SBA Communications REIT (A) Stock

I'm John Atkin, I cover the communications infrastructure space here at RBC. And I'm pleased to have the Executive Vice President and Chief Financial Officer of SBA Communications, Marc Montagner. Welcome.

Thanks for having me.

So I think let's start a little bit about kind of the core U.S. market and any kind of trends that you would like to kind of call out in terms of U.S. leasing. There's a bit of a trough going on with leasing in 2026 and who knows what 2027 will bring. But what makes you excited about some of the incremental drivers for same-store growth on your U.S. portfolio?

Yes. So I think I've been in the industry for 30 years, and it's a very cyclical industry. The cycle repeats itself. Wireless operators who buy will receive new spectrum band, a new generation technology and then harvest that technology until the next one comes along. So I think if you go back 20 years, CapEx as a percentage of revenue for the big 3 operators at the peak of the cycle right after they receive the spectrum and deploy about 25% of revenue. And in a harvest mode, it drops to about 15% of revenue. So in 2022, 2023, it was 25% mark. Last year and this year, we were at about the 15% mark. So I think the beauty for our company is that even at the trough in the cycle, we still growing. Lease up this year is going to be $35 million. 2022, I think it was $78 million. So I think that's kind of the range.

6G spectrum is going to be auctioned in the first half of next year. It's about 18 months clearing. So it makes it like late '28, early '29. I think that the cycle will repeat itself. So I'm pretty excited about 6G. I also think that the FCC is auctioning 160 megahertz of spectrum, which is interesting because 6G is probably going to be in a 30 megahertz band. So they may be expecting more than 3 [indiscernible] for this, maybe 4 or 5. So I'm hoping that we'll see some satellite operator there and create more demand. So that's really on a pure leasing side from the wireless operators. And then I'm excited about the new use case. So I think, obviously, it's still unclear what the satellite operators are going to do.

If you think of a base station, it's probably has a capacity of over 100 satellite. There are about 200,000 base stations in the U.S. So I just don't think you ever replicate that capacity in space, be too expensive and to take too long to build this. I think the other thing is if you're in an office, a conference room and a true downtown Chicago, Manhattan, you're going to have an obstructed view to the sky. So I think you're going to need some terrestrial component in order to provide services. And we have edge data centers, a lot of talk about the edge data center. We have probably 50% of our site could accommodate a small data center, 200, 300 megawatts of power. And we've seen companies that have a significant amount of capital do those mini data center at the edge of the tower, the bottom of the tower and basically sell compute power directly to companies providing AI agent apps on the device.

The big advantage there is that from day 1, you have no zonal requirement because you are in closed space, you are based on a concrete slab, you have power at the site, you have fiber to the site and you have low latency because you're right sitting at the bottom of the tower. So I'm pretty excited about use cases in 6G. So I feel good in the future.

On the edge compute, any kind of demand signals worth commenting on? Or is this kind of more of a belief at this point that it's likely to happen as opposed to exploratory discussions?

Company have raised capital and on negotiating the lease agreement. I want to ask them, have you signed any basically a retail customer or people are going to use that compute, I get very fuzzy answer. So I don't know what they're planning to divest, but are people really looking to basically sign leases for the space and get access to the tower and the bandwidth. So I assume that, that demand will show up in the next year or so.

And kind of sticking on edge compute, what is it that you foresee offering? Is it still going to be largely a passive infrastructure model in terms of just the ground lease? Or do you get up in terms of things like power space, shell, thoughts on how much of the value chain you would be willing to go?

Passive real estate company. We sell vertical space on the tower and lease vertical space on the tower and we lease horizontal spaces on the ground. For this particular edge data center, we may provide power as well to the extent they want it because their power demand are fairly limited.

And then maybe we can pivot to LatAm. And what are you seeing there?

[indiscernible] Brazil 15% of revenue, 15% of TCF. I feel very bullish about Brazil for the long term. The country has a net balance of building over $5 billion a month, large exporter of grain commodity, minerals, energy, very young population, fast growing and the population is probably 25% of the density we have in the U.S. The inflation was under control. Central Bank has done a great job. I think Brazil is going to be well. Just like in the U.S., [indiscernible] was consolidated by T-Mobile, wireless heavily to Oi wireless in Brazil and was carved out to the other 3 wireless operators. So we're facing consolidation churn hitting us in '26. It's going to stay elevated in '27, it's going to go away after that.

But long term, 5G in Brazil is less than 50%. The carriers have 5G deployment requirement, they have coverage requirement, the regulators are really pushing the operators to deploy. We have 3 very well-capitalized operator part of [indiscernible] enterprise, you have Telefonica, Vivo and then you have TIM and Telecom Italia. So they're well capitalized, and they need to build capacity and coverage. So I feel pretty good about those in long term. Just like '26 and '27 headwind, but will go away over time. And then you have Central America, we bought 7,000 sites from Millicom last year, 11x multiple, 15-year contracts in U.S. dollars, escalators, U.S. CPI for 2,500 BTS over the future. We lock in a mid- to high-single-digit growth rate in U.S. dollars. Those sites are very attractive. So I feel pretty good about Central America. And then we still have 3 very small markets there that are totally immaterial.

So on some of the smaller markets, does it make sense to just sort of consolidate your portfolio and perhaps seek buyers for some of the noncore contributors?

Yes, it does.

And then just maybe still on Brazil then, there is a fragmented universe of some mom-and-pop developers. The M&A multiples in that market are different than what we would find in the U.S. in the private market. So the path forward there would be primarily build-to-suit? Or could you see some inorganic growth ahead?

We have 12,000 towers. We have significant scale in Brazil. I think we have top 2 or 3 operators in Brazil, American Tower is bigger than us. But we have significant scale. I don't see us expanding in Brazil M&A.

And then on Dish, maybe kind of any thoughts on settlement discussions with some of their debtors essentially and outcomes for the tower industry and for SBA in particular, as well as the plans for Dish equipment that is still on the towers that are being operated.

That's a good question. We get that a lot for us. I mean our exposure to Dish is $56 million of revenue this year from Dish, so that's churn. [indiscernible] coming from the short term. We had short-term lease with Dish was about $100 million. So from Dish is around $100 million mark. We have a claim in the bankruptcy court. I have no idea the recovery is going to be every week you have a new speculation. I think for us, we have a claim, it's a small number. If we get it, it's great, but it's not material. As far as the equipment was claiming that the equipment at Dish left on the towers abandon and we could reclaim that equipment. So the carriers right now to use the space. So if we have a new demand for that space, we take down the equipment and release the space. Otherwise, we just leave the equipment up there until we are able to release the space. But I think that's where we are.

Happy to take any audience questions if there are any. Contract structures in Brazil and in the U.S., MLAs usage base, you've got kind of a different escalator structure in Brazil than in the U.S. But as you kind of prepare yourself to optimize growth beyond next year, let's say, what are your kind of thoughts philosophically around your MNO relationships and contracts?

We signed last year 10-year deal with Verizon. It's going extremely well. Verizon is very busy with us. We have MLA in place with AT&T until April of 2028. And so it's going very steady. Verizon is very busy. AT&T is steady. And T-Mobile, I think with the new management team and the focus on free cash flow is slowing down a little bit this year, but we don't know what next year is going to be. So at some point, everybody is going to have to be busy again. So we -- our goal is really to be a good partner, provide good quality of service, make it easy for our customers to roll out. And I think MLA makes sense for everybody. It's predictable for them. It's predictable for us, and it makes it easier to deploy.

AI, we had a discussion with some other tower companies earlier about what that means in terms of traffic patterns and just as traffic patterns perhaps change with mobile use of AI, uplink traffic and so forth. Any implications for your business that you can see that would be material?

As we said earlier, we are a passive infrastructure provider with less space. It's going to depend on the 6G equipment, the manufacturer, Ericsson, Nokia, [indiscernible] Samsung, have to engineer the equipment and the network to deal with a more 50-50 spread between uplinking and down versus the current 80-20. So I think it's going to be part of the massive MIMO equipment that's going to be deployed as part of the 6G rollout and so forth. It means new towers and new equipment. So it means more leases, more amendment, more touch to the tower. So it's good. But we're not in the engineering business. So it's really up to the carriers to design the network to take care of this.

Question.

Are we ever going to get to a point or anytime soon where satellite phone service is going to start causing less towers to be needed?

Or satellite is a threat?

I think satellite is a complement, and I think SpaceX said that at some of their investor meeting. If you really look at suburban environment, it's going to be very difficult to have direct line of sight to a satellite, and they're never going to have enough capacity to basically cannibalize wireless. I'll give you an example, XM Sirius, which is a satellite radio company has thousands of repeaters in urban and suburban environment just because if you're driving around downtown Chicago, downtown New York under a tree, you just lose coverage. So they just repeat the signal. I assume they're going to have to do the same thing if they really want to go and provide basically coverage.

As far as the tower environment, I think, frankly, those sites are running cheap to operate. Most of them have 3 tenants on them. If you are one of the big 3, would you take it down and give that traffic to a competitor like SpaceX. I think it's probably easier to just keep the site, maybe add a backhaul by satellite, which is going to be cheaper than doing fiber backhaul and any other backhaul. So I think even the newer sites are probably very few of them are going to be at risk. Actually, different things that one of the operator now has an agreement with SpaceX, and they could see basically traffic being originated to the network using satellite because they don't have tower and they could pin them to the map where they have coverage holes where they should actually have the tower because there's satellite traffic coming out of very particular spots.

Let me ask you the opposite question. So my dad lives in the suburbs here. I never thought I'd see this. He got a letter from AT&T saying that they're no longer going to be offering landline service. And they gave them a choice of having some sort of cellular module that connects his home line where you can go to Comcast and -- do you see growth coming, any significant growth coming from companies getting rid of their telephone service?

So wireless displacement of wireline -- of legacy wireline opportunity.

This is going for 20 years. I mean I still never canceled my wireline phones, and we have 3 places and 0 wireline phone. I mean it's all cellular now because the quality is good enough. And even the security system runs on wireless now. So I don't -- you don't even need telephone line for security systems, all runs on wireless. So yes, I think the copper wire is going away. It's just that infrastructure is over 100 years old. I don't see it coming back.

So 90 seconds, maybe just quickly kind of put a bow on capital allocation, building towers, buying back land, balance sheet actions. What are kind of the top priorities? And then the AFFO algorithm and maybe total shareholder return given AFFO growth trajectory, dividend yield, perhaps share buybacks. Maybe you can kind of quickly summarize.

Certainly, I think you look at us those numbers of probably [indiscernible] of EBITDA, $250 million of maintenance CapEx, growth CapEx, $7 million of cash taxes, $530 million of dividend, $500 million of cash interest expenses, you're left with $600 million of extra capital every year. '23, we'll pay down about $700 million of debt. Last year, we bought share for $0.5 billion depends on where the share price is, what the M&A opportunities are and interest rates are. So we just want to be flexible. The algorithm is for us to create shareholder value for the long term. Right now with FFO per share at $12, where our stock is trading 6.5% plus yield on buying back shares. We can still raise capital -- raised at 5.25%. So buyback is more accretive than paying down debt. So we are just flexible, but right now indexing towards share buyback.

Good summary. Thanks so much.

Thank you. Thanks for having me.

Good morning, everyone. Mike Funk from Bank of America. I lead the North American telecom, data center and tower equity research team. Really pleased to have Marc Montagner here again from SBAC. I'm sure you all know Marc. So we'll go ahead and get kicked right off. Marc, thank you again for coming.

Michael, thanks for having me.

And do you have any safe harbor to review?

No, no.

I think we can go right into Q&A then.

Let's go straight to Q&A.

Great. Great. I want to start high level, Marc. So growth has been relatively constrained for domestic tower operators for a number of reasons. But if you're looking out for the next couple of years, what leading indicators are you watching for acceleration in domestic tower leasing?

Right. So I think I've been in the wireless industry for 30 years now. The old analog, the GSM, CDMA, 2G, 3G, 4G, 5G, and it's just a big cycle. MNOs either buy or receive a new spectrum band. They rolled out a new technology. They got a 10x increase in capacity, a massive drop in the cost per bit that is being delivered and then they harvest that basically that capacity is being put to use.

And if you look at CapEx as a percentage of revenue for wireless operators, when they deploy a new technology, it runs at about 25% of revenue. Massive capacity increase. They basically start selling aggressively and harvesting that new capacity and they cut CapEx because they don't really need it because they got the coverage and the capacity with the initial rollout.

And so if you look at 2022, 2023, when 5G was rolled out by the 3 MNOs in the U.S., CapEx as a percentage of revenue was running at about 25%. They spent over $40 billion per year building the 5G network. And in 2025, 2026, I think we are in a harvest mode. CapEx as a percentage of revenue is probably at an all-time low below 15%, but even in this environment, we are still seeing lease-up on our portfolio. Last year, excluding DISH, lease-up was about $35 million. This year, our midpoint of our guidance is about $35 million a year, and it's steady.

At some point, 6G will come and the CapEx cycle will start again. So I feel pretty good about the next few years. The FCC is auctioning 160 megahertz of upper C-band spectrum by June of 2027. It probably take 18 months to clear. But I think by 2029 or maybe late '28, 6G rollout may start. The OEM from Lucent, Ericsson, Samsung all have basically 6G equipment in beta test and then be ready to roll out the new technology.

And that's going to -- basically, it's going to be more spectrum efficient. It is going to deliver more bits per hertz than 5G. And also, it's going to dramatically cut the cost per bit that is being delivered to the end user. So I think it's just going to help the MNOs to provide new services and support new application from AI agent to fixed wireless access, self-driving cars and so on.

