SBA Communications at Morgan Stanley Conference: Strategic Growth and Challenges

On Wednesday, 05 March 2025, SBA Communications (NASDAQ: SBAC) participated in the Morgan Stanley Technology, Media & Telecom Conference. The company discussed its strategic initiatives and challenges, highlighting optimism about the tower industry’s future amidst rising 5G demand. However, challenges such as carrier consolidation in Brazil and foreign exchange volatility were also acknowledged.

Key Takeaways

• SBA Communications is expanding its portfolio with a $975 million acquisition of Millicom towers.
• The company is exiting markets where it lacks scale, focusing on Central America.
• SBA anticipates increased core leasing revenue driven by 5G deployments.
• The company plans to maintain dividends and repurchase stock when prices are favorable.
• SBA is leveraging AI and drones for operational efficiency.

Financial Results

Domestic Business:

• Revenue growth is projected at approximately 3%.
• New leases are expected to grow by an average of 3%, with variations based on carrier spending.
• Non-Sprint churn is decreasing, projected to be in the low $20 million range by 2025.

International Business (Brazil):

• The Brazilian real faced a 23% decline last year, impacting revenues.
• Carrier consolidation is leading to elevated churn over the next few years.

Millicom Deal:

• The $975 million acquisition involves 7,000 towers, with an 11x tower cash flow multiple.
• Expected to generate $42 million in revenue and $29 million in cash flow annually.

Operational Updates

• Over 55% of SBA’s U.S. sites are upgraded to 5G, with T-Mobile leading at over 80%.
• The company is seeing increased demand for co-location services, with a 6-9 month book-to-bill cycle.
• SBA plans to build 800 sites in 2025, focusing on Central America and Tanzania.

Future Outlook

• Spectrum auctions are expected to drive carrier spending, particularly with C-band spectrum.
• Fixed Wireless Access is noted as a significant driver of 5G capacity demand.
• SBA is prepared to invest in edge data centers if demand arises.

Q&A Highlights

• SBA is evolving strategic relationships with carriers, exemplified by agreements with AT&T.
• The Millicom deal is expected to close by September 2025, pending approvals.
• The company remains opportunistic in M&A activities, focusing on high-margin businesses.

In conclusion, SBA Communications is strategically positioning itself for growth in the evolving telecommunications landscape. For further details, refer to the full transcript below.

Full transcript - Morgan Stanley Technology, Media & Telecom Conference:

Simon Flannery, Morgan Stanley: morning, everybody. I’m Simon Flannery. Welcome to day three of the TMT conference. Hopefully, lot of you got to a chance to listen to Elon a few minutes ago. And now we’ve got a great follow-up here.

We’re delighted to welcome Marc Montagnier, the EVP and CFO at SBA Communications. Thanks for joining us, Marc.

Marc Montagnier, EVP and CFO, SBA Communications: Thank you, Simon.

Simon Flannery, Morgan Stanley: Great to have you here. We’re colleagues many years ago, so nice to catch up again. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morkinsonley.com/researchdisclosures. So Mark, you’ve been at SBA now a little bit over a year. You’re a telecom industry veteran.

You’ve seen the industry from a lot of different angles. I’d love to get just a little bit of a 30,000 foot perspective. So in your time at the company, how has your perspective changed on the tower industry on SBA versus what you were expecting going in?

Marc Montagnier, EVP and CFO, SBA Communications: Right. So first of all, I want to congratulate you for like thirty years. I remember you doing this conference in 1995 while I was at Morgan Stanley. And you’ve seen, just like me, the beginning of the wireless industry. It was basically no Internet, no data center.

And this you’ve seen the downturn, 02/2002, ’2 thousand and ’3 and the explosion of wireless. And now we all carry personal computer in our pocket basically and we have access now to AI and videos and everything. So it just speaks of the power of technology and how it has transformed our daily life. I mean, I have like dollars in their early 20s, and they can imagine a world where you can watch a video anytime or where you have Google Map and pictures in your phone. So our business has been around for thirty five years.

