SBA Communications Reports Third-Quarter 2026 Results

SBA Comms (NASDAQ: SBAC ) reported third-quarter financial results on Monday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

Access the full call at Summary SBA Comms reported strong third-quarter results with a notable AFFO per share increase, high operating margins, and significant shareholder returns through dividends and share repurchases. The company is optimistic about future growth driven by new spectrum auctions and increased activity from carriers upgrading to 5G and preparing for 6G, with a focus on expanding its customer base to satellite and edge providers. Internationally, SBA Comms is focusing on core markets and exiting several South American countries to enhance cash flow stability, while continuing to expand in Central America and Africa.

Significant capital allocation included an inaugural investment-grade bond offering and substantial share repurchases, while maintaining a strong balance sheet with a leverage ratio at 6.4 times net debt to adjusted EBITDA. Management remains positive about long-term industry prospects, with ongoing strategic reviews and capital allocation intended to maximize shareholder value despite current challenges like Sprint and EchoStar-related churn. Full Transcript OPERATOR Welcome and thank you for joining the SBA Comms third quarter 2026 results. All audio lines are in listen-only mode.

There will be a Q and A session at the end of the call and we'll give you instructions on how to ask a question at that time. With that, I'll turn the call over to Louis Friend, Vice President, Finance and Capital Markets. Please go ahead. Louis Friend (Vice President, Finance and Capital Markets) Good evening and thank you for joining us for SBA Comms' third quarter 2026 earnings conference call.

Here with me today are Brendan Cavanagh, our President and Chief Executive Officer, and Marc Montagner, our Chief Financial Officer. Some of the information we will discuss on this call is forward looking, including but not limited to any guidance for 2026 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, November 2nd, and we have no obligation to update any forward-looking statement we may make.

In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our Supplemental Financial Data Package which is located on the landing page of our Investor Relations website. With that, I will now turn it over to Brendan to comment on the third quarter. Brendan Cavanagh (President & Chief Executive Officer) Thanks, Louis.

Well, we had another great quarter with industry-leading AFFO per share, strong operating margins, continued progress on our portfolio review, over $430 million returned to shareholders through dividends and share repurchases, and a solid investment-grade balance sheet. In the US, the level of customer activity in the third quarter was slightly below what we saw in the first half of the year, but in line with our expectations, our customers remained focused on investing in their wireless networks. The bulk of the activity continues to come from new leases as carriers address coverage gaps and add capacity.

In addition to new leases, carriers are upgrading their existing leases with 5G-capable mid-band spectrum including C-band and technological improvements such as massive MIMO and higher-capacity radios. Fixed wireless access also continues to grow with millions of new subscribers compared to just a few years ago. That growth, paired with steadily increasing mobile data traffic, is placing more and more strain on today's network, according to CTIA's 2026 annual survey released in September.

In 2025, mobile data grew by 20% in the US and expectations are for data demand to quadruple by 2032, much of that fueled by AI and the continued growth in non-phone devices such as wearables and smart sensors. To help support this growth, we expect to see a new wave of spectrum come to market soon, including AT&T's 600 MHz. New spectrum has always been one of the most important drivers of our business and, looking farther out, the spectrum pipeline continues to build and I believe it is as strong as it has been in many years. The upper C-band auction is scheduled to begin in April of next year with the FCC required to complete it by July.

It will make 160 MHz of spectrum between 3.98 and 4.14 GHz available and, combined with the existing lower C-band, create a large 440 MHz of contiguous mid-band for wireless use. Whoever wins this spectrum will have to put it into commercial service, and putting it into service means new equipment on our towers. Beyond the upper C-band, we see steady progress across several additional bands. Just last week the FCC proposed auctioning 25 MHz of mid-band spectrum in the 1.6 and 2.0 GHz bands.

Given the administration's plans to make up to 400 MHz of spectrum available for commercial use by 2028, we expect proposed rulemaking for the 2.7 GHz and 7 GHz bands to come soon and continue to believe the FCC could auction the spectrum as early as 2028. Additionally, the 4 GHz band is now being studied for full-power commercial licensed use, and as the industry moves towards 6G, we expect a more balanced uplink and downlink network architecture, driven in part by AI applications sending more data from devices back into the network.

Each major spectrum auction over the last two decades has been followed by a meaningful deployment cycle on our towers, and our priority is to be ready for the next one with the right sites, the right people, and the right processes to help our customers deploy quickly. While the timing of carrier activity will move around from quarter to quarter, the long-term direction is very exciting. We believe this spectrum will be the foundation of sustained organic leasing growth well into the next decade. Beyond our core customers, we see a real opportunity to expand our customer base to both satellite and edge providers.

