What Management Said

Read the full Q3 2025 transcript ↗

Good evening, and thank you for joining us for SBA's third quarter 2025 earnings conference call. Some of the information we will discuss on this call is forward-looking, including but not limited to any guidance for 2025 and beyond. and international markets, and as a result, we are modestly increasing our full-year outlook for both new leasing activity and escalations. The backlog remains healthy as well, and it is steady compared to last quarter.

Our services business also continues to perform extremely well, increasing revenue by 81% in Q3 compared to the prior year period, primarily from construction-related projects focused on network expansion. As a result of this activity, we are increasing the full-year site development revenue outlook by $20 million. In addition to our strong operating performance, we have also had a number of other significant accomplishments since our last earnings report. Pro forma for the Millicom and Canada closings, SBA owns a total of over 46,000 tower sites worldwide, representing an increase of 40% since 2020.

Another recent significant accomplishment since our second quarter earnings report is today's announcement that Verizon and SBA have entered into a new long-term agreement that supports Verizon's continued network modernization plans. As part of this agreement, Verizon has committed to a certain level of growth through new deployments across SBA's best-in-class tower portfolio. If that was not enough, since our last earnings report, we took advantage of what we believe to be market dislocations, directing capital toward share repurchases. As stated in today's press release, however, we are officially changing our financial policy and reducing our target leverage range to six to seven turns of net debt to adjusted EBITDA.

What went well
  • SBA delivered another quarter of positive financial and operational results, including industry-leading AFFO per share.
  • The company saw strong leasing demand in both the U.S. and international markets and modestly increased its full-year outlook for both new leasing activity and escalations.
  • The services business performed extremely well, increasing revenue by 81% in Q3 versus the prior-year period, primarily from construction-related network expansion projects, prompting a $20 million increase in the full-year site development revenue outlook.
  • SBA completed the final closing of all remaining Central American assets under its Millicom purchase agreement, making it the leading independent tower company in Central America.
  • SBA closed the previously announced sale of its Canadian tower business earlier than anticipated.
  • Pro forma for the Millicom and Canada closings, SBA owned over 46,000 tower sites worldwide, a 40% increase since 2020.
  • SBA and Verizon entered a new long-term agreement supporting Verizon's network modernization, with a minimum commitment around collocations for the next 10 years.
  • SBA repurchased shares at what it believed were market dislocations, spending $153 million at an average $196.99 per share to retire 776,000 shares, for a 2025 total of $325 million and 1.6 million shares.
  • SBA received a second investment-grade rating as Fitch issued a BBB-minus corporate and issuer rating, pairing with S&P to create a clear path to the investment-grade debt market.
  • Current leverage of 6.2x net debt to Adjusted EBITDA remained near historical lows, with a cash interest coverage ratio of 4.3x.
  • The weighted average interest rate was 3.8% across total debt, with approximately 96% of outstanding debt fixed.
What went wrong
  • The slight delay in the Millicom closing versus prior assumptions negatively impacted the third quarter by $4 million of site leasing revenue and $3 million of tower cash flow.
  • Domestic net organic leasing revenue growth was only 1.6% due to 3.7% of churn, with $11 million of Q3 churn related to Sprint consolidation (anticipated at $51 million for full-year 2025).
  • Total international churn remained elevated in the third quarter, mainly due to ongoing carrier consolidation.
  • The adjusted timing of both the Millicom acquisition and the Canada sale negatively impacted the current site leasing revenue outlook.
  • Interest expense is expected to be a headwind to AFFO heading into next year as low-cost debt is refinanced at higher rates.

