SBA Communications Q3 2025: Contradictions Emerge on Carrier Churn, DISH Leasing, Fixed Wireless Investments, and Verizon's Leasing Impact

Guidance:

• Modestly increased full-year outlook for new leasing activity and escalations.
• Increased full-year site development revenue outlook by $20 million.
• Officially reduced target leverage range to 6–7x net debt to adjusted EBITDA (new financial policy).
• Board declared quarterly dividend of $1.11 per share (payable Dec 11, 2025); company expects dividend growth over time.
• Continued share-repurchase program with $1.3 billion remaining authorization; capital allocation to buybacks, M&A and dividends maintained.

Business Commentary:

• Revenue and Leasing Activity Growth:
• SBA Communications Corp reported an industry-leading AFFO per share and increased its full-year site development revenue outlook by $20 million.

• This growth was driven by strong leasing demand, both domestically and internationally, primarily from new colocations and construction-related projects.

• Millicom Acquisition and Strategic Moves:

• SBA completed acquisitions from Millicom, resulting in over 46,000 tower sites worldwide, a 40% increase since 2020.

• These acquisitions align with the company's strategy to operate as a leading tower company in each market and strengthen ties with top wireless operators.

• Verizon and SBA Partnership:

• SBA entered into a new long-term agreement with Verizon, which includes a minimum commitment for new colocation and amendment growth.

• This partnership enhances operational efficiencies and provides both companies with stability and future growth opportunities.

• Share Repurchase and Financial Policy Changes:

• SBA spent $325 million on share repurchases in 2025, with $1.3 billion remaining in its authorization.
• The company reduced its target leverage range to 6 to 7 times net debt to adjusted EBITDA, aiming for investment-grade status and dividend protection.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted "another quarter of positive financial and operational results," Q3 services revenue grew 81% YOY, announced a new long-term Verizon MLA that locks in multi-year growth, increased site-development revenue outlook by $20M, completed Millicom and Canada transactions, repurchased $325M YTD and lowered target leverage to 6–7x while keeping buybacks/deliverables intact.

Q&A:

• Question from Batya Levi (UBS): Can you provide color on how the Verizon MLA could impact new leasing revenue next year (amendment/colocation components and capture of adjacent spectrum)? Also, is DISH current with rents and are they seeking to exit contracts early?
  Response: Verizon MLA includes minimum co‑location commitments (multi‑year, ~10 years) plus amendments, locking in predictable growth; DISH is current on rents and management expects them to honor agreements.

• Question from Ric Prentiss (Raymond James): Are DISH payments current (timing), did the Verizon deal address high‑cost site escalators, and what's the status of T‑Mobile churn?
  Response: Payments are typically at the beginning of the month; the Verizon agreement focused on future growth and extended terms without materially altering existing base financial terms; T‑Mobile overlap exposure is small (~$20M annual) and expected to roll off over the next few years.

• Question from Nicholas Del Deo (MoffettNathanson): When you say the Verizon deal is more linear than AT&T, do commitments provide a relatively steady pace over 10 years? And could BEAD/fixed wireless move the needle for new leasing?
  Response: The MLA has a minimum annual commitment but growth will scale with Verizon's activity; BEAD/fixed wireless is supportive but its impact is uncertain and depends on carrier deployment plans.

• Question from Eric Luebchow (Wells Fargo): Heading into 2026, how do you feel about the current run‑rate for domestic new leasing (especially with DISH likely 0 next year) and are big carriers favoring colos or amendments? Also, any monetization opportunities from recent spectrum trades or satellite entrants?
  Response: Too early to provide 2026 guidance, but carrier activity and the Verizon MLA give confidence that new leasing should be in a similar range as today; spectrum/satellite monetization remains premature and depends on carrier choices.

• Question from Benjamin Swinburne (Morgan Stanley): Could hybrid satellite‑terrestrial (e.g., Starlink) be a material opportunity for SBA, and how should we think about international churn over the next couple of years?
  Response: Hybrid satellite opportunities are intriguing but very early; international churn is elevated due to consolidation (notably Brazil) and should step down materially over the next couple of years as markets stabilize.

• Question from Michael Rollins (Citigroup): How does the Verizon MLA affect your conviction in mid‑single‑digit domestic leasing growth and what have you learned from regulatory engagement in LatAm about doing more deals?
  Response: The long‑term, predictable nature of the Verizon MLA reinforces conviction in mid‑single‑digit organic domestic leasing growth; regulatory timelines in LatAm can be unpredictable but are a manageable consideration in evaluating bolt‑on acquisitions.

• Question from James Schneider (Goldman Sachs): With rising interest expense, are there OpEx savings you can pursue to offset headwinds? And how does the Millicom portfolio performance compare to underwriting?
  Response: Management continues to pursue operational efficiencies and technology to maintain strong margins; early signs from the Millicom acquisition are positive and management expects performance may exceed initial underwriting over time, though it's early to conclude.

• Question from Aryeh Klein (BMO Capital Markets): Any progress on a T‑Mobile agreement and is the services business sustainable/expandable (especially with Verizon)?
  Response: Discussions with T‑Mobile are expected as their agreement nears expiry and management expects to reach a mutually beneficial arrangement; services revenue growth looks sustainable but is customer‑concentrated and can broaden with increased Verizon activity.

