SBA Communications at Bank of America Conference: Strategic Insights on Growth

On Thursday, 04 September 2025, SBA Communications (NASDAQ:SBAC) presented at the Bank of America 2025 Media, Communications & Entertainment Conference. CFO Mark DeRussy highlighted both opportunities and challenges, with a focus on carrier deployments and international expansion. While domestic leasing activity remains slow, international markets show promise, and strategic capital allocation continues to drive growth.

Key Takeaways

• T-Mobile has nearly completed its 2.5 GHz spectrum deployment, while Verizon and AT&T are at 70% and 50% completion, respectively.
• SBA’s international strategy emphasizes Central America, with a significant tower acquisition from Millicom.
• The company plans to manage its debt maturities using a $2 billion revolving credit facility.
• SBA aims to grow its dividend payout ratio to 50%-60% over the next few years.
• LEO satellites are not seen as a significant threat to SBA’s terrestrial network business.

Operational Updates

• Carrier Deployments: T-Mobile’s 2.5 GHz deployment is nearly complete. Verizon has reached 70% completion on SBA towers, and AT&T is at 50%.
• Application Volumes: Applications have increased for six consecutive quarters, with over 50% of revenues now coming from colocation on applications.
• Book-to-Bill Cycle: The cycle remains at six to nine months, impacting revenue realization. SBA reaffirmed its guidance of $37 million for the second half, exceeding the first half.

International Markets

• Central America: SBA acquired over 7,000 towers from Millicom, with a 15-year agreement and U.S. dollar contracts. Millicom’s commitment to build 2,500 sites supports growth.
• Brazil: The market faces churn due to carrier consolidation, but the long-term outlook is positive. The currency has appreciated by 20% this year.

Capital Allocation

• Strategy: Focuses on M&A, share buybacks, debt repayment, and dividend growth. In 2023, SBA spent $100 million on buybacks and $600 million on debt repayment. In 2024, $200 million was allocated to both buybacks and M&A.
• Debt Management: Plans to use a $2 billion revolving credit facility to address upcoming debt maturities. S&P upgraded SBA to investment grade BBB minus.

Future Outlook

• Spectrum Auctions: The FCC may issue an NPRM soon, potentially leading to an auction in early 2027. This could bring 120 megahertz of upper C-band to market by 2028 or 2029, aligning with 6G development.
• Churn and Impact: Expects $50 million in churn from Sprint in 2026, with $20 million thereafter, and $25 million from EchoStar in 2027 and 2028.
• Dividend Growth: SBA plans to grow its dividend at low double-digit rates until reaching a 50%-60% payout ratio.
• LEO Satellites: DeRussy dismissed LEO satellites as a threat due to higher costs compared to terrestrial networks.

For a detailed overview, please refer to the full transcript below.

Full transcript - Bank of America 2025 Media, Communications & Entertainment Conference:

Unidentified speaker, Host, BofA: In the BofA Media Telecom Conference, we’re going to wrap it up here on day two with SBA Communications Corporation. Thank you again, Mark DeRussy, for coming out to the conference and participating in the fireside chat and the one-on-ones today.

Mark DeRussy, CFO, SBA Communications Corporation: Thanks for having me. Happy to be here.

Unidentified speaker, Host, BofA: Absolutely. What are the higher level topical items and what’s of interest to investors, and just how people should be thinking about the current state of carrier deployments and where they are in the cycle?

Mark DeRussy, CFO, SBA Communications Corporation: Right. I think a different stage is funny because they’re all in the same space competing, but they’re totally different stage of development. I think T-Mobile is pretty much already done on the 2 to 5 spectrum. Verizon, or at least from what we could see on SBA towers, Verizon is probably at the 70% mark, very active right now, very good relationship. I think they’re doing a lot of work with us. AT&T is probably at the 50% mark playing catch up.

Unidentified speaker, Host, BofA: Okay. That’s very clear. SBA Communications has been very vocal about application volume increase, and you’ve shown that the last several quarters. What is the disconnect between the elevated application levels translating into domestic leasing activity?

