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SBA Communications NASDAQ: SBAC sees a cyclical recovery in U.S. tower leasing tied to future spectrum deployment, while also identifying edge computing, Latin American growth and share repurchases as areas of focus, Executive Vice President and Chief Financial Officer Marc Montagner said during an RBC communications infrastructure session.

Montagner said U.S. wireless carrier capital spending typically rises after operators acquire spectrum and deploy a new generation of technology, before declining during a subsequent “harvest” period. He said capital expenditures for the three major U.S. carriers historically have reached about 25% of revenue at cycle peaks and fallen to roughly 15% during slower periods.

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“In 2022, 2023, we were right at a 25% mark. Last year and this year, we were at about the 15% mark,” Montagner said. Despite the current trough, he said SBA continues to grow, estimating growth of about $35 million this year compared with approximately $78 million in 2022.

Spectrum Auction and Edge Computing Montagner pointed to a planned 6G spectrum auction in the first half of next year as a potential future leasing catalyst. He said the spectrum would require roughly 18 months to clear, putting potential deployment activity in late 2028 or early 2029. The Federal Communications Commission is expected to auction 160 megahertz of spectrum, he added, suggesting there could be more than three bidders and potentially participation from satellite operators.

He also discussed opportunities for edge data centers at tower sites. SBA believes about half of its sites could accommodate a small data center, according to Montagner. He said companies have raised capital and are negotiating leases to place mini data centers at the base of towers, where they could benefit from existing power, fiber and low-latency connectivity.

However, Montagner said customer demand for the computing capacity remains uncertain. “When I ask them, ‘Have you signed any, basically a retail customer or people are going to use that compute?’ I get very fuzzy answers,” he said, adding that he expects demand could emerge over the next year or so.

SBA intends to remain principally a passive infrastructure provider, leasing vertical tower space and horizontal ground space. For edge data center tenants, it could also provide power where requested, Montagner said, because those facilities’ power needs are relatively limited.

Brazil and Central America Outlook Montagner said Brazil represents about 15% of SBA’s revenue and 15% of tower cash flow. He described the company as bullish on the country’s long-term outlook but acknowledged near-term headwinds from carrier consolidation churn in 2026 and 2027.

He said 5G deployment in Brazil remains below 50% and that carriers face coverage and deployment requirements from regulators. SBA has about 12,000 towers in Brazil and does not anticipate expanding through mergers and acquisitions in that market, Montagner said.

In Central America, SBA built 7,000 sites for Millicom last year under a 15-year U.S.-dollar-denominated contract that escalates with U.S. CPI, he said. The company has commitments from Millicom for another 2,500 build-to-suit sites and has locked in a net-to-high-single-digit growth rate in U.S. dollars, according to Montagner.

Montagner also agreed that it could make sense to consolidate the company’s portfolio and potentially seek buyers for certain non-core smaller markets.

DISH Exposure and Carrier Activity Regarding DISH Network, Montagner said SBA expects about $56 million of revenue from the company this year, which he characterized as churn. SBA also had about $100 million in short-term leases with DISH and roughly $100 million in unpaid payments, for which it has filed a claim in bankruptcy court.

“I have no idea what the recovery is going to be,” Montagner said, calling the potential recovery immaterial to SBA. He said equipment left by DISH on SBA towers has been deemed abandoned. If SBA receives demand for the space, it removes the equipment and re-leases the location; otherwise, it leaves the equipment in place until it can re-lease the space.

Montagner said SBA’s 10-year agreement signed with Verizon last year is performing well, while its master lease agreement with AT&T runs through April 2028 and has been steady. T-Mobile has slowed somewhat this year amid a focus on free cash flow, he said.

Capital Allocation Montagner said SBA generates approximately $600 million of excess capital annually after accounting for figures including roughly $1 billion in EBITDA, $250 million of maintenance capital expenditures, $530 million of dividends and $500 million of cash interest expense.

The company paid down about $70 million of debt in 2023 and repurchased about $500 million of shares last year, he said. SBA plans to remain flexible based on its share price, master lease opportunities and interest rates, but is currently leaning toward buybacks. Montagner said the company’s AFFO per share was about $12 and its share repurchase yield was above 6.5%, compared with debt recently raised at 5.25%.

