The paragraph is an introduction to SBA's first quarter 2025 earnings conference call. The call is being hosted by Mark DeRussy, Vice President of Finance, with Brendan Cavanagh, President and CEO, and Marc Montagner, CFO, also present. The statements made will include forward-looking information and non-GAAP financial measures. They clarify that results met expectations and show growth, especially in the U.S., where mobile network operators have increased their investment in macro tower sites, leading to a successful quarter for new domestic leasing business.

The paragraph highlights positive developments for the company's leasing and services business, noting an increase in leasing backlog and a shift towards new lease colocations in the U.S. Services also exceeded expectations, prompting an optimistic full-year outlook. International markets showed solid leasing activity, with high CPI rates offering potential lease escalation benefits. The company emphasizes macro sites for advancing wireless coverage and is positioned for growth in network investments over the coming years. Additionally, portfolio management and capital allocation improvements were made, with completed exits from the Philippines and Colombia to better focus resources and enhance market positioning.

In the first quarter, the company completed a portion of a purchase agreement with Millicom International for Central American sites, despite regulatory hurdles. Amid economic uncertainty and market volatility, the company remains stable and consistent, with no impact from current tariffs, strong cash flow, and robust customer demand. Confident in its future, the company repurchased 583,000 shares and announced a $1.5 billion share repurchase plan, enhancing shareholder returns alongside its strong dividend growth. Positioned for success, the company plans to focus on operational efficiency, technology integration, customer relationships, and disciplined capital allocation in 2025, while adapting to opportunities in the evolving wireless ecosystem.

The paragraph discusses the company's strong start to the year, leading to an increased outlook for key financial metrics such as Site Leasing Revenue, Tower Cash Flow, Adjusted EBITDA, AFFO, and AFFO Per Share compared to initial 2025 guidance. Key factors for the improved outlook include better-than-expected first-quarter results, an early acquisition of some towers from Millicom, and lease extensions. There was a 5.2% increase in domestic organic leasing revenue, with 4.2% churn largely due to Sprint consolidation, expected to cause $50-$52 million churn for 2025. Estimated Sprint-related churn for the next seven years remains unchanged. Non-Sprint domestic churn remains steady, and U.S. dollars accounted for 80% of consolidated Cash Site Leasing Revenue in the first quarter.

In the first quarter, international leasing revenue grew by 1.6% net on a constant-currency basis, despite elevated churn due to carrier consolidation. This consolidation is expected to strengthen remaining wireless operators, enabling better long-term investment and steady growth. The company acquired 344 sites for $58 million, mainly in Nicaragua, contributing $4 million in site leasing revenue and $3 million in tower cash flow to the 2025 outlook. There are 6,700 more sites under contract, with a closing date subject to regulatory approval. Additionally, 67 new sites were built outside the U.S. The company maintains a strong balance sheet with ample liquidity, having funded recent share buybacks with excess cash. The current leverage ratio is at a historical low, with most of the debt interest rates fixed at 3.7%. The next significant debt maturity is a $750 million ABS security due in January 2026.

The company ended the quarter with $12.5 billion in total debt and $11.8 billion in net debt, with a net debt to annualized adjusted EBITDA leverage ratio significantly below their target range. They reported a strong net cash interest coverage ratio of 4.9 times. In the second quarter, they repurchased 583,000 shares for $123 million at an average price of $210.87 per share. A new $1.5 billion share repurchase plan was authorized, replacing the previous plan from October 2021. This plan will remain until modified or terminated by the Board. Additionally, they declared and paid a cash dividend of $1.11 per share in the first quarter and announced another quarterly dividend of the same amount, payable on June 17, 2025. This dividend marks a 13% increase from the previous year's second quarter and a 35% increase at the midpoint of their full-year AFFO outlook. The floor was then opened for questions, with the first being from Jim Schneider of Goldman Sachs, inquiring about updates on carriers' plans in the U.S.

