SBA Communications’ numbers for the first quarter were ahead of Wall Street analyst estimates, with site leasing revenue growth of 58 percent, tower cash flow up 49 percent, adjusted EBITDA up 55 percent and adjusted funds from operations (AFFO) per share rising 46 percent.
“We had another great quarter on all fronts. We exceeded the high end of our guidance for leasing revenue, services revenue, tower cash flow, adjusted EBITDA and AFFO,” said Brendan Cavanagh, CFO and senior vice president. “The lease-up we executed in the first quarter exceeded our expectations and is a continuation of the increased level of customer activity that started in the second half of 2012.”
SBA’s increased leasing revenue was driven by both organic and portfolio growth, including the effect of the Mobilitie and TowerCo acquisitions and an acquisition in Brazil.
“The combination of organic growth and a materially larger portfolio of towers drove strong year-over-year gains in both our leasing and services segments, as well as in adjusted EBITDA and AFFO per share,” said Jeffrey Stoops, president and CEO.
Domestic activity, which accounts for 93 percent of total leasing revenue, is the result of the rapid LTE buildout, according to Stoops, but there is plenty of headroom for growth.
“We would estimate that on our tenancies from the big four U.S. wireless carriers, LTE has been deployed on less than 40 percent of our sites, which implies much remaining amendment activity,” Stoops said. “Given the mandates for entire projects, particularly by Sprint and T-Mobile, we have visibility going into 2014. We believe it is going to be our busiest year ever and on into next year.”
AT&T remains SBA’s largest customer in terms of incremental revenue added with nationwide activity. Verizon stayed active as well and began to deploy its AWS spectrum to add LTE capacity. Verizon’s AWS deployments involved different and additional equipment on the tower compared with its 700-megahertz deployments, which provides SBA with additional revenue opportunity. Sprint is now fully engaged in the Network Vision project.
“We are seeing increasing numbers of installations completed for Network Vision, which is the event that triggers the commencement of cash revenue recognition for SBA,” Stoops said. “T-Mobile has also ramped up its LTE deployment. All in all, it is a very busy time around our tower sites. In the last four quarters, we have processed over 7,800 monetary amendments.”