Mark DeRussy, CFO, SBA Communications Corporation: Right. Our level of application has been going up sequentially for six quarters in a row, still growing. Now we’re at a stage where over 50% of the revenues are from basically colos on the application. It’s a good sign that the carriers are doing densification, and we’re pleased about this. I think the issues on application is that the book-to-bill cycle is six to nine months, depending on the carriers. It just takes time for those basically applications to transfer into dollars and cents. I think it was a little bit misleading that $9 million in the first quarter, $8 million in the second quarter, one number was rounded up and the other one was rounded down. We have not changed the guidance for the year, $37 million for the second half. The second half is still going to be greater than the first half.

We are very happy with the level of activity that we’re seeing right now, and it’s really spread among the three carriers.

Unidentified speaker, Host, BofA: It was more just a factor of the difference in whole numbers versus take it out to one place past a decimal.

Mark DeRussy, CFO, SBA Communications Corporation: It’s just like it’s forced precision. It’s almost like noise in the system. I think what you need to keep an eye on is 37 midpoint for the year, and the second half is still going to be greater than the first half.

Unidentified speaker, Host, BofA: Okay. I want to come back to your comment about the book-to-bill because I think last quarter you also noted that one of your customers, the commencement timing was taking a little bit longer maybe than expected. Are you seeing a lengthening in the book-to-bill? If not, what?

Mark DeRussy, CFO, SBA Communications Corporation: Not really. I think we feel good for the bookings and the billings for the second half of the year.

Unidentified speaker, Host, BofA: Okay.

Mark DeRussy, CFO, SBA Communications Corporation: I think the pace going into next year, I think we’re happy with what we can see right now.

Unidentified speaker, Host, BofA: Is there any insight into why one carrier might be a little bit slower with commencement than you expected?

Mark DeRussy, CFO, SBA Communications Corporation: They all have very different organizations. Those are very large organizations. Some are more like regional, some are more like centralized, and they just operate at different speeds. That’s all. I wouldn’t read anything into it really.

Unidentified speaker, Host, BofA: Okay. Do you ever see slower commencements when carriers are undergoing major core network upgrades? Maybe that could, I’m trying to, I guess, get to the root of what might be causing the slower commencements for one carrier.

Mark DeRussy, CFO, SBA Communications Corporation: I don’t really know the answer to this, to be honest with you. I think it just takes time. You’re dealing with a very, very large organization. Those are very large networks. I mean, 70,000 towers for some carriers. It just takes time to do the work.

Unidentified speaker, Host, BofA: Okay. Maybe less myopically focused and looking beyond 2025, what do you see for the long tail of 5G deployments for the carriers? Obviously, densification is going to be part of that, but how do you envision that development over the next several years?

Mark DeRussy, CFO, SBA Communications Corporation: I really think that once you get the coverage, the next step is really colos just because the traffic on the handset is still growing at probably around mid-teens. Fixed wireless access, we’re going to see another 10 million subs added this year. Fixed wireless access customers probably use 15 to 20 times more bandwidth than handset users. That’s just using a lot of capacity, a lot of tonnage on those networks. I think the next wave, I feel pretty good about the next wave, which is going to be more colos to be able to handle the traffic.

Unidentified speaker, Host, BofA: Are there other tools? Is there a formula? Are there metrics that you look at to gauge when FWA is going to potentially overload that network and demand more densification? From my seat, what I’m hearing and what I’m seeing is that current capacity, you can kind of get to maybe 25, 30 million FWA subs covered. The carriers are suggesting that they have enough spectrum, enough existing file capacity to fuel growth for the foreseeable future. AT&T, with the EchoStar deal announced last week, and the mid-band spectrum, is talking about leaning in heavier FWA, utilizing that spectrum with less densification. From the outside, in my perspective, it’s hard for me to look at a date and say, okay, densification needs to begin in earnest at this point. I’m just curious, with the intelligence that you have, if there’s a way to calculate that.

Mark DeRussy, CFO, SBA Communications Corporation: For us, I think it’s almost impossible to do this. I think the carriers don’t share that type of information with us. We see the applications for colos going up, which is a sign that they are working on densification. That being said, if you look at AT&T, for example, buying the 3.45 spectrum, deploying that spectrum is a software upgrade. That’s correct. On the SBA towers, they only have deployed 5G on 50% of the network. They still need to finish the deployment on 5G in order to activate that spectrum. I think we still see a lot of lease up coming up down the pike.