The paragraph discusses the overall positive environment in the U.S. carrier market, highlighting an increase in leasing activity and growing backlogs, indicating ongoing demand. It notes the role of fixed wireless access in driving subscriber growth and the need for network investment due to its heavy broadband consumption. Additionally, the paragraph touches on capital allocation, expressing positivity about a recent $1.5 billion buyback, despite higher interest rates than anticipated. There is a consideration of refinancing needs for 2026 and future buybacks if the current rate environment remains unchanged.

The paragraph discusses the company's approach to capital allocation, emphasizing their flexibility and good positioning despite high interest rates. They have reduced their leverage balance and taken advantage of market dislocations to buy back shares. A new plan by the Board indicates a focus on share repurchases, but capital allocation will continue to include a mix of buybacks, new asset investments, debt repayments, and dividends. The company is comfortable with their current position and remains adaptable to opportunities. The conversation then shifts to Jonathan Atkin from RBC Capital Markets, who inquires about the U.S. leasing run rate expectations for the year, to which Brendan Cavanagh responds.

The paragraph features a discussion between Jonathan Atkin and Brendan Cavanagh about the company's financial expectations and contracting relationships. Cavanagh mentions that they anticipate generating more than $9 million from new leases and amendments in the U.S. by the fourth quarter, although he refrains from specifying an exact number. He also clarifies that the company typically has equipment-specific master lease agreements (MLAs) with customers, with the exception of a holistic deal with AT&T. They are open to more holistic agreements but these depend on negotiation dynamics. Following this, Batya Levi from UBS inquires about the drivers behind higher network services business and recent increases in domestic churn, excluding Sprint.

The paragraph discusses the company's growth in services due to one customer accelerating their network investments beyond expectations, which has led to an increased annual outlook. The U.S. churn rate is slightly higher than previous quarters but remains within expected ranges for the year, with an annual forecast of around 1.2%. Regarding M&A activities in Canada, the company plans to approach opportunities there with a thorough evaluation, similar to its strategy for any global market where it operates.

The paragraph discusses potential business opportunities and market positioning strategies related to international markets, specifically focusing on Canada and DISH network. The speaker mentions the interest in acquiring mobile towers in Canada if operators divest them, highlighting the importance of size and scale in the market. They express willingness to pursue opportunities as they arise, without committing to any specific outcomes. In a discussion with Walter Piecyk, the focus shifts to DISH's plans to lease its spectrum, possibly in rural areas, and how this may impact their business. The conversation also touches on interest from cable companies in the spectrum market, considering potential costs before making a move.

In this paragraph, the discussion revolves around the limited conversations with cable companies regarding tower usage and spectrum leasing. Brendan Cavanagh explains that there hasn't been much development or detailed discussions with cable companies about using towers, particularly regarding CBRS (Citizens Broadband Radio Service). Despite Comcast's exploratory efforts with CBRS and potential shifts in vendor partnerships, these haven't translated into significant material impacts or plans involving tower companies. Additionally, the conversation touches on DISH Network's plans, with Cavanagh noting there's been no specific talks about spectrum leasing affecting contracts, and their current contract terms wouldn't change if they lease their spectrum.

The paragraph features a conversation about the current slower pace of leasing activity and basic upgrades for a standalone network. There's hope that leasing activity will increase, but currently, only a few small leases are being signed. Walter Piecyk acknowledges technical difficulties, and Brendan Cavanagh thanks everyone as the conversation shifts to Michael Rollins from Citi. Rollins asks about visibility for organic growth and churn dynamics, particularly in Latin America, and inquires about the impact of negative straight-line revenue on GAAP results for the next few years. Brendan Cavanagh responds, starting with the second question, suggesting that it might not significantly impact GAAP results.

The paragraph discusses the concept of straight-line revenue, which involves accounting for revenue not yet received in cash, eventually balancing out to zero. The maturity of the business and its leasing portfolio can cause fluctuations in this revenue. There have been new leases signed and extended, affecting revenue timing. The business is now in a mature phase, particularly with its biggest customers. On the topic of international operations, there has been churn due to consolidations in markets like Latin America, but the company is nearing the end of this phase in several markets, particularly in Central America, where most lease adjustments have been completed.

