With site leasing revenue growth of 12 of percent, tower cash flow growth of 16 percent and AFFO per share growth of 22 percent, SBA Communications had a strong fourth quarter and increased its expectations for 2014.
Jeffrey Stoops, president and CEO, said, “Our U.S. business was very busy, with our wireless customers continuing the strong pace of equipment installation that we have experienced all through the year. With continued expected strength in organic growth and material portfolio growth, we are able to increase key elements of our 2014 Outlook. We are expecting another strong year for SBA in 2014.”
Amendment activity contributed more than half of incremental leasing revenue in the fourth quarter. Additional collocation leases contributed more than 40 percent of new leasing revenue, compared with 15 percent in the fourth quarter of 2012. The tower company’s leasing backlog remains at record levels.
“Interestingly, [collocations as a percentage of new leasing revenue] is down from the prior quarter. However, and very importantly, the absolute number of leases was up from Q3,” Jennifer Fritzsche, Wells Fargo senior analyst, wrote. “The percentage was down given the high amount of amendment revenue SBAC also continues to see.” Amendments are being driven by the efforts of AT&T and Verizon to increase the density of their networks, as well as to deploy additional AWS spectrum, she added.
AT&T and Verizon represented well over half of SBA’s new business in the quarter. Sprint continues its Network Vision project and has just begun its 2.5 GHz build out, and T-Mobile continues its 4G upgrade, although not in the 700 MHz band on SBA towers.
“We had a very busy quarter with respect to new leasing business,” Stoops said. “And we signed up another high number of both new tenant leases and amendments. Our customers are requesting larger equipment loads, which has a favorable impact on rate.”
During the fourth quarter of 2013, SBA purchased 2,138 communication sites for $321.1 million and built 119 communication sites. As of December 31, 2013, SBA owned or operated 20,079 communication sites. Total cash capital expenditures were $403.9 million, including $398.2 million for new tower builds, tower augmentations and communication site acquisitions.
“With respect to portfolio growth, we had another strong year, exceeding the high end of our portfolio growth goal in 2013. We’re off to a very strong start in 2014, and we anticipate exceeding the high end of our annual goal by the end of the first quarter,” Stoops said. “We will continue to look for additional opportunities certainly in our existing markets and potentially some new markets, although our preference currently is to stay in the Western Hemisphere.”