SBA Communications (SBAC): Navigating Near-Term Headwinds for Long-Term Growth

Julian CruzTuesday, May 20, 2025 10:46 am ET
40min read

In an era where telecom infrastructure is the backbone of global connectivity,

(SBAC) stands as a titan in the tower industry. Yet, like all companies, it faces headwinds—debt sustainability, churn pressures, and macroeconomic uncertainties. This article dissects how SBAC is not only weathering these challenges but positioning itself to dominate in the years ahead.

Debt Sustainability: A Foundation of Strength

SBA’s financial resilience is its anchor. As of December 31, 2024, the company’s Net Debt to Annualized Adjusted EBITDA leverage ratio hit 6.1x, the lowest in its history, down from 6.4x at the end of Q1 2025. This metric, a critical gauge of debt capacity, signals that SBA is efficiently managing its $13.7 billion debt load.

SBAC EBITDA, EBITDA YoY

The company’s strong operating cash flow—$310.2 million in Q1 2025—supports this progress. With no debt maturities in 2025 and $600 million in cash, SBA has ample flexibility to navigate near-term pressures. The AFFO per share of $12.40–$12.76 in 2025 further underscores its ability to sustain dividend payments and capital returns, a key driver for income-focused investors.

Strategic Shifts: Building for Tomorrow

SBA’s playbook in 2025 revolves around portfolio optimization and geographic expansion. The acquisition of 321 sites from Millicom in Q1 2025, with a $925 million deal pending regulatory approval by September, exemplifies its growth strategy. These moves bolster its international presence, particularly in high-growth markets like Africa and Latin America.

Simultaneously, the company is pruning non-core assets. Divesting 430 sites in Q1—primarily in the Philippines and Colombia—allows SBA to concentrate on markets with stronger leasing demand. This discipline is critical: as of March 2025, SBA’s portfolio stood at 39,709 sites, with a strategic 44% focus on the U.S. market, where leasing backlogs are rising.

The capital allocation strategy is equally compelling. A $1.5 billion share repurchase authorization and a 13% dividend hike reflect confidence in cash flow stability. Investors are rewarded not just through growth but through direct returns, making SBAC a hybrid of growth and income equity.

Churn and Cost Pressures: Navigating the Storm

Churn remains a hurdle. SBA’s 2025 outlook accounts for $50–52 million in Sprint consolidation churn and $47–53 million in regular churn. However, the company is countering this with aggressive leasing activity. New leases and amendments are projected to add $51–57 million in revenue, while rate escalations could contribute $68–71 million.

The U.S. leasing backlog, a key metric, has grown since year-end, signaling robust demand. International markets, though volatile due to currency fluctuations (e.g., the Brazilian Real), are being managed via constant currency assumptions. SBA’s ability to offset churn through pricing power and new contracts suggests resilience in an uncertain environment.

Outlook: Growth Amid Caution

SBA’s 2025 outlook is cautiously optimistic. Revenue is projected to rise to $2.536–2.561 billion, driven by both site leasing and development. The Adjusted EBITDA midpoint of $1.891 billion represents a 0.3% increase from 2024, while AFFO per share growth of $0.14 highlights margin stability.

Risks remain. Regulatory delays on the Millicom deal and foreign exchange swings could disrupt timelines. However, SBA’s diversified portfolio and fortress balance sheet mitigate these concerns. The $1,255–1,275 million in discretionary capital expenditures are targeted at high-return projects, ensuring growth without overextending financially.

Why Invest Now?

SBA Communications is at a pivotal juncture. Its lowest-ever leverage ratio, robust cash flows, and disciplined capital allocation create a moat against cyclical pressures. While near-term churn and macro risks linger, the company’s strategic focus on high-growth markets and shareholder returns positions it to capitalize on the long-term demand for telecom infrastructure.

For investors seeking a resilient, dividend-paying telecom play with global scale, SBAC offers an attractive entry point. With a P/EBITDA ratio well below its five-year average and a yield of ~4.5%, the stock balances growth and income—a rare combination in today’s market.

SBAC Closing Price

The path forward is not without potholes, but SBA’s execution to date suggests it can navigate them. This is a company primed to turn near-term challenges into long-term gains. The question isn’t whether SBAC will grow—it’s whether investors will act before the market catches on.

Action Item: Consider adding SBA Communications to your portfolio for a blend of income, growth, and defensive resilience.