The paragraph discusses the current state and future outlook of the telecommunications industry in different regions. It anticipates increased network investment and activity among carriers, although Brazil is currently experiencing the effects of market consolidation with some resulting complexities, such as increased churn and a focus on rationalization over organic growth. The impact of Claro's acquisition of Nextel is also felt. This period of slower growth in Brazil is expected to last a few years before leasing activity accelerates as the market matures. The dialogue includes a transition to questions from analysts, specifically Matt Niknam from Deutsche Bank, inquiring about potential lengthening sales cycles and carrier conversations in the U.S.

In the discussion, Brendan Cavanagh addresses two questions from Matt about the impact of a choppier macroeconomic environment on spending plans and the mix of colocation versus amendment for new leases. Brendan notes that there hasn't been an observable impact on sales or leasing discussions due to the macro environment, though it's early, and future impacts cannot be ruled out. He is optimistic due to strong network needs and competitive dynamics among carrier customers. Regarding the second question, most new revenue in the U.S. is coming from new lease colocations rather than amendments, continuing a trend from last year. Specific percentages weren't provided, but further details could be given in a follow-up call.

In the paragraph, Nick Del Deo from MoffettNathanson asks Brendan Cavanagh about the company's efforts to drive efficiencies through new technologies and systems, and the decommissioning of towers overseas. Brendan explains that the company is focusing internally on implementing new systems for operational, leasing, and back-office functions, including an ERP system overhaul that integrates AI to seek efficiencies and potential new revenue streams. He acknowledges that it's too early to quantify the financial impact but hopes to report future savings. Nick also inquires about the risks associated with changing the ERP system, and Brendan expresses confidence in managing those risks.

The paragraph discusses ongoing changes and projects related to decommissioning and leasing in the communications infrastructure sector. Brendan Cavanagh explains that their current decommissioning efforts mainly involve towers in Brazil, associated with site consolidation to reduce costs, while most of the figures reported are due to the divestiture of operations in Colombia and the Philippines. Additionally, he mentions that a significant portion (75%) of new leasing business in the U.S. comes from colocation (colos) rather than amendments. This increase is influenced by factors such as regulatory requirements and early signs of network densification due to mid-band deployments.

The paragraph discusses the correlation between leasing activity and services work, specifically noting that most services are conducted on the company's own power sites, linking the increase in services to leasing activities. While the company has a significant portion of its services business with one major carrier, the growth in services demand is more widespread. This key customer, however, significantly influences the company's outlook as their business activity increases. The conversation ends with a question from Brandon Nispel, asking Brendan to compare the current new bookings and backlog to historical periods.

In the article paragraph, Brendan Cavanagh discusses the current state of the book-to-bill ratio, noting that the level of applications driving their backlog is the highest in over two years, comparable to levels seen in 2022-2023. He mentions that due to a shift in the mix towards new leases, the process is more extended but shows slight improvement, with deployment times ranging between three to nine months. Brandon Nispel and Mike Funk ask questions regarding the increase in new leasing activity and its attribution to carriers, as well as potential better escalators related to CPI rates internationally. Cavanagh avoids specifics regarding individual carriers but acknowledges an overall increase in activity.

The paragraph discusses various factors influencing leasing activity on macro tower sites, such as increased subscriber activity, bandwidth-intensive products like fixed wireless access, and regulatory requirements, particularly for T-Mobile related to the Sprint acquisition. There is also mention of competitive pressures among carriers. Additionally, there is discussion on the impact of rising CPI rates in Brazil on international escalator contributions, which could potentially raise the leasing outlook, albeit with a minor financial impact. Mike Funk and Brendan Cavanagh conclude their points, followed by an acknowledgment of a question from Ric Prentiss of Raymond James, related to colocation amendments.

In a discussion between Brendan Cavanagh and Ric Prentiss, they talk about revenue from new colocations being higher than from amendments and the outlook for new spectrum availability. Cavanagh mentions that while there's interest from the current administration and FCC in auctioning new spectrum, it could take four to five years before it's cleared, available, and deployed, which would increase leasing activity. In the meantime, the industry should focus on colocations rather than amendments for growth.