So we feel pretty good about the next few years. And in the current environment, I think the MNOs are still spending money, still expanding coverage, doing densification, colocation. So I think our role is really to support their build, support their network. We try to provide a high-quality network, be very responsive to their need and be there for when they roll out 6G.

And Marc, can you bridge me from 2026 to 2029, right? Because you mentioned the C-band auction, I mean that's the next big event, right, for carrier wireless spending. You already mentioned probably 2029, 2030 before that spectrum is cleared. 4G standards and technology also will probably be deployed in lockstep. What is the bridge from '26 to '29 that could be an incremental catalyst for growth, right? So a couple of things come to my mind and add more, please, if I'm missing anything. So you have the 600 megahertz spectrum that AT&T acquired that they could not deploy the simple software upgrade that they could to 3.45, right? So that will be deployed. That's number 1. So love to hear, I guess, how meaningful that could be to SBAC.

Second, you mentioned DISH briefly, and we all know that DISH basically just stopped making payments to vendors last year. I'm not going to talk about litigation, but they were a contributor to revenue for SBAC. Love to have you remind us how much. And then one of your competitors mentioned that they felt that Starlink, if it wanted to have a terrestrial component, could potentially just take over some of the old DISH equipment, right, and resume those payments. So that's number 2, as I'm thinking about potential drivers of revenue growth.

And then third, in my mind, at least, would be carriers that are deploying FWA for their broadband strategy, potentially needing to densify, add capacity, as they are overselling existing capacity in certain areas. So those are the 3 things in my mind between '26 and '29. Can you walk through each one, maybe and add any that I missed?

Yes, sure. And there are some other case -- use cases I'd like to point out. So let's address DISH first for us. It's $56 million a year. We're taking a churn in 2026, and there's no ongoing assumption as far as revenue is concerned. We have a litigation against DISH. Our total claim is less than $200 million between unpaid lease services.

The smallest of the tower carriers.

Less than $200 million between decommissioning cost and unpaid lease payments. I don't know what the recovery will be, but in the scheme of them, it is not that material to us. As far as -- let's just talk about them one by one. 600 megahertz from AT&T, we have an MLA agreement with AT&T. So is we going to depend, that is in place until June of 2028. So how much we are going to benefit from the AT&T deployment in the 600 megahertz band really depends on what type of equipment and the timing of it. So it's still a little bit unclear at this stage.

And let's talk about SpaceX. I think I'll give you the analogy of SiriusXM, for example. It's a satellite radio service. But in order to make sure that when you drive down narrow streets surrounded by tall buildings in New York City or if you are in a suburban environment with trees, you still get the signal. They have thousands of repeaters in the U.S. that receive the signal by the satellite and then get rebroadcasted terrestrially. And if you look at SpaceX or Starlink, if you really want to provide a direct to handset service, first of all, a base station has a capacity of about 100 satellites.

There are about 200,000 base stations in the U.S. So just imagine how many birds you will need in the sky just to replicate that capacity. Satellite is great for coverage. It's not that great for capacity. In addition, if you are in a city like New York or tall buildings, in an office, in a conference room, in a hotel room, under a tree, you're not going to have direct line of sight to a satellite. So in order to have coverage and capacity in urban and suburban environment, I think the physics would tell me that they will need some form of terrestrial network in order to reach those dual-mode handsets, and that would call for some form of terrestrial deployment.

So I don't know what the timing will be. I don't know if that's what the plan is. I don't know scale -- what type of scale they may or may not build in the future. And you have at least 2 very well-funded potential LEO operators between Amazon, Blue Origin and Starlink that are trying to get into this space at scale. So I feel that there would be lease-up potential from us, from either Amazon or Starlink just because of their ambition, I think it would be very difficult for them to fulfill their ambitions without having some form of a terrestrial network.

And just on that terrestrial portion quickly, we hosted some expert calls a week or 2 ago, 1 with Dr. Saul from T-Mobile, another 1 with Crown Castle, just to address Elon Musk's comments in the 2Q call about deploying femtocells for the terrestrial network. If you could give a quick comment on your thoughts on the ability of femtocells to replicate the reliability and coverage you need in a wireless network. I'd love to hear that.

Well, I think it's going to be very difficult to get the scale, get the capacity and roll out rapidly using femtocells. So I think it's -- I think they walk back those comments since the second quarter call from what I heard. I don't see that as being a good alternative, but I don't know what their plans are. We shall see. But I feel pretty good about, I think, SpaceX and Blue Origin eventually getting into the space and that would create a new customer for us. And we have plenty of space on our towers. We'll be more than happy to accommodate them.

Let's assume timing that you kind of -- you get spectrum in the handsets and you get the V3s launching '27, '28. So their timings like a '28, '29 from when you deploy a wireless service, a direct-to-consumer wireless service. How far in advance of that launch would you start having conversations with a potential customer? Would it be a year or 2 in advance to start deploying equipment? Like what's the focus, the lead time?

It's probably a year or 2 in advance because for the...

So you'll be having conversations end of this year or beginning of next year if their aspiration is to launch service in 2029.

I think at some point, those conversations will need to take place. Obviously, we are monitoring the situation. We are very excited about the opportunity. But it's too early to say, Michael. I just don't know. I can't speculate. I just don't know. It's too early to say. I feel better in terms of short-term opportunity, there are a number of edge data center companies that have been funded and that are looking to basically lease space at the bottom of the tower horizontal space in order to put a cabinet and install basically computing power for AI. So it's like a mini-cloud where they would basically build it and they will come, just build infrastructure.

And when you think about it, it makes a ton of sense because you don't have zoning issues. You're in an enclosed space, you have fiber going to those tower facilities, you have space at horizontal space at the bottom of the tower, you have power and it's -- you don't have a zoning issue. And you would distribute the power across thousands of base stations, distribute the computing -- the electricity would be distributed. The computing power would be distributed and you could sell that computing power to a company selling AI agent, AI application with basically a very low latency, which could be attractive.

And then the other markets are starting deploying drone detection technology. We have not seen that in the U.S., but if you think about it, it's cheaper and with less latency than doing it by satellite. So it's happening in Europe, it's happening in some countries in Asia. I don't know if it's going to happen in the U.S. or not, but that's another potential future use case. The infrastructure is in place. And self-driving cars. I mean I was told like a Waymo car, for example, goes back to a warehouse twice a day to get the battery recharged.

The car is cleaned up and someone takes the hard disk out of the trunk, download the data and put it back in the trunk. There's no reason why this couldn't be done wirelessly at some point in the future once you have 6G or more capacity on the wireless system. So I think the infrastructure is in place. It's almost impossible to replicate it given the inflation and how much it costs to build a tower now. It's -- the zoning law really make it very difficult to replicate that infrastructure in urban and suburban environments. And if you're, I don't know, a satellite operator, you're wireless carriers, you're edge AI company, it's so much easier to go to an existing facility than trying to build something from scratch. You piggyback on basically the power and the fiber that has been already put in place.

You mentioned edge data centers, and this is not a new idea, right? We were talking about it in 2016, '17. And then I think the use cases failed to appear. Because the idea back then was that I think it was going to mostly do for autonomous cars, right? Let's assume though the use cases develop now. How large of a market opportunity are the edge data centers? I mean I'm assuming these are new tenants, they're paying you rent per month for space and whatever else power and access to the transport. So how large is that opportunity? How many tower sites have you identified that could be attractive for edge data centers?

We don't know what the demand is going to be, but we probably have a few thousand sites that could basically...

A few thousand sites. And what would the rent be?

I don't know yet. I can't speculate yet. But I think it could be a real opportunity going forward.

Okay. Perfect. So I want to shift gears and talk about international, where I think we are seeing stronger growth opportunity. And can you identify the markets where you see the strongest growth potential internationally and then the drivers of that growth?

Sure. So let's start with the one closest to home, Central America. We bought 7,000 sites from Millicom about a year ago. We like Central America. It is a consolidated market, 2 wireless operators, Claro and Millicom. There's no more further consolidation risk. Contracts are in U.S. dollars with a CPI escalator, 15-year contract. And we have a BTS commitment from Millicom to build 2,500 sites over the next few years. We're probably going to build 400 BTS in Central America this year approximately. And we probably lock in a mid- to high single-digit growth rate.

The governments are pushing hard for expanded coverage. Millicom is very aggressive in terms of growing the top line and capturing market share. And any tower we build could potentially accommodate colocations from Claro. So we feel really good about Central America. The largest market is Brazil. It's probably 15% of revenue, 15% of EBITDA. Brazil is being consolidated from 4 into 3. So Oi, the fourth wireless operators that we carve out to Claro, Vivo and TIM. We have been facing elevated churn in Brazil for the last few years.

Oi Wireline is going out of business. So it's $14 million churn this year. And we are going to have elevated churn in Brazil this year. I think we have about -- midpoint of our guidance is $38 million of international churn, 3/4 of it will be Brazil this year. We are probably going to see elevated churn again in Brazil in 2027, and then it should be a much more stable market once the Oi churn is behind us. But -- we like Brazil as a country. The population is young. The number of base station population is -- density is still very low, about 25% of what it is in the U.S.

5G is less than 50% deployed. The operators have coverage requirement. There's more 5G auction spectrum coming to market. The country is doing very well. Balance of payment is positive, $4 billion to $5 billion a month, large exporter of mineral, agricultural product, energy. So we feel pretty good about Brazil in the long term. And once it is consolidated into 3 operators and Oi churn is behind us. So that should be probably a mid- to high single-digit market long term. It's kind of flattish today because of the churn.

Then Tanzania, it's still small, but growing at double mid-teens for us, probably going to be close to 200 sites in Tanzania this year. The government is pushing the operators to expand coverage. It's probably the only telecom infrastructure in most of the country is wireless. People use wireless and wireless app for payment and all sort of application. So we feel very good about Tanzania. And then we have 3 very small markets in Latin America, Chile, Peru, Argentina. That's probably immaterial. We don't have scale in those markets. So we are harvesting those markets, running them for cash basically and not growing.

Okay. Makes sense. So I want to turn an important component of growth in the next couple of years, and that's just the balance sheet and debt refi. I know investment grade was a priority of yours for a long time, Marc. So congratulations once again on getting to investment grade. But you as other tower operators have debt maturing in the next year or 2 that carries relatively low coupons, right? Can you just walk us through what is maturing for remainder '26, 2027 and your thoughts about potential for refi rates versus the expiry?

Yes, that's a good question. I think we have a number of low-cost debt that is being refi-ed in 2026, 2027. That's creating higher cash interest expenses for us in '26, '27 and is putting pressure on FFO and AFFO per share. So we just did a $3.5 billion investment-grade transaction on July 14 of this year, a very attractive pricing. I think we hit the market perfectly. We got lucky in terms of timing. We paid down -- we had $1.1 billion drawdown on the revolver. We fully paid down the revolver.

We paid down our term loan B, $2.3 billion, and we still have $0.5 billion of cash on the balance sheet following that transaction. Coming up is $1.2 billion ABS in November of this year that was a one handle on it. There's a $1.5 billion high yield maturing mid-February with a 3 and 5/8% coupon and there's another $900 million ABS in April with one handle on it. We intend to refinance these securities in the investment-grade market, assuming low 5% coupon.

This is going to create pressure on FFO and AFFO per share in 2027. But past this last wall of refi, I think by 2028, we will not see increased cash interest expenses. We'll be in a more stable environment. We'll have in place basically long-term investment grade debt deal in place and full access to capital. $2.5 billion revolver is on top, so we have plenty of liquidity.

Okay. we've talked throughout 2026 just about your guidance for the year and the number of pressure points in the Latin American churn. Refi is a bit of a pressure in '26 and then the carrier activity being slower domestically as well. As I'm thinking about '27, the conversation we've had so far, right, about bridging to the growth further out, it feels as the carrier activity is probably relatively stable, maybe even down, right? We don't know. More pressure from refi. You're working through most of the LatAm churn, I guess, but still some residual Brazil churn in '27. So it feels to me, thinking about the growth outlook that '27 could look a lot like 2026. And then '28 is when we start ramping into, well, less headwind from refi and then potentially more carrier activity. Am I framing that all correctly, just back of the envelope, if I'm thinking about FFO growth?

I would agree with you, Michael. I really think that '27 is a transition year, still elevated churn internationally, at least $56 million of churn from Sprint and $56 million from DISH will be out of the way that's worrying us in '26. International churn should be elevated but start to come down. Lease-up, it's unclear what 2027 is going to be. I don't think the network teams at the 3 MNOs have received their budget for 2027 yet. I'm sure that work is being done in the fall. So we'll probably get more visibility by December or January of what the CapEx spend is going to be for the MNOs in 2027.

Last -- so the pressure really in '27 is going to be just like '26, international return, higher cash interest expenses, but will set up the company very well for a pickup in growth in 2028 going forward. But meanwhile, I mean, we -- our dividend yield is 2.5%. We -- last year, we intend to keep increasing the dividend at low double digit for the foreseeable future. Our payout ratio is low 40%, about 41%, and we have room to increase the dividend for the next few years.

And last year, we bought $0.5 billion of shares at an average price of $200. I think we believe that share buyback at the current valuation is accretive to FFO and AFFO per share and creates value for shareholders in the long term. So we were not shy in terms of buying back shares in last year. We didn't do it in the first half of the year because we had $1.1 billion drawdown on the revolver. We had to do refinancing first. So the revolver is paid down. We have a new $2.5 billion revolver that ends up access to the investment-grade market. And we have plenty of liquidity. And we think that buying back shares at this level is accretive to create value for shareholder.

