Brendan T. Cavanagh
President and Chief Executive Officer at SBA Communications
Thank you, Mark. Good afternoon. The first quarter marked a good start to 2024. We executed well operationally and produced financial results in line with our expectations. As a result, we have made very few adjustments to our full year outlook on a constant currency basis. In many of our markets, macroeconomic challenges have continued, and as a result, incremental network investments by our customers have remained measured and largely in line with activity levels that we saw last year.
In the U.S., leasing activity from an execution standpoint was only slightly higher than the fourth quarter. However, during the first quarter, we saw increases in applications for both new leases and amendments as well as an increase in our services backlog. Our customers continue to have significant network needs. A large percentage of our sites still require 5G-related upgrades and data-heavy use cases, including fixed wireless access, will compel continued investment by our customers over the next several years. I am personally of the belief that the current high cost of capital environment is perhaps the biggest overhang on this spending and is driving the more elongated spending cycle. Nonetheless, the needs are great. Consumers are demanding and competitive pressures will continue.
Our infrastructure will be a critical component of the delivery chain for our customers to meet these challenges, and I believe we are well positioned to support them in their efforts. In addition, the current cost of capital may persist longer than anticipated just a few months ago. I believe it will ultimately come down in time, which will encourage increased network investment. It is all really just a matter of timing. Internationally, results were also in line with expectations. Although each market has its own specific dynamics on average, we are in a period of slower growth internationally compared to our historical levels. Lower inflationary escalators are a contributor, but the primary reason is consolidation-related churn and its associated impacts on carrier focus. Internationally, we have found that during these consolidations, the surviving carriers direct most of their attention to rationalizing their existing networks, causing much of their incremental network expansion. However, new spectrum and new technology generation deployments remain important and we believe will result in an acceleration in organic growth rates over time.
As discussed on our last call, chart [Phonetic] remains elevated due primarily to these consolidations, but we believe that the steps we have taken and are taking to reach mutually beneficial contractual amendments with these customers will enhance the long-term strength and stability of our cash flows. Turning now to our balance sheet and capital allocation priorities, we have not shifted our previously stated overall approach, but we do very much make adjustments along the way in response to broader market dynamics and opportunities. We prioritize our dividend and have again announced a quarterly dividend 15% higher than the prior year period. This dividend level remains less than 30% of our guided full year AFFO, leaving meaningful capital available for allocation.
During the first quarter, we added a relatively small number of towers to our portfolio. And as a result of carrier consolidation, we decommissioned almost as many sites as we added. We remain selective about the quality of the sites that we add to our portfolio, but we really remain particular about the price at which we add them, which these days has been the main gating issue. That's okay as our focus continues to be on return on investment, not growth just for growth's sake.
Opportunities will come along. In fact, they come along all the time. So we are comfortable being patient appropriately considering the new cost of capital environment we are operating in, and going after those opportunities that we believe we can best drive strong returns on. The sites we are decommissioning are related to consolidation activity among our customers. We will be more proactive in the coming years in evaluating naked sites for cost-saving opportunities and potentially decommissioning.
As I mentioned earlier, cost of capital and specifically cost of debt remains high and is now broadly expected to remain elevated for longer. This dynamic beyond any other has had the most significant impact on public tower company valuations. During the first quarter and beginning of the second quarter, we responded to some of this decline in valuation by spending $200 million to repurchase 935,000 shares of our stock. I believe that when there is ultimately a downward shift in rates, repurchases at this level will be even more accretive to future shareholder value. Nonetheless, rates remain elevated today, and we recognize the impact of potential future higher interest costs on AFFO. So a portion of our capital allocation will continue to be appropriately dedicated to reducing debt. We are not formally changing our leverage targets as we believe retaining flexibility for the right investment opportunities is valuable, but operating with lower leverage in the current environment is clearly prudent.
Our balance sheet and liquidity position remain in great shape. If not for the share repurchases, our revolver would have been fully paid down as of today. Our average cost of debt remains very low at 3.1%. However, over the next 12 months, we have approximately $1.8 billion that will need to be refinanced. The cost of that debt will certainly be higher than what we are paying today, but our ability to manage the amount of debt needed and the time we are locked into higher rates will be important factors in the approach we take. Capital is widely available to us. It's really just a matter of cost. We are evaluating a variety of options and we'll provide further updates during the year as incremental steps are taken.
Finally, I would like to revisit some of my comments from our prior earnings call with regard to the portfolio review we have undertaken. On the last call, I mentioned that we had begun an effort to analyze all of our operations and our potential operations through a lens of stabilizing results, growing our core business and shifting our mix more and more to high-quality assets and operations. I do not see this goal as having a finite deadline as it is more definitional around the key decisions we make. However, there are some very specific steps being taken and looking at each of our key operations, each of our business lines in each of our international markets.
We are setting baselines as to where we think these operations end up on a status quo basis one year from now, five years from now and even 10 years from now. Then based on potential opportunities we see in each case, we are developing alternative results profiles based on different paths we might take with the ultimate goal being improving the outcome relative to the base case. We are making good progress in gaining good insights through the effort, but this is not an overnight initiative. Many of the potential steps identified to enhance our positioning in given markets or operations will take time, sometimes possibly years to effectuate.
After our prior call, a lot of attention was paid to the possibility of divestitures of businesses or markets. While that may be an outcome in some cases, it is far from the priority or preferred path. I would much rather find ways to improve our position in the market through the addition of quality assets, enhance customer relationships and agreements and other creative solutions. In fact, I was recently visiting our team in Brazil, and learned a number of creative solutions we are introducing to enhance the customer experience at our sites and thereby improve the longevity of our customer relationships at those sites. I am encouraged by the seriousness with which our teams are approaching this initiative. In the end though, as I stated previously, financial results always matter, and we will make the best decisions we can to protect or create shareholder value as our top priority. We have a great business and great assets. It is our job as the management team to maximize the value we can realize from those assets, and that is where our focus squarely is.
I'd like to wrap up by thanking our team members and our customers for their contributions to our solid first quarter, and we look forward to continuing to share our progress throughout the year. With that, Jeffrey, we are ready for questions.