The paragraph discusses the challenges faced by companies in acquiring U.S. communication towers due to high private valuations compared to public ones, driven by limited asset availability and high demand. This makes competition difficult. Internationally, there's been some rationalization, though asset trading is still limited due to mismatch between seller expectations and buyer offers. The speaker hopes for more rational valuations, particularly in the U.S., to align with rising capital costs and support the industry's overall health.

In this conversation, Brendan Cavanagh discusses the visibility into full-year domestic site leasing growth, noting that assets are trading in the mid-30s and sometimes higher, depending on the portfolio's maturity. Despite the promising outlook, the company has not changed its initial forecast for U.S. leasing contributions given earlier this year. Cavanagh expresses optimism about accelerating revenue trends and mentions an increasing backlog and quicker lease-ups. Additionally, Ben Swinburne inquires about any changes regarding Millicom's contribution to revenue and gross profit, but Cavanagh does not provide specific updates in this excerpt.

The paragraph focuses on a conversation between Ben Swinburne and Brendan Cavanagh about their company's financial outlook and a discussion on an acquisition involving Millicom. Brendan mentions that while they remain within their projected financial range, they are optimistic about potentially reaching the higher end if progress continues positively. Regarding the Millicom acquisition, Brendan clarifies that there are no significant changes to their initial expectations, except for a timing difference with some sites that have already closed early. Richard Choe from JPMorgan then inquires about whether the increased activity on the services side is due to near-term actions or confidence in sustained levels throughout the year.

The paragraph contains a discussion about the services revenue outlook and capacity of a business, with Brendan Cavanagh explaining that the increase in guidance for services revenue is due to better-than-expected performance in the first quarter and increased backlogs, suggesting confidence for improvement over the year. Cavanagh indicates the company has capacity to handle more volume if opportunities arise, referencing past achievements of higher services revenue. Jonathan Chaplin then asks for clarification on the deployment of 2.5 GHz and 3.5 GHz spectrum by carriers, querying whether the reported percentage pertains to the company or carriers' sites, and expressing surprise that this hasn't led to more amendments rather than predominantly new leasing growth.

The paragraph discusses the progress of leasing agreements and site amendments related to mid-band spectrum upgrades with telecom carriers. Brendan Cavanagh and Jonathan Chaplin discuss that around 60% of the leases with carriers (such as T-Mobile) have been upgraded for mid-band spectrum on their sites, with about 40% still available for potential amendments. The current focus for carriers seems to be adding equipment to new sites rather than further amending existing ones. Additionally, there is mention of a wide bid-ask spread potentially preventing some transactions from finalizing, with this spread being an issue observed both recently and throughout the year.

The paragraph discusses the consistency of SBA's cash flow amidst economic uncertainty. Brendan Cavanagh notes that despite potential softness in the U.S. economy, SBA's significant annual cash flow of approximately $1.4 billion ensures stability. Even if there's reduced leasing activity, the impact on overall cash flow would be minimal. The company remains confident in its ability to continue operations and deliver returns to shareholders, even in a less favorable economic environment.

In the paragraph, Ari Klein from BMO Capital Markets inquires about the prospects for continued growth in domestic leasing activity with carriers over the next few years. Brendan Cavanagh responds that it's difficult to predict the activity level with precision over multiple years due to its cyclical nature, influenced by various factors and events. He mentions that while they are currently optimistic due to specific drivers, shifts in the market could lead to increased or decreased activity. Long-term factors such as new spectrum availability and future 6G developments are expected to drive network investment cycles, which should ultimately benefit their business.

The paragraph discusses the leasing activity and financial outlook for the company. Brendan Cavanagh explains that although current leasing activity has improved, the financial guidance for the year is lower than last year due to a lag between signing agreements and their financial impact. However, this improvement is expected to be reflected in financials next year. The call concludes with a note on upcoming second quarter results in July, and the operator ends the conference call.

This summary was generated with AI and may contain some inaccuracies.