The best use of capital at this moment. So I wanted to talk about one potential positive I guess, driver remainder of '26 and '27 and love to hear your feedback. This past quarter, we heard from tower companies and then also some of the builders like Dycom and MasTec, that one or more of the carriers maybe had slowed or paused their activity in 2Q. Some attributed to some headcount reductions at one or more of the carriers that might have impacted that with the thought being that the aggregate spending wouldn't change just maybe the activity got pushed out later into '26, early '27. Do you agree with that hypothesis that we could see maybe some ramp in carrier activity from one or more in the back half of the year? Or are you not seeing that?

I think that -- I mean, the lease-up has been steady. The breakdown of the spend among carriers has shifted a little bit. We have a new MLA with Verizon. Verizon is very busy with us right now. But we think that all carriers are still active, and it's too early to see where 2027 is going to lead us to.

Okay. That's very clear. And how are you -- you mentioned a bit ago about some of the smaller Latin American territories that really are not contributing to growth. It's de minimis, not material. So how are you thinking about M&A, right, either a potential acquisition to add scale to markets where maybe they're not material or even divesting markets where you decided maybe it did not play out the way that you and management have expected and now is the time to monetize those assets?

So I'll just go back to when Brendan Cavanagh became our CEO, having been CFO before for 15 years. In the first earnings call in February of 2024, he announced a portfolio review. And we basically looked at our market and realized that in order to grow and extract value, create value and generally high margins, it was important to operate in a market that is -- that was consolidated because churn, whenever carriers is being carved out to the other operators, it's a 3- to 5-year period of churn because the new owner wait for the lease to expire and doesn't renew it. So you basically see churn going on for 3 to 5 years. This is what we've seen in the U.S. with DISH when Brazil deployed.

So we want to be in markets with either 2 or 3 operators that are stable. We also think it's important to have scale because if you have scale, if you're one of the leading tower companies in the market, you are the first one to get the call from the operators because they want to roll out a new technology or expand coverage of capacity rapidly. So you are part of the dialogue. If you're 1 of 30 tower companies, it's very difficult to create value. And so we went through -- if we don't have scale that either you divest or you find an opportunity to grow through M&A.

And for the last 3 years, we sold Colombia and Argentina. We sold -- we had a very small operation there. We sold the Philippines. We only had a few hundred towers. We are 1 of 30 tower companies in the Philippines and we exited that market. Canada was a fantastic market, but we only had a few hundred towers. We didn't see a path to create a portfolio with a few thousand towers. So we sold in a very attractive multiple to a PE firm.

And we are -- we have 3 markets in Latin America, Chile, Peru and Ecuador. Those markets are being run for -- in a harvest mode. So I think we're very pleased with the margins and the free cash flow we're extracting from those markets. If someone were to pay us a number that is above our DCF value, I think we'll be happy to sell. Otherwise, we have staying power. They are generating free cash flow. And -- but I don't see us at this stage going into new markets. And I don't see any massive new international M&A at the current moment in emerging markets.

Okay. So it seems like priority for use of capital is going to remain consistent for at least the intermediate term.

Disciplined and consistent. Discipline is important. We would strongly believe that -- I mean, in order to create value, yes, you have to support your customer, be fully behind your customer, make sure you respond to all their needs. But capital allocation is really a key driver of value creation through either accretive M&A like the Millicom transaction in Latin America, high single-digit growth rate in U.S. dollars for 11x multiple, share buyback in 2023 in a rising rate environment, we paid down, I believe, $700 million of debt. So I think we have all these levers.

And if you just step back a little bit, right, where is that cash coming from for either buyback or paying down debt or M&A? Guidance is about 1 point, I'm running the numbers. I've used those numbers before we were public. It's about $1.95 billion of EBITDA, about $250 million of growth CapEx and maintenance CapEx, minus about $500 million of cash interest expenses, about $70 million of cash taxes, about $530 million in dividend and you left with $700 million of extra cash every year. You could easily do buyback without changing the leverage, you could pay down debt, you could do small M&A. We have a target leverage of 6 to 7x. We're currently levered at about 6.5x. And we have flexibility within that range to either keep buying back shares or doing small M&A, tuck-in M&A or paying down debt if interest rates increase too much.

So I want to go back higher level for the final question, Marc. So look, I agree with, I guess, your statement about buying back stock being the best use of capital and SBA stock price. I think the tower stocks in general are trading incredibly cheap, right? On a historic basis, also relative to the broader REIT universe based on what I think is longer-term projected growth. Is the best way to recognize that value in the public markets working through the next couple of years of some of the growth headwinds? Or is it better to be private and work with that owner partner maybe that has a longer-term horizon than the public equity markets? And if not, why? Maybe recognize greater value going private rather than being public and trying to convince public investors that sort out the 2029 growth.

Well, listen, I mean, we are very shareholder-friendly. Our Board has fiduciary duties to all stakeholders. And I think if someone were to approach us with an attractive offer, I'm sure our Board will engage. But that's all I'm going to say. I think it's true that if you look at private valuation today in the transactions that are taking place in the U.S. dollar business, the multiple on being paid are greatly above the publicly traded value of our stock or our public multiple.

And it just speaks of the value of our company, we think it's undervalued at this level. And we are patient. We are coming to work every day, trying to allocate capital to create value for the long term. And our team, I think, from a service business to people operating in the U.S., operating in the regions, internationally, our sales team, everybody is aggressive out there, trying to cover our customers to the best we can, grab market share, and create value for the long term. I think we are operators. And if someone is going to come to our Board, I think our Board will engage. But that's all I want to say we have -- we are operators, and we care greatly about shareholders. We want to create long-term value for our shareholders.

And the reason I think that tower stocks are trading at a discount and SBA in particular, is this transition of growth, right? Because the things you laid out earlier, the churn rate, moving it into 5G build, waiting for 6G, DISH, EchoStar. And I think the market had a difficult time resetting the valuation to an appropriate level. So can you walk us through what the right long-term growth rate is for SBAC? Are we back to a mid-single digit, type FFO growth longer term, thinking about escalators, new tower build contribution, other factors. What is the right level of growth?

I think the way we look at it is on the top line, escalator is about 3%. Lease-up, normalized lease-up is going to be 2.5% to 3% of revenue. And churn is probably stabilized at around 1%. So you're looking at probably 4.5% to 5% top line growth rate. So -- and remember, any new equipment you put on the tower is almost like a 100% free cash flow conversion because of high fixed cost, low variable cost business. So through operating leverage, we think we could probably grow EBITDA at mid- to high single-digit FFO, excluding refinancing risk post 2027 at mid- to high single digit. So you basically have a mid- to high single-digit AFFO, FFO per share growth, and you collect a dividend at 2.5% that is basically growing at double digit, low double digit. And on top of it, you get accretion from share buybacks. So I think you can get to high single-digit total return TSR.

And just to put that all in context for the investors not familiar with the broader REIT universe, I think you're trading at a 4 or 5 turn discount to the average REIT, the average REIT maybe grows low to mid-single digits on FFO per share. So you're talking about higher durable long-term growth once you get past some of these short-term headwinds with the stock trading at a 4 or 5 turn discount versus the average REIT with arguably a more durable and defensible business model in the tower business. Does that frame it all pretty well?

We like the economics. It's 85% gross margins, TCF margins. It's mid-single-digit top line growth rate with an infrastructure that is almost impossible to replicate. I just don't see how you could build those towers in some suburban or highly populated areas. You drive around Florida, you drive around Connecticut, drive around Long Island, California, Arizona, and you see those massive macro towers and you just look at it...

You can't get zoning. You couldn't replicate it today. They have to push back when you talk about NIMBYism for data centers, you imagine trying to build on some new macro cell sites. Maybe in the last minute, why isn't there a threat for less or slower rural semi-suburban densification additions from carriers if there is a SpaceX direct-to-device, direct-to-consumer threat because that's probably the market where they can best serve lower population density. So why isn't there a risk of maybe less build, less activity in rural semi-suburban areas?

Well, if you're a carrier, right, if you have a cell site today, first of all, that cell site cost much less to build. You could probably do backup by satellite using Starlink. Microwave is cheaper backup than fiber. And that site is built, it's probably low cost to keep it going. I think we are probably going to be low in urban area, that's suburban, urban where it's less constrained. And you're going to capture the traffic going through that area. Why give up that traffic to Starlink? They are just going to cannibalize your customers. I think if I'm a carrier, I may just decide to keep that site and capture whatever traffic I can as opposed to offloading this to Starlink.

Okay. Perfect. Marc, about out of time. Thank you so much. I really appreciate it.

Good. Thank you for having me.

Always good to see you, Marc.

Always good to see you.

Great. Wonderful. Good afternoon, everybody. Welcome to the SBA Communications fireside chat at the Goldman Sachs Communacopia and Technology Conference. My name is Mike Ng, and I cover SBA and telecom services and infrastructure here at the firm. And I have the privilege of introducing Brendan Cavanagh, who's the CEO and President of SBA Communications.

First and foremost, thank you so much for being here today, Brendan. It's a privilege to have you here.

Yes. Happy to be here, Mike. Thanks for having me.

Great. To start things off, I was just wondering if we could kick things off and talk about big picture strategy, overall priorities. You spent a couple of years optimizing the asset portfolio. Maybe you can just walk through the opportunity set as you think about each of the regions and whether you see any specific market or segments that have a more meaningful monetization opportunity?

Yes, sure. First of all, we are fortunate to be in one of the better businesses that was ever created in terms of the stability and the profile of it. And so our focus has been on maximizing our core business, trying to strengthen it in the areas where we've had challenges. Some of those challenges have come from consolidation among our customers, both here in the U.S. as well as in our international markets. And so we made a decision a couple of years ago to focus on trying to -- focus on the markets where we have a stronger position, and either enhance our position in those markets where we are a bit subscale and be one of the leading tower providers in that market aligned with the leading carriers or, in some cases, exit those markets. And so we've done that in a number of cases in some of our subscale markets.

And so our focus is really on bolstering and strengthening our core business, making sure we're delivering service to the top customers, carrier customers in those markets and can be a leader in terms of organic growth opportunities in those markets. And that will be our focus, I think, going forward as well.

Great. I was wondering if you could just characterize the current state of U.S. carrier activity. It seems like many of them are in the middle to later stages of the their respective 5G coverage build-outs. What are you seeing from carrier activity more broadly? And what do you anticipate in terms of changes in activity as we head into the rest of the year and into 2027?

Yes. So activity in the U.S. has been relatively steady. I would say it's not necessarily the same across every customer. They each have their own kind of focus areas and the things that they're doing. And frankly, their cultures in the way that they behave in terms of network deployments have always been a little bit different from carrier to carrier. In this particular environment, we've seen one of our customers who we signed an MLA with last year, be particularly busy over the course of this year in terms of new leasing activity. That's both amendments upgrading existing installations as well as infill with a lot of new leasing being done as well. So that's been the biggest part of our organic growth drivers during 2026.

Some of the others have been a little bit slower. I think some prioritization of initiatives around fiber deployments and other initiatives have had to be a little bit slower than it's been in the last couple of years, but that's not that atypical. There's sort of a cyclical nature to some of these things. And I would expect as we move into next year, and we start to see new spectrum getting auctioned, and you'll probably ask me about some of the upcoming spectrum auctions, but there'll be a large upper C-band spectrum auction that happens midyear next year. And I think that will the outcome of that and who participates in a meaningful way, and I'm sure all the 3 incumbents will, we will see the next cycle of activity starting to build on that as well as some of the fallow spectrum they're holding today.

Great. I think that's a great segue, maybe you can expand on that. As you think about that 160 megahertz of upper C-band that's going to come to auction next April, how would you contextualize that opportunity for SBA? How quickly can that spectrum be cleared and deployed? What are your expectations there?

Yes. So, it's hard to say exactly how quickly it will be cleared. It has to go through that clearing process after it is auctioned off. First of all, it's a large amount of spectrum. It's the largest amount of spectrum being auctioned at one time in many, many, many years. And so that's a good sign. And the speed at which it was made available to the auction was another positive. But on top of that, some of the rules that have been placed around spectrum auctions now by the FCC to help ensure the deployment of that spectrum and that it happens quickly and efficiently, including penalties, including the loss of the spectrum, if you don't meet certain coverage objectives, I think will drive that activity maybe faster than it's been driven in the past. And so that's good from our perspective.

Obviously, the clearing of the spectrum has to take place first. That sometimes can take a couple of years, but it might actually happen faster. In this case, I think there will be agreement around trying to make it happen as fast as possible. And I think there's an opportunity to possibly see activity starting maybe even as early as 2028 in terms of initial deployments related to that. That remains to be seen. So we'll see who wins it and how it rolls out. But I think there's an opportunity to see a clear amount of increased activity as we get towards the end of this decade.

Great. I certainly appreciate your perspective there. And maybe just talking about the broader 800 megahertz that's been mandated to auction through 2034. What additional bands do you think will make up the remainder that we don't know about already or we haven't spoken about yet? And does the deployment of that spectrum change -- differ in terms of an opportunity relative to what you just talked about as it relates to the upper C?

