SBA Communications Corporation (SBAC) Earnings Call Transcript & Summary

I'm John Atkin, I cover the communications infrastructure space here at RBC. And I'm pleased to have the Executive Vice President and Chief Financial Officer of SBA Communications, Marc Montagner. Welcome. .

Thanks for having me.

So I think let's start a little bit about kind of the core U.S. market and any kind of trends that you would like to kind of call out in terms of U.S. leasing. There's a bit of a trough going on with leasing in 2026 and who knows what 2027 will bring. But what makes you excited about some of the incremental drivers for same-store growth on your U.S. portfolio? .

Yes. So I think I've been in the industry for stories, and it's a very cyclical industry. The cycle repeats itself. Whereas operators receive new spectrum band, there will be a new generation technology and harvest that technology until the next 1 comes along. So I think if you go back 20 years, CapEx as a percentage of volume for the big 3 operators at the peak of the cycle or right after they receive the spectrum and deploy is about 25% of revenue and in a harvest more it drops to about 15% of revenue. So between 2022, 2023 25% mark. I assume this year about the 15% mark. So I think what really for our company and even the trough in the cycle, we will still go up this year is going to be $35 million. 2022, I think it was $78 million. So I think that's kind of the range. Spectrum is going to be auctioned in the first half of next year. It's about 18 months clearing makes it like late '28, early '29, I think the cycle will repeat itself. So I'm clearly excited about I also think that the FCC is auctioning 160 megahertz spectrum, which is interesting because 6 years point megahertz band. So we may be expecting in both for this, maybe. So I'm hoping that we'll see some saturatoperator there and accrue more demand. So that's we want a pure leasing side from the wires operators. And then I'm excited about the case. So I think, obviously, it's still unclear what the satellite operators are going to do. If you think of a base decision, it's probably has a capacity of 100 satellite or about 200,000 base stations in the U.S. So I just don't think you have a replicate that capacity in space be too expensive and to take to build this. I think the other thing is if you're in the office, a conference room under true downtown Chicago, Manhattan, an obsolete view to the sky signed some terrestrial component in order to provide services. We've hedged a and there's a lot of talk about edge data center probably 50% of our site could accommodate a small data center, to 300 megawatts of power see companies have a very significant amount of capital to these data center at the edge of the tower, the bottom of the tower basically sell compute power geri companies providing AI agent apps on -- the big advantage there is that from the mine, we have no zone requirement because close so that is 1 concrete slab. You have Portside fiber to the site and you have low latency because you're selling at the bottom of the tower. So I'm pretty excited about this initial and SGS I feel good in the future.

On the edge compute, any kind of demand signals worth commenting on? Or is this kind of more of a belief at this point that it's likely to happen as opposed to exploratory discussions.

Company have capital and ongoing sales agreement, when I asked them, have you signed a basically a retail customer people are going to use that compute. I get very for the answer. So I the opening close to the vest, but people looking to basically sign leases for the space and get access to the tower and the ban.

So I assume that demand will show up in the next year or so. And kind of sticking on the edge compute, what is it that you foresee offering? Is it still going to be largely a passive infrastructure model in terms of just the gladlease? Or do you get up in terms of things like power space, shell thoughts on how much of the value chain you would be willing to go.

Passive real estate company. We sell voice space on the tower and caspase on meta and release all the mental spaces on the ground. -- for this particular edge dealer central, we may provide power as well to the extent they want it because their power demand are fairly limited.

And then maybe we can pivot to LATAM. And what are you seeing there?

In Brazil, that's 15% of revenue, 15% of TCF. We have seen very manometer. The country has a net balance of over 5 billion, large exporter of grain commodity, minerals, energy, on population, fast-growing the population is for 25% of the density, we have a new U.S. to inflation was under control in Central Bank has done a great go -- and I think Brazil is going to do well. just like where we pro considering the IT mobile luteal wireless in Brazil and we cover out to the other 3 wires operators. So when facing consolidation churn, telling us in '26 so it's going to stay elevated in '27 and it's going to go way after that. But long term, a in Brazil is less than 50% the 5G deployment or they have coverage required this is really pushing the operators to deploy through very well-capitalized operator part of Mr. Slim enterprise, you have Telefonica, Vivo and then you have Tim and from Italia. So they're well capitalized and then to build capacity and coverage. So I about those in long term, it's like '26 and '27 headwind, but will go away over time. And then with Central America, we with 7,000 sites from Medicom last year, 11x multiple, 50 new contracts in Vestas is U.S. CPR on them for 2,500 BTS over the future. We work in a multi-high single-digit growth rate sales so very attractive to clear. So then to good about Central America. And then we still have 3 very small material.

So on some of the smaller markets, does it make sense to just sort of consolidate your portfolio and perhaps seek buyers for some of the noncore contributors. And then just maybe still on Brazil then that there was a fragmented universe of some mom-and-pop developers, the M&A multiples in that market or different than what we would find in the U.S. in the private market. So the path forward there would be primarily build-to-suit or could you see some inorganic growth ahead?

Have with significant scale in Brazil. I think we have top 2 or 3 operators in Brazilian American to is bigger than us, but we have significant scale. I don't see us explain Brazil M&A.

And then on DISH, maybe kind of any thoughts on settlement discussions with some of their debtors essentially and outcomes for the tower industry and for SBA in particular, as well as the plans for DISH equipment that is still on towers that are operated.