“Right now we’re indexing towards share buyback,” he said.

About SBA Communications (NASDAQ:SBAC)SBA Communications Corporation is a real estate investment trust that owns, operates and develops wireless communications infrastructure. Its portfolio primarily includes communications towers, rooftops, small-cell networks and distributed antenna systems used by wireless service providers, government agencies and other communications customers.

The company generates revenue mainly by leasing antenna space and related infrastructure to tenants, who install equipment used to provide wireless voice and data services.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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SBA Communications (SBAC - Free Report) reported $715.29 million in revenue for the quarter ended June 2026, representing a year-over-year increase of 2.3%. EPS of $3.03 for the same period compares to $2.09 a year ago.

The reported revenue represents a surprise of +1.7% over the Zacks Consensus Estimate of $703.37 million. With the consensus EPS estimate being $2.96, the EPS surprise was +2.37%.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how SBA Communications performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Sites owned - Domestic: 17,362 versus the three-analyst average estimate of 17,378.Sites owned - International: 29,028 versus the three-analyst average estimate of 29,139.Sites owned - Total: 46,390 versus the three-analyst average estimate of 46,517.Sites decommissioned - Domestic: -32 compared to the -18 average estimate based on two analysts.Sites owned previous - International: 28,980 versus the two-analyst average estimate of 28,980.Sites owned previous - Total: 46,358 compared to the 46,358 average estimate based on two analysts.Sites acquired - Total: 6 compared to the 118 average estimate based on two analysts.Sites built - Total: 109 versus 118 estimated by two analysts on average.Revenues- Site Development: $51.39 million compared to the $49.85 million average estimate based on three analysts. The reported number represents a change of -23.5% year over year.Revenues- International Site Leasing: $211.44 million versus $208.89 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +30.5% change.Revenues- Domestic Site Leasing: $452.45 million compared to the $449.07 million average estimate based on three analysts. The reported number represents a change of -3.7% year over year.Revenues- Site Leasing: $663.89 million versus the three-analyst average estimate of $657.96 million. The reported number represents a year-over-year change of +5.1%.View all Key Company Metrics for SBA Communications here>>>

Shares of SBA Communications have returned -1.9% over the past month versus the Zacks S&P 500 composite's +0.2% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

SBA Communications NASDAQ: SBAC reported second-quarter results in line with its expectations and modestly increased its full-year 2026 outlook for site leasing revenue, funds from operations (FFO) and FFO per share, citing higher straight-line revenue and improved net cash interest expense.

Chief Financial Officer Marc Montagner said second-quarter FFO per share was $3.05. The company paid a quarterly cash dividend of $1.25 per share and declared another $1.25-per-share dividend payable Sept. 17 to shareholders of record as of Aug. 20. The declared dividend is about 13% higher than the dividend paid in the prior-year period, according to Montagner.

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“We had another good quarter, and our results were in line with our expectation,” Montagner said. SBA said its companywide Tower Cash Flow margin was just under 80% during the quarter.

Leasing Activity Remains Steady In the U.S., SBA added about $9 million of new lease and amendment billings during the second quarter, with most activity coming from new co-locations as carriers densified networks and expanded coverage. Internationally, the company added about $4 million of new lease and amendment billings.

President and Chief Executive Officer Brendan Cavanagh said U.S. application volumes entering the second half remained relatively consistent with the first half of the year. One customer was more active than the others, though he said changing levels of activity among carriers were not unusual.

The company expects U.S. new-leasing contributions to be lower in the second half than in the first half, consistent with its prior outlook. Cavanagh said the company had not changed that expectation.

International demand remained healthy, though churn continued to be elevated because of carrier consolidations, bankruptcies, restructurings and network rationalizations. Cavanagh said SBA is working with customers on longer-term arrangements intended to provide more stable and predictable cash flow, sometimes involving rental relief in exchange for greater contractual certainty.

SBA expects it is nearing the end of its period of heightened international churn, though Cavanagh declined to provide a specific outlook for next year while discussions with customers continue.