Yes. Well, there's a number of different bands that are being evaluated now for potential ultimate wireless usage. The 2.7 spectrum was recently approved for that by the NTIA. And I would expect that, assuming it gets through its approvals in Congress, it will be made available potentially for auction as early as 2028. So that's likely the next one that happens after the upper C-band auction. In addition, right now, there's attention being paid to the 1.6 spectrum, the 4.4 spectrum as well as the 7 gigahertz band. What's really good about some of those -- the higher bands, if you get up to 7 gigahertz that spectrum simply doesn't propagate as well as the historic low band and mid-band spectrum. And so what that means from our perspective is you're going to need denser networks, equipment that's closer together, and that's an opportunity set for incremental leasing.

So it's setting up well. There's a lot of spectrum that will certainly be made available because of this 800 megahertz that's been identified is the amount they need to get out there. And the more of it that comes in the bands that we just talked about, I think it will be a driver of incremental growth for, frankly, the next decade.

Great. And then you mentioned at the onset, there may be an opportunity for currently fallow spectrum or maybe some spectrum licenses that the carriers have that have yet to be deployed whether that be, I guess, AT&T's recently closed 600 megahertz spectrum acquisition from DISH or some of the, I guess, lower -- upper C-band that have been acquired but not yet deployed. Just would love to have your perspective on when do the carriers actually go and deploy this stuff and when you might be able to see some tailwinds?

Yes. I think we'll see. First of all, AT&T has not -- on our sites at least, and I think broadly has not yet started to deploy the 600 megahertz. We do believe that will require incremental equipment. So it's an opportunity down the road. And I think we'll probably start to see that, my guess would be next year, some time that, that would be starting, but we'll see how it goes. T-Mobile still sitting on C-band spectrum. They have not deployed any of that yet either. I do think that they probably are waiting on the outcome of the upper C-Band auctions, and it will be a more coordinated rollout of that spectrum band, both pieces, the mid-band and the mid- C-band and the upper C-band together in the future.

So the timing on that probably remains to be seen until after the next spectrum auction, and we'll get a better picture then. But again, there are -- the clock is ticking on those bands as well in order to hang on to them. They're going to have to get moving on them pretty soon. And they have every incentive to for their network quality as well.

Great. Super helpful. Where are we in the U.S. as it relates to 5G deployment and additional densification? And then as you think about 6G, will there be a similar dynamic, as you described as it relates to the 7 gigahertz where is 6G going to operate in a band where the propagation characteristics would result in a need for denser networks?

Yes. I think on the 5G progress to date, the carriers are fairly far along. The -- they're not all at the same level, but they're getting towards the latter days in terms of the upgrading their existing network for 5G mid-band spectrum, which is how we kind of measure it. How many of their sites do they have with us? Have they upgraded with that mid-band spectrum? And if it's been 90% of those? Then I would say they're pretty far along with completion of that. And they're not all at that level. One of them is closer to 65%, 70%. That's probably the lowest one. So there's a little bit of upside still left. But by and large, we've seen a lot of that get done.

On the 6G side, a lot of the spectrum bands that we just talked about a moment ago, I think will be key components to ultimate 6G deployments. And I think about 6G as being defined in my mind, by AI-enabled applications being the biggest driver of the usage of a 6G technology. And given that dynamic, it will result in a much greater percentage of the total traffic that's occurring happening on an uplink basis as opposed to downlink. Today, you have roughly 90% or more of the traffic is downlinked as opposed to uplink. And I think we'll start to see that shift. Some people have said as much as 50-50, but even if it's 45 -- 40-60, something like that, it's a huge shift. And that will require a lot of incremental equipment at the tower site to make that happen. And so I think that dynamic will be very, very positive for our industry. And that's not going to happen tomorrow, but it does set up the trajectory very well over the longer term.

Great. Could you just expand a little bit on what the increased uplink capacity means for towers? Is that just different types of equipment that would be needed?

Yes. So different types of equipment, some different antennas, there's certainly different radios and I think it's just a sheer increase in the number, actually.

Okay. Very helpful. Starlink and satellite has obviously been very topical for the industry. Could you just talk a little bit about whether or not that's a positive or a negative for the industry for SBA? Could satellite be a substitute for future rural densification? Do you worry about femtocell terrestrial deployments as something that replaces macro towers?

Yes. I don't worry about that. Just to answer that last question. I think it remains to be seen how the satellite direct-to-cell market develops and it could go any number of different ways, obviously. And so I don't know for sure how those will shake out. But as I look at the range of possibilities, it's, in my view, worst case for us and our industry, it's neutral. But the best case is there's a meaningful contributor to increased organic growth. If you have true competition being brought to the existing incumbents through one of these providers where they're providing direct-to-cell, I'm 100% certain that there is a terrestrial component that will be needed as part of those networks.

I do not believe that femtocells are the answer to that. Maybe there's some element of it that's in there. But in terms of it being the wholesale solution, I'm highly skeptical of that based on everything we've seen throughout our entire history, and it's been tried before. So, that, to me, says that there will be a macro-based terrestrial component of those networks. And basically, it provides us a whole new customer potential. Now, it may not be 3 customers going to 4, it might be 3 going to 3.5 effectively. But still, it's all incremental and would be a meaningful growth driver. That's, of course, if they're going to compete as a true stand-alone competitor. And that's what they've indicated to date, and so take at least SpaceX at their word that, that is their intention. And there are other providers, by the way, who this applies to as well, it's not just them. So we'll have to see.

But if it doesn't go that way and they end up with some kind of partnership or MVNO relationship, which I know has been said by our existing customers that, that's not something they're going to do. But if it should ever go that way, I think at a minimum, it's a positive in the sense that it drives incremental traffic through these networks, and that's at least around the margins is certainly favorable to us. It's definitely not a negative. We're no lesser position than we are today, and I think we're modestly better off. So to me, that's sort of the downside case as it relates to our industry, but the upside is quite promising if it goes in that direction.

Great. Very clear, and I appreciate your perspective there. Maybe shifting to international. Last year, in 2025, you closed on approximately 7,000 tower acquisition in Central America from Millicom. And I think at the time, the colocation demand for those sites was running ahead of some of your initial lease-up assumptions. Maybe you can just talk a little bit about Central America, Millicom and those assets and how things are pacing.

Yes. So we were pretty pleased with that transaction, and we were primarily pleased with it because what we were trying to accomplish is what I was alluding to earlier with your first question is to strengthen our position. We were already in these markets in that region, Central America, and we were looking to make sure that we were in the position as the leading tower provider across the entire region. And through that acquisition, we were able to do that. Plus we aligned ourselves with the #1 carrier in the region, which was Millicom, and we have long-term lease arrangements with them. We're locked in hand-in-hand for a minimum of the next 15 years with all or nothing renewals, which effectively makes an even longer commitment from them. It's all U.S. dollar based. So there are a lot of good things that came out of it.

But one of the things that we think will be promising going forward is that anybody that wants to challenge Millicom and América Móvil is the leading -- Claro is the leading competitor in most of these markets. The closest way to close -- the quickest way, excuse me, to close the gap is to now come and make themselves take advantage of these assets that are already there where Millicom has taken the lead in some of these markets. So we're starting to see that develop, and we think it will actually be a driver of nice growth. So, we feel very good about that investment and the price point that we went in at and we continue to build more sites down there. We've done a build-to-suit agreement with them as part of that. And so that will be a driver of continued growth in that region. And I think it will work out very well for us for the coming years.

Great. On the international markets more broadly, I was just wondering if you could talk about what's happening as it relates to carrier consolidation and churn? I know that, that's led to a little bit of an elevated level of churn in some markets. So, any just like incremental visibility on the current state of churn and when it will improve? And just kind of mark-to-market on what you're seeing there.

Yes. Yes, we've had -- we went through our first 10 years or so in the international markets that we're in with virtually 0 churn. But over the last couple of years, we've seen consolidation of some of the carriers in these markets, and we've seen a few others that were some of the weaker carriers have not survived in the markets. And so that's driven elevated churn in some of those markets. And we're kind of in the midst of that now. This year is a fairly high year in terms of churn percentages in our international markets. And I would expect that, that probably continues into next year as well. It's not an absolute certainty because we're still working through arrangements with some of the carriers in Brazil, in particular.

So we'll have to see how that gets finalized, but I would expect that next year would be similarly elevated similar to this year. But as we get that completed through that time period, it definitely will improve meaningfully. In large part, because we'll have a lot of it behind us. Similar to the U.S. with the challenges we've had with the Sprint churn related to their consolidation with T-Mobile and then the DISH thing on top of it.

The good news is, once it's done, it's done. It doesn't repeat. So we kind of get it out of the way, and I think we're getting to a more stable position now.

Great. Makes perfect sense. How do you think about emerging markets as part of your broader portfolio? As you mentioned you're building some new sites in Central America, you have I think some meaningful contributions from Tanzania. At least one of your peers is doing a little bit less in emerging markets. So maybe you can frame the returns you're generating in those markets and explain what makes that opportunity attractive, certainly relative to some of the risks that you may have to deal with as it relates to FX and things like that.

Yes. We -- and we're not necessarily focused on emerging markets as a target of something that we want to go invest meaningful capital into. It's really more specific to the individual opportunity that is available to us at a given time, and in particular, in markets where we already have a presence. And so the Central America example was we were already in those markets. and the acquisition that we did and some of the new builds we're doing there are improving the positioning of our company in that region, which makes us much stronger to withstand any challenges that occur in the future. So that's really more the thinking there.

In the case of Tanzania, it's a market that we've been in for a number of years, and it's actually growing like crazy. It's probably our best performing, highest returning market anywhere. And if you look at what's happening just from a big picture standpoint, in that country, you've got exploding population growth. It's probably going to double the population there in the next 10 years. You've got everything moving towards wireless. Obviously, all the banking, everything else is done through wireless devices. They don't have the same embedded landline type of infrastructure that we have here. And so it is a critical function. And as a result, the government is very supportive of pushing for more and more wireless network development.

And so we're basically feeding off of that. We're working closely with the leading customers, and it's allowing us to see very high levels of growth, both in terms of assets and organic lease-up on those assets. So I think when we have those specific situations, particularly when we already have a presence there, we're going to lean into that and take advantage of the strength of our positioning, which is not the same as saying we're going to go and just pick an emerging market and invest there, that's not likely to be the case. We're mostly going to focus on enhancing our position in markets where we already have a presence.

Great. That's very clear. I wanted to ask about your expansion strategy. How do you weigh new builds versus tuck-in M&A, ground lease buyouts and if you could just offer that perspective as you think about domestic versus international, that would be helpful.

Yes. I mean, our -- there's really only a few buckets -- obvious buckets for capital allocation within our business. And the first, of course, is expanding our portfolio through both acquisition and through new builds. That would be our preferred use of available incremental capital that we have, but it's really an economic analysis. And what is the return potential of those assets. Unfortunately, new tower acquisitions and even new tower builds, particularly in the United States, more than anywhere, has been competitive at price points that we've just not found to be attractive and to make any sense, frankly, to us. And so, as a result, we've not done that much of it lately. We do a small number here or there where we can be selective, but it's limited.

And so as a result, it leaves us looking at the other potential pockets of where we can invest. And we've largely -- and Millicom is an example of where we do this internationally. But in many cases, we've determined that new assets have not been the best use in recent days of incremental capital, and we've turned towards share repurchases and we do more stock buybacks. And frankly, if you just look at our valuation relative to where these private assets are valued, there's such a disconnect that we have the option. Some of the private folks that we compete with do not have the option to buy themselves back. We do at a much cheaper rate. And so we might as well take advantage of that.

So you're going to see us continue to lean into that as a meaningful use of capital. And we've done a little bit of delevering and stuff, but I think we're at a good leverage level now. So I would expect a mix of the other 2 is the primary use. I didn't mention the dividend, but that kind of goes without saying, we obviously continue to prioritize our dividend growth.

Great. One of the potential new business opportunities is edge compute. So I was just wondering if you could share how you may leverage your portfolio to be an edge compute provider? What have you done to date? What are interest levels like? And what are some of the obvious use cases for edge compute that may not be fulfilled by traditional data center?

Yes. I think edge compute has been one of those topics that's been talked about for quite a long time. I've unfortunately been around them -- old enough to have been around a long time to have heard this talked about for probably the last 15 years at least. And there was a lot of hype around it in the early days and it never quite developed. And so I'm always a little cautious about it as a result of that. But having said that, I do think at this point in time, it has more promise and potential than it's had at any point in our history of becoming a reality. And I think there's a couple of different drivers. The one thing that was always talked about and still continues to get mentioned, but I think is actually secondary is the idea of reduced latency, all of these new applications that are coming along where you need to push the compute further and further out to the edge.

While I think that, that certainly matters and will be a benefit to having this distributed compute, I don't -- I actually think that it's not the primary driver anymore. I think the primary driver of the potential now is some of the challenges that exist around the larger data centers, which power being the #1 issue that's raised nowadays, if you can come up with a more disaggregated distributed approach to compute, you are by default coming up with a more disaggregated distributed approach to power consumption. And if you can do that, you can perhaps create the same amount of power capability, but on a more spread-out basis. And that's something where we're well positioned to do that.

We obviously have all these existing locations today. We have power. We've enhanced power at a number of the sites. That's one of the things that we've done to better position ourselves. And the other issue, by the way, for the big data centers is, of course, NIMBYism. Nobody wants these things built, it seems. Well, we already went through that as a tower industry. Nobody wanted the towers in their backyard either. And now we have these facilities that are already there. And if you take those existing facilities and you place smaller edge compute type facilities there, it really avoids and goes under the radar of all those issues because we're already set up for that. These facilities already exist.

