Connect (X)

Tag Archives: SBA Communications

SBA Communications in Q1 Steady as She Goes

By J. Sharpe Smith

SBA CommunicationsMay 5, 2016 — Enjoying a solid start to 2016, SBA Communications reported that carrier activity was consistent with the last three quarters of 2015, featuring mostly amendments to existing macro sites, according to the towerco’s first quarter earnings call. Aside from normal churn and an iDEN de-commissioning hangover, which will last most of 2016, SBA achieved organic leasing revenue growth of 8.1 percent in the first quarter.

“By application and executed contract volume, the activity is substantially amendments,” said Jeffrey Stoops, president and CEO. “We expect the investments in macro sites by our U.S. customers will remain heavily weighted towards amendments for the remainder of this year.”
SBA projected increased growth in the long term (by 2020) through new sites and amendment activity, but conservative short-term estimates led Wells Fargo Securities to maintain its Market Perform rating for its stock.

“While this is a positive, SBAC continued to speak to a more muted domestic spending environment, which does not seem to be changing near term,” wrote Senior Analyst Jennifer Fritzsche.

During the quarter, carrier activity centered on the AWS-1 (Advanced Wireless Services at 1.7 GHz and 2.1 GHz) and 700 MHz deployments, as well as refarming of 2G and 3G spectrum to LTE,

“We are in the very early innings of AWS-3 (1.6 GHz, 1.75 GHz, 2.15 GHz), WCS (Wireless Communications Service at 2.3 GHz) and 2.5 GHz spectrum deployments all of which remain opportunities ahead of us,” Stoops said. “The amount of activity around an investment in our customers’ existing macro sites continues to be robust and underscores the importance of macro sites in our customers’ network plans.”

SBA lowered its services guidance to reflect reduced work from Sprint, while other carriers are expected to remain steady, compared with last year.

American Tower

Carrier activity reported by American Tower in the first quarter took place in the AWS-3, WCS, and 2.5 GHz bands, as well as through refarming 2G and 3G spectrum into 4G in the 800 MHz and PCS bands. Refarming drove amendments as old antennas were swapped out for more advanced antennas, according to James Taiclet, American president and CEO.

“This shift drives further investment into cell sites through technologies such as carrier aggregation as well as adding new cell sites to reduce the transmission radius and, therefore, the quality improvement for each signal,” he said. “This increase in cell site density is expected to drive incremental collocation opportunities on macro towers, as customers like us demand higher and higher peak speeds to enhance our user experience.”

Organic growth of U.S. property revenue is projected to be 5.5 percent by American Tower, compared with 12 percent for international properties.

Crown Castle International

Crown Castle saw organic site rental revenue grow 7 percent plus 3 percent cash escalations minus 2 percent from churn in the first quarter.

Jay Brown, Crown Castle CFO, also said carrier activity won’t increase in 2016. Additionally, the execution of new leases and amendments will be backloaded, 40 percent in the first half and 60 percent in the second half.

“Our view is that leasing activity in the full year of 2016 is going to be very similar to what we saw in 2015. And we continue to hold that view,” he said.

Tower Company Prices $500M in Tower Revenue Securities

By J. Sharpe Smith

SBA Communications has priced $500 million of Secured Tower Revenue Securities Series 2015-1. The move, which will pay 3.156 percent interest annually, provides the tower company with low cost capital and fulfills investors’ needs for reliability.

“Over the last few years, the institutional yield investors have come to understand the quality of tower cash flow; therefore, the market has developed for transactions like the one SBA has priced,” Howard Mandel, president, Peppertree Capital Management.

Net proceeds from the offering will be used to repay drawn amounts on the revolving credit facility of SBA Senior Finance II and for general corporate purposes.

“It’s all about cost of capital for the tower company,” Mandel said. “SBA is refinancing existing debt with a long term, debt-like instrument.”

With interest rates remaining low, investors are having difficulty finding securities that will generate a predictable, acceptable return, which makes the SBA securities especially appealing, according to Mandel.

“For the investors, it’s about their need for yield,” Mandel said. “These investors are willing to take a relatively low return because tower rent fits the desired parameters (i.e., predictable, high credit) – and there are not a lot of good alternatives in the market.”

Lawsuit Names SBA, FDH and S&S in Tower Fatality

By J. Sharpe Smith —

June 4, 2015 — SBA Communications, FDH Engineering and S&S Communications Specialists were among the defendants named in a lawsuit filed by the mother of the firefighter who was killed in the tragic cell tower collapse, Feb. 1, 2014, in West Virginia.

Hulbert, Oklahoma-based S&S Communications Specialists was contracted by FDH Engineering to perform structural modifications to an existing cell tower. While the employees were removing diagonal bracing, the tower collapsed, killing two workers. Subsequently, as the tower fell it hit the guy wires of another nearby tower and it became destabilized. The second tower fell killing Michael Garrett as he came to rescue the injured tower workers.

The tower climbers were beefing up the tower in anticipation of adding more equipment to the structure, replacing four or five braces at a time without attaching support braces, when the accident occurred. The lawsuit alleges that S&S knew or should have known that if the support braces were not replaced properly it would compromise the structural integrity of the tower, causing it to fall.

“It was pretty apparent why that tower came down considering the number of braces that had been removed at one time,” Miley said. “It was shocking to hear statements made to the state police that the [the tower climbers] had done it that way hundreds of times. It is probably a miracle that something like this didn’t happen earlier.” In fact, S&S Communications was cited by OSHA in August 2014 with two serious workplace violations for directing employees to remove diagonal structural members on the tower without using temporary supports. The firm was previously cited by OSHA in 2009 when a technician fell to his death from a communications tower in Missouri.

SBA hired FDH to perform the engineering work for replacing the guy wires and the support braces on the tower. The lawsuit alleges that FDH (which is now FDH Velocitel) knew that S&S did not have the engineering expertise needed for replacing the supports and guy wires.

“Once FDH prepared plans for the removal and replacement of the braces, we believe they should have taken that extra step to ensure the removal process was done safely and should have provided engineering insight into what is necessary to maintain the structural integrity of the tower while the work they have called for is being done,” said Doug Miley, an attorney who represents the plaintiff.

The lawsuit commented that the industry’s layers of contractors and subcontractors can affect safety. In certain circumstances, West Virginia law won’t allow responsibility for an accident to be delegated to an independent contractor, according to Miley. Hence, the lawsuit claims that SBA, as the owner of the towers, is ultimately responsible for the work on its tower.

“Another factor that causes safety problems in the [tower] industry is the layers of companies set up to do various tasks, which creates an environment where ultimate responsibility for almost all aspects of the workers’ safety has no clarity,” according to the lawsuit.

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

Organic Leasing Growth Highlights Q3 for SBA

By J. Sharpe Smith

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.