I’ve been in telecom industry since 1989. And it was a land grab initially, dozens of carriers at spectrum and just need to build coverage as soon as possible. Thirty five years later, the world has gone wireless. We all carry a personal computer in our pocket, and it’s not going to go away. So eighteen months, sixteen months at SBA now, I think I can see that how this company is going to be around in another thirty five years just because our customers, the wireless operators need our infrastructure.

And so it’s a little bit of a step function. Like carriers buy spectrum, they roll out a new technology, two gs, three gs, four gs, five gs. They get a 10x capacity increase. And then to fill up that capacity. And when that capacity is used, they go back and fill in the co location extra coverage.

So I think if you really look, you go back fifteen years, the big three CapEx as a percentage of revenue oscillate between 15% of revenue and 25% of revenue. So it was like 20%, twenty one %, twenty two %. It was above 20%. And last and they got plenty of capacity in last year 2023%, twenty twenty four %. I think 24% was probably below 15% of revenue was spent on CapEx.

But as we mentioned earlier last year, we’re seeing we’re so sorry to see green shoots in industry in our business in the first half of last year. And the momentum has been building where we see more men burn quarter over quarter. The number of applications from the carriers has keep increasing. And now we are seeing more demand for colocation as opposed to just demand. So it’s just building up and I think we feel pretty good about 2025 and it’s probably a good transition and a good momentum for 2026.

Simon Flannery, Morgan Stanley: Right. So maybe just summarize some of your 2025 guidance for it, if you would. We’ve got the Millicom deal coming in at the end. So how does that all tie together? You’ve got a little bit of churn still to deal with?

Marc Montagnier, EVP and CFO, SBA Communications: Right. So I think if we look at our business, you have domestic business and international. Domestically, it’s actually fairly easy to forecast. It’s our escalator is about 3% of revenue. And new leases, it should converge at around 3% growth.

So slower, it’s closer to 2% where the carriers has to spend more capacity. It’s probably going to be close to 4%. So you have 3% growth on the escalator, about 3% average from new leases. And the non spring churn is about 1%. And you’ve seen our non spring churn going from $30,000,000 a year in 2023, dollars ’20 ’5 million a year in 2024, low $20,000,000 for 2025.

So you’re kind of in a world of three plus three minus one in terms of top line growth. And that’s domestic business, 80% of our revenue of our leases, 80% of our EBITDA roughly are U. S. Denominated. And then And then 15 of our business is in Brazil.

So I think we’re still bullish long term on Brazil. We have a large exposure share. I think the country is going through consolidation from four carriers to three. So we faced churn in the last two years and churn is going to remain elevated there for the next couple of years. And last year, unfortunately, the real was the worst performing foreign currency.

It was down 23%. It stabilized this year, interest rates in Brazil were at 13% going to 16%. So I think we feel better about the real in the short term. But long term, Brazil is a country that’s going to keep growing, and we just need to go through the consolidation. So I think The U.

S. Market, I think, we have very good visibility. And internationally, Latin America is going to grow a growth engine at some point. But currency and carrier consolidation is a little bit of a headwind in the short term.

Simon Flannery, Morgan Stanley: Great. You talked a few minutes ago about The U. S. Carriers still doing amendments, but looking at co locations. Could you just unpack that a little bit for us?

And just where are we on the C band or the mid band deployment at least back? A lot of the 2.5 from Sprint is now out in the market, but there’s a lot more to go for the other carriers and then DISH is there well behind as well.

Marc Montagnier, EVP and CFO, SBA Communications: That’s right. So if we look at our site, ESBA sites in The U. S, about 55% have been upgraded to five gs. It’s 55%. T Mobile is above 80% or 2.5% spectrum.

Verizon is about 70% and AT and T below 50% on our side. I can’t speak for their network overall. And I think Verizon T Mobile is still very busy. They have minimum coverage requirement for mid-twenty six, so very active. Verizon is very, very steady and AT and T is playing catch up.

So I think we see the momentum coming from ’24 into ’25. Now the book to bill cycle on the November is maybe three months, but on the colocation is six to nine months. So we’re going to see that mostly in the numbers probably in the second half of twenty twenty five.