With regard to satellite providers, our view has not changed. Satellites are a complement to terrestrial wireless networks. This view is supported by a satellite provider's recent purchase of low-band 800 MHz spectrum, which is well suited for in-building coverage and enhanced capacity from the ground. We are confident that any provider looking to deliver ubiquitous, high-quality mobile service, particularly in areas of heavy traffic, will need terrestrial infrastructure to do it.

We believe our high-quality portfolio and our experienced teams position us very well. In addition, we continue to make progress on edge compute initiatives. The explosive growth in AI is driving a migration toward a more distributed compute architecture, particularly for inference workloads that require low latency, storage capacity, and a general need to sit closer to the end user. The traditional data center industry is facing challenges around power availability, permitting, and long construction timelines.

Our tower sites are well positioned to address many of these needs. We already have power, fiber, and security in place. Our sites are zoned and, in many cases, they have existing shelters or ground space at the base of the tower that can be readily put to use. Through our SBA Edge entity, we offer access to the power and infrastructure needed so that AI customers can deploy quickly and efficiently.

We have several edge sites up and running with a handful of different companies building out distributed AI inference capacity. So far, the incremental capital remains minimal as these edge deployments use vacant space and excess power at our tower. It is still early and the immediate revenue contribution will be modest, but the economics are very attractive and the opportunity for much greater scale across our portfolio of US towers is real. These initial sites give us an early framework for bringing compute to our sites.

I'm excited about the potential of this business and I look forward to updating you on our progress. Internationally, we continue to execute on the portfolio review we began in early 2024. Our objective has been clear from the start: to be a leading tower company in each market where we operate, to align ourselves with the leading wireless operators in those markets, and to improve the overall durability of our cash flows. During the third quarter, we agreed to sell approximately 1,800 sites in three South American markets, representing a complete exit from that region outside of Brazil.

Those three markets represent approximately $43 million of annual leasing revenue and $20.5 million of annual adjusted EBITDA. Two markets have already closed and we expect the remaining market to close by year end. This follows our exits from the Philippines and Colombia in early 2025 and from Canada last October. The steps we have taken allow us to have a more focused geographic concentration internationally.

Our international strategy is focused on locking in long-term stable cash flow internationally. We also built 210 new towers in the third quarter, more than double the 99 we built last quarter, primarily in Central America and Africa, and we expect our build program to remain at these levels over the coming quarters. Turning now to capital allocation, it was a busy quarter. Following our inaugural investment-grade bond offering in July, which allowed us to fully repay our revolver and term loan, we resumed share repurchases, and we did so in a meaningful way.

Since our last earnings report, we have repurchased 1.7 million shares at an average price of $179.68 per share for a total of $300 million. And as of today we have $800 million remaining on our authorization. Our priority is to allocate capital where it will generate the highest risk-adjusted return for our shareholders. And today we believe our stock is a great value.

With third quarter leverage at 6.4 times net debt to adjusted EBITDA, below the midpoint of our target range of six to seven times, we have the balance sheet capacity and cash on hand to opportunistically retire more shares. We believe in the strength of our business, our future growth potential, and our ability to execute, and we will continue to allocate capital where we believe it will create the most value for our shareholders over the long term. As I look ahead, I'm excited about where our industry is going. The networks being built today are only the beginning and 6G is around the corner.

Add to that the largest pipeline of new spectrum in many years, new networks being built to work alongside satellites, and AI workloads moving to the edge. SBA Comms is well positioned for that future. We have a high-quality portfolio and investment-grade balance sheet, a disciplined approach to capital allocation, and the best team in the industry. And finally, I'd like to thank our team members around the world.

Their hard work and commitment are what allow us to pursue our vision to be our customers' first choice provider and the industry leader in quality infrastructure solutions, and they deliver on it every day. I'd also like to thank our customers for their continued trust and partnership and our shareholders for their ongoing support. With that, I will now turn it over to Mark to comment on the third quarter results and 2026 outlook. Marc Montagner (Chief Financial Officer) Thank you, Brendan.

Our third quarter results were in line with our expectation, and if not for changes in FX and the sale of our operations in Chile and Ecuador, our full year 2026 outlook for site leasing revenue, tower cash flow and adjusted EBITDA would have been mostly unchanged. The sale of our towers in Chile and Ecuador reduced our full year outlook by approximately $10 million of site leasing, $6 million of tower cash flow and $4 million of adjusted EBITDA. We're increasing the midpoint of 2026 guidance for AFFO and AFFO per share by $2 million and 8 pennies, respectively.

