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Tag Archives: SBA Communications

New Lease Revenue Grows at SBA Sites

By J. Sharpe Smith, Senior Editor

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.

Infrastructure Investors Driving up Value of Towers

By J. Sharpe Smith, Senior Editor

The marketplace for tower assets continues to be very competitive on a global as well as domestic basis, in part, because of the increased involvement of long-term investors, SBA Communications President and CEO Jeffrey Stoops said the recent earnings report. Investors, such as infrastructure funds pension funds, insurance companies and sovereign wealth funds, are attracted to industry’s with low competition and high barriers to entry, and they also invest for the long term.

“In the last 12 months, these funds have outbid strategic investors for a number of communications assets around the globe,” Stoops said. “Now why is that important? Because I know that the assets being purchased by these funds at much higher multiples are nearly of the same quality as ours.”

In an interview with AGL eDigest, separately, Tarpon Towers CEO Ron Bizick agreed with Stoops, saying towers are attractive to infrastructure funds, because they are stable, long-term businesses, with steady cash flows.

“It is not surprising that pension funds and infrastructure funds would gravitate toward that stability,” Bizick said. “They accept much different returns on their investments, compared with private equity. They can underwrite returns in the high single digits or low double digits, which is a far cry from the many of the traditional private equity funds in the United States.”

Infrastructure funds have enormous amounts of money, which they invest over a much longer period of time. Their deals can be written for less in annual returns.

MacQuarie Infrastructure and Real Assets, for example, has been investing in cell towers, along with bridges, roads and tunnels, among other things, for more than 20 years.

“We set out to offer investors a new kind of investment.  One with long-term horizons offering sustainable, predictable returns and low correlation to traditional asset classes: infrastructure,” the firm’s web site said. “Today we have an unrivalled track record in infrastructure asset management.  We take a responsible, long-term approach to building sustainable value throughout the investment cycle by investing wisely, managing with discipline and selling at the right time.”

4Q Site Leasing Rise Predicted for SBA

Zacks predicts fourth-quarter site leasing will come in at $443 million, up from $414 million in Q4 2017 when the SBA Communications releases its results after the closing bell today.

Site development revenues are also expected to top last year: $30.2 million compared with $29 million. Total revenues are projected to be $472 million, well over $443 million in the year-earlier quarter. The firm said those positive numbers have plenty of catalysts to continue in the future.

“SBA Communications is poised to benefit from strong customer activity both domestically and internationally, coupled with healthy backlogs with each of its big four U.S. customers. The company expects the positive momentum, backed by investment by these customers in their networks, to have resulted in new leases and amendment signings in the quarter,” Zacks wrote.

SBA Communications Sees Best Domestic Leasing Numbers Since 2014

Third quarter 2018 financial results for SBA Communications were ahead of its expectations with domestic cash site leasing revenue topping $350 million compared to $327.9 million in the year earlier period, an increase of 6.9 percent. Domestics site leasing profit rose 8.9 percent year over year, as well.

“Customer activity remained strong both domestically and internationally for SBA Communications in the third quarter, we executed new domestic leasing business at a rate which was well above the year ago period and the highest since 2014. That new business will certainly positively impact future financial results, said Jeffrey A. Stoops, President and CEO.

The Big 4 carriers all contributed to SBA’s growth, with newly signed up domestic leasing revenue coming from 60 percent amendments and 40 percent new leases. And the big four carriers represented 95% of total incremental domestic leasing revenue that was signed up during the quarter.

During the third quarter of 2018, SBA purchased 679 communication sites for $106.9 million. SBA also built 90 towers during the third quarter of 2018. As of September 30, SBA owned or operated 29,357 communication sites, 16,249 of which are located in the United States and its territories, and 13,108 of which are located internationally.

“Our domestic and international backlogs remain very healthy. We continued to allocate capital opportunistically to a mix of portfolio growth and stock repurchases, materially investing in both while staying within our target leverage range,” Stoops said. “We believe the combination of strong customer demand, operational excellence and disciplined yet opportunistic capital allocation will allow us to continue to drive shareholder value through growth in AFFO per share.”

Packet to Locate Mobile Edge Datacenter at SBA Site

By The Editors of AGL

Packet, a bare metal automation platform for developers, is collaborating with SBA Communications to create an edge data center operational model with direct wireless connectivity. The two companies have broken ground on the first Boston edge data center location at an SBA cell tower site in Foxborough, Massachusetts. Customer availability is expected by the end of 2018.

“We are excited to partner with Packet to bring the power of edge computing to our tower site in Foxborough, the first of what we expect will be many sites in our extensive portfolio to become distributed network connectivity points for emerging 5G and edge computing applications,” Clay Moran, director of strategy at SBA said.

Packet is expanding its edge computing presence with some 50 new sites under development. In a departure from the hyperscale cloud model, Packet is inviting physical and supply chain partners to participate in what is expected to be a highly disaggregated and rapidly expanding ecosystem.

“We view this initiative as one similar to what we are seeing from the other towercos, including CCI’s working relationship with Vapor IO (who is also working with other tower cos outside of CCI), and AMT’s goal of achieving 25% revenue from non­macro sites,” wrote Jennifer Fritsche, senior analyst, Wells Fargo. “We continue to believe the “edge” theme is in its very early innings. In our view the towers are in a position to play a very significant role in this developing theme. The base of the tower is a logical place for a micro edge data center given the power and fiber to the location as well as the security in place. We look for more developments around this theme to come in 2019.”

The Boston edge location is the first of many planned site expansions in collaboration with SBA and other cell tower companies. In addition to offering its cloud services, Packet will also enable solutions for the 3.5 GHz CBRS band, while also offering a clear path for additional spectrum bands and the proliferation of 5G technologies and shared spectrum solutions.

“With our announcement today, we are delivering on our promise to reinvent the service provider model and deliver dynamic ‘one click’ cloud native infrastructure including wireless access,” said Ihab Tarazi, CTO at Packet. “Our customers will also have a clear path for IoT and Public Cloud integration providing high performance for their edge applications.”