Simon Flannery, Morgan Stanley: So you’ll be accelerating accelerating out of 2025? That’s right. And all these co locations, is this densification, is this infill, what’s the nature of that?

Marc Montagnier, EVP and CFO, SBA Communications: It’s both. It’s coverage and it’s densification. Okay.

Simon Flannery, Morgan Stanley: And DISH is fairly quiet right now?

Marc Montagnier, EVP and CFO, SBA Communications: We don’t didn’t mention much from DISH in 2026, because I think they’re going to be focusing on handset purchases and marketing. But we were there to support them. We have very good dialogue with them. And I think they got eighteen months relief on the regulatory front. So we expect them to be back in 2026.

Simon Flannery, Morgan Stanley: And we see the FCC making some moves on spectrum, the DE auction, upper C band proceeding, there’s questions about the lower C band. Is that something that you you think can benefit you over the next couple of years or longer, I guess?

Marc Montagnier, EVP and CFO, SBA Communications: Definitely, I think if you look at the industry, right, when carriers receive a new band of spectrum, they usually spend a lot of money for it and need to put it to work. So that would be a catalyst at some point. But that being said, I was on the board at Intelsat. They cleared up 100 megahertz of C band spectrum. It takes a long time to clear spectrum.

Because you need to launch new

Simon Flannery, Morgan Stanley: traditional satellite.

Marc Montagnier, EVP and CFO, SBA Communications: Because you need to launch new satellite, repack your 200 megahertz into 100 megahertz. So I don’t see C blocks coming to market before the probably the end of the decade. But it’s doable. It’s a question of time and money, but it will definitely happen. And I know that the FCC is very focused on getting more spectrum

Simon Flannery, Morgan Stanley: to market. Yes. It seems like particularly for spectrum that’s not really being used effectively right now giving it because I think the Chairman has been talking about how The U. S. Is falling behind in terms of spectrum per carrier.

Marc Montagnier, EVP and CFO, SBA Communications: That’s right. And if you look at the satellite industry, at least the geo, I think they would love to to see more proceeds going to their shareholders because they could probably repack some of the spectrum. So everybody would benefit, but it takes time. You have to do NPRM at the FCC. So is it common, find a way to compensate the satellite operators, water satellites from Boeing or other manufacturers.

So it just takes time.

Simon Flannery, Morgan Stanley: And since we’re on satellites, we get the question a lot. I’m sure you do is how does that Starlink is now at 5,000,000 subscribers. How does that interplay with the tower business? Is there any competitive risk or is it really for areas where there is no five gs, there’s no fiber?

Marc Montagnier, EVP and CFO, SBA Communications: To me, satellite is a great complement to the wireless service. I think if you look at it, it’s especially on the geology, it’s a fantastic product if you’re on the maritime, like container shipping or cruise ships, airline industry, you want to have Wi Fi or the ocean or anywhere, you’re an oil driller in the Tundra or in the Gulf Of Mexico. I think it’s a fantastic technology. I think in the terrestrial, I think it’s pretty just applicable in very rural area. You’re always going to have a tree and you’re in a parking lot, in apartment.

You’re not going to have line of sight to a satellite. And the capacity is always going to be limited. So I don’t see it as a threat more as a compliment. And for the wireless for the tower company, I think if you really want to reduce the latency from the satellite, you don’t want to take, I don’t know, Starlink is probably forty, forty five millisecond, you want to take it twenty five or thirty millisecond, you’re probably going to need more uplink and downlink from the towers pointing at the sky and terminate on a fiber network. So I think long term, it’s probably positive.

But I think it’s going to be a great complement to the wireless industry.

Simon Flannery, Morgan Stanley: Yes, moving quickly. The domestic services business, so what are you seeing there right now? And it used to be that that was a pretty good precursor to leasing trends. Is that still a good relationship you think?

Marc Montagnier, EVP and CFO, SBA Communications: Yes. And it’s a leading indicator of where our business is going. So we did about 150 in revenue last year. We guided at the midpoint 170 in revenue this year. So we see great momentum in that business.

