SBA Communications 2025-26: $35M New Leases, 2026 Trough Year
FY25 revenue $2.82B (+5%); op income $1.37B (-5%); NI $1.05B (+41%); EPS $9.80. FCF $1.07B (-4%). Capex $-225M (-1% YoY). Total debt $15.32B (-3% YoY). $498M buyback (+149% YoY). Dividend $-479M (+13%). FY26 outlook: $35M incremental US revenue from new leases / amendments; Verizon MLA impact; 2026 expected to be bottom for organic leasing — international growth expected to improve.
Key takeaways
- 2026 is the bottom for organic leasing. Mgmt explicit on Q4 call. The carrier consolidation overhang (Verizon MLA, USM churn) compresses 2026 organic leasing growth — but mgmt frames this as the trough quarter / year, with reacceleration in 2027+.
- $35M incremental US revenue from new leases / amendments. Modest absolute number reflects elevated cell tower churn from carrier consolidation. The structural offset: 5G upgrades + fixed wireless access (FWA) + early 6G prospects creating future organic demand.
- NI +41% YoY despite revenue +5%. $1.05B FY25 NI vs $750M FY24 — substantial earnings inflection. Reflects efficient operating leverage + interest cost optimization + portfolio mix.
- International growth thesis intact. Brazil (spectrum + network density), Central America, Africa flagged as growth markets. Brazil mobile data growth + density continues.
- Capital return acceleration: $498M buyback (+149% YoY). Dividend +13%. Combined ~$1B return = ~4% of market cap. Mgmt confidence in long-term cash flow despite 2026 trough.
Business
SBA Communications Corporation is the third-largest US-listed cell tower REIT (after AMT, CCI). Single segment: communications towers + ground / rooftop assets:
- US Towers (~75% of revenue). 39,000+ towers in US. Customers: Verizon, AT&T, T-Mobile, DISH (consolidating), USM (US Cellular, in M&A discussions). Lease + amendment revenue + escalators.
- International Towers (~25%). Brazil dominant (8,000+ towers); Central America + Africa expanding. Brazil + Central America growing on mobile data + spectrum + network density. Africa earlier stage.
- Site Development Services (residual). Small services business.
Key business mechanics:
- Multi-decade ground leases with carriers (typically 10+ years initial + 5-year extensions)
- Annual escalators (~3% US, varies internationally)
- Revenue per tower grows with amendments (additional carrier installations on same tower)
- Capital intensity: building new towers (organic) + tuck-in tower portfolios (M&A)
Strategic moves FY25:
- US new leases / amendments contributed; 2026 bottom expected
- Verizon Master Lease Agreement (MLA) impact (consolidation effect)
- USM (US Cellular) churn ongoing
- Brazil + Central America + Africa expansion
- Lawsuit regarding default on contract (Q4 disclosure)
- Direct device satellite (Starlink/Iridium) impact on terrestrial towers being monitored
- 5G + FWA + 6G adoption thesis
FY25 financial performance
| Metric (FY) | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($B) | 2.63 | 2.71 | 2.68 | 2.82 |
| Revenue YoY | n/a | +3% | -1% | +5% |
| Op income ($B) | 0.93 | 0.92 | 1.44 | 1.37 |
| Op margin | 35.1% | 34.1% | 53.6% | 48.7% |
| Net income ($M) | 461 | 502 | 750 | 1,054 |
| Diluted EPS ($) | 4.22 | 4.61 | 6.94 | 9.80 |
| FCF ($B) | 1.07 | 1.31 | 1.11 | 1.07 |
| Capex ($M) | -214 | -237 | -228 | -225 |
| Total debt ($B) | 15.17 | 14.46 | 15.76 | 15.32 |
| Dividends ($M) | -307 | -370 | -424 | -479 |
| Buyback ($M) | -432 | -100 | -200 | -498 |
The earnings progression: revenue compounded at LSD over 4 years; op income volatility partly reflects classification + portfolio actions; NI $1.05B FY25 (+41% YoY) demonstrates strong underlying profitability inflection. EPS $9.80 (+41% YoY) reflects same.
Total debt $15.32B (-$0.44B YoY) — modest deleveraging. Capex $-225M consistent — maintenance + selective tower additions. The high op margin (~50%) reflects the asset-rich business model — once tower built, marginal lease revenue ~95%+ flows to EBITDA.
Capital allocation
- Capex $-225M FY25 (8% of revenue, asset-rich model). Includes: building selective new towers, ground purchases, structural augmentations.
- Dividends $-479M FY25 (+13% YoY). Quarterly dividend cadence; SBAC has compounded dividend at HSD per year.