Excluding both FX and the sales of our operations in Chile and Ecuador, the midpoint of AFFO and AFFO per share is up by $5 million and 11 pennies, respectively. These increases in AFFO and AFFO per share are mostly driven by lower net cash interest expenses, lower non-discretionary capital expenditure, along with the benefit of a lower share count from our third quarter share buyback. Our outlook does not yet include an impact from the pending sales of our towers in Peru, which remains subject to regulatory approval and is expected to close in the fourth quarter.

In the third quarter, we continued to operate efficiently, controlling different costs and achieving company-wide tower cash flow margins of 80% and an adjusted EBITDA margin of 69%. AFFO per share was $3.19 and we paid a cash dividend of $1.25 per share. Operationally, we added approximately $8 million of domestic new lease and amendment billings in the quarter. Sprint-related churn was $16 million in the quarter and we continue to expect $55 to $56 million for the full year.

We expect Sprint churn in 2027 to be less than $20 million. EchoStar-related churn was $14 million in the third quarter and we expect $56 million for the full year. 2026 internationally, we added approximately $5 million of new lease and amendment billings in the quarter. We are seeing healthy leasing demand broadly across our international portfolio.

The midpoint of our full year outlook for international return remains at $38 million as carriers work through consolidation, restructuring and network rationalizations. We expect international return to remain elevated in 2027 but to begin to normalize in 2028 when the impact of carrier consolidation is behind us. Turning to investing activities, during the third quarter we built 213 towers and we spent $108 million to acquire seven sites. We also spent $13.7 million to purchase land easements and extend ground lease terms.

Total cash expenditure for the quarter was $105.2 million, of which $14.1 million was non-discretionary. Moving to the balance sheet, I'm very pleased with the progress we have made as an investment grade company. In July, we issued an inaugural $3.5 billion investment grade bond. In addition, on September 25th we established a $2.5 billion commercial paper program.

These programs give us another flexible local source of short-term liquidity. As of today, we have no amount outstanding under either our revolver or the commercial paper program. As we approach the maturity date on our $1.165 billion ABS tower security, we anticipate a complete refinancing of those securities at an estimated rate of 5.25% in the coming days. Access to capital remains very robust and we will continue to look at ways to reduce our overall cost of debt.

Our 2026 outlook does not include the impact of any additional share repurchase beyond those completed through the date of this call. During the third quarter, we declared and paid a cash dividend of $131.3 million, or $1.25 per share. Through our third quarter share buyback and dividend payout, we returned approximately $430 million of capital to our shareholders. And today, we announced that our board of directors declared a quarterly dividend of $1.25 per share, payable on December 10, 2026 to shareholders of record as of the close of business on November 12, 2026.

This dividend represents an increase of approximately 13% over the dividend paid in the prior year period and an annualized weight of approximately 41% of the midpoint of our full year AFFO per share outlook. Let me now turn the call over to the operator for Q&A. OPERATOR Thank you, ladies and gentlemen. If you'd like to ask a question, please dial pound two on your telephone keypad.

Now we'll announce your name and you will hear that your line is unmuted when it's your turn to speak. And again, dialing pound two will place you in the question queue. All right, let's go to our first caller, Rick Prentice with Raymond James. Rick Prentice (Analyst at Raymond James) Hey, thanks.

Good afternoon, everybody. Brendan Cavanagh (President & Chief Executive Officer) Hey, Rick. Rick Prentice (Analyst at Raymond James) Hey. A couple questions if I could.

Obviously never dull in tower land, rumors today. Could there be a SpaceX and a Dish MVNO? Walk us through a little bit about what your thoughts as far as what the future might hold. And I got to admit, universe of one here.

I have a hard time imagining an MVNO-only strategy and wanting to achieve 60, 70% EBITDA margins. But just help us kind of unpack what you think might be happening there. Brendan Cavanagh (President & Chief Executive Officer) Yeah, well, first before I do that, Rick, let me just say I think this is your last earnings call and you've probably been on every earnings call that SBA had over the last 28 years or so. So we're going to miss you and thank you for all of your service over the many years.

We've enjoyed working together. So, to your question. Yep. To your question on SpaceX and Dish.

You know, I mean, obviously I have no specific intel or insight into exactly what they may or may not be doing, so it's not really my place to comment on that. You know, you should look to those parties to comment. I think if there's truth to it, I think what's good from our perspective is that it is an indicator, another indicator, another data point that suggests the necessity of terrestrial components of any network that's going to be put out there to provide mobile coverage. And that we feel like is ultimately going to be a good thing for us if that's the way that it goes.