So it’s heavily indexed toward T Mobile, but it’s a leading indicator of the future level of activity. So it’s another good data point for us. And what are the big buckets you’re seeing within that? Is it sort of RF planning for them construction? What do you think?

It’s planning, it’s design, it’s construction planning and all of this. So, I think it’s all of the above really.

Simon Flannery, Morgan Stanley: Great. Well, let’s pull back out to the big picture here. Brendan took over from Jeff, I guess, a year ago. You’ve got a strategic review. You’ve done taken some actions already.

Sounds like there’s some more to go. So just help us understand the process and the objectives and where we are and where we’re going?

Marc Montagnier, EVP and CFO, SBA Communications: That’s a good question. So I think Brendan became CEO in January of last year. He has been with the company for twenty seven years, so he was there from the ground up really. And we operate in about 15 international markets. And I think if you really look at the numbers, we had better businesses, better margin, better growth prospect in countries where we had scale because obviously, with scale, G and A is a small part of revenue, but also you have a better dialogue with the leading wireless operator because they need your tower because you operate at scale, you have the coverage.

And so I think the view was to do a strategic review and to the extent it’s possible, exit the market where we didn’t have scale or find a way to reach scale in order to be a dominant tower company. So in the last twelve months, we sold our operations in The Philippines, over 30 tower companies in The Philippines. We did not ever see leaseback with one of the leading wireless operators. We exited The Philippines. We exited Colombia and Argentina.

And the numbers are really not material. It’s a very small market. In Central America, we like Central America because there are two wireless operators. And those markets have been consolidated out to Millicom and Claro, which is part of Carl’s slim portfolio of companies. The contracts are U.

S. Denominated and we are operational there. And Millicom was selling 7,000 towers. So we have an agreement to buy 7,000 towers for Millicom. That’s $975,000,000 in build to suit program, exclusive right to build 2,500 towers for Millicom over the next seven years.

As part of the agreement, we have a fifteen year contract with Millicom in U. S. Dollars with an escalator. And we extended the lease with Millicom on the towers where that we operate in the market. So I think the beauty of it, we pay 11x tower cash flow, 11.5x EBITDA.

It’s an accretive deal. We locked in mid to high single digit growth rate in U. S. Towers in markets where we have people distribution, operation, support, etcetera. So it’s almost markets we’re very comfortable with and this deal is very accretive to us.

And with de facto the dominant operator

Simon Flannery, Morgan Stanley: in Central America. So to that point, you mentioned scale a couple of times. How do you define scale?

Marc Montagnier, EVP and CFO, SBA Communications: I don’t think there’s a formula. I think it’s Number

Simon Flannery, Morgan Stanley: one or two and then maybe

Marc Montagnier, EVP and CFO, SBA Communications: Number one or two, maybe number three. I think if you look at the other international market where we operate on Africa, we are in Tanzania and South Africa. So Tanzania is really a growth market for us. If you really look at our BTS build to suit program, new site build for 2025, it’s going to be one of the busiest year ever. We have a forecasting to build 800 sites, about 500 for Medicom in Central America.

And then the second largest market is Tanzania. The government is really pushing for the operators to extend coverage. We have good relationship with Vodacom Airtel. And it’s really a growth market for us. It’s those are tough market to operate in because the roads are tough.

Power is an issue, so we provide power as a service. It’s for solar panel. We outsource the truck roll for diesel to third party, but we are not exposed to the cost of fuel. It’s basically a cost plus contract to the carriers. And South Africa is we have scale in South Africa.

I think the countries are still growing at high single digit. Tanzania is definitely growing in the double digit. I think power getting reliable power supplies is a real issue, but we have a good relationship with the operators and we’re pleased with the operation in South Africa. So I don’t we don’t have any processes right now and there’s not a formula for what the scale mean. But if we lack a margin, we lack a growth prospect, I think there’s a market we’re willing to invest.

