 1.9x Verizon VZ $58.87 (2.7%) (4.1%) $243,840 $115,560 $8,983 $351,878 2.4x $128,781 $132,151 $46,903 $48,141 4.3% 7.5x 7.0x 11.8x 13.1x 12.1x 11.8x 12.4x 11.4x 2.6x T-Mobile TMUS $132.92 1.8% 69.5% $166,549 $69,192 $6,571 $229,170 2.8x $73,804 $77,377 $19,830 $22,806 N/A 11.9x 10.1x NM 38.2x NM 39.3x 27.4x 27.2x 0.6x Lumen (CenturyLink) LUMN $9.86 (1.7%) (25.4%) $10,699 $32,592 $547 $42,744 3.7x $20,707 $20,321 $8,848 $8,917 10.1% 4.9x 4.6x 4.5x 4.2x 7.1x 7.2x 9.0x 8.4x 6.8x Telecom Carrier Average (2.3%) 3.4% 2.9x 7.2% 7.8x 7.0x 8.0x 16.0x 9.4x 16.8x 14.6x 14.1x 3.0x U.S. Treasury Yield - 10 years Spread vs VZ/T: 4.8% 1.0% Cable Average (ATUS, CHTR, CMCSA) 1.0% 26.4% 4.2x 1.8% 11.2x 10.5x 18.8x 16.4x 35.8x 27.1x 17.1x 15.7x 1.5x Tower Infrastructure 2021 EV/EBITDA Price 2W YTD Mkt. Cap. LT Debt Cash Ent. Val. Net Debt/ Revenue (MM) EBITDA (MM) Div AFFO/share EV/EBITDA AFFO Multiple EV/uFCF / 2021 EBITDA Company Symbol 12/24/20 % Chg. % Chg. (MM) (mil.) (mil.) (MM) LQA EBITDA CY20E CY21E CY20E CY21E Yield CY20E CY21E CY20E CY21E CY20E CY21E CY20E CY21E growth American Tower AMT $218.64 (0.4%) (4.9%) $97,548 $24,782 $1,730 $121,612 4.4x $7,979 $8,635 $5,104 $5,551 2.1% $8.42 $9.30 24.5x 21.2x 26.8x 24.3x 31.8x 28.2x 2.6x Crown Castle International CCI $154.00 (2.0%) 8.3% $66,066 $19,453 $416 $85,103 5.4x $5,848 $6,160 $3,420 $3,614 3.5% $6.09 $6.71 25.9x 23.6x 26.7x 24.2x NM 46.3x 4.4x SBA Communications SBAC $275.02 (0.2%) 14.1% $31,271 $10,717 $333 $41,654 7.0x $2,074 $2,199 $1,490 $1,584 0.7% $9.41 $10.27 29.1x 25.6x 31.3x 28.5x 32.2x 30.6x 4.2x Landmark Infrastructure LMRK $11.24 3.2% (31.5%) $286 $474 $12 $693 9.3x $58 $65 $64 $66 7.1% $1.32 $1.42 10.9x 11.2x 8.5x 8.0x NM 30.0x 3.6x US Wireless Tower Infrastructure Average (excl. LMRK) (0.9%) 5.9% 5.6x 2.1% 26.5x 23.5x 28.3x 25.7x 32.0x 35.0x 3.7x Fiber/Bandwidth Providers Price 2W YTD Mkt. Cap. LT Debt Cash Ent. Val. Net Debt/ Revenue (MM) EBITDA (MM) Div EV/EBITDA P/FCF AFFO Multiple EV/uFCF 2021 EV/EBITDA / 2021 EBITDA Company Symbol 12/24/20 % Chg. % Chg. (mil.) (mil.) (mil.) (mil.) LQA EBITDA CY20E CY21E CY20E CY21E Yield CY20E CY21E CY20E CY21E CY20E CY21E CY20E CY21E growth Cogent Communications CCOI $59.56 1.3% (9.5%) $2,729 $1,079 $393 $3,414 3.1x $567 $579 $213 $222 4.7% 18.2x 18.0x 45.8x 42.2x 30.1x 28.9x 25.2x 23.9x 5.3x Uniti Group Inc. UNIT $11.59 5.1% 41.2% $2,698 $5,034 $196 $7,607 6.1x $1,058 $1,088 $817 $858 5.2% 9.3x 8.9x NM 26.9x 7.0x 7.2x 14.5x 14.8x 1.8x Superloop Limited SLC AUD 1.06 3.4% 8.8% AUD 386 AUD 44 AUD 16 AUD 414 3.5x AUD 116 AUD 129 AUD 17 AUD 21 NA 25.5x 21.0x NM NM NM NM NM NM 0.9x Megaport Limited MP1 AUD 14.50 10.5% 35.0% AUD 2,228 AUD 21 AUD 167 AUD 2,082 15.1x AUD 71 AUD 104 -AUD 19 -AUD 2 NA NM NM NM NM NM NM NM NM NM Competitive Bandwidth Average (US only) 3.2% 15.8% 4.6x 5.0% 13.7x 13.5x 45.8x 34.6x 18.5x 18.0x 19.9x 19.4x 3.6x * AMT excludes preferred stock (series A and B) from the share count and EV.