So I think I'm talking about it in fairly simplistic terms. There is a lot more complexity to it, but I do think there's real opportunity. And I don't expect anybody to accept it as an absolute today. It probably has to be proven. It's a bit of a show-me story, but I'm excited about the potential of it. And I think maybe a year from now, we're going to have a whole different conversation on it either about how great it is and how it worked out or how it was just another one that didn't work, didn't happen again. But I think there's a lot more promise in the potential over this time around.

Yes. I mean that's super interesting, and I appreciate what felt like a very honest and candor assessment of the opportunity. And we certainly are seeing more distributed AI training, but these are like mega campuses to mega campuses. Are any of the major players, whatever, hyperscalers, AI labs in your mind, thinking about what you just described, which I guess is more distributed, I'll call it, like micro compute like edge compute?

Yes, there are some, there are, yes.

We can leave it there.

We can leave it there.

Maybe just to wrap up, could you just talk about key areas of focus, execution miles, milestone-wise that you're focused on in the next 1 to 2 years.

Yes. I think actually, some of these things that we talked about today, including the edge compute that we just discussed and even the hybrid terrestrial components of satellite networks, all those things are new potential avenues of growth. And so I would expect over the next couple of years that we will be fully exploring those opportunities as well as other things that we did not talk about because I think as great as our business is, it is certainly a little more mature. And as a result, the potential for incremental growth while there still is potential because of the incremental spectrum is coming along, it's also limited. And I think some of these other paths that may supplement our growth profile will be the most meaningful thing that unleashes extra value that is available within our equity in our company.

And so we'll spend a lot of time around that going forward. But we also have to do the best we can to protect the core and support our core customers just as we always have and provide top-level service and maintain a very strong culture. So those are the things that I prioritize every day and so does our leadership team.

Great. Well, Brendan, thank you so much for participating in our conference. It's been a privilege to have you on stage here.

I appreciate it. Thanks, Mike. Thanks for having me. All right. Thank you.

As we begin, disclosures are available at the registration desk. And for those of you I haven't met, I'm Mike Rollins and I cover communication services and infrastructure for Citi. We're pleased to welcome Marc Montagner, Chief Financial Officer of SBA Communications. Marc, it's great to see you. Thank you so much for being with us today.

Thanks for having us.

So maybe jumping in. When you think about the opportunities for SBA, what are the initiatives that are the most critical to enhancing your financial performance and shareholder value? And not just as you look at like the balance of this year, but as you think of the multiyear opportunity for your company?

Right. That's a good question. I think we will look at creating value for our shareholders for the long term. And the number of levers we use, one is growth. I think we are very focused on generating long-term growth by either basically selling more services on an existing portfolio of towers or doing accretive M&A.

And the second lever really is capital allocation. So in terms of growth, we obviously have a great reputation for providing superior quality of service to our customers. We -- I think our team's -- our operating team does a great job in operating those towers, maintaining those towers. And we have a very active leasing team to generate more revenue on those towers.

In terms of avenues of growth, I mean we are down to 3 carriers, 3 customers in the U.S. with investment grade. We have long-term MLA agreement with them, which is, I think, makes it easier for them to deploy and easier for us to support them. They are new, I think, use case for our towers going forward. I mean, obviously, the LEO operators, the satellite operators. Just look at the physics of it, you probably need 100 satellite to get the same capacity as one base station.

There were about 200,000 base stations in the U.S. I think at some point, they are going to have to deploy some form of a wireless terrestrial network in the U.S. Don't ask me when or how many sites they will need. I don't know what their plans are. But if you look at Amazon, really, I think, being aggressive on the LEO side, SpaceX -- if you look at the physics of operating LEO providing coverage by satellite in a metro, if you're in an office building, in a conference room, if your view of the sky is basically obstructed by tall building, you're on a suburban environment and retreat, you're not going to have coverage and you're not going to have the capacity. So I think some form of wireless terrestrial network is going to be required.

What's -- maybe since you brought it up, double click on this for a moment. Because I feel like there's 2 questions in what you're describing with satellites. So one is, if a satellite company, LEO, Starlink, for example, if they're just going to do direct to device like complementary to mobile, so they're not looking necessarily in this scenario, we'll move aside mobile for a moment as a direct competitor. So they're direct to device.

They have a broadband business as well that's been a growing, expanding business. Is that the piece just before we even get into mobile that you think might need some terrestrial coverage and help over time? Or when you think about the opportunity set from LEOs, is it the idea that they do want a slice of the core mobile pie, and that's what they need to invest in towers and terrestrial infrastructure?

I think it's really difficult to do a direct to device without having a device with a dual-mode chipset. And in order to have a dual mode chipset, you need to use probably a different spectrum band. And therefore, you need terrestrial wireless spectrum. So SpaceX bought spectrum or you need MVNO with the wireless operators. I have -- I cannot speculate yet. I don't know which way the industry is going to evolve.

But it seems to me wireless is a very competitive industry and having a better, I think, device, if you market a device, this device is going to work on a wireless terrestrial network in the U.S., and you could travel anywhere in the world or in remote areas in the U.S. or on a boat, you're going to be able to make a call or send text or access mobile data. Since satellite, you certainly have a much better product to market to your customers.

So if you're one of the big 3, you may have an incentive to do MVNO. If you are afraid of being cannibalized, you don't give them MVNO, but then they're going to feel the pressure to build it themselves. So I don't know which way the industry is going to evolve. But the next 2 years, I think I'm going to be very interesting.

But in any case, I really think that someone is going to have to use our wireless that digital infrastructure at tower to bring more spectrum to market and provide a solution that has a direct device capability. So in any case, I think we would benefit from this. And I cannot tell you when or how big the opportunity is, but I feel very strongly that the opportunity is there.

One thing I just try to think a lot about for towers, and we're getting into this with the customer possibility of expanding customers is just TAM expansion, right, just whether it's the adjacencies, the opportunity to create a larger wireless pie for you to take a slice of -- what are those opportunities? Like how much of it is like whether it's cable, LEOs, utilities for private networks, like how much of it is like just trying to expand the customer set for your services versus the edge or other things? Like how do you think about this?

We spend a lot of time thinking about it, obviously, because we have a wireless infrastructure that is very difficult to replicate. Given the cost of billing towers, the zoning law and how long it takes to build a tower. I think that new use cases, Europe is using towers for drone detection technology. It's probably faster and cheaper than doing it through satellite. And that's probably an area that is going to come to the U.S. took some other emerging markets where we operate.

Edge data center edge computing thing is definitely an opportunity. There are a number of startup companies that have been funded and are looking to basically deploy mini computing centers at the base of the tower, and their business model is to provide computing power to companies providing AI agent services.

The idea is that, first of all, it's easier to deploy because you could just use a concrete slab at the base of the tower, you have direct access to wireless basically connectivity. You have power. It's a safe -- and you don't have a zoning issue in terms of deploying that computing capacity. And so these companies are out there basically looking at deploying mini Neocloud, if you're at the base of the tower, that's real.

If you look at Waymo cars or self-driving car, I know, for example, that the Waymo car goes back to the warehouse twice a day, it gets cleaned up. The battery gets we charge but also someone takes out the hard drive from the back of the car, download the data on the hard disk and put it back at some point that is probably going to go wireless and more and more robotaxis self-driving car, I think that is going to generate, I think, additional demand on the wireless network.

So 6G, I think remember, when you go from 1G to 2G to 3G to 4G, the big benefit to the carriers is extra capacity and also dramatic decrease in the cost per bit that is being delivered, 10x to 25x. So you look at the wireless operators have had 45% EBITDA margin for the last 25 years, they used to sell you a minute of voice for $0.25 a minute and a text of $0.10 a minute and a gigabyte of data for $45 a month. And now it's one bundle, $45 a month, unlimited usage is still growing at mid-teens every year, but the EBITDA margin is still 45%. And why is this?

It's just because cost per bit that is being delivered keeps decreasing exponentially from 4G to 5G to 6G. FCC is going to auction 6G spectrum next year, 160 megahertz. The OEM have 6G technology in a lab and in beta test. And I think it's just a question of time before 6G comes to market. If you are MNO, I think look at the part of the bundle, I travel a lot to Europe for personal reasons and between cable TV plus broadband, video and wireless. And the bundle has come to the U.S., look how successful the cable TV operators have been selling wireless. So if your MNO today, you need to have a bundle.

AT&T and Verizon spending significant amount of by building fiber to the home, it's going to take longer than anyone anticipated. And if your T-Mobile, you don't have that portfolio of fiber to the home. So bundling fixed wise access with your wireless product is going to give you basically a much stickier product and churn is an important factor in driving value. So I think 6G -- I have personally, I think that 6G is going to be a huge accelerator in terms of lease-up for the tower company just because of the new use cases and the potential for new entrance at a LEO operator in the ban.

Great. Maybe that's a good segue just to get into leasing. Like so how is leasing pacing for SBA? And how are you thinking about it for the remainder of the year in terms of the activity you're seeing?

So I think our midpoint of our guidance is about $35 million for this year. Excluding DISH last year, we did 35%. So it's steady. And I think it's still too early to look at 2027. So I think we feel comfortable with about $35 million lease this year, which is consistent with last year. And I don't think the operators have worked on their budget for 2027. So we have visibility in 2027.

So for '26, $35 million, that puts you normalized at about 4% when you exclude DISH and --

Yes. About 4.5%. I think if you look long term, we always talk about revenue growth in the U.S., 3% from escalator, about 2.5% to 3% on a normalized basis in terms of lease up and about 1% churn, including DISH and Sprint. So this year, last view of heavy churn in the U.S., $56 million from Sprint, $56 million for DISH. And then churn in the U.S. is going to normalize a much lower number.

So when you think about '27, you mentioned the auction that's upon us for next year. In your experience, and you've seen it from multiple angles, the carrier angle as well as the tower angle, do companies -- do the wireless companies like slowed down their CapEx, their network investments ahead of an auction because they don't know what they're going to spend? Of course, if they get spectrum, that's capacity for them? And is that something that we all should be mindful of for 2027?

I'm not worried about it just because mobile traffic keeps increasing at mid-teens and they face capacity constraints, they need to support their customers. So I think I am not concerned about it. In addition -- I think you should ask them the question, but I think that more so the way they look at spending money on spectrum, it's basically CapEx as opposed to an OpEx cost. So they spend a few tens of billions of dollars buying spectrum. It's not going to impact their P&L or the EBITDA number.

So you think it's kind of a normal course, invest for demand, invest for the customers, invest for the capabilities. In terms of the activity that you're seeing this year and because of the visibility of your model, I imagine there's leasing you're doing today that will start to hit in '27, are you seeing any changes in like the types of activity like a pickup in massive MIMO upgrades or a pickup in densification? Now that we're in this like second half of the 5G cycle, what are you kind of seeing from like the activity itself?

Well, there's a lot of densification at least one of our customers is deploying massive MIMO. I think -- and 6G is going to require new equipment, probably massive MIMO as well. So all this bodes well for the future. Remember, the -- the industry is very cyclical, and we're kind of in a trough right now in U.S. operators CapEx spend in '22 and '23, they roll out 5G. CapEx as a percentage of revenue went to about 25%. In '24 and '25, '26, we are hovering around the 15% of revenue is being spent on CapEx. But even in that environment, our lease-up is still positive. We're still growing at the trough of the cycle. So we all just -- we feel good about, I think '28, '29.

So you feel good that '28, '29, '26 running in line.

'27 is steady with 2025 and '27, I don't know. I don't think the wise operators know exactly what the CapEx spend is going to be next year, and we're probably going to start getting more color on this late this year, early next year.

And just when you think about like massive MIMO, for example, as an opportunity, you said one of your customers is deploying it. Are they the last to deploy it? Or like do you see more opportunities of other carriers deploying massive MIMO on your sites?

I don't know the answer. I think that we are passive wise infrastructure. We release vertical base in horizontal space at the base of the tower and the operators, I think, basically, or driving the dialogue. I think our goal is really to support them, make it easier to deploy and provide them with high quality of service.

In the past, and I think maybe even referenced it earlier, there's been a restraint on supply. Is that still the case where it's just really hard to create alternatives or new towers? And what does that mean in terms of maybe the opportunity of you finding build-to-suit in the U.S.?

That's a good question. It is difficult to build towers due to zoning law. The cost of building towers has gone up since the pandemic. And we built -- I mean, we're going to build less than 30 towers in the U.S. this year. We're very active in Central America, in Africa. But in the U.S., the economics that we're providing to us by the carriers didn't make it very attractive build BTS in the U.S.

As just the industry has matured around these 3 large customers in the United States that you have and their networks are maturing. What's the possibility -- you mentioned 1% churn is kind of a baseline right now. What's the potential for that to stay ex the merger churn and DISH churn? Like what's the opportunity for that to stay well below 1% just because like the networks are just so much more mature now?

I agree with you. I think it's very difficult to predict the future, but I think 1% is probably a good number. There's a lot of force precision there. It could be lower. We could hover at the 1% level. But we feel good that churn in the U.S. is going to, I think, stabilizing in a very low number.

Okay. Internationally, you referenced some of the investments that you're making there. How are you seeing leasing across the international markets? And you've been working through a lot of like industry structure and consolidation churn. What inning are we into on just getting that through and behind us?

So every market is different. Tanzania is a high-growth market. Government is pushing carrier for expanding coverage. Wireless probably the only infrastructure that they have, and we're building very aggressively, over almost 200 sites in Tanzania this year is going at mid-teens or slightly above. So very pleased with the growth there. And still, it's a small base, but a very attractive market.