Unidentified speaker, Host, BofA: Of course. In the past, SBA has been relatively agnostic about master lease agreements, other than with AT&T. Do you see that changing in the future and a greater pursuit of master lease agreements with AMT and CCI? If not, what is the advantage of not having a master lease agreement with a carrier versus having one?

Mark DeRussy, CFO, SBA Communications Corporation: I think it’s really on a case-by-case basis. I think if you take the step back a little bit, look at it from 30,000 feet, the carriers are growing the top line at mid-single digit. In an industry structure with an oligopoly, three carriers, they really want to control basically their cost basis. From our standpoint, we want to secure growth. I think to the extent you could craft a deal where they make volume commitment to us, we are willing to obviously be more flexible on pricing if we don’t, because locking in future growth rate is very important to us through minimum volume commitment and escalator. To the extent that the stars are aligned, MLA makes sense. If carriers want to do it on a tower-by-tower basis, we are willing to do that as well.

It’s really on a case-by-case basis, whatever makes more sense for us and for them.

Unidentified speaker, Host, BofA: Okay.

Mark DeRussy, CFO, SBA Communications Corporation: There is no real rule. It’s really on a case-by-case basis.

Unidentified speaker, Host, BofA: Okay. I presume every master lease agreement is different because they’re negotiated down to the nth degree.

Mark DeRussy, CFO, SBA Communications Corporation: That’s right.

Unidentified speaker, Host, BofA: You mentioned one factor, which is the minimum volume commitment. What do those normally look like, and what do they include and not include in a standard MLA?

Mark DeRussy, CFO, SBA Communications Corporation: I don’t want to go into that level of details to compare it with, obviously, but I think for us, securing long-term growth rate is important through basically volume commitment escalators. I think we are a good partner. We could help the carriers deploy faster on our network. I think MLA makes sense because it speeds their deployment. I think it’s a win-win situation if you could craft the right agreement.

Unidentified speaker, Host, BofA: Yeah, it makes a lot of sense. I wanted to shift to services for a moment. I know it’s not a recurring business for you, but it’s also been very strong in recent quarters. Any details on what type of activity we’ve been performing on the services side would be helpful.

Mark DeRussy, CFO, SBA Communications Corporation: The service business, remember, is very indexed to one carrier at SBA. Obviously, this year we’re doing extremely well. We just raised guidance for our service business, but it’s a non-recurring business. There’s very little visibility beyond one quarter or two. I wouldn’t read too much into it. It’s a good indicator, but there’s just no long-term visibility in that business.

Unidentified speaker, Host, BofA: Okay. My next question was, you know, how much visibility do you have into the business? You don’t get a lot of heads up or visibility from customers.

Mark DeRussy, CFO, SBA Communications Corporation: One to two quarters at the most.

Unidentified speaker, Host, BofA: One to two quarters beforehand that you can look forward and say, I can predict services business with a degree of accuracy. Beyond that, it’s best guess.

Mark DeRussy, CFO, SBA Communications Corporation: That’s right. It’s very difficult for us to see beyond two quarters, to be honest with you.

Unidentified speaker, Host, BofA: Okay. That makes sense. I wanted to shift to international for a moment, just thinking about that sleeve of the business. How do you think about the current health of the Latin American market? I know there’s some carrier consolidation related churn, but outside of that, how do you see the general health in the market?

Mark DeRussy, CFO, SBA Communications Corporation: Right. I think we need to break it apart a little bit. For us, Latin America is really Central America first and then Brazil, where we have a willing number to operate at 12,000 towers. In Central America, we recently bought over 7,000 towers from Millicom. We have a 15-year agreement with Millicom with a CPI escalator, U.S. dollar contract, and basically a commitment from Millicom to build 2,500 sites. This is going to lock in mid to high single-digit growth rate for us in the region for the foreseeable future in U.S. dollars. Those are very healthy markets. It’s been solidly down to two carriers, Claro and Millicom. Both carriers are well capitalized. 5G is probably at either, depending on the market, 5% to 15% deployed. We see a good prospect in Central America. Brazil, personally, I’m very bullish on Brazil.

