SBA Communications (SBAC) Citi’s 2026 Global TMT Conference summary

Strategic growth initiatives

• Focus on long-term value creation through organic growth and accretive M&A, leveraging existing tower assets and exploring new use cases such as LEO satellite partnerships and edge computing.

• Expansion opportunities include drone detection, edge data centers, and supporting AI agent services at tower sites.

• 6G technology is expected to drive significant lease-up and new use cases, with spectrum auctions and OEM readiness anticipated soon.

• U.S. market growth is supported by long-term agreements with three investment-grade carriers, with stable churn and steady lease-up rates.

• International strategy involves divesting subscale or high-risk markets and expanding in consolidated, high-growth regions like Central America.

Financial performance and capital allocation

• Maintains a leverage target of 6x-7x net debt to EBITDA, enabling flexibility for share buybacks, M&A, or debt repayment.

• Recent capital allocation includes $500 million in share repurchases and a $1 billion acquisition in Central America.

• Annual cash flow after expenses provides about $700 million for discretionary allocation.

• Dividend yield is about 2.5%, with plans for low double-digit growth and a payout ratio in the low 40% range.

• 2027 marks the last significant refinancing hurdle, after which interest expense pressure on AFFO should subside.

Market trends and operational outlook

• U.S. lease-up guidance is steady at $35 million for 2024 and 2025, with normalized growth of 2.5%-3% and churn stabilizing near 1%.

• CapEx by U.S. operators is currently at a cyclical trough, but lease-up remains positive and growth is expected to accelerate post-2027.

• Internationally, Tanzania is experiencing high growth, Central America is stable with long-term contracts, and Brazil faces short-term churn due to industry consolidation but offers long-term potential.

• Churn in Brazil is expected to remain elevated through 2027 but should improve thereafter, with international churn guidance at $38 million for 2024.

• Monetization models in international markets mirror the U.S., with revenue from co-location and amendments, though contract terms vary by region.