Central America, we -- it's a stable market, 2 operators Claro and Millicom. We bought 7,000 sites from Millicom in the region at about 11x multiple. We have a 15-year agreement with Millicom tied to CPI, and they have a 2,500 BTS commitment to us. We will be to suit. So that region is going to grow mid- to high single digit. The contracts on in U.S. dollars. So very pleased about Central America, the 5 markets we operate in Central America.

Brazil. Oi, the fourth carriers is being basically absorbed by the other 3 operators. We had high exposure to Oi. So we are '26 and '27, we are still going to see high churn in Brazil. I think the midpoint of our guidance for international churn this year is about $3 million. So it's a little bit frustrating because it's $20 million of escalator and $20 million lease up internationally and $38 million of churn, but this is temporary by the end of '27. I think the churn will be behind us, and it's mostly Brazil churn, Oi being consolidated. Oi wireline is going -- is basically going out of business and Oi wireless is carved out to the other 3 operators.

But Brazil, 5G is less than 50% deployed, more spectrum margin in Brazil. The industry is very stable with 3 operators, and it's a young population, growing the number of towers as a percentage of the population is probably 25% of what it is in the U.S. The significant growth potential -- and I think in addition, the country is doing very well. Brazil is a large exporter of agricultural product, mineral, energy. Balance payment is positive by over $4 billion amount, and the currency has done very well for the last 2 years. So long term, we feel very bullish about Brazil, short term. There's going to be churn pain in '26, '27.

And so just to articulate that just a little bit more, so we appreciate the trend. Is it that it's really flattish, so there's really like minimal growth to no growth through the end of '27? Or does '27 start to show a little bit better churn, so like things start to maybe gradually get better through '27 and into '28?

I think '27 churn should come -- I think -- the Street is a $25 million to $30 million of turn for next year. So that's what's in our number today versus $38 million this year.

Okay. So there's a little improvement.

There's a little improvement, but it's going to remain elevated.

Got it. Got it. And when you look at the monetization model in your international markets versus domestic and you mentioned 6G is an opportunity that's underbuilt. Is it the same formula? So not only do you get paid for colocation, but in all of these international markets, you get paid on amendments as well.

That's correct.

So same model, same opportunity, different dollars may be different.

Yes. But every contract is different. Every market is different.

Do you -- so you've had the benefit maybe of coming in and looking at how SBA has done things with an independent perspective. How do you see the international strategy? Do you still see it strategic to own these assets over time? Or is there an argument to be made that there's a value that could be created if you had a set of investors for international different maybe than the set of investors for domestic?

Right. That's a good question. If you really look at our portfolio, 80% of revenue in U.S. denominate 8% of EBITDA. I think there's room for high-growth asset in our portfolio, especially look at Central America. So when Brendan became CEO in his first earnings call in February of 2024, he announced a strategic review of our portfolio. And the rationale was to look at every single market and either divest the market where we were subscale or where there are risk of further consolidation or expands in markets that are attractive, that have been consolidated, where we could generate above-average long-term growth.

So we saw the Philippines over 30 tower operators. We had a few hundred sites subscale. We are able to get another good valuation. Canada is a fantastic market, 3 operators, unfortunately, with subscale just few hundred towers. We're able to sell to a PE firm at a very attractive multiple. Argentina and Colombia were subscale and we saw those market. Central America, we had been operating in the region for a long time. And those markets are fully consolidated between Millicom and Claro. And we had the opportunity to buy the Millicom assets, in a 5-year long-term contract with Millicom all U.S. dollars, and we believe that it is going to create long-term shareholder value for our company. So every opportunity is very different.

But I think there's room for high-growth, high-quality tower asset in our company. And we know how to operate towers. We are, I think, are good operators. We have very high margins and low G&A, and we apply the lessons that we learned in the U.S. to our international operation. So I think there's a potential to create value at sort of the U.S.

Looking at the slide the other day, it was your leverage over the last 3 years, I think it was. And show that now within this new target range of 6% to 7% for you guys, net debt to EBITDA. And I was just thinking like as you look forward, like -- how do you think about where you want to be in that range at any given time? And when you look at the share price where it is, like -- do you have an ambition to say, "You know what, let's take some of this leverage capacity and put more of it into repurchasing shares?" or maybe there's opportunity for M&A wherever it is, let's just keep our powder a little dry over here. Like how do you look at this capital allocation process?

Right. So first of all, we have been 6 to 7 turns of leverage for the past 3 years, this new target official target rate. I think S&P about a year ago, changed the methodology to rate our company given the long-term contract we have with our operators and the fact that all our customers in the below 7 turns of leverage would qualifies for investment grade.

So it came to us, we use the opportunity to basically issue bonds in the investment-grade market. We took out our terminal B, our revolver -- and we are going to refinance upcoming maturity, high-yield debt and EBS Tower securities in our investment grade market. In terms of capital allocation, it's about $1.95 billion EBITDA, those numbers of public have used them in the past. It's about $250 million of CapEx, maintenance and both CapEx, $530 million of dividend, $70 million of cash taxes and about $500 million of cash interest expenses.

So you have about $700 million of extra cash to allocate every year and we believe that capital allocation is a key driver to create long-term shareholder value. So last year, we spent $0.5 billion buying back shares and an average stock price of $200. We're trading to below $190 today. So you should assume that we like buying shares at that level. We didn't do it in the first half of the year because of revolver was $1 billion do on it.

When we issue our new bonds in investment-grade market in September, we paid down our revolver completely. We almost $0.5 billion of cash on the balance sheet at the last earnings call. So we have plenty of liquidity. And it's very accretive, given $12 of FFO per share for this year at the midpoint of the guidance, it's very accretive to basically buy back share at this level. But we have plenty of flexibility.

And for the right opportunity, as you've seen with Millicom in 2024, we spent $1 billion buying assets for USD 11 turns. We think that we're going to -- that deal created value. So we're going to be opportunistic. And -- but I think that leverage ratio 6 to 7x, give us plenty of flexibility to either pay down debt, buy back shares or do M&A.

So we'll try to hit 4 maybe like quick rapid fires. So -- the first one is internally at SBA for years, there was a drumbeat about 5% to 10% expansion of the portfolio through investments, build-to-suit, M&A. Is that still the philosophy that sort of pushes you internally? Or is that now just kind of like it's more opportunistic than that?

I think we want to be opportunistic. Buying towers in the U.S. is very expensive. This is of good asset and a lot of competition from PE for those assets. So we want to be disciplined, but we still buy towers on this and to that.

Interest expense, how far along are we in that journey to just kind of get through what was fantastic, right, low rates that you had this debt at but that's been a headwind to AFFO per share growth. So like how close are we to that finish line of --

Well, 2027 is the last year with $1.2 billion of ABS with $100 million in November. We have $900 million ABS with 1 handle maturing in April and $1.5 billion of high-yield mature in February with 3.78% coupon. This is really the last wall of refinancing. So '27 is the last year where cash interest expenses are going to pressure.

Any update quickly on the DISH litigation or any predictions there?

I can't predict this. You need to talk to a bankruptcy lawyer. Our exposure is very low, less than $200 million between decommissioning costs and leasing costs, leasing commitment. So it's immaterial to us, and we'll see what we get. But it's not a big exposure.

So you're optimistic about '28, you mentioned earlier. '27 is the last maturity wall for the interest expense headwind. Latin America churn or the international churn should be largely behind you and there's nothing really incrementally you're concerned about for '28.

So I'm very positive about '28, I think 6G is going to come in.

Okay. So what could -- like so maybe help take all of that, is there a way that investors should think about the growth opportunity of where you can get back to, whether it's top line or AFFO per share in 2028?

No, I think the way you look at it between share buyback, we paid a dividend yield of about 2.5%, we're going to keep increasing the dividend at a low double digit for the next foreseeable future. Our payout ratio is low 40%. So we have room to expand the dividend. So you get paid through share buyback, dividend, dividend growth until you pick up the upswing in the next couple of years.

Marc, always great to see you. Thanks very much.

Thank you, Michael.

Welcome, and thank you all for joining today's SBA Second Quarter 2026 Results. Please note that today's call is being recorded. [Operator Instructions]

With that, I'd now like to formally begin today's call and turn it over to Louis Friend, Vice President of Finance and Capital Markets. Please go ahead.

Good evening, and thank you for joining us for SBA's Second Quarter 2026 Earnings Conference Call. Here with me today are Brendan Cavanagh, our President and Chief Executive Officer; and Marc Montagner, our Chief Financial Officer.

Some of the information we will discuss on this call is forward-looking, including, but not limited to, any guidance for 2026 and beyond. In today's press release, and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, August 3, and we have no obligation to update any forward-looking statements we may make.

In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website.

With that, I will now turn it over to Marc to comment on the second quarter results and 2026 outlook.

Thank you, Louis. We had another good quarter and our results were in line with our expectations. Given the solid performance in the second quarter, we are modestly increasing our full year outlook for site leasing revenue, AFFO and FFO per share as compared to our prior 2026 guidance. The primary drivers of these increases include higher straight-line revenues and improved net cash interest expenses.

In the second quarter, AFFO per share was $3.05, and we paid a cash dividend of $1.25 per share. We continue to operate efficiently, controlling direct costs in achieving company-wide tower cash flow margins of just under 80%. In the U.S., we added approximately $9 million domestic new lease and amendment billings in the second quarter. The bulk of the activity continues to come from new colocations as carrier both densify and expand their network footprint.

With respect to churn, our prior outlook for both [indiscernible] and EchoStar related churn for the year remains unchanged. With regard to EchoStar, we continue to litigate demand in federal court and believe strongly in our contractual rights. Internationally, we continue to see healthy demand for our infrastructure, and we added approximately $4 million of new lease and amendment billings in the second quarter. International churn continues to be elevated due to carrier consolidations, carrier bankruptcy, restructuring and wireless operators network rationalizations.

Moving to our balance sheet. I'm very pleased to discuss our recent debt offering where in July, we issued our first unsecured investment-grade bonds. The [indiscernible] was $3.5 billion and net proceeds we used to pay in full both our Terminal B and amounts outstanding on our revolving credit facility. As of today, the revolver is fully paid down, and we currently have a $570 million of cash on our balance sheet.

Pro forma for this transaction, the amount of secured versus unsecured debt is now below 50%. The transaction generated very strong demand for each of the 3 tranches we issued. The 3 tranches include $1.350 billion due 2030 with a cash coupon of [ 4.78%]; and $1.350 billion, 2031 with a cash coupon of 5.15% and $800 million due 2033 with a cash coupon of 5.45%. In aggregate, the $3.5 billion has a blended cash coupon of 5.11% and a weighted average maturity of 5 years.

In addition to the new bond offering, we put in place a new larger revolving credit facility with $2.5 billion of capacity, which is unsecured. We now have a solid base of investor for investment-grade debt and we plan to continue to issue investment-grade notes in the future to refinance our upcoming maturing ABS and high-yield security. I would also like to point out an in June, SBA was upgraded from BBB- to BBB by S&P, another positive step in our new investment-grade journey.

Consistent with our prior outlook, we continue to assume that at $1.2 billion November ABS maturity will be refinanced in November of this year at 5.25%. We ended the quarter with approximately $13 billion of total debt. Our current leverage of 6.4x net debt to adjusted EBITDA remains near historical lows and within our target range of 6x to 7x.

During the second quarter, we declared a cash dividend of $132.7 million or $1.25 per share. And today, we announced that our Board of Directors declared a quarterly dividend of $1.25 per share, payable on September 17, 2026, to shareholders of record as of the close of business on August 20, 2026. This dividend represents an increase of approximately 13% over the dividend paid in the prior year period and an annual rate of approximately 41% of the midpoint of our full year AFFO outlook.

I will now turn the call over to Brendan.

Thanks, Marc. The second quarter represented another solid period of both financial and operating results. We continue to lead the industry in AFFO per share and dividend growth. Throughout the quarter, the level of customer activity remained steady and in line with the first quarter. In the U.S., our customers continue to invest in their networks, expanding 5G coverage with new spectrum, including C-band, technology upgrades such as massive MIMO antennas, and growth in fixed wireless access subscribers.

Internationally, we continued the solid progress we made last quarter, integrating the Millicom assets and expanding our new tower build capabilities. We built 99 new towers, up from 75 in the last quarter. We expect this number will increase steadily over time. New tower builds continue to be a good use of capital, and we expect the risk-adjusted returns to exceed our cost of capital often on day 1.

We continue to see positive organic growth in our international portfolio due in part to local CPI-linked rent escalators. While international churn remains elevated, we continue to focus on locking in stable, predictable operating cash flow through long-term contracts and high-quality customer partnerships.

Looking ahead, I am excited about a number of prospects that I think will contribute to organic growth for years to come. On July 22, the FCC formally adopted a plan to auction 160 megahertz of upper C-band spectrum starting in April of next year. When combined with the existing lower C-band spectrum previously auctioned, this auction will create a harmonized super band of 440 megahertz of contiguous mid-band spectrum to be used for wireless.

In addition to the large amount of spectrum being made available and the accelerated pace of the auctions, we were very pleased with the stricter build-out requirements established by the FCC requiring holders to deploy the spectrum or risk forfeiture with no review or waiver process. The upper C-bands build-out requires 45% population coverage 2 years after the transition deadline and 80% coverage 6 years after, paired with automatic license termination for not fulfilling the second performance benchmark.

In addition, the FCC made clear that alternative uses such as IoT and fixed point-to-point and private networks do not count towards coverage milestones. And these tougher build-out requirements are now expected to also extend to private investment firms and others that hold spectrum into the future. This structure will be helpful in ensuring that license winners are serious about deploying spectrum for the benefit of the American wireless consumer.

