Summary of SBA Communications Conference Call Company Overview - **Company**: SBA Communications (NasdaqGS:SBAC) - **Industry**: Communications Infrastructure, specifically focusing on tower leasing Key Points Industry Growth Outlook - The broader tower industry is experiencing growth driven by co-location for densification and coverage, as well as amendments for existing equipment [4][10] - The industry has seen a consistent 10x increase in capacity with the rollout of next-generation technology, leading to a significant reduction in cost per bit [4][5] - Current EBITDA margins for wireless carriers remain stable at around 45%, despite changes in pricing structures [5] Future Catalysts - The next major catalyst for growth is anticipated to be 6G technology, with potential auctions for C-band blocks by the FCC in 2027 [6][10] - The company expects to see a peak in top-line growth rates as the industry transitions into a harvest mode following a period of high CapEx [6] Financial Performance and Projections - In 2023, SBA Communications reported $78 million in lease-up, with a guidance midpoint of $35 million for the current year [6] - The company projects a growth rate of 4%-5% in the U.S., with 3% from existing leases and 2%-3% from amendments and co-location [10][11] Fixed Wireless Access (FWA) - FWA accounts for 15 million subscribers and over half of the overall network capacity, driving co-location for densification [14] - Research indicates that 50% of traffic on wireless networks comes from FWA, which is expected to continue influencing leasing activity [14] Customer Agreements and Revenue Streams - SBA has a 10-year agreement with Verizon, which is expected to be a significant revenue driver in 2026 [20] - AT&T has a steady 5-year agreement, aiding in their 5G deployment [22] - The company anticipates a $56 million revenue exposure from DISH, with a lawsuit filed to protect its interests due to non-payment issues [26][27] International Markets - Brazil represents approximately 15% of site leasing revenue, with challenges due to Oi's consolidation and FX volatility [30] - The company remains optimistic about Brazil's long-term growth potential, citing a young population and ongoing demand for 5G [31][32] - In Africa, SBA operates in South Africa and Tanzania, achieving high returns on invested capital, but does not plan to expand into new African markets [33] Capital Allocation and Market Valuation - There is a disconnect between private and public market valuations, impacting M&A activity [46] - The company plans to prioritize buybacks and debt reduction over large acquisitions due to high valuations in the U.S. market [48] - SBA's capital allocation strategy includes $1.9 billion of EBITDA, with significant portions allocated to dividends, interest expenses, and growth CapEx [47] Industry Challenges and Opportunities - The tower industry faces valuation compression, with SBA trading at mid-10s forward AFFO compared to historical averages in the low 20s [50] - The company believes that ongoing traffic growth, the introduction of AI, and the upcoming 6G technology will drive future demand [51][52] - The infrastructure built over the past 35 years presents significant barriers to entry for new competitors, ensuring stability in the market [52][53] Conclusion - SBA Communications is positioned for stable growth in a challenging market, with a focus on leveraging existing infrastructure and customer relationships to drive future revenue. The anticipated rollout of 6G and the ongoing demand for wireless connectivity present significant opportunities for the company moving forward [54][55]

Financial Data and Key Metrics Changes - In Q4 2025, total operating revenues decreased by 1% year-over-year and 2% for the full year, with revenues flat year-over-year when excluding divestitures [19][21] - Adjusted EBITDA improved by 6% in Q4, but declined by 6% for the full year due to divestitures and a non-cash adjustment in Q1 [20][21] - Capital expenditures for the full year were $406 million, with a forecast for 2026 between $550 million and $600 million [21][22] Business Line Data and Key Metrics Changes - TDS Telecom added 58,000 new marketable fiber addresses in Q4, a 39% increase year-over-year, and delivered 140,000 new addresses for the full year [11][12] - Residential fiber net adds were approximately 15,000 in Q4, up 11% from Q4 2024, totaling about 45,000 for the year [12][18] - Cash site rental revenue for Array increased by 64% year-over-year in Q4, with a 96% increase when including T-Mobile interim site revenue [29] Market Data and Key Metrics Changes - The divestitures in 2025 impacted revenues, accounting for a $3 million decline in Q4 compared to the prior year [19] - The company identified 300,000 additional fiber address opportunities across approximately 50 new communities, increasing long-term fiber address goals from 1.8 million to 2.1 million [8][15] Company Strategy and Development Direction - The company aims to strengthen its corporate and capital structure, grow TDS Telecom's fiber business, and support Array's success as a tower company [5][6] - The focus for 2026 includes delivering a fiber build plan, driving sales growth, and enhancing customer experience [16][17] - Array's strategy emphasizes optimizing tower operations and monetizing spectrum holdings, with significant progress in spectrum monetization already achieved [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth