SBA Powers Through Challenges, Sets Stage for Strong 2025
SBA, a leading provider of wireless communication infrastructure solutions, has wrapped up a successful 2024 with a solid fourth quarter. According to the company's latest conference call transcript, SBA navigated headwinds from the macro interest rate environment and a strong dollar to achieve several key accomplishments.
Domestic new carrier activity, or bookings, continued to increase sequentially from the third quarter, driven by the shift in the makeup of SBA's new business towards higher percentages coming from new lease colocations versus amendments to existing leases. This trend reflects the growing demand for 5G mid-band coverage, including capacity for fixed wireless access and expanded network coverage into underserved areas.
"Our carrier customers continue to expand their 5G mid-band coverage, including adding capacity for fixed wireless access as well as extend network coverage into areas of the country that have little to no cell coverage today," said Brendan Cavanagh, President and Chief Executive Officer. "Even with increased bookings in the quarter, our leasing application backlog grew throughout the quarter and finished at the highest level of the year."
SBA's U.S.-based services business also had its best quarter of the year, with the company expecting another quarter-over-quarter increase in new leasing business to begin this year. The 2025 services outlook contemplates a year-over-year increase in business.
Internationally, SBA's fourth quarter results were in line with expectations as customers continue to invest in their networks. However, international churn remains elevated due to customer consolidations, and the company is working closely with customers to achieve necessary network efficiencies.
"We believe the surviving customers will be stronger and better positioned for ongoing investments and ultimately will support greater stabilization in our international cash flows," Cavanagh noted.
Operationally, SBA expanded and strengthened its relationships with largest customers, grew leasing and services backlogs, refreshed its mission, vision, and values, and streamlined several operations and processes. The company also invested over $550 million in asset acquisitions, stock repurchases, and new tower builds while growing its dividend at an industry-leading 15%.
SBA's balance sheet and liquidity position have improved significantly, with the refinancing of a $2.3 billion term loan, extension of a revolving credit facility, and entry into a forward-starting interest rate hedge all contributing to this improvement.
"We ended the year at 6.1x net debt to adjusted EBITDA, the lowest level in our history," said Cavanagh.
With its strong financial position and operational momentum, SBA is well-positioned for success in 2025.