And this will, of course, be good for SBA. As we invest in supporting our customers and meeting their network build-out goals, we expect to see incremental equipment deployed at our sites, driving organic growth for years to come. And these opportunities do not only apply to the upper C band. The NTIA recently announced the 2.7 gigahertz spectrum can be repurposed for full power commercial licensed use. Once approved by Congress and coordinated with [ Noah ] and the FAA, the FCC could auction 2.7 gigahertz spectrum as early as 2028.

We expect the deployment of this spectrum will also require new equipment at the tower site and support long-term sustained site leasing organic growth. And on Friday, the NTIA announced that it has cleared plans to study the 4.4 gigahertz band for full power commercial license use as well. We now have the largest set of federal spectrum bands ever under consideration for repurposing, including 1.6 gigahertz, 2.7 gigahertz, 4.4 gigahertz and the 7 gigahertz band. While it will be several years before these airwaves are made available for commercial use, real progress is being made that will be supportive of network investment on our infrastructure for the next decade.

In addition to new spectrum deployments, I'm excited for the prospect of other new organic growth drivers, including low latency edge compute demand and terrestrial complements to potential future satellite direct-to-device offerings. With regard to edge compute, we see a clear migration towards a distributed architecture with a significant increase in the required number of power and fiber fed locations to improve speed and latency, enhance redundancy and reduce the concentration of resources needed to support the growth in AI-oriented applications. Our existing portfolio of assets are well suited to support this growing architecture, and I believe we have the opportunity to realize meaningful incremental organic growth over the coming years as a result of this type of activity.

With regard to satellite solutions, there's been a lot of discussion around direct-to-device satellite technology, but our view remains unchanged. Satellites are a complement to terrestrial wireless networks, not a substitute for them. However, depending on how the industry develops, the advancement of this technology is expected to provide growth opportunities for our business. Potential new entrants offering direct-to-device satellite-based coverage will require [indiscernible] component to their networks in order to provide ubiquitous high-quality coverage at a level competitive with traditional networks. As new providers arise, new opportunities to benefit from our extensive high-quality infrastructure portfolio and our experienced network deployment teams will grow as well. I look forward to the potential of this incremental growth opportunity.

Finally, turning to capital allocation. Our dividend remains the fastest growing in the industry and among the fastest growing of all REITs. Nonetheless, as a percentage of AFFO, it remains relatively low, providing capacity to continue allocating significant capital for the benefit of our shareholders. Our leverage at quarter end was 6.4x net debt to adjusted EBITDA below the midpoint of our target range.

As a result, we have ample liquidity to put to work. We will continue to build new towers and look for attractive acquisition opportunities. However, today, we believe share buybacks are the best use of capital at current valuation levels. As Marc mentioned earlier, we have now fully paid off our revolver balance, and we intend to resume share buybacks in the second half of this year. We believe in the strength of our business, the future growth potential and our ability to execute. As a result, we see share repurchases at current valuations as a low-risk, high-return opportunity.

Before opening it up for questions, I'd like to thank our team members and customers for their trust in SBA. The company's ability to achieve our vision to be our customers' first choice provider and the industry leader in quality infrastructure solutions is what we work towards every day. I'm excited about the future with the new bands of spectrum becoming available, new edge use cases for our existing tower infrastructure and towers being at the center of all future wireless deployments. I'd also like to thank our shareholders for your ongoing support.

And with that, operator, we are now ready for questions.

[Operator Instructions] Moving to the first hand up in our queue, Batya Levi with UBS.

Great. Could you provide a little bit more color on the application volume that you're seeing in the second half? And if any early indications of the activity that you talked about, higher colocation and the spectrum held by the carriers, if that could show up as an acceleration in the growth rate into next year?

Sure, yes. The volumes that we're seeing in terms of applications are relatively consistent with the first half of the year. We haven't necessarily seen an uptick. That's not necessarily the same across all carriers, and I assume this question is specific to the U.S. market. So that's how I'm answering it.

In the U.S. market, it is -- one of our customers is a little bit busier than you others with us today, but that's not really that dissimilar from where we are at various points in time where there's some cyclicality and rotation among who's the busiest. So overall, if you added up the application volumes, they're relatively consistent with where they've been throughout the year.

And in terms of the drivers of growth opportunities into the future, particularly around the new spectrum bands. Most of what we talked about is something that is longer term in its nature. So that's something that's going to happen over the next 5-plus years. I don't necessarily expect it to have a significant impact on next year, but we're also not ready to give our outlook for next year's leasing growth yet. So stay tuned for that for next year.

Moving to our next question, Rick Prentiss with Raymond James.

A couple of questions. One, I got to admit, a little confused by why change guidance at all when it's like rounding points. Obviously, down a little bit unchanged without FX. But it seems like the ranges were widen up. What's kind of the philosophical thought on guidance. So I have a couple of other quick ones.

Yes. I mean we didn't really change much, right? Most of the stuff on the top end has changed slightly because of FX. And because we're changing the specific FX assumption, which is really driven by what's happened specifically with the Brazilian real. While it's small, just the math without making a change is driven in large part because of the FX, which is why we break out what the changes excluding FX, and you can see most of those did not change.

As you get a little bit further down the P&L, there's a few minor changes that are mostly to do with things like interest expense, which has changed in part because of the financing that we did. So that causes an impact. And so really, we're just flowing those into the numbers. But basically, there's no change in our outlook from what we gave last time except for a couple of the specific things that occurred that we felt that we should modify the ranges for. But generally, you're correct. I would expect everything still end up in the same ranges that we gave before.

Okay. Glad to hear the news on the stock buyback. Earlier today, we had EchoStar say they're going to do a $5 billion buyback, but it didn't seem like there was pacing there. I appreciate you're saying that you could resume second half '26. I think it's $1.1 billion you guys have left. But how should we think about your pacing of the buyback, how it works with leverage and your other capital allocation items?

Yes. I mean, obviously, I don't want to say exactly and specifically what we would do, but we were trying to be pretty clear that we fully expect to be active during the second half of the year and buying back our stock. And if you look at where we were before. We had a fairly large amount outstanding on our revolver. We had some refinancing that we needed to get done. We completed that in July just a few weeks ago. And so with that now behind us, we feel like we're in a very strong position to lean into what we think is a very good value in our stock today, unfortunately.

Yes. No, I appreciate that. And last 1 for me. On the competition from satellite, we agree, it seems more complementary. But how should we think about what percent of your base is like really rural? What percent of your towers? Because we think that's probably the better venue for satellite direct-to-sell, we like to differentiate direct-to cell versus directed device. But how do you think about that? Are they -- are there some sites on the [indiscernible] that might be better served by satellite. And what kind of magnitude is that for you guys?

Yes. I mean it's hard to say, obviously, exactly. I think when we look at our portfolio, we've done some of our own analysis about what might be those [indiscernible] sites. It's probably no more than 2% to 3%, Rick. But even that, I'm hesitant to really quantify because this remains to be seen how this all plays out. And I don't -- I'm not so sure that it's going to be all that impactful at all.

It's a small number. In fact, it might actually find some sites that need to be built, I guess, as you look at when people start using satellite connectivity that they might want to actually say, "Oh, we need a cell site here."

Yes, for sure. I think I've shared in the past some stories that I've heard anecdotal evidence of the need for incremental sites that might come through satellite activity. And I know that our carrier customers today have used the data that they've gathered from some of the satellite service that has been provided through partners to identify places where they had needs to maybe put a tower site to serve a greater amount of usage than they were expecting in a particular location. So I think there will be some balance. There will probably be some [indiscernible] sites that perhaps aren't economical to maintain, and there will be other places where the opposite is true, and there'll be new infrastructure added.

Moving to the next caller, Michael Rollins with Citi.

Two questions, if I could. Just one, in terms of just overall asset strategy, where are you in terms of the process of continuing to optimize our assets, thinking about monetization opportunities, whether it's for a particular market or portions of a market?

And then secondly, is there anything -- now that we're in August, and you kind of look back and you mentioned your observations on the stock on this call. Is there anything that you're able to share about any processes that you did employ during the first half of the year or through July that might also be informing you of your view of how to value your own company.

So in terms of our efforts around optimizing our assets and really what we talked about 2 years ago. We've been on a consistent journey around that throughout the last couple of years. You've seen a number of activities where we have expanded our presence in certain markets to improve our positioning in other places, we have exited certain markets. We continue on that, Mike. It's not the kind of thing that every quarter, there's something specific to announce, but you can be assured that it's an ongoing effort here at the company. And I expect in the future, there will be steps taken to improve our positioning as it relates to a variety of markets and businesses that we're in where they are either subscale or we see greater opportunity to enhance what we're doing there. So I guess all I'd say on that is stay tuned, and we continue to pursue that effort. .

On the second question, there's really not much I can say. We're always looking at opportunities in the market in all different ways. And what we see there as well as conversations with our customers, inform our views on the value of our company. And I can just reiterate that I think today our our stock is at a price that would suggest a valuation below where we think our intrinsic value is, and that is usually why you see us lean into buying it at times like that.

Moving to our next question, Jonathan Atkin with RBC Capital Markets.

A couple of questions. One, in LatAm, 1 of the Brazilian carriers talked about expense controls when it comes to things like tower rent. And I wondered if you could give us an update on what you're doing and how your contracts are structured to maybe prevent exposure to that, if there is anything adverse to be aware of.

And then secondly, ground lease buybacks and what's going on in that segment of the market in terms of multiples, your activity level and pace. And if I can maybe [indiscernible] a third one, the returns that you're seeing on new tower builds.

Sure. So on the LatAm question about tower rents, I mean, it's not really that different in Latin America versus our other markets in the sense that all of our customers are always looking at ways to be more efficient and to control costs. And one of those costs is their rents on towers. But it's really a matter of making sure that what we're delivering to them is of greater value than the costs that they're incurring in order to be there. And I think generally speaking, we're able to do that through having high-quality locations, providing service and support that meets their needs and provides them a better outcome than they might see from somebody else.

And so we continue to work with all of our customers in LatAm and otherwise on how we can provide them the most value for what they need out of the sites that we're leasing to them. And I think we've done a pretty good job with that. I mean there's always going to be situations where there's a site that they don't need or they have some other alternative, and it's more cost effective. But I'd say that those are more the exception than the rule.

In terms of ground land buyouts, that's something we continue to do. It's something we've been doing for 15 to 20 years. Now here, we have a a well-established function inside of the company that focuses on buying out land both for strategic purposes as well as financial purposes. And I think we've done a very good job.

One of the downsides to having done it so well for so long, is that the opportunity set is a little bit smaller than perhaps it's been in the past, particularly in places like the U.S. where we've been at it for a long time. Most of the the new opportunities that we see are with the new assets that we've added in some of the other markets, including Central America, and we continue to lean into it there.

In terms of the values, though, we continue to find opportunities to do immediately financially accretive deals as well as secure our assets for the long term. And then in places like Brazil and others where you have pass-throughs of land costs, we're able to share a little bit of that with our customers, and that goes to your first question in that it helps reduce some of that cost for them and make it a better value proposition.

And then your last question, I think, was on new tower builds, if I remember correctly, the returns on new tower builds. And we have -- it's been tough in the U.S. to see very strong returns because we've had competition from folks who have been willing to accept, frankly, returns that we just really weren't willing to accept. But our ability to deliver timely for our customers and to do a quality job, I think, is going to allow us some incremental opportunities here over the next couple of years. And I would expect to see us do a little bit more. But having said that, I don't expect it to be overly material.

Internationally, though, we're building a lot of sites we have some great opportunities in both Africa and in Central America, in particular, and you're seeing us build more and more sites. And as I mentioned in my prepared comments, as we move through the balance of the year, I would expect that you'll see us build a greater amount of sites, each of the successive quarters throughout the rest of the year.

Moving to the next question in our queue, Brendan Lynch with Barclays.

Great. Brendan, maybe just a follow-up on the B2B opportunity. There was some discussion about potential additional towers, but maybe you could just kind of scope the order of magnitude of what this opportunity might be and how it relates to either just deployments on your tower specifically or maybe just using your sites for ground stations or something else? Just to help us understand what might be the outcome over the next couple of years.

Yes, Brandon, that's honestly a little bit of a hard question to answer because of where we are in the current status of the development of those opportunities. The companies that are obviously looking at direct-to-device service are still in the very early stages of working out how that might work as they acquire spectrum bands, and they start to do network planning.

The comments that I made were really meant to highlight what I believe will be a long-term driver of additional opportunity for our towers. And that is that anybody that is going to provide direct-to-device satellite service, if they plan to compete with the existing MNOs and the existing networks in order to do that effectively and to deliver the kind of quality that will be required there will be a need for a terrestrial component of those networks. And if that is the case, obviously, that will be good for us because we will be able to provide a solution that gets them to market and on air as quickly as possible. And I think we're very early in those conversations.

So it's premature to talk about anything specifically. But I'm hopeful that over the coming year to we will have more specifics that we can discuss as that starts to develop. But the bottom line is really the physics and what's necessary to provide that kind of service and compete. And I think we're well positioned to benefit from that.

Okay. Great. That's helpful. And then maybe just on the head count reductions that we've seen at some of the U.S. carriers recently, has this altered their or the pace of deployments that you're seeing for this year or kind of even going into 2027.