Simon Flannery, Morgan Stanley: Thank you. So, I think on the strategic review, you suggested you’d be back to us with more information later this year. So, is there some other transactions or other kind of productivity initiatives?

Marc Montagnier, EVP and CFO, SBA Communications: No, I think it’s there are no processes to market any portfolio right now. I think we’re happy with what we have. But we always, I think, are obviously optimistic opportunistic and either on the buy side, on the sell side.

Simon Flannery, Morgan Stanley: You mentioned you’re stepping up the build to suit. So how do you as a CFO think about the return on investment, the initial yields, the lease up potential? Because certainly in The U. S, you haven’t been doing much of that for a while. The industry hasn’t, but there’s a it’s a lot of capital upfront.

Marc Montagnier, EVP and CFO, SBA Communications: Yes. So in The U. S. With inflation cost to build have gone up obviously and it’s a comparative industry. So we’re still building towers in The U.

S, and we’re still buying towers in The U. S, but we are very, I think, disciplined in terms of return. Internationally, I think we have a formula with Medicom where we are comfortable with the return we’re getting. And it’s the same thing in Tanzania. But I think for every market, we obviously have cost of capital, a WACC that we use.

And then you add a counter risk depending on which country you operate in. And then you have to factor in FX risk, the valuation on top of the counter risk. So the cost of capital discount rate we use is really I think it’s specific to each market when we look at either M and A opportunities or build to suit. But I really think as senior management, as management team, capital allocation is really the way we are going to create value and distinguish ourselves.

Simon Flannery, Morgan Stanley: You talked about FX a couple of times and American Tower has been talking about reducing the proportion that’s in emerging markets. How are you thinking about the right balance there? You obviously did the Millicom deal, but it’s U. S. Dollar based in terms of having enough exposure to those high growth markets at the same time the volatility can be?

Marc Montagnier, EVP and CFO, SBA Communications: Right. So today about 80% of our leasing revenue, 80% of our EBITDA or denominated in U. S. Dollars, We are, I think, have increased the hurdle rates that we are seeking in emerging market, non U. S.

Denominated market. And you’re going to see a reduction on a benefit that is being spent in Latin America.

Simon Flannery, Morgan Stanley: Coming back to sort of demand drivers broadly, I think there’s been some talk on the season’s earnings calls around fixed wireless being an incremental driver because some of the companies have been pretty clear we’re not going to invest for fixed wireless. But it sounds like you are seeing it and clearly the long term guidance we’ve heard from some of the carriers suggest they’re going to double the usage and we’re seeing hundreds of gigabytes a month. So what are you seeing on the ground? What do you expect from fixed wireless certainly in The U. S, but maybe internationally as well?

We seem it would be a good product there too.

Marc Montagnier, EVP and CFO, SBA Communications: I think fixed wireless access to me is the first five gs application

Simon Flannery, Morgan Stanley: right? And You talked about everybody getting wireless right at the open of our dialogue. That’s right. It’s the next step.

Marc Montagnier, EVP and CFO, SBA Communications: It’s the next step. And either as a replacement to fiber, I think even as a complement or as a backup And the doctor, I think we had some markets where the hurricane hit our sites last year. And apparently, you just couldn’t find a fixed wireless equipment anywhere in the region that got hit by the hurricane. There will be a rush to a store to get a fixed wireless equipment. So I think about 10,000,000 new adds last year, another 10,000,000 new adds this year.

Each fixed wireless access customers probably huge 15 to 20 times more tonnage than a handset. That’s driving capacity. So we don’t have visibility on the CapEx that we deploy on our towers by the operators because a bit is a bit is a bit. So it’s really hard to see if it was deployed for fixedwise access or just handset consumptions. But it is going to drive demand.

And then, I mean, Simon, you and I remember how the Internet changed our lives in the 1990s and everybody’s life since improved productivity. And now you are going to have a device in your pocket with AI app. And that is I don’t not smart enough to see what it’s going to mean for productivity, but it is just going to drive more demand on the wireless network. And so if you take a ten year view or twenty year view on this business, some of our towers has been there for twenty years, twenty five years, thirty years. Recently, I was my wife and I drove down to Key West for a long weekend and then I saw a tower that is currently on the market or was on the market in Key West.