I think Brazil is the largest economy in Latin America. GDP per capita is four to five times GDP per capita in India. It’s a growth market for the long term. Large exporter of grain, of mineral, of oil. Last year was a tough year with inflation running up. I think the Central Bank has done a fantastic job getting inflation under control. I feel good about the country going forward. In terms of the telecom industry, the market has gone from consolidation from four into three. Oi, which was one of our major customers, is being consolidated into Claro, Vivo, and TIM. We are in the middle of this phase of consolidation. We got a deal with TIM last year. We’re doing the same thing with Vivo this year. We’re going to see some churn from Claro going forward.

I think we’re probably going to see elevated churn in Brazil for the next few years. Long term, this is a market where 5G is only about 30%, 30%, 35% deployed. You’re going to see a very healthy carrier market, oligopoly, three wireless company, well capitalized. I think long term, Brazil should do well. It’s just a tough time on it now.

Unidentified speaker, Host, BofA: Got it.

Mark DeRussy, CFO, SBA Communications Corporation: The currency has appreciated by 20% this year. We have adapted our operation. I think we took some cost out. We have cut our CapEx spend tremendously, and we are seeking to see a much higher return on invested capital in Brazil.

Unidentified speaker, Host, BofA: Do you see Central America and Brazil, the pace of the 5G deployments, do you see that tracking similar to the pace that we saw in the U.S., or are there structural reasons, country-specific reasons why that will be slower or faster?

Mark DeRussy, CFO, SBA Communications Corporation: I don’t see any reason why it would be slower. I think those markets are going to get to the same point.

Unidentified speaker, Host, BofA: Okay. You mentioned the churn that’s going to persist for a number of years, and then you still have the Sprint churn. In the U.S., would just love your perspective from the CFO of the advantages and disadvantages to address the front, right, through a contractual agreement versus letting it wind down over time naturally through expirations. How do you think about the pros and the cons of the two different approaches?

Mark DeRussy, CFO, SBA Communications Corporation: It depends on the NPV, right? I mean, if you get a prepayment upfront, you start talking about discount, and it really depends on the discount. Some carriers, I think, are happy to do that. I think we were able to strike a deal with TIM and Vivo. With Claro, we are just, I think, probably going to see the churn over time. In the U.S. market, with Sprint, we are just letting those contracts expire. As a CFO, I think I’d rather take a prepayment upfront so the numbers are cleaner going forward, but it’s all based on NPV. You need to get the right deal at the right price.

We are very disciplined. Very disciplined.

Unidentified speaker, Host, BofA: Yeah, that makes a lot of sense. You know, through the Millicom acquisition, you get even more exposure to Latin America. Can you give us any thoughts on the line of sight or the timing of closing the remaining sites?

Mark DeRussy, CFO, SBA Communications Corporation: Yeah, so we have another $400 million of basically acquisition costs to pay to Millicom. This is for Honduras and El Salvador. It’s about two thirds of El Salvador. That should be closing anytime now. It’s just a question of getting a signature on a page. We don’t expect any issues. It’s just a question of getting regulatory approval.

Unidentified speaker, Host, BofA: What advantage does the Millicom acquisition bring to SBAC and the region, or is it not strategic? Is it just more of a good financial deal?

Mark DeRussy, CFO, SBA Communications Corporation: It’s a little bit of both. When Brendan Cavanagh, our CEO, at his first earnings call in February 2024, announced a portfolio review, I think we made it clear that we thought it was important to, in each one of our 15 markets, have a strategic dialogue with our customers. In order to do this, you need to be a leading tower company because then you get the call, they need you to deploy their network. Where you are a small player, your margins are lower because your DNA costs are basically fixed and you’re not necessarily in the flow in the dialogue. We exited the Philippines where there were over 30 tower companies. We exited Colombia where we had a very small position. We exited Argentina. We just announced the sale of our Canadian operation. We’ve been up there for 15 years. We had about 400 towers.

We didn’t see an opportunity to do a large sale leaseback with the three larger operators in Canada. They’re fantastic operators. It’s a great market for anyone, for the wireless industry. We just didn’t see how we could really get a large sale leaseback from them. I think normally looking at, I think, financial engineering solution with some of the pension funds in Canada with a deal where they’re selling 49% of their operations. We decided that was not a path to be a leading tower company in Canada. We monetized it at a, I think, a multiple that we think is very attractive to us. After tax, it’s about adjusted 26 times the FFO. We thought given our small position, it was better to exit that market and we deployed the capital. Now I’m finally answering your question. I get to Central America.