- Buybacks $-498M FY25 (+149% vs $-200M FY24). Significant acceleration; mgmt confidence in cash flow trajectory through 2026 trough.
- M&A Selective tower portfolio acquisitions (small).
- Debt $15.32B (-3% YoY). Investment-grade; refinancing cadence matters.
- FCF $1.07B (~38% of revenue, high-quality cash conversion).
The combined dividend + buyback of ~$977M = ~94% of FCF return — aggressive capital return reflecting tower model maturity.
FY26 outlook (per Q4 2025 call, 2026-02-26)
| FY26 framework | Detail |
|---|---|
| US new leases / amendments | $35M incremental revenue |
| Verizon MLA impact | Continuing consolidation drag |
| USM churn | Continuing |
| Organic leasing | 2026 expected bottom; reacceleration FY27+ |
| International growth | Expected to improve |
| Capital return | Continued buyback + dividend |
| Lawsuit | Default-on-contract litigation Q4 disclosed |
| 6G prospects | Future demand driver mentioned |
The FY26 guide is qualitative rather than precise revenue / EPS — typical of tower REITs. The framework suggests modest revenue growth in 2026 + meaningful reacceleration 2027.
Key risks
Carrier consolidation continuing. Verizon MLA + USM churn already factored. Future M&A among US carriers (T-Mobile / DISH dynamics, AT&T strategic moves) could bring additional churn. Mgmt monitoring.
Direct-to-device satellite (Starlink, Apple/SpaceX, Iridium). Q4 mgmt explicitly flagged as a risk to terrestrial towers. Currently affects only specific use cases (rural, emergency, IoT) — but if direct-to-device satellite scales for primary mobile coverage, terrestrial tower demand compresses meaningfully.
Default lawsuit. Q4 disclosure of lawsuit due to default on contract — specific commercial dispute that creates short-term legal cost / uncertainty.
FWA (fixed wireless access) demand durability. SBAC's growth thesis includes FWA as a 5G-driven new use case — but FWA economics depend on speed / latency / capacity that may face pressure as fiber buildout accelerates.
6G timing. The 6G prospect mentioned by mgmt is a 2030+ catalyst. If 6G deployment is delayed or modified, future amendment revenue compresses.
Brazil / Central America / Africa execution. International expansion requires local regulatory + currency + competitive navigation. Brazil Real volatility + spectrum auction outcomes affect Brazil revenue. African markets are earlier stage and require capital deployment with multi-year payback.
Interest rate environment. $15.3B debt + REIT structure means refinancing cost matters. Higher rates compress FFO; lower rates boost it.
REIT structure / dividend mandate. Required REIT dividend payout 90%+ — limits flexibility for opportunistic capital deployment vs other corporate structures.
Tariff / supply chain. New tower construction depends on steel + electronics. Tariffs + supply chain disruptions affect capex efficiency.
Bottom line
SBAC FY25 is a transition year on the way to the 2026 bottom and 2027+ reacceleration: revenue +5%, NI +41% to $1.05B, EPS $9.80 (+41%), FCF $1.07B, $498M buyback (+149%), dividend +13%. Mgmt explicit that 2026 is the bottom for organic leasing — Verizon MLA + USM churn consolidating effect — with reacceleration framed for 2027+ on 5G + FWA + early 6G + international growth.
The $35M incremental US revenue is modest in absolute terms but normalized for the carrier consolidation cycle. The combined ~$1B capital return + asset-rich tower model + multi-decade lease structure keeps the business compounding at HSD+ per share over time even through cyclical lows.
The risks are real — direct-to-device satellite, default lawsuit, interest rate environment, REIT structural constraints. The competitive dynamics with AMT + CCI + smaller tower competitors continue. But the structural thesis (tower demand from mobile data + 5G + FWA + 6G + international expansion) is intact and the operating model is high-margin, asset-rich, and generates significant FCF.
Quality cell tower REIT compounder with the cleanest "2026 trough / 2027+ reacceleration" setup in the cohort. Investors who buy at the trough should benefit from organic leasing reacceleration + continued capital return + multi-year escalator math.
Citations
- SBA Communications Corporation FY25 Form 10-K (filed February 2026, SEC EDGAR).
- SBAC Q4 2025 earnings call, 2026-02-26 — $35M US incremental new leases / amendments; Verizon MLA impact; 2026 expected bottom for organic leasing; international growth expected to improve; lawsuit due to default on contract; USM churn impact; direct-device satellite risk monitored; 5G + FWA + 6G prospects discussed.
- SBAC Q3 2025 / Q2 2025 / Q1 2025 earnings calls — supporting carrier consolidation + organic leasing dynamics + international expansion (assumed in line with Q4 trajectory).
- Internal financial_statements view (consolidated annual + cash flow + capital structure).