And you look at this tower and you see no one is ever going to build anything anywhere close to this. This site has probably been there for twenty five years and is going to be there for another fifty years because there’s no place to build. So we have this unique portfolio of towers that is going to be almost impossible to replicate for zoning or for from a cost standpoint. And the wireless operators are going to have to squeeze more and more equipment on that infrastructure. And when you drive around, you could just see those towers getting bigger and stronger and taller.

And that’s a power of the earning power of our business really.

Simon Flannery, Morgan Stanley: How do you think about then the edge opportunity? I think four or five years ago, there was this vision of a data center at every tower. Right. And we’ve obviously seen one of your peers buy a big data center business and you’ve got some investments. But what’s your latest thinking on what the right way to kind of invest against that opportunity, either partnerships or

Marc Montagnier, EVP and CFO, SBA Communications: other? We are ready to do something if we see demand, but it’s probably still a lot away with we don’t see the demand right away. It may arrive at some point with AI. I just don’t know. Yes.

It’s too early.

Simon Flannery, Morgan Stanley: But you indirectly if it just drives wireless traffic, you benefit from that anyway? I think that’s right. I think that’s right. Yes.

Marc Montagnier, EVP and CFO, SBA Communications: And remember, we have in our business, you rent vertical space on the tower, but we also rent horizontal space for the generators, the battery, the routers, the various operators have to bring their own fiber. So, they need physical space at the bottom of the tower. So, to the extent that hedge becomes a reality that’s we have the real estate where they could put that edge data center.

Simon Flannery, Morgan Stanley: Another big debate in the industry has been, do you have holistic MLAs or do you have kind of pay by the drink sort of thing and SBA has typically been more the latter, but you’ve signed a deal recently. How do you think about that coming into the company and the industry and is what’s the right way? Are you still flexible to whatever works with the carriers?

Marc Montagnier, EVP and CFO, SBA Communications: I really think it’s evolved more into a strategic relationship with the carriers. And they’re growing in mid single digit. We’re growing in mid single digit. They need to have visibility on their cost structure. We need to have visibility on our growth prospects.

So I think there’s a natural dialogue to us. So we have MLA now with AT and T. And we I think it’s we are flexible whatever works the best on an ongoing basis.

Simon Flannery, Morgan Stanley: So probably no big changes in how you operate?

Marc Montagnier, EVP and CFO, SBA Communications: I don’t see big changes going forward.

Simon Flannery, Morgan Stanley: You went through the Millcomm deal. I think you put September 1 close in your guidance. Just can you help us through what approvals you need and where those stand today in terms of the kind of risks to it could I think you said it could close earlier or parts of it could?

Marc Montagnier, EVP and CFO, SBA Communications: It’s really hard to predict. It’s five markets. You have regulatory approval, antitrust approval. We don’t expect any issues. It’s just a question of going through the process.

So it’s we assume it’s probably going to close around September 1. I think guidance for the year is $42,000,000 in revenue and $29,000,000 of total cash flow. So it’s about a little bit over $7,000,000 a year a month in total cash flow, a little bit over $11,000,000 in terms of revenue per month. And it may close earlier, but we feel pretty good about September.

Simon Flannery, Morgan Stanley: Are there any more millicoms out there?

Marc Montagnier, EVP and CFO, SBA Communications: How is the M and A environment? I can’t comment. I think you’re probably going towards capital allocation discussion, right? So obviously, our preference this is a business with a 70% EBITDA margins, $1,900,000,000 of EBITDA. And then if you just run down the number, it’s about $4,800,000,000 for the dividend, $50,000,000 for maintenance CapEx, $2,500,000,000 for growth CapEx for this year.

Cash expense another $430,000,000 and cash taxes about $40,000,000 So you left about $650,000,000 of capital extra capital to allocate. So less last year, we bought back shares $200,000,000 We also did M and A mostly in The U. S. Over $200,000,000 and then paid down debt. This year, that $650,000,000 we paid down our revolver completely last year.

