November 5, 2014 — SBA Communications has experienced unparalleled organic leasing activity in 2014, well above expectations in terms of revenue added per tower, Jeffrey Stoops, president and CEO, said during the company’s third quarter earnings call. Domestic site leasing revenue for the quarter grew to $283 million from $252 million year over year.
Domestic tower cash flow for the third quarter of 2014 was $228.8 million compared with $199.2 million in the year earlier period, an increase of 14.8 percent.
“Our organic leasing activity, which has been particularly strong this year and materially ahead of our expectations, was once again the reason for our outperformance [in the third quarter],” Stoops said. “We are experiencing strong demand across our portfolio, both domestic and international. We are seeing the benefits of the demand in both our leasing and services segments.”
Although SBA expects strong leasing activity for years to come, the 2015 forecast will return to growth more similar to 2011 to 2013, Stoops said. Similar to the other public tower companies, SBA is factoring in the decommissioning of iDEN sites and possible terminations from MetroPCS, LEAP and Clearwire, which represent $80 million in annual revenues. SBA expects to retain at least a third of that $80 million in the long term.
The 2015 outlook for site leasing revenue, tower cash flow, adjusted EBITDA and AFFO includes an assumed negative impact of $16 million associated with 2015 iDEN lease terminations.
“We expect the continued benefits of solid leasing activity for the next few years as carriers build out their initial [LTE] footprints to be followed by capacity spending as consumer adoption increases. Our network speed and quality are now and will remain a priority,” Stoops said.
Leasing activity levels at AT&T and Verizon continue to be high, representing the majority of new business for SBA, which also benefited from continued contributions from Sprint’s Network Vision project and now from the carrier’s 2.5 GHz build out. T-Mobile’s 4G network upgrade activity has been accelerating, and, overall, backlogs continue to be healthy.
SBA reported that its services business continued to be strong in the third quarter, with Sprint and T-Mobile serving as the primary customers, with an increase in activity from Verizon. In Q4, services are expected to remain strong, resulting in an increased outlook. Services outlook for 2015 is strong but tempered somewhat by uncertainties concerning Sprint’s 2.5 GHz build.