SBA Communications Corporation Q3 FY2025 earnings call

• Pleased with positive financial and operational results, including industry-leading AFFO per share, and strong leasing demand in US and international markets, modestly increasing full year outlook for new leasing and escalations.
• Services business revenue up 81% in Q3 2025, with site development revenue outlook increased by $20 million.
• Completed final closing of all remaining Central American assets under Millicom purchase agreement, slightly delayed due to regulatory approvals; closed Canadian tower business sale earlier than anticipated.
• Verizon and SBA entered new long-term agreement supporting Verizon's network modernization plans, building on long-standing partnership.
• Spent $153 million on share repurchases in Q3, $325 million year-to-date, with $1.3 billion remaining on authorization.
• New financial policy with target leverage range 6 to 7 turns of net debt to adjusted EBITDA, aiming to reduce secured debt percentage and move towards investment-grade debt (Fitch upgraded to BBB-).

Third quarter domestic organic leasing revenue growth over the prior year was 5.3% gross and 1.6% net (including 3.7% churn). $11 million of Q3 churn was related to Sprint consolidation, with full year 2025 Sprint-related churn expected at $51 million. Non-Sprint domestic annual churn remains between 1%-1.5%. International organic leasing revenue growth (constant currency) was 8.5% gross in Q3. Services business revenue increased 81% in Q3 2025 compared to prior year, with full year site development revenue outlook increased by $20 million. Third quarter consolidated cash site leasing revenue had 80% denominated in US dollars, and adjusted EBITDA had 85% denominated in US dollars.

• Modestly increasing full year outlook for new leasing activity and escalations.
• Increasing full year site development revenue outlook by $20 million.
• Revised financial policy with target leverage 6 to 7 turns of net debt to adjusted EBITDA, seeking to reduce secured debt percentage and move towards investment-grade debt, which is expected to reduce cost of debt, lower refinancing risk, and extend weighted average maturity.

• Delays in Millicom and Canada closings impacting current site leasing revenue outlook.
• Regulatory approvals affecting timing of M&A transactions.
• Carrier consolidation leading to elevated international churn, with ongoing rationalization in markets like Brazil.
• Rising interest rate environment potentially impacting interest expense and AFFO.

Q: Batya Levi asked about Verizon MLA impact on new leasing revenue, DISH's status.

A: Brendan Cavanagh said Verizon deal has colocation and amendment components, minimum co-location commitment for next 10 years; DISH is current on rents, expect them to honor agreements.

Q: Ric Prentiss asked about T-Mobile USM churn.

A: Brendan Cavanagh said minimal interaction with T-Mobile on those sites, overlap sites have ~2.5-3 years left.

Q: Nicholas Del Deo asked about Verizon MLA structure and BEAD impact.

A: Brendan Cavanagh said Verizon deal is more linear than AT&T, BEAD is positive for fixed wireless growth but insight depends on customer plans.

Q: Eric Luebchow asked about new leasing outlook and international churn.

A: Brendan Cavanagh said new leasing outlook has visibility, international churn expected to step down once carrier consolidation settles.

Q: Benjamin Swinburne asked about Starlink hybrid network and international churn.

A: Brendan Cavanagh said Starlink discussion is early, international churn depends on market consolidation progress.

Q: Michael Rollins asked about Verizon deal impact on leasing and M&A regulatory delays.

A: Brendan Cavanagh said Verizon deal gives confidence in mid-single digit domestic leasing growth, M&A regulatory delays are part of process but not major hurdle.

Q: James Schneider asked about OpEx impact on AFFO.

A: Brendan Cavanagh said continue to look for OpEx efficiencies to offset interest expense headwinds.

Q: Aryeh Klein asked about T-Mobile M&A and services business sustainability.

A: Brendan Cavanagh said T-Mobile deal under negotiation, services business sustainable but dependent on carrier needs.

Q: Michael Funk asked about Verizon deal negotiations and fixed wireless.

A: Brendan Cavanagh said Verizon deal discussions ongoing, fixed wireless seen as driver of subscriber growth.

Q: Brandon Nispel asked about Verizon minimum commitment and portfolio pruning.

A: Brendan Cavanagh said Verizon deal locks in growth, portfolio review focuses on improving market positioning, no immediate cash proceeds from pruning.

Q: David Barden asked about investment grade and rural deployment.

A: Mark DeRussy and Brendan Cavanagh said investment grade helps reduce cost of debt, rural deployment has carriers targeting areas, but direct-to-sell may replace uneconomic areas.

Q: Jonathan Atkin asked about LatAm developments and US divestitures.

A: Brendan Cavanagh said LatAm carriers focus on infrastructure sharing, not philosophically opposed to divestiture but practical issues exist.

Q: Brendan Lynch asked about FCC spectrum auction.

A: Brendan Cavanagh said likely requires incremental antennas and radios for spectrum deployment.