We were in four markets with very small position and a short-term lease as part of the deal with Millicom. Today, we are the number one tower company in Central America. We’re extending the lease on the existing sites that we had with Millicom to 15 years. We have a new 15-year lease agreement renewable with Millicom going forward. It’s a two-carrier market, Claro and Millicom, well capitalized, all U.S. dollars. We pay 11 times for those markets. We thought it was a fantastic deal. We have a good, good, very good relationship with Millicom.

Unidentified speaker, Host, BofA: You’ve already touched on it a bit, but presuming international is better than being exclusively domestic, and you’ve already chosen that strategy. What makes the international market attractive? What are the variables? You already mentioned stable two-carrier market, well capitalized, but what other factors make the international market attractive to you? What markets that you aren’t in today could potentially fit the criteria?

Mark DeRussy, CFO, SBA Communications Corporation: I think having a long-term lease, a strategic relationship with the MNO is key to success over the long term. That’s why we like the M&A we have. We want to support our operators. I think at the end of the day, we are in the same industry. You could craft a win-win agreement by teaming up with your customers. That’s what we did with Millicom in Central America. I think we like our position in Tanzania. This is a growth market. The government is really pushing for coverage. Our team is doing extremely well. This is a growth market for us. We’re building a lot of sites in Tanzania with a very attractive return. We have been in South Africa for many years now. It’s the market with the best ROIC of most of the markets we operate in. I think we like our position where we are today.

Unidentified speaker, Host, BofA: I’m just curious when you’re evaluating these deals, I mean, from the equity side, we always kind of talk about a country risk premium, right, when thinking about investing in equities in a specific market. I presume you use a similar approach when thinking about investing in different markets. How do you apply that premium when thinking about making acquisitions in non-U.S. markets?

Mark DeRussy, CFO, SBA Communications Corporation: We have different cost of capital for hurdle rates for every single market. It’s basically our bike plus the country risk plus another risk premium. I can just tell you, for example, Brazil, the cash we have in the bank in Brazil is yielding in the checking account 15%.

Unidentified speaker, Host, BofA: Wow.

Mark DeRussy, CFO, SBA Communications Corporation: The currency is appreciated by 20% today. When the team asks for a new site or a new CapEx plan, it’s clear. I could tell you that the hurdle rate is fairly high. I keep telling my team, that’s my world. Why should I do this deal? I could just leave the cash in a bank account and collect 15%. To answer your question, we have very much higher hurdle rates for some of these markets.

Unidentified speaker, Host, BofA: Yeah, that blends in well with the next question is on how you think about the capital allocation options for SBAC and even rank ordering those and how they might be shifting over the next 12 or 24 months.

Mark DeRussy, CFO, SBA Communications Corporation: Right. That’s a good question. The numbers I’m going to give you all are public. I’ve used them in the past. I really think that going forward, the path to value creation for us is really through capital allocation. You look, start with the top line, about $1.9 billion of EBITDA minus $475 million of dividend, about $35 million of cash taxes, another $435 million of cash interest expenses, $50 million of maintenance CapEx, $200 million of growth CapEx. You’re left with $700 million of cash to allocate every year to either M&A, share buyback, dividend, and debt payment. In 2023, in a rising interest rates environment, we spent $100 million share buyback and about $600 million paying down debt. In 2024, we did $200 million of share buyback, $200 million of M&A, and the rest we paid on debt. This year is an unusual year.

We have $975 million payment to Millicom. We’re getting some proceeds from selling Canada, about $280 million of the cash. We did about $175 million of EBITDA. This year is more indexed towards M&A. Frankly, this was a very unique opportunity for us. This Millicom deal right now, M&A opportunities in the U.S. are very scarce and very expensive. I don’t see ourselves expanding into new emerging markets in the near future. I think next year we’re probably going to index towards buyback and paying down debt.

Unidentified speaker, Host, BofA: Okay. Addressing the debt analysis, my colleague Ana Gasco probably knows this much better than I do. I was going to ask the question anyway. In addressing debt maturities, can you just kind of walk through the prioritization of just paying down debt, refining the debt, and if you are refining the debt, how you rank order priority for how you might do that with different options that you would have.

