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Tag Archives: Jeffrey Stoops SBA CEO

SBA Sees Double-Digit Increase in Q4 Site Leasing Revenue

March 5, 2015 — SBA Communications’ domestic cash site leasing revenue in the fourth quarter 2014 increased 16.1 percent to $295.4 million, with more than half of the incremental leasing activity coming from new leases. The big four major U.S. carriers contributed 75 percent of consolidated incremental leasing revenues in the quarter.

Organic leasing activity was strong throughout 2014, ahead of initial expectations, and was the driver of the tower company’s outperformance, Jeffrey Stoops, president and CEO, said during the fourth quarter 2014 earnings call.

“Our customers were very busy all year with network improvements, which benefited both our leasing and services segments,” Stoops said. “We continue to see strong demand across our entire portfolio, both domestic and international, as well as in our services segment.”

For the first time in many months, revenue from new leases was greater than amendments, representing more than 50 percent of incremental U.S. leasing revenue.

“This change in [the new lease/amendment] mix reflects both different priorities and different levels of activity among our customers,” Stoops said. “AT&T and Verizon represent once again the substantial majority of our new business in the quarter, but less on a percentage basis than they have in prior quarters.” SBA is still getting work from Sprint on the Network Vision project and now in the 2.5 GHz band. The tower company also reports increased LTE activity from T-Mobile

SBA Communications Ends 2013 on a High Note

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.”

SBA Expands in Brazil, Acquiring Additional Sites

The Olympics are not the only thing going to Brazil. SBA Communications has purchased more than 2,000 wireless sites from Oi, one of Brazil’s largest telecom carriers, for $645 million. Previously, SBA acquired use rights to 2,113 sites from Oi, a deal that closed in November.

SBA President and CEO Jeffrey Stoops said he was impressed with the quality of the sites, which are concentrated in the most populous areas of Brazil and have demonstrated attractiveness to additional tenants.

“With this acquisition, we will have established SBA as one of the largest and most capable independent tower operators in Brazil, a market which we believe is very attractive and will produce strong growth in the future,” he said.

Under the long-term agreement, Oi will make monthly lease payments for antenna space on each of the sites, which average 1.6 tenants. SBA expects to fund the purchase price from cash on hand, existing revolver capacity and future debt issuances.

During the “View From the Top” session at PCIA’s Wireless Infrastructure Show in October, Stoops said SBA gauges international investments by risk adjusting them against the North American market and analyzing the company’s capital allocations.

“Shareholders like to see top line and EBITDA growth,” he said. “To make sure we always had the largest or the right size of playing field to deploy capital, we moved international investment first in Canada, then in Central America and, most recently, in Brazil.”

Whether a capital allocation is made in the U.S. versus international is based on which has the appropriate return on investment, according to Stoops.

“The return on international investment always is higher than what we would seek in the United States,” he said.

The end game for SBA, according to Stoops, is to always stay fully invested, so if investments in foreign or domestic towers aren’t attractive, it will purchase its own stock or pay down debt.

“It’s all about managing the equation to produce the greatest value for shareholders,” he said.

American Tower Also Bets on Brazil

SBA is not the only U.S. tower company heavily invested in Brazil. American Tower entered the market in 2000 and now has 7,500 towers covering 80 percent of the country’s GDP.

American’s portfolio is mostly urban and suburban in the large metros, such as Sao Paulo, Rio de Janeiro. Towers are also strategically located along major transportation corridors, and 70 percent of them are self-supporting structures, 20 percent are rooftops and 10 percent are monopoles/guyed structures.

The reason tower companies are interested in Brazil is simple. With an IT/telecom market size of $180 billion, Brazil stand as the fourth largest market in the world and it represents more than 50 percent of Latin America.