Guidance Changes

MetricPeriodCurrent guidance
Full-year new leasing activity and escalations (2025)FY2025Modestly increased
Full-year site development (services) revenue (2025)FY2025Increased by $20 million
Target leverage rangeOngoing6.0-7.0x net debt to Adjusted EBITDA
Full-year 2025 Sprint churnFY2025~$51 million
DISH churn (2027 and 2028)2027-2028~$25 million in each of 2027 and 2028

Performance Breakdown

MetricYoYNote
Services (site development) revenue +81% in Q3 Construction-related projects focused on network expansion
Domestic organic leasing revenue growth (gross) +5.3% New collocations from carriers densifying and expanding networks
Domestic organic leasing revenue growth (net) +1.6% Offset by 3.7% churn, including $11 million of Sprint consolidation churn in Q3
International organic leasing revenue growth (gross, constant currency) +8.5% Healthy international demand, partly offset by elevated churn from carrier consolidation
Quarterly dividend per share +~13% (to $1.11) Approximately 35% of the midpoint of full-year AFFO outlook
Total tower sites (pro forma) over 46,000, +40% since 2020 Millicom acquisition closings net of Canada divestiture and portfolio review

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Verizon MLANo comprehensive Verizon agreementNew long-term agreement with a 10-year minimum collocation commitment and amendment component, more linear and activity-tied than the AT&T deal—
Financial policy / leverageTarget 7.0-7.5x, operating in the 6s for yearsFormally reduced target to 6.0-7.0x; moving toward less secured debt to enable investment-grade issuance—
Investment gradeS&P upgrade in JulySecond IG rating from Fitch (BBB-minus); clear path to deeper IG debt market—
Portfolio reviewOngoing since February prior yearCentral America expanded via Millicom; Canada exited; continuing to align with leading carriers in each market—
DISH / EchoStarUncertainty on paymentCurrent on rents through November; ~$55 million annualized revenue; expects ~$25 million churn each in 2027 and 2028—
Direct-to-device / satelliteEmerging questionViewed as complementary to terrestrial towers, best for hard-to-reach areas; satellite pings even help carriers identify where macro towers are needed—
Leadership transitionMark DeRussy in IR/Finance roleDeRussy retiring at year-end after 16 years; Louis Friend taking over IR responsibilities—

Q&A Summary

How will the Verizon MLA impact new leasing revenue, and is DISH current and looking to exit early?
Cavanagh said the Verizon deal has both collocation and amendment components, with a 10-year minimum collocation commitment locking in growth, and is a win-win. He confirmed DISH is current on its rents and SBA expects them to honor their agreements, but declined to detail the correspondence between the companies.
Is the Verizon structure similar to AT&T's step-up/step-down, or more linear?
Cavanagh said it is much more linear and tied more directly to activity, with a certain minimum expected each year but the potential for Verizon to do more and shift growth timing earlier, unlike the one-time special AT&T structure.
Did the Verizon deal touch high-cost sites or escalators, which have been a sacred cow of the tower business?
Cavanagh said the deal is mostly about future growth; the existing base was not really touched other than some extensions to term lengths, and the actual financial terms on the existing base were not changed.
What is the outlook for international churn over the next couple of years?
Cavanagh said significant consolidation, especially Oi in Brazil (both wireless consolidation and wireline financial challenges), has weighed on churn, but once those items are behind, he expects a significant step down; Central America consolidation is largely done, and international churn should be much less in a couple of years.
Should SBA invest more heavily in data centers, and what is the Millicom organic growth outlook versus underwriting?
On Millicom, Cavanagh said it is very early but SBA has seen strong interest from the other leading carrier and believes it will do better than modeled. On data centers, the focus is edge compute at tower sites rather than large standalone facilities.
Any philosophical view on tuck-in divestitures given high private-market multiples?
Cavanagh said he is not philosophically opposed but it is not what SBA does; it would consider it only for a very significant valuation arbitrage, though financing structure and MLA implications create practical hurdles. He argued the real issue is that SBA's public valuation is too low rather than private prices being too high.
How does the change to investment grade affect refinancing costs?
Cavanagh said the rating largely came to SBA as leverage fell; the main required action is reducing the secured-debt share. IG versus high-yield could save roughly 50-75 basis points on unsecured paper, a smaller difference versus the ABS market, alongside benefits from deeper market access and longer tenors.

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Q3 2025 call
Reported 2025-11-03 · figures from the Sba Communications Corp Q3 2025 earnings call.

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