Mark DeRussy, CFO, SBA Communications Corporation: Right. I think 2026 is going to be an easy year for us. We have a $750 million ABS maturing in January, and we have $1.2 billion maturing in November. We have a $2 billion revolving credit facility on top. I think we’ll probably use the revolver to pay down the ABS in January and then pay down the revolver in order to delever. That’s probably where we’re going unless it’s an incredible market and we could tap the ABS market at a very attractive rate. If you really look at SBA Communications Corporation at the balance sheet, it’s $12 billion of debt. S&P recently upgraded us to investment grade BBB minus at the corporate level. The question for us really is, is there a time in the future where you go to an investment grade market? You start tapping investment grade markets.

It probably makes sense over time in the long term because you’re in an environment where you grow the top line at basically mid-single digit. You have long-term agreements with your largest customers, and you have the ability to issue very long-dated security at an attractive rate in a market that’s always open. You de-risk refinancing risk, and you could probably lower your cost of capital going forward. We haven’t made a formal decision yet. One of the gating items in order to get to investment grade level, I think we need to get to a 50-50% secured and unsecured. Today, $9 billion of our debt is secured, $7 billion of ABS, over $2 billion of term loan, and we have $3 billion of high yield that’s unsecured. It takes time as that debt matures.

You could take the opportunity to refinance that debt in the unsecured market and eventually work your way to investment grade. No formal decision has been made. We lock our leverage at around 6.5 times. The number is good enough to be investment grade. I think the gating item is really the mix of secured and unsecured.

Unidentified speaker, Host, BofA: Okay. The last point that you made, the mix, I mean, it sounds like that’ll take some time to work through that before you can start to really tap the unsecured market, which is, to your point, a more predictable market, potentially lowers your cost of capital. I think one question that investors have that could probably even skew the system of a concern is the refinancing risk and the potential weight or pressure that might put on AFFO per share growth.

Mark DeRussy, CFO, SBA Communications Corporation: Right.

Unidentified speaker, Host, BofA: We’re obviously in a higher rate environment. What would you say to investors maybe to reduce that concern or to answer that question?

Mark DeRussy, CFO, SBA Communications Corporation: I really think that the leverage is an output. The input is cash interest expenses. If interest rates come down, I think you could probably operate with higher leverage and have lower cash interest expenses. In a rising rate environment, it makes sense to pay down debt and go to investment grade. We want to maintain flexibility. We’ll see where we are in late this year, early next year. You’ll hear from us probably at some point in the future, in the near future.

Unidentified speaker, Host, BofA: Okay, that’d be great to get an update on that. I appreciate it. Last one on capital allocation, dividend growth.

Mark DeRussy, CFO, SBA Communications Corporation: Yep.

Unidentified speaker, Host, BofA: How do you weight growing the dividend versus buying back stock? How do you do the math around that?

Mark DeRussy, CFO, SBA Communications Corporation: Our payout ratio is about 35% today. Dividend policy, remember, is a board decision. It’s not a management decision. I think we have the opportunity to keep growing the dividend at low double digit for the next few years until we get to basically a 50% to 60% payout ratio. For the next three years, two to three years, I think we could grow the dividend at low double digit and still deliver the company.

Unidentified speaker, Host, BofA: Okay. I wanted to come back to the domestic business and the Sprint churn. I’m just trying to understand this better. It’s kind of connected to your densification comment. You and we are projecting relatively high Sprint churn for the foreseeable future. Is there an opportunity or an open door to negotiate direct with T-Mobile, look at their need to densify over time, and maybe talk about less Sprint-related churn in the short term to help maybe address the densification needs longer term, but it’s maintaining some of the sites. Is there any kind of connection you can make between those two to reduce the churn?

Mark DeRussy, CFO, SBA Communications Corporation: I think it’s difficult at this stage. Right now, it’s $50 million of churn in 2026 and $20 million of churn thereafter. I think those leases are just going to expire. We have a good relationship with T-Mobile’s number one customers that are very active with us. I think it’s status quo on those leases, which is going to take $50 million of churn next year and $20 million in 2027 and thereafter.