Investment-Grade Debt Offering Reshapes Capital Structure In July, SBA issued $3.5 billion of unsecured investment-grade bonds, its first such offering. The company used net proceeds to fully repay its Term Loan B and outstanding balances under its revolving credit facility. As of the call, SBA’s revolver was fully paid down and it had about $570 million in cash.

The offering included:

$1.35 billion of notes due in 2030 with a 4.78% cash coupon; $1.35 billion of notes due in 2031 with a 5.15% cash coupon; and $800 million of notes due in 2033 with a 5.45% cash coupon. The bonds had a blended cash coupon of 5.11% and a weighted average maturity of five years. SBA also established a new unsecured revolving credit facility with $2.5 billion of capacity.

Montagner said secured debt now represents less than 50% of the company’s debt following the transaction. SBA ended the quarter with approximately $13 billion in total debt and net debt-to-adjusted EBITDA leverage of 6.4 times, within its target range of 6 to 7 times. In June, S&P upgraded SBA’s credit rating to BBB from BBB-.

The company continues to assume that its $1.2 billion asset-backed securities maturity in November will be refinanced at a 5.25% rate. While SBA expects to benefit from its investment-grade status, Cavanagh noted that some debt being refinanced had lower rates than current market borrowing costs.

Buybacks Take Priority Over Higher-Valued Acquisitions Cavanagh said SBA intends to resume share repurchases in the second half of 2026 after completing its July refinancing. He said management views buybacks as the best use of capital at current valuation levels and characterized the company’s shares as trading below what management believes is their intrinsic value.

The company will continue building towers and considering acquisitions, but Cavanagh said the limited supply of U.S. assets available for purchase generally carries valuations substantially higher than SBA’s own valuation. As a result, he said repurchasing shares is currently more attractive than pursuing acquisitions that could be dilutive.

SBA expects to build roughly 600 new towers during 2026, primarily in Central America, with a meaningful number also planned in Tanzania. The company built 99 towers in the second quarter, up from 75 in the first quarter. Cavanagh said construction activity should rise in each successive quarter through the rest of the year.

New tower construction has offered stronger returns internationally than in the U.S., where competition has at times compressed potential returns, according to Cavanagh. He said SBA sees opportunities in Africa and Central America and expects risk-adjusted returns on international builds to exceed its cost of capital, often beginning on the first day of operation.

Spectrum, Edge Computing and Satellite Seen as Longer-Term Drivers Cavanagh pointed to future spectrum auctions as potential long-term sources of equipment deployments and leasing growth. The Federal Communications Commission adopted a plan to auction 160 megahertz of Upper C-band spectrum beginning in April 2027. Combined with previously auctioned Lower C-band spectrum, the auction would create 440 megahertz of contiguous mid-band spectrum for wireless use.

He said the FCC’s build-out conditions, including population-coverage requirements and automatic license termination for failure to meet a later benchmark, should encourage spectrum holders to deploy their licenses. However, Cavanagh said the new spectrum opportunities are more likely to affect results over the next five or more years rather than materially influence next year’s leasing growth.

SBA also sees potential opportunities in edge computing. Cavanagh said the company is speaking with multiple parties interested in more distributed computing architectures that use power- and fiber-connected locations to reduce latency, improve redundancy and support artificial intelligence-oriented applications. He said developments could emerge over the next 12 months, though he did not identify customers or provide financial estimates.

Management said roughly half of SBA’s U.S. portfolio could be well suited to the edge-computing uses currently under discussion. The facilities being considered would generally be smaller than one-megawatt deployments, Cavanagh said.

On satellite direct-to-device services, Cavanagh said SBA views satellite connectivity as complementary to terrestrial wireless networks rather than a replacement. He said satellite providers seeking to offer ubiquitous, high-quality service competitive with traditional mobile networks would likely need terrestrial network components. SBA has spoken with multiple satellite providers, he said, but characterized the discussions as early stage.

