SBA Communications Q3 Earnings Call Highlights

Key Points

• SBA Communications met third-quarter expectations, reporting AFFO per share of $3.19, an 80% Tower Cash Flow margin and a 69% Adjusted EBITDA margin. Management raised the midpoint of its 2026 AFFO and AFFO-per-share guidance, citing lower interest expense, reduced capital expenditures and share repurchases.
• Domestic leasing demand remained supported by 5G upgrades, network-capacity needs, fixed wireless access and rising mobile data usage. Management expects future spectrum deployments, including the 2027 upper C-band auction, to support tower leasing growth into the next decade.
• The company returned approximately $430 million to shareholders through $300 million of share repurchases and $131.3 million in dividends. SBA is also continuing to streamline its international portfolio, including the sale of roughly 1,800 South American sites, while investing selectively in higher-return markets.

SBA Communications NASDAQ: SBAC reported third-quarter results that management said met expectations, supported by domestic leasing activity, high tower cash flow margins and capital returns to shareholders. The company also raised the midpoint of its 2026 outlook for adjusted funds from operations, or AFFO, and AFFO per share, while continuing a portfolio review that has included international divestitures.

President and Chief Executive Officer Brendan Cavanagh said the company generated “industry-leading AFFO per share,” continued to review its portfolio and returned more than $430 million to shareholders through dividends and stock repurchases during the quarter.

Leasing Activity and Network Demand

Cavanagh said U.S. customer activity during the third quarter was slightly below first-half levels but aligned with the company’s expectations. The majority of activity continued to come from new leases as wireless carriers seek to address coverage gaps and add network capacity, while carriers also upgrade existing equipment with 5G-capable mid-band spectrum, C-band holdings, massive MIMO technology and higher-capacity radios.

Management pointed to fixed wireless access subscriber growth and expanding mobile data consumption as factors increasing strain on wireless networks. Cavanagh cited CTIA data showing U.S. mobile data traffic rose 20% in 2025, with demand expected to quadruple by 2032.

The company sees potential future leasing catalysts from additional spectrum deployments. Cavanagh noted that the FCC’s upper C-band auction is scheduled to begin in April 2027 and must be completed by July, making 160 MHz of spectrum available between 3.98 GHz and 4.14 GHz. He said that spectrum, combined with existing lower C-band holdings, would create 440 MHz of contiguous mid-band spectrum for wireless use.

“Whoever wins this spectrum will have to put it into commercial service, and putting it into service means new equipment on our towers,” Cavanagh said.

He also cited potential future commercial spectrum opportunities in the 1.6 GHz, 2.0 GHz, 2.7 GHz, 4 GHz and 7 GHz bands. While the timing of carrier activity can vary quarter to quarter, Cavanagh said the company believes the spectrum pipeline could support organic leasing growth into the next decade.

Quarterly Operations, Churn and Guidance

Chief Financial Officer Marc Montagner said third-quarter results were in line with expectations. SBA reported company-wide Tower Cash Flow margins of 80% and an Adjusted EBITDA margin of 69%. AFFO per share was $3.19, and the company paid a quarterly cash dividend of $1.25 per share.

• Domestic new lease and amendment billings totaled about $8 million during the quarter.
• International new lease and amendment billings totaled about $5 million.
• Sprint-related churn was $16 million in the third quarter, with full-year churn expected to be $55 million to $56 million.
• EchoStar-related churn was $14 million in the quarter, with 2026 churn expected to total $36 million.
• International churn guidance remained at a $38 million midpoint for 2026.

Montagner said SBA expects free churn in 2027 to be below $20 million. Cavanagh said normalized U.S. churn could eventually move toward roughly 1% after the company works through larger Sprint- and EchoStar-related amounts. International churn is expected to remain elevated in 2027 amid carrier consolidation, restructuring and network rationalization before beginning to normalize in 2028.

The company increased the midpoint of its 2026 guidance for AFFO by $2 million and AFFO per share by $0.08. Excluding foreign-exchange changes and the sales of Chilean and Ecuadorian operations, the midpoint of AFFO increased by $5 million and AFFO per share increased by $0.11, Montagner said. The improvement was attributed primarily to lower net cash interest expense, lower non-discretionary capital expenditures and the effect of a lower share count following third-quarter repurchases.

International Portfolio Review Continues

SBA agreed during the third quarter to sell approximately 1,800 sites in three South American markets, completing its exit from the region outside Brazil. The markets represent about $43 million of annual leasing revenue and $20.5 million of annual Adjusted EBITDA. Two of the market exits had closed by the time of the call, and management expects the remaining transaction to close by year-end.

The company had previously exited the Philippines and Colombia in early 2025 and Canada in October 2025. Montagner said the Chile and Ecuador transactions reduced full-year outlook by approximately $10 million of site leasing revenue, $6 million of Tower Cash Flow and $4 million of Adjusted EBITDA. SBA’s outlook did not include the pending sale of towers in Peru, which remains subject to regulatory approval and is expected to close in the fourth quarter.

Meanwhile, SBA built 210 international towers during the quarter, more than double the 99 built in the previous quarter, primarily in Central America and Africa. Cavanagh said South Africa and Tanzania have produced strong returns on invested capital, and the company expects to continue investing where it has scale, strong relationships with leading carriers and attractive return opportunities.

Capital Allocation and Edge Computing

SBA repurchased 1.7 million shares for $300 million at an average price of $179.68 per share since its prior earnings report. As of the call date, $800 million remained under its repurchase authorization. The company also paid $131.3 million in dividends during the third quarter, bringing total quarterly shareholder returns from dividends and repurchases to approximately $430 million.

The board declared a quarterly dividend of $1.25 per share payable Dec. 10 to shareholders of record on Nov. 12. Montagner said the dividend was approximately 13% above the prior-year period’s payment.

SBA’s leverage was 6.4 times net debt to Adjusted EBITDA, below the midpoint of its six-to-seven-times target range. The company issued $3.5 billion of investment-grade bonds in July, established a $2.5 billion commercial paper program in September and had no outstanding balance under its revolver or commercial paper program as of the call.

Management also discussed its SBA Edge initiative, which uses available power, fiber, security and space at tower sites to support distributed AI inference workloads. Cavanagh said several edge sites are operating with different companies, with incremental capital requirements remaining minimal so far. Revenue contributions are currently modest, he said, but the company sees potential to expand the platform across its U.S. tower portfolio.

About SBA Communications (NASDAQ:SBAC)

SBA Communications Corporation is a real estate investment trust that owns and operates wireless communications infrastructure. The company's portfolio primarily consists of wireless communications towers and related sites that support cellular, wireless broadband, and other communications equipment.

SBA Communications leases antenna space on its towers to wireless service providers, government agencies, and other communications companies. It also provides site development services, including zoning, permitting, construction, and project management, as well as tower construction and acquisition services in selected markets.

Founded in 1989 and headquartered in Boca Raton, Florida, SBA Communications serves customers across the United States and in parts of Central and South America.

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