Unidentified speaker, Host, BofA: Okay. The AT&T EchoStar, EchoStar, only 2% of your revenue, smallest of all the tower operators, but you’re the lowest % of revenue. I also believe that your contract expires with them sooner than your peers. Can you walk through the expected or potential churn impact from EchoStar?

Mark DeRussy, CFO, SBA Communications Corporation: Sure. It’s about $55 million of revenue currently. It was about $2 million of lease up in our guide and budget for 2025. That’s called for. There’s no impact to lease up for the second half or last part of 2025. Out of the $55 million, about $25 million is going to churn up in 2027, another $25 million in 2028, and a little bit in 2026, and a little bit in 2029. The impact is we’re going to be $25 million in 2027, $25 million of churn in 2028.

Unidentified speaker, Host, BofA: Relatively small numbers.

Mark DeRussy, CFO, SBA Communications Corporation: It’s a very small number.

Unidentified speaker, Host, BofA: is high visibility into the short-term nature of it. You know, kind of sticking in with spectrum, upper C-band, NPRM, right, projected potential auction date in early 2026.

Mark DeRussy, CFO, SBA Communications Corporation: I think.

Unidentified speaker, Host, BofA: What are your thoughts on that and what it potentially means for SBA in the tower industry in general?

Mark DeRussy, CFO, SBA Communications Corporation: I think this is a very good question, actually, because I mean, I was on board at Intelsat for two years, part of this negotiation with SES. Today, SES and Intelsat are one company. They own 90% of the upper C-band in the U.S. The FCC, I’m hearing, is probably going to issue an NPRM this month, definitely in the next coming weeks. That’s probably going to take 12 months to clear, and they could draft an auction rule probably early 2027, get an auction done. It may take 18 months to clear that spectrum. You could see 120 megahertz of upper C-band coming to market late 2028, sometime in 2029. You have three operators, 120 megahertz of spectrum coming. That’s 40 megahertz each. Its timing would be just right for 6G, right? I think the equipment makers would love to see the next wave of CapEx.

We’d love to see the next wave of CapEx. I think it’s good for the operators. I’ve been in this industry for 30 years now. Each time you go from 2G, 3G, 4G, 5G, you basically lower the cost per bit you deliver over the airwave by about 10x.

Unidentified speaker, Host, BofA: Yeah, you get better spectral efficiency.

Mark DeRussy, CFO, SBA Communications Corporation: Better spectral efficiency. If you are a carrier, remember, you used to get $1 a minute for voice and then $0.25 a minute and then $0.05 a minute. I’m going to give voice away, but I’m going to charge $0.25 for text. Then you give the text away and then you give the data away. The number one priority is maintaining that ARPU at about $55, $60. They’ve done a fantastic job. Twenty-five years later, they still get $55, $60 of ARPU every month. They give you all this capacity and they’ve maintained 40% plus EBITDA margin. It’s quite a business, quite an achievement what they have done. The reason they’ve been able to do it is because each time you get more spectrum, you roll out a new generation technology, it’s more spectrum efficient, you lower the cost per bit by about 10x.

Look at this industry with fixed wireless access. Everybody may have, or not everybody, but at least my kids, my daughters in their 20s are probably going to have Meta glasses walking around, video going everywhere. It’s just going to keep driving traffic, AI to the handsets. If you’re a carrier, you want to take advantage of that opportunity. You need new spectrum, you need 6G. Put things in perspective. There’s a lot of, I think, false precision in all of this forecast. If you go back 25 years, you look at CapEx as a percentage of revenue for wireless operators, it’s always between 18% and 25% of revenue. I remember when I was a banker to Nextel in the 1990s, every business plan had CapEx at 25% revenue dropping to 10% after 10 years. It never happened. I joined the company, all my models saw the same thing.

It never dropped to below 20%. Look at the CapEx as a percentage of revenue in 2022-2023. It was 25% for the big three. It was over $40 billion of CapEx spent in the U.S. market. This year, it’s a trough. You’re about like less than 15%. It’s going to creep up again because when they build that 5G, they got a 10x increase in capacity. That’s why they were able to do fixed wireless access. Now they need to do densification colos to basically support this fixed wireless access customer video traffic. I think the cycle will start again by 2029, 2030. You’re probably going to see CapEx as a percentage of revenue for the big three at probably way above 20%. This business has been around for 35 years. Those towers are going to be there in 35 years.

