The lion’s share of SBA Communications’ leasing and services growth in the third quarter came from carriers in the middle and early stages of 4G deployment, with some cell splitting activity, Jeffrey Stoops, SBA president and CEO, told a third quarter earnings call.
“We expect to benefit from this technological upgrade for the next several years, as carriers build out their initial coverage footprints to be followed by capacity spending, as consumer adoption increases,” Stoops said. “We are seeing cell splitting in certain 4G markets, although domestic leasing activity continues to center around customer overlays and upgrades to existing antenna sites.”
SBA’s site leasing revenue rose 35.2 percent to $208.8 million year over year, and site leasing operating profit was up 34.5 percent to $162.2 million, with strong demand across its entire domestic and international tower portfolio.
“Our organic leasing activity was particularly strong, with the highest revenue added per tower in many years,” Stoops said. “We expect strong levels of activity to continue through the remainder of 2012 and all through 2013.”
AT&T and Verizon represented more than half of SBA’s new business in the third quarter, which saw an increase from Sprint’s Network Vision deployment and the beginnings of T-Mobile’s 4G upgrade. Also in the quarter, SBA extended the leases for T-Mobile on 2,800 legacy SBA Towers and 520 TowerCo towers where T-Mobile was a tenant, with an increased in cash escalators.
“With the agreements now in place, T-Mobile’s working hard to bring 4G to our sites, and that now makes all four U.S. carriers extremely busy with us on technology upgrades, positively impacting both our leasing and services segments,” Stoops said.
In the third quarter, SBA acquired 37 towers and built 99 towers, ending the quarter with 13,257 owned towers, an increase of 36 percent compared with the end of 3Q 2011. Most of the towers, 11,541, are owned by SBA are in the United States, with 1,716 in international markets. SBA’s purchase of 3,256 towers from Towerco was closed in October and will be reported in the fourth quarter.
SBA spent $20.8 million on tower acquisitions and another $17.1 million on building in new towers. Of the additional $6 million spent on tower upgrades, $5 million was reimbursed by customers.
“With respect to the land underneath our towers, we spent an aggregate of $10.4 million to buy land and easements and to extend ground lease terms,” said Brendan Cavanagh, chief financial officer. “Our investments in land are both strategically beneficial and almost always immediately accretive. At the end of the quarter, we owned or controlled for more than 20 years, the land underneath 70 percent of our towers.”