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SBA Communications Corporation
CEO : Mr. Jeffrey A. Stoops

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2023 Q2	4.1% YoY	36.5%	193.7%	2023-07-31

Brendan Cavanagh says,

Financial Results

• Total GAAP site leasing revenues for Q2 2023 were $626.1 million, slightly ahead of expectations.
• Cash site leasing revenues were $618.7 million.
• Foreign exchange rates had a benefit of approximately $1.9 million compared to previous forecasts and a headwind of $4.2 million compared to Q2 2022.

Domestic Leasing Activity

• Domestic operational leasing activity declined in Q2 compared to Q1 due to several customers signing up agreements below expectations.
• Long-term potential leasing growth from 5G upgrades remains significant.
• A new long-term master lease agreement with AT&T was announced, increasing projected leasing revenue by $6 million for 2023.
• Amendment activity represented 42% of domestic bookings, while new leases represented 58%.
• Top four carriers (AT&T, T-Mobile, Verizon, DISH) accounted for approximately 89% of total incremental domestic leasing revenue.
• Sprint-related churn is expected to be at the high end of the previously stated range for 2023, resulting in a change to the full-year domestic churn outlook of $4 million.

International Leasing Activity

• International leasing activity exceeded internal expectations in Q2.
• Projected contribution to 2023 leasing revenue from international organic new leases and amendments increased by $1 million.
• Brazil had a very good quarter with a same-tower organic growth rate of 5.7%.
• Actual and projected Brazilian CPI rates caused a moderation in the outlook for international escalation contributions by approximately $1 million.
• International churn remains in line with expectations.

Tower Cash Flow and Adjusted EBITDA

• Tower cash flow for Q2 was $503.5 million, benefiting from accounting-driven cost reclassifications.
• Tower cash flow margins were strong, with a domestic margin of 85.5% and an international margin of 70.3%.
• Adjusted EBITDA for Q2 was $471.7 million, with a margin of 70.3%.

Adjusted Funds from Operations (AFFO)

• AFFO for Q2 was $352.7 million.
• AFFO per share was $3.24, a 6.2% increase compared to Q2 2022 on a constant currency basis.

Investments and Portfolio

• During Q2, 9 communication sites were acquired for $7.2 million and 64 new sites were built.
• 134 sites are under contract for purchase, with an aggregate price of $72.9 million, expected to close by the end of the year.
• Investments were made in land and easements, and ground lease terms were extended.
• Owned or controlled land underneath approximately 70% of towers, with an average remaining life of ground leases of approximately 36 years.

Jeff Stoops says,

Leasing Activity and Network Investment

• Leasing growth in Q2 was lower than anticipated due to slower activity from AT&T in anticipation of the new MLA (Master Lease Agreement).
• This slowdown in activity is part of the normal cycle of carrier network investment.
• Additional material network investment is expected over the next several years due to growing wireless demand, remaining sites that need upgrading, regulatory coverage requirements for DISH in 2025, and the newly signed MLA with AT&T.

Master Lease Agreement with AT&T

• The new MLA with AT&T highlights the long-term importance of SBA sites to AT&T’s future network deployment plans.
• The agreement will improve operating efficiencies between SBA and AT&T and enhance stability with regard to future leasing growth.

Services Business

• While the services business is down on a year-over-year basis, 2023 will still represent the second biggest service year in SBA’s history.
• SBA’s legacy and reputation in the services business keep them well positioned to be a go-to provider for their customers’ network rollout goals.

International Leasing Activity

• Greater organic leasing activity than anticipated in international markets, with contributions from amendments to existing leases and new leases.
• Brazil, SBA’s largest market outside of the U.S., performed ahead of internal expectations with contributions from each of the big 3 carriers.
• Positive movements in the currency exchange rate in Brazil provide financial benefits and contribute to increased U.S. dollars for repatriation.

Financial Performance and Capital Position

• SBA generated solid AFFO (Adjusted Funds from Operations) in Q2.
• The outstanding balance on SBA’s revolver was paid down, reducing floating rate cash interest obligations.
• SBA’s net debt to adjusted EBITDA leverage ratio was 6.6%, the lowest in their history as a public company.
• SBA’s balance sheet is in great shape with no debt maturities until October 2024 and good access to capital.
• Most future cash flows are expected to be directed towards debt repayment as the most accretive short-term and long-term use of capital.

Q & A sessions,

Impact of MLA on Numbers

• The MLA contributed to a $6 million increase in revenue
• The MLA activity was slower in the second quarter, resulting in a lower contribution
• Expect an uptick in MLA contribution in the third quarter
• Anticipate a lower trajectory in MLA contribution in the fourth quarter
• The lower trajectory is not related to the MLA, but rather slowing activity from other carriers

Agreement with AT&T

• The agreement with AT&T has been in the works for over a year
• Both organizations believe it is beneficial
• The company has been transparent and open to this type of agreement
• Not commenting on other customer agreements
• Focus on finding mutually beneficial agreements with customers