If you just drive around in Connecticut, Long Island, Florida, all these places where it’s really difficult to get new towers up, just look how much equipment is sitting on those towers. They keep getting bigger and bigger and bigger. We have that real estate. It’s always going to be easier for them to come to us than building a new site because they have the fiber going to the site, they have the generators, they have the solar panel, they have the fuel tank, they have the equipment up there. If you have an MLA, it’s just going to be so much faster to deploy next gen. I feel good about our business long term. We had the Sprint headwind and now we have a little bit $55 or $25 a year in 2027 and 2028 for DAS.

If you look at the long term, it’s really a blip on the screen.

Unidentified speaker, Host, BofA: Last question from me, I’ll leave a minute or two for the audience in case there are any out there. What role, if any, do you think that LEO satellite constellations can play in carrier coverage? Is there any threat to the tower business, to the terrestrial wireless networks?

Mark DeRussy, CFO, SBA Communications Corporation: I really think there are two different LEOs. I mean, Iridium started a long time ago.

Unidentified speaker, Host, BofA: Yeah.

Mark DeRussy, CFO, SBA Communications Corporation: One of the biggest bankruptcies in the 1990s.

Unidentified speaker, Host, BofA: We were working back then, yeah.

Mark DeRussy, CFO, SBA Communications Corporation: That’s right. That’s right. You and I went banking at the time. Now it’s coming back. I think it’s always going to be a niche product for the handset. You send a text or you make a call if you’re in an area with very low coverage or no coverage. I think the SpaceX business model is very different. I ran sales and marketing for the old MSV, Mobile Satellite Venture. I’ve been working in the industry. I think it’s a fantastic product for the maritime industry, cruise ship, container shipping. You could do live tracking of all these containers. You have Wi-Fi on the ship. It’s great for the airline industry. Suddenly, you have Wi-Fi on the plane. You put a small dish on the roof of the airplane and you have fantastic connectivity. You live in rural America. You get 200 or 300 kilobits of data.

You’re not going to watch Netflix, but you’re going to have email and pretty good coverage. You’re still going to need to plug the antenna to an outlet. You need to be outside because if you have a tree or you’re inside, you don’t have coverage. It’s a fantastic product, but it’s more a data product than a voice product.

Unidentified speaker, Host, BofA: The use cases you mentioned were like the legacy ViaSat business.

Mark DeRussy, CFO, SBA Communications Corporation: That’s right.

Unidentified speaker, Host, BofA: Right. Yeah. Right. I mean, shipping, recreational boating, mountaineering, rural broadband, that’s all legacy use case. You don’t think that the application can be more just regular cellular usage, direct-to-device providing usable broadband speeds?

Mark DeRussy, CFO, SBA Communications Corporation: I don’t see it just because the cost per bit is going to be an order of magnitude greater than the cost per bit on the wireless network.

Unidentified speaker, Host, BofA: That is the name of the game, right?

Mark DeRussy, CFO, SBA Communications Corporation: That’s the name.

Unidentified speaker, Host, BofA: What are the costs to carry a bit?

Mark DeRussy, CFO, SBA Communications Corporation: That’s right. What’s the cost to deliver a bit over the air? It’s always going to be lower on the wireless network because the handset is cheap, the RAN network is cheap, and you have massive scale that you’re never going to get in the satellite industry.

Unidentified speaker, Host, BofA: Okay.

Mark DeRussy, CFO, SBA Communications Corporation: I mean, carriers spending $40 billion just in the U.S. building a RAN network. Imagine you have 300 megahertz of spectrum to deliver basically a bit to a handset using this massive infrastructure. It’s going to be, I don’t see the satellite industry being able to replicate that. The capacity, the throughput, and the cost per bit.

Unidentified speaker, Host, BofA: That was very helpful. Mark, we’ve run out of time. Thank you. Thank you so much for being here today.

Mark DeRussy, CFO, SBA Communications Corporation: Thanks for having me.

Unidentified speaker, Host, BofA: Thank you. Good to see you again.

Mark DeRussy, CFO, SBA Communications Corporation: Yeah, it’s delicious.

Unidentified speaker, Host, BofA: Of course.

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