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.
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
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.
More Growth to Come as Sprint and T-Mobile USA Join the 4G Roll Out
By Don Bishop
Growth, both organic and through acquisitions, was the dominant topic as executives from the big three tower companies spoke at the Wireless Infrastructure Show on Tuesday in Orlando, Florida. Ben Moreland, president and CEO of Crown Castle International; Brendan Cavanagh, senior vice president and chief financial officer of SBA Communications; and Rod Smith, senior vice president and chief financial officer of American Tower’s U.S. tower division, spoke with PCIA President and CEO Jonathan Adelstein during “The View from the Top: An Executive Roundtable,” a plenary session.
“We’re up to our ears in integration,” Moreland said, speaking of Crown Castle’s acquisition of a portfolio of towers from AT&T. “We’re integrating 9,700 sites we acquired from AT&T at the end of last year.” He said with an acquisition of this size, it normally takes six to nine months before a tower company is able to accept applications for antenna space rental on the acquired sites at the same speed as other sites.
Smith spoke about American Tower’s acquisition of towers from Global Tower Partners, saying, “At this point we’re ahead in terms of capturing our selling, general and administrative expense synergies that we originally had in our investment case. That provides a tailwind for future margin expansion. We also posted strong growth in those assets in the first quarter of 2014. The core organic growth for the GTP assets was 9.9 percent for the first quarter. That outpaces the core organic growth for the quarter for the legacy American Tower sites, which was 9.2 percent.” He said both numbers are well ahead of the 6 to 8 percent core organic growth rate that American Tower targets for the long term.
Cavanagh addressed the issue of 4G network build outs and their effect on the tower business. “Although we’ve seen record growth during the past couple of years from our Big Four carrier customers in the United States, the backlog remains at a record level,” he said. “The growth trajectory for continued deployment is significant for the next few years. Many amendments have been for 4G upgrades, and it is still going on. And the carriers are engaging in a lot of coverage builds, too. We expect to see growth during the next few years comparable with what we’ve seen during the past few years.”
Moreland said Crown Castle expects a record application volume this year. “We’ve never seen it as busy as it is now,” he said. “A lot of amendments are carrying out 4G deployments, depending on which carrier. We’re seeing significant collocation activity return to the market.” Leading the way are Verizon and AT&T, he said, adding that he expects it to continue with Sprint and T-Mobile USA later on. He said the carriers and Wall Street recognize that the use of towers for network build outs represents an efficient use of capital.
Smith said that during the past several years, American Tower has invested $7 billion in U.S. infrastructure. He said the company also has assets in 12 countries in four continents. He said 64 percent of the company’s acquisition capital has been spent in the United States in the past several years. “We absolutely are bullish on the U.S. market,” he said.
Smith said Verizon has completed its initial roll out of LTE. “We describe its network as a mile wide and an inch deep,” he said. “They’re going to have to come back in and densify the network.” He said AT&T is moving rapidly through its initial LTE upgrade. Sprint and T-Mobile also are working on LTE upgrades. “It’s been a long time since we saw all four wireless carriers as active as they are,” he said. “We believe that will continue.”
The executives spoke about progress with loosening restrictions on wireless infrastructure. “There definitely seems to be a shift at the FCC to appreciating what wireless infrastructure does and to try to speed the process for deployment,” Moreland said. “Even so, you have things that fly in the face of that, whether it’s rules about public notices for towers’ effects on migratory birds that seem to be the opposite of the overall theme. But there’s a positive shift.”
Cavanagh said there has been a recognition of the value that wireless infrastructure brings to the consumer and the economy that is significant. Smith added that the U.S. government seems to recognize the value of bringing broadband services to people across the country.
Moreland tied innovation at the consumer wireless device level with growth for the wireless infrastructure business. He also noted spectrum owned by the First Responder Network Authority and Dish Network look like future opportunities for antenna space rental. “Over time, that spectrum will be deployed in some shape or form that will result in further sharing of our infrastructure,” he said.
Cavanagh said the clearer growth opportunity lies with the four large U.S. commercial wireless carriers. “It’s nice to know that there are other guys out there with additional swaths of spectrum that will ultimately be deployed,” he said. “Whether it’s in partnership with an existing carrier or independently, that will help to sustain the growth rate for years to come.”
In past years, the “View from the Top” roundtable has featured as many as five executives from large tower companies, but with consolidation reducing the number of large tower companies and concentrating tower holdings among Crown Castle, American Tower and SBA Communications, this year’s roundtable had fewer figures on the stage.
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.”