In a sign that carriers are adding coverage as well as capacity, new leases increased during 2018, almost catching up with amendments. In the fourth quarter 2018, SBA Communications’ new leases accounted for 47 percent of site revenue compared with 33 percent of revenue in the first and second quarters. Accordingly, amendment dropped to 53 percent of revenue from 66 percent of the revenue in the first half of the year.
Domestic leasing activity is being driven by new spectrum deployments, the rollout of FirstNet, and 5G preparations. The Big Four accounted for 84 percent of revenue for SBA, and Dish Network provide a “nice contribution” to revenue, according to Jeffrey Stoops, president and CEO.
“We exited the year with a solid domestic backlog, which we expect to provide us with a continued healthy level of new lease and amendment signings as we move into 2019, and earlier activity has been consistent with that,” Stoops said during the SBA’s fourth quarter earnings call.
During the quarter, SBA purchased 79 sites at a cost of $28.5 million and built 169 sites. “We met our portfolio growth goals, growing the portfolio by 6 percent in 2018,” Stoops said.
SBA’s 2019 services guidance assumes that that the Sprint/T-Mobile merge receives approval and all Sprint activity ceases in the third quarter. However, the merger will not impact the company’s 2019 leasing outlook.
Total revenue in the fourth quarter of 2018 grew 9.2 percent to $483.8 million from $443.1 million year over year. Domestic cash site leasing revenue was $356.4 million in the fourth quarter of 2018 compared to $332.9 million in the year earlier period, an increase of 7.1 percent. Site leasing operating profit grew 8.5 percent year over year to $351.3 million.