While some rural or fringe tower locations could face competitive pressure from satellite service, Cavanagh said SBA’s internal analysis suggests those sites represent no more than roughly 2% to 3% of its portfolio, while satellite data could also help identify locations where additional terrestrial infrastructure is needed.

About SBA Communications (NASDAQ:SBAC)SBA Communications Corporation NASDAQ: SBAC is a real estate investment trust that owns, operates and develops wireless communications infrastructure. Its core business is the leasing of space on communications towers, rooftop sites and other wireless structures to mobile network operators, broadband providers and other wireless service customers. The company also provides site development, construction and ongoing site management services to support the deployment and operation of wireless networks.

In addition to traditional macro towers, SBA offers a range of infrastructure solutions designed for dense urban and suburban markets, including small cells, distributed antenna systems (DAS) and fiber backhaul and transport services.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and SBA Communications wasn't on the list.

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Key Takeaways SBAC gained 14.8% in three months, outpacing the industry's 10.3% growth on tower leasing strength.SBA Communications sees healthy 2026 leasing activity backed by rising backlog and carrier capacity needs.SBAC expanded with site buys, land purchases and new towers while continuing consistent dividend growth. SBA Communications’ (SBAC - Free Report) shares have rallied 14.8% in the past three months compared with the industry’s growth of 10.3%.

The company benefits from rising wireless data demand through long-term tower leasing, steady colocation activity, strategic tower expansion and site acquisitions, complemented by site development services and consistent dividend growth, supporting long-term shareholder value.

Analysts seem bullish on this Zacks Rank #3 (Hold) stock. The Zacks Consensus Estimate for its 2026 AFFO per share has been revised northward by 6 cents to $12.20 over the past two months.

Image Source: Zacks Investment Research

Factors Behind SBAC Stock’s Price SurgeMobile data usage continues to rise as carriers expand coverage, densify networks and upgrade sites with additional spectrum bands and technologies such as C-band and massive MIMO antennas. Fixed wireless access growth adds load to carrier networks and supports additional equipment needs at existing macro sites. This activity underpins demand for SBA Communications’ tower infrastructure across the United States and its international markets in Central America, South America and Africa.

SBA Communications generates most of its revenues from long-term tower leases, which support visibility in cash flows and high tower cash flow margins. In the first quarter of 2026, U.S. leasing activity was driven largely by new colocations as wireless carriers added capacity. Management expects healthy leasing activity to continue through the remainder of 2026, supported by an increasing domestic leasing backlog.

SBA Communications provides site development services in the United States, helping carriers with site acquisition, zoning, construction and equipment installation. The segment also offers installation, optimization and integration services across network technologies. While site development is a smaller contributor to operating profit than site leasing, it deepens customer relationships and helps the company participate in network build cycles beyond pure colocation.

SBA Communications continues to expand its footprint through selective acquisitions, land purchases and new tower builds in markets where carrier demand supports returns. As of March 31, 2026, the company owned or operated 46,358 communication sites. In the first quarter of 2026, it acquired 10 communication sites and the rights to the land underneath about 3,900 communication sites in Guatemala for $133 million, and built 80 towers. Subsequent to quarter-end, the company purchased or is under contract to purchase 56 sites for $36.9 million in cash, with the transactions expected to close by the end of the third quarter of 2026.

SBA Communications’ dividend hikes demonstrate its commitment to driving shareholder value and superior capital-distribution ability. The company has increased its dividend five times in the past five years, and its five-year annualized dividend growth rate is 17.06%. Given SBA Communications’ solid operating platform, the dividend distribution is expected to be sustainable over the long run.

Key Concerns for SBACCustomer concentration, Sprint and EchoStar churn, leverage, interest expenses, currency fluctuations and technology shifts can limit SBA Communications near-term growth and valuation.

Stocks to ConsiderSome better-ranked stocks from the broader REIT sector are Lamar Advertising (LAMR - Free Report) and Vornado Realty Trust (VNO - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for LAMR’s 2026 FFO per share is pegged at $8.81, which indicates year-over-year growth of 6.66%.

The Zacks Consensus Estimate for VNO’s full-year FFO per share is pinned at $2.34, which calls for an increase of 0.86% from the year-ago period.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.