prospects for 2026, particularly in fiber and tower operations, despite challenges from divestitures and legacy revenue declines [22][37] - The company is focused on executing its business transformation initiatives to improve operational efficiency and customer experience [14][17] Other Important Information - TDS repaid $150 million in term loan debt and received a special dividend of $726 million from Array's spectrum sale [7][8] - The company is committed to delivering $100 million in savings by the end of 2028 through business transformation efforts [16] Q&A Session Summary Question: Is DISH included in the 2026 guidance? - DISH is completely out of the 2026 guidance for revenue, OIBDA, and free cash flow, with any settlement considered upside [45][47] Question: What is the outlook for tower leasing applications? - The company is optimistic about growth prospects for 2026, expecting significant same-store growth and positive results from insourcing the sales team [48][49] Question: How is the company addressing video services? - The company sees video as a critical part of its value proposition and does not plan to outsource it, as it attracts bundled customers [87] Question: What is the strategy for monetizing naked towers? - The company views naked towers as having significant latent value and aims to reduce holding costs while exploring lease-up opportunities [93] Question: What is the growth rate embedded in the revenue guidance for 2026? - The expected growth rate on a same-store basis is around 6%, excluding DISH revenue [83]

Financial Data and Key Metrics Changes - The company raised its outlook for property revenue, EBITDA, and AFFO due to strong demand and favorable FX tailwinds [4][19] - Consolidated property revenue grew 1.2% year over year, with a more than 3% increase when excluding non-cash straight-line revenue [15] - Adjusted EBITDA grew 1.8% year over year, approximately 4.5% when excluding non-cash straight-line revenue [16] Business Line Data and Key Metrics Changes - The U.S. services business had a near-record quarter, with application volumes among the big three customers up over 50% year over year [12][13] - The data center business, particularly CoreSite, saw over 13% revenue growth, driven by hybrid cloud demand and AI-related use cases [15][16] - Colocations increased by 200% year over year, indicating a shift towards densification [12][97] Market Data and Key Metrics Changes - In developed markets (U.S., Canada, Europe), mobile traffic growth rates are expected to slightly outpace global averages over the next five years [6] - The Africa business showed robust growth due to stabilized lower churn and better consumer pricing, while Latin America is expected to see low single-digit growth through 2027 [8][9] - The company anticipates a modest increase in its outlook for Brazil due to market stabilization and improved carrier economics [9] Company Strategy and Development Direction - The company aims to benefit from the durability of tower leasing and growing mobile data demand trends, focusing on capital allocation and maintaining a high-quality balance sheet [11] - The strategic focus includes prioritizing funding for CoreSite and maintaining a disciplined approach to capital allocation [10][11] - The company plans to continue enhancing its service offerings and expanding its tower footprint to capture new business opportunities [5][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth through the second half of the year, driven by resilient demand across the global portfolio [12] - The company noted that while there are timing delays in customer commencements, the overall leasing pipeline remains healthy [30][31] - Management expects churn to trend down as the company moves past the final year of Sprint churn [52] Other Important Information - The company issued €500 million in senior unsecured notes to strengthen its balance sheet, with net leverage standing at 5.1 times [14] - The revised capital plans for 2025 include approximately $1.7 billion in capital expenditures, reflecting a slight decrease from prior expectations [23] Q&A Session Summary Question: Can you elaborate on the domestic leasing observations and the impact of delays in commencements? - Management indicated that while application volumes are healthy, one customer is experiencing a slower conversion to commencements, which may affect the second half of the year but does not indicate a pullback in overall demand [26][29][30] Question: What is the exposure to US Cellular and DISH? - US Cellular represents less than 0.5% of global property revenues, while DISH accounts for over 2% of global revenues. Management remains optimistic about DISH's recent positive developments [45][48] Question: Can you provide insights on CoreSite's supply chain risk management? - Management has proactively secured long lead-time items and built contractual mitigations to manage potential tariff impacts, ensuring stability in their development pipeline [66][68] Question: What are the expectations for the Latin America business? - The company anticipates low single-digit growth in Latin America through 2027, with significant improvements expected around 2028 [80][81] Question: How does the company view direct-to-device satellite connectivity? - Management views direct-to-device satellite technology as complementary to macro cell networks, particularly in low-density areas where building towers is not economically viable [55][56]