For this year, obviously, we need $975,000,000 for Millicom. Part of it will be funded through the free cash flow, part of it through the revolver. We have a $2,000,000,000 intact facility. And and and

Simon Flannery, Morgan Stanley: Welcome to the conference center. Do you think is this more of a new run rate for given the Millicom commitment? Or is this the peak year for build to suit, do you think?

Marc Montagnier, EVP and CFO, SBA Communications: I don’t know. It’s 2,500 towers for Millicom over the next seven years. I think in terms of revenue impact, it’s minimum for 2025 because it’s all back end loaded. We received the search ring, then you have to find the land, price for zoning. So it’s going to take a while.

So the all the construction is back and loaded. So there’s no real impact to the top line growth rate in 2025 from this all is built to suit.

Simon Flannery, Morgan Stanley: So you were talking about the funding options you have, leverage is at historic low level, knocking on the investment grade door if you want, I guess. But it sounds like you’re still comfortable staying in this range. Millicon doesn’t take you up very much, but just keeping your options open as you roll over debt and so forth.

Marc Montagnier, EVP and CFO, SBA Communications: So you’re right. Leverage at the end of the year was 6.1%. The revolver was fully paid down. This is the lowest leverage in the history of the company. And the average cost of debt is 3.2% In a rising rate environment, we just need to be careful.

We have $750,000,000 of ABS maturing in January of twenty twenty six, another $1,200,000,000 maturing in November of twenty twenty six. So we have $2,000,000,000 refinancing in 2026. Those ABS have a one hander in front of them. So obviously, we’ll be refinancing at a higher cost of cash.

Simon Flannery, Morgan Stanley: And you still like the ABS market?

Marc Montagnier, EVP and CFO, SBA Communications: We like the ABS market of $12,000,000,000 of debt, $7,000,000,000 in the ABS market. We financed in late September, early October at 4.8%. So I think we price really through the investment grade market levels. We don’t we like the flexibility. I think it’d be nice to be investment grade.

But investment grades means you need a commitment to stay investment grade. So I think it would have been very difficult for us to spend $1,000,000,000 in mill income after having made a commitment to being investment grade. We like the flexibility. If interest rates too were to come down again, I think we’d be happy to deploy more capital, do more share buyback and take the leverage back up. We like that flexibility and I don’t think we are paying much more in terms of our cost of capital and investment grade company.

Simon Flannery, Morgan Stanley: Could you talk about your OpEx and your margins? And we’ve obviously had a lot of talk about AI here and benefits in terms of running your organization more efficiently, maybe surveying your towers to see if everybody’s got what they’re paying for or what they’re paying you for?

Marc Montagnier, EVP and CFO, SBA Communications: Yes. No. So I think we are fairly centralized in our G and A costs as a percentage of revenue are fairly low. There’s just not a lot to extract on that front. And but AI is going to help us.

We have literally 40,000 towers, multiple leases with each operator per tenant. So you’re talking over 100,000 leases. And AI is really helping us sorting through duration, terms, escalator and all of this. So I think it’s a great tool. And obviously, we fly drones to get data on the towers for all the videos, see exactly you don’t have to send a person up there to really find out what’s going on.

So AI is a productivity tool at this stage, and we look to do more of it going forward.

Simon Flannery, Morgan Stanley: Right. Well, we’re just running out of time here, unfortunately. But maybe one last one on the dividend, another double digit increase here. So it sounds like you still got room to move the payout ratio up as your NOLs run off. We can get double digit for next few years?

Marc Montagnier, EVP and CFO, SBA Communications: That’s right. We did 15% last year, 13% this year. Our payout ratio is about 35% of FFO. And we have room to keep growing the dividend at double digit for the next couple of years next few years. And we still have NOL, so we have on the dividend.

Simon Flannery, Morgan Stanley: Sounds great, Mark. Thanks so much for joining us today. Great conversation.

Marc Montagnier, EVP and CFO, SBA Communications: Congratulations. Thank you. Thank you.

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