• Question from Michael Funk (BofA): When did Verizon negotiations begin and are you seeing active carrier discussions about expanding FWA into rural areas or is that anticipatory?
  Response: Negotiations ran much of the year; fixed wireless expansion is anticipated and observable in carrier activity, which should drive additional deployments though details remain carrier‑specific.

• Question from Brandon Nispel (KeyBanc): How does Verizon's minimum commitment compare to your current Verizon run‑rate (is there a big incremental step next year)? Any further portfolio pruning and how would proceeds be used?
  Response: Management wouldn't accept terms that underperform stand‑alone economics and is comfortable the deal is accretive; portfolio reviews are strategic to improve market positioning rather than primarily to generate large cash proceeds, with opportunistic sales (e.g., Canada) being exceptions.

• Question from David Barden (New Street): How materially does the investment‑grade rating change refinancing costs and access, and do satellite/direct‑to‑device offerings meaningfully reduce tower demand in rural areas?
  Response: Investment‑grade ratings modestly lower borrowing costs (roughly 50–75 bps) and deepen access to longer tenors; satellite/direct‑to‑device will fill true unserved pockets but often highlights concentrated demand where terrestrial towers remain the more efficient solution.

• Question from Jonathan Atkin (RBC): With Vivo and potential carrier M&A in LatAm, what are implications for SBA (cost optimization, sharing)? And would you consider selling U.S. assets into private market multiples?
  Response: LatAm ARPUs are lower so infrastructure sharing and cost optimization are important and SBA supports increased sharing; SBA would consider divestitures only if valuation arbitrage is compelling, but it's not the firm's primary strategy.

• Question from Brendan Lynch (Barclays): If the FCC auctions 3.9–4.2 GHz, can carriers deploy that spectrum via software upgrades on current sites or will incremental hardware be required?
  Response: Most carriers would need incremental antennas/radios (e.g., massive MIMO); deployment is not achievable by software upgrade alone.

Contradiction Point 1

Carrier Churn and Leasing Impact

It involves different perspectives on the potential impact of carrier churn, specifically DISH, on leasing revenues, which could affect investor confidence and expectations.

What's your outlook for domestic leasing growth through 2026, considering DISH is expected to be zeroed out next year? - Eric Luebchow (Wells Fargo Securities, LLC, Research Division)

2025Q3: We expect DISH to be zeroed out next year, so we're not expecting a lot of contribution to our leasing from DISH in 2026 obviously. - Brendan Cavanagh(CEO, President & Director)

How durable are the demand drivers, and how do churn or rent reduction initiatives impact forecasting? - Jonathan Atkin (RBC Capital Markets, Research Division)

2025Q2: We have no assumptions in our guidance for rent reduction initiatives from the carriers, whether it's DISH or otherwise. - Brendan Cavanagh(CEO)

Contradiction Point 2

DISH's Leasing Activity and Payment Status

It directly impacts expectations regarding the contribution of DISH to SBA's leasing revenue and financial stability, which are critical for investors.

Can you explain the impact of Verizon's MLA on next year's new leasing revenue? Does Verizon plan to generate additional revenue from new spectrum acquisitions through the MLA? Is DISH current on payments? - Batya Levi (UBS Investment Bank, Research Division)

2025Q3: DISH is current on rent payments, and while there are ongoing conversations, SBA expects them to honor their agreements. - Brendan Cavanagh(CEO, President & Director)

What are DISH's plans for its spectrum, and have there been any partnerships or collaborations with cable companies? - Walter Piecyk (LightShed)

2025Q1: DISH is focused on a standalone greenfield network, with limited leasing activity. - Brendan Cavanagh(President and CEO)

Contradiction Point 3

Carrier Investment Plans for Fixed Wireless Access

It involves changes in strategic assessments regarding carrier investment in fixed wireless access, which directly affects SBA's business prospects and growth opportunities.

What are the potential implications for SBA from Vivo's cost optimization and America Movil's Chilean M&A? - Jonathan Atkin (RBC Capital Markets, Research Division)

2025Q3: Fixed wireless access as a driver of network investment is significant. - Brendan Cavanagh(CEO, President & Director)

What are carrier investment plans in fixed wireless access, and how might they impact SBA's business? - Jim Schneider (Goldman Sachs)

2025Q1: It's clear that fixed wireless is a driver, and it's a driver to every carrier. It's a driver for rural, suburban, urban, enterprise, and that's largely driven by the need to densify for 5G. - Brendan Cavanagh(President and CEO)

Contradiction Point 4

Verizon's Impact on Leasing Revenue

It involves differing perspectives on the impact of the Verizon agreement on domestic leasing revenue expectations, which is crucial for assessing SBA's growth trajectory.

Can you detail the Verizon MLA's impact on new leasing revenue next year? Will Verizon generate additional revenue from new spectrum acquisitions through the MLA? Can you confirm whether DISH is current on payments? - Batya Levi(UBS Investment Bank, Research Division)

2025Q3: The Verizon deal provides a minimum commitment of colocation activity over a decade, ensuring steady growth and ease in business operations. - Brendan Cavanagh(CEO, President & Director)

How will domestic leasing growth compare to this year's guidance in future years if budgets remain unchanged? - James Schneider(Goldman Sachs)

2024Q4: We should not be too concerned about the overall CapEx budgets because what we're seeing on the ground is a lot more activity around their wireless networks, specifically the macro-based networks. - Brendan Cavanagh(CEO, President & Director)