Yes. I don't know whether the head count reductions specifically, but I do think that there's been a change in leadership at a couple of our larger customers and certainly a renewed focus on cost control and maybe just a refreshed review of how things are done. And I think while taking a pause to refresh how they view these things and where they spend their resources, that has had some impact on spending levels here in the U.S. But I don't think that it means anything that significant for the long term because ultimately, network quality is going to continue to be critical for their future competitive positioning, and I think we're in a good position for that.

Moving to our next question, Richard Choe with JPMorgan.

I just wanted to follow up on the edge opportunity. Just what kind of conversations are you having? And what kind of timing should we expect could something happen this year? Or is it more for next year and the year after?

Well, I can't give you the specific details at this point, but we are talking to a number of parties who have an interest in this more disaggregated approach to compute and specifically, to spread out the usage of power, those types of things that I think present challenges in the existing more centralized or hyperscale data center structure.

So based on how the conversation is going, I would expect that things will develop over the course of the next 12 months, but it's just a hair premature to get into that specifically, but I do feel more confident today than I have at any point in the past about the development of this particular opportunity for us.

And from what you're saying, it seems like maybe there's been a pickup in how many conversations you're having in terms of -- that are just with 1 company, it could be multiple ones.

Yes, that's true.

Moving to our next question, Cameron McVeigh with Morgan Stanley.

So just a couple. With the increase in the discretionary CapEx guide, just curious how many total builds might now be expected in this year, '26. And how much of that increase relates to Central America and Millicom?

And then secondly, from a high level, could you characterize just the stage of the 4G to 5G investment cycle across your international markets? And curious where you might see the greatest remaining runway for carrier activity.

Yes. So on the discretionary CapEx, I would say that we are expecting in the ballpark of around 600 or so sites to be built, new tower builds this year, most of those in Central America and a reasonable amount in Tanzania as well. So that's maybe slightly up from what we had previously assumed, which contributes to the discretionary CapEx increase.

And then your second question and I apologize if I got this a little bit mixed up, I think you're asking the status across our international markets of a 4G to 5G transition. Is that correct?

That's right. Yes.

Yes. So many of our markets do not actually have 5G service outside of the core central urban areas. And that allows a great opportunity for us to see incremental spending and amendment activity to upgrade those networks over the coming years. I don't have a percentage for you. Offline, we can probably get you something to give you a ballpark on that, but it's fairly low. It's certainly well behind the U.S., I would say. If you're looking at it in terms of years, it's at least 5 years and maybe more behind the U.S. in terms of development for our average LatAm and African market. .

Moving to our next caller, David Barden with New Street Research.

This is [ Ryan Smith ] on for Dave. Just a couple of quick ones here. going back to the Dish lawsuit, like EchoStar believes that the bankruptcy code entitles them to [indiscernible] cut the claims by 85%. And where do you guys stand on that? And then separately, just with the escrow fund being finalized there, is there anything that's come across with that, that changes your view on fighting out in court versus settling?

Yes. I mean we, obviously, [indiscernible] disagree with their claims of the cap, and we will fight that as we currently are. I think we're pretty well aligned with the rest of the industry and the counterparties that are involved in this. I don't want to say too much about something that's ongoing litigation. I am pleased that the FCC did make it clear that some of the games, frankly, that were being played by DISH, EchoStar around the funds, the escrow fund that was set up in terms of their rights to claim -- to make claims there that, that was shut down pretty quickly by the FCC, which we appreciate.

But we expect that we will be successful in our legal pursuits and that there will be plenty of funds available within that account to meet many of those obligations that we expect DISH will have to SBA.

Great. And then 1 more, if I can. Just with the recent [ DE ] auction, Verizon came out a winter there. as they deploy that spectrum, is that within your agreement, is that something that you'll be able to monetize?

Yes. Short answer, yes.

Moving to the next caller, Matt Niknam with [ Truist.]

Two quick ones, if I could. I guess, first, on M&A. So you only acquired about 6 sites in the quarter. I think it's the lowest we've seen in some time. Maybe if you could talk about the opportunities you're seeing on the M&A front. And I understand that you may be a little bit more constructive on share buybacks. Just wondering whether the enhanced balance sheet flexibility accommodates more opportunity for M&A?

And then just secondly, how should we think about the cadence of new leasing in the U.S. in the second half of the year, just given the relative consistency in application volumes and activity being year-to-date?

Sure. On the M&A front, you should expect that we are looking at everything as we have always and continue to do that. I mean what really is being reflected here with the low number of sites that we've closed on and the commentary on the buybacks, which you correctly put together is just simply that -- and this is mostly specific to the U.S., but the relative valuations for the limited number of assets that are available in the U.S. are on average at a much higher valuation that our own company is valued at by a fairly significant margin.

And so as a result, comparatively in terms of using our resources for investment, we see our stock as a much better use of capital than paying up for dilutive deals, frankly. However, there are opportunities that still come along and where we think maybe we can add value, and I would expect that we will still be active in the M&A market when those opportunities arise.

On the new leasing cadence in the second half, if you look at our outlook that we provided in the revenue bridge that's in our press release and you look at the range that we provided. At the midpoint of the range, for new leasing contributions in the U.S., you'll note that based on the actual results of the first half of the year, it implies a lesser contribution in the second half of the year. That's kind of been the expectation throughout the year.

So nothing is really different than what we expected. We didn't change that outlook at all. But based on a little bit of a slowdown coming out of last year and into this year. And although it's been steady this year, that that flows through with it being a little bit higher in the first half of the year and a little bit lower in the second half of the year. So that's still our expectation. Nothing has happened to change that for this year.

Moving to our next call, Eric Luebchow with Wells Fargo

Brendan, I think you alluded to the fact the majority of your activity levels today are coming from colos versus amendments. And when do you think we'll start to see an uptick in amendment volumes? Is it next year with 600 megahertz for AT&T or lower C-band for T-Mobile? Or are we largely waiting for some of the larger upcoming auctions like upper C-band next year to drive the next amendment cycle?

Yes. I think each of the things that you just mentioned would certainly drive more activities because they would each require either a replacement of the existing antennas with 1 that has a new radio embedded or there would be incremental antennas added in some cases. Those would all be in the form of amendments. So I would expect that would be the nearer-term drivers, the 2 items that you just mentioned. But definitely longer term with some of these new spectrum bands that will come online over the coming years that we discussed in our prepared comments, I would think a lot of that initial activity would be in the form of amendments.

And there is usually a cycle where you have amendments where you upgrade the existing network, and then there's kind of an effort where there's more colocations as there's some infill or densification of the network done for that newer spectrum band over time. And in this point in time, we're sort of in that phase for prior deployments, including C-band, lower C-band.

Great. Appreciate that. And just 1 follow-up for me. Could you maybe update us on international churn? I think you've talked about this being a peak year, but I believe there's still a chunk of [ Claro ] churn that could come. So just trying to gauge the timing of when the international churn comes down back to a more normalized level?

Yes. It's been elevated recently and probably remains elevated for at least a little while. We're in regular conversations with our customers, but the reality is there's been a decent amount of both consolidation and even bankruptcies in some of our international markets, particularly our largest international market. And so that's had an impact on the international churn.

In any case, our focus is on working out agreements with each of our largest customers where we stabilize that through long-term arrangements where they get something out of it, that might be some rental relief that results in churn, but that -- we get something out of it too, which is a much more stabilized and consistent and reliable cash flow stream and it allows us to work together towards new growth opportunities as they deploy new spectrum bands.

So we're kind of in the midst of that. I don't want to commit as it relates to next year because, frankly, we're having a lot of those conversations today and I don't know for sure what the timing will be. But I expect that we're we're nearing the end of this heightened international churn mostly because we've gone through it with most of the customers, and there's only a couple left.

Moving to our next question, Michael Ng with Goldman Sachs.

I just have 2 as well. First, just with the IG senior notes that you issued to pay down the 2024s and the revolver. I was just wondering if you could give us a sense of what the net interest savings are going to be and how we should think about interest going forward?

And then second, just in the U.S., I was just wondering if you could talk about some of the factors that would push you more towards a holistic agreement or an a la carte agreement as you go through those [indiscernible] that come up over the next couple of years?

Sure. On the bond, I think we gave all the details that you can look at for each of the specific tranche of notes and what the interest rates are. And so you can basically do the math on what that will be going forward. When you talk about it in terms of savings. Unfortunately, we're refinancing debt that is, generally speaking, less expensive or will be in the future. So it's really a matter of savings against what the alternative might be. And I think as an IG issuer, we're getting a better interest rate today than we could get if we weren't.

So there are savings, but we're in an overall higher interest rate environment than we were when we put in place some of the debt instruments that will be coming due now and in the next several years. But it should all be very clear and our guys can walk through that with you, Michael, if you need any help on calculating the interest impacts going forward.

On the wholesale MLAs versus a la carte approach, the reality is we're sort of indifferent to the structure in and of itself. It really comes down to the specific terms. I think with the wholesale MLAs. We've done more of that recently than we had in the early days of our history, in part because had an evolution here where things are getting a little bit more mature, there's less customers. And there's a value that they see and frankly, we see in having some level of certainty, not only in price points, but also in how business flows, how we process things, how we can be helping them be more efficient in their deployments, which ultimately benefits us. And the easier we make business for them, I think that, that benefits us.

But having said all that, at the end of the day, if the terms are not something that we feel is in the best interest of our company, our shareholders, then we're fine doing it a la carte as well, and that's what we've done many times in the past. So I would expect that will probably be a situation at some point where we have some carriers on MLAs and others that we are dealing with on an a la carte basis.

Moving to the next question, Nick Del Deo with MoffettNathanson.

First, Brendan, in your comments a few moments ago discussing satellite providers potentially deploying terrestrially. You said that we're very early in those conversations. Just to be clear, should we take that to mean that you've had exploratory discussions with satellite providers on that front?

We have talked to many satellite providers, yes.

Okay. Second, I was hoping to return to the edge compute idea. There are various concepts of how that might be deployed, whether it's kind of small fraction of 1 megawatt deployments at a host of different sites or call it, single-digit megawatt mini data centers at certain sites. Are the conversations you're having skewing towards -- more towards 1 architecture than another?

Well, it depends on who we're talking to. Obviously, there are different thoughts depending on the potential customers that we're currently engaged with and some have very specific plans and expectations, and they're not all exactly the same. But on average, these would be smaller type of facilities, not -- these would not be 1 megawatt facilities typically. That's something that is possible down the road. But really, our tower sites are not set up today for that in terms of power availability specifically. But we continue to work through what the needs are, and we're able to make adjustments and accommodations to help meet the needs of the customer based on what works for them. So it will continue to evolve, I'm sure, and we'll find the right balance between [indiscernible] and what they need. .

Moving to our next question, Aryeh Klein with BMO Capital Markets.

You have some flexibility on the balance sheet noted you can take leverage to 7x. But curious if you'd push up to the top end of that range with your repurchases? Or are you more likely to stay kind of in [ mid-6 ] range?

Yes. We have flexibility, as you said, and -- the good news is that we're producing a lot of free cash flow as well. So we actually have flexibility that doesn't even have a major impact on our leverage. I would expect us to try to be more towards the middle of our target range over time. But if we saw an opportunity where we could be opportunistic around some dislocation that we thought didn't make any sense, then perhaps you would see us temporarily bring leverage up a little bit closer to the high end.

And then maybe just following up on the edge questions. Any color that you can provide on the types of customers that are looking at it? And then just curious what percentage of your portfolio or U.S. portfolio you think could ultimately accommodate edge data centers or just benefit from it.

Yes. I don't really want to say too much about -- for competitive reasons, I don't want to say too much about the specific customers today, but that is something that we will certainly talk more about if it develops, as I expected it will. In terms of our portfolio, the types of things that we're looking at today, I would say roughly half, just about half of our portfolio in the U.S. would be well suited for the type of uses that we're discussing with some of these parties today.

That concludes all of the questions in our queue. With that, I'll turn it back over for closing comments.

Great. Well, thank you all for taking the time tonight, and we appreciate it. We look forward to reporting our third quarter results next quarter. So thank you again.

Thank you to all of our speakers, and thank you all in the audience for joining us today. With that, our call is concluded, and you may now disconnect.

Hi. My name is Richard Choe. I cover communications infrastructure for JPMorgan. I'd like to welcome Marc Montagner. I'd like to welcome Marc Montagner, EVP and CFO, SBA Communications. Thanks for being with us today.

I just wanted to start off for people that don't know, you have 46,000 tower sites, most of them in the U.S. but also internationally. When you look at your portfolio, how should we view kind of the growth opportunities for both the domestic and international assets?

Yes. So in the U.S., we always talk about 3 plus 3, minus 1% or 3 plus 2.5, minus 1. 3% growth from escalators that are in our long-term contract, then about 2.5%, 3% growth rate from new lease activity from the big 3 MNOs, minus 1% churn from non-DISH and non-Sprint. So you get to 4.5%, 5% growth rate.

And international markets are all very different. In Central America, we just bought 7,000 towers from Millicom. They gave us a 2,500 new build commitment over multiple years. So between, I think, colocation, new BTS, we are looking at a high single-digit growth rate. The agreement is all U.S. dollars. It's indexed to CPI, all in U.S. dollars.

Tanzania, that's a growth market. We're growing to be over 200 sites. The government is really pushing for additional coverage. That's growing in a double digit.

And our largest international market is Brazil. Brazil is about 15% of revenue. So I think on the top line, I think it's really CPI-driven, but local CPI, which runs at about 5% to 6% in Brazil. New lease activity is probably around 4%. I think the issue in Brazil for the last few years has been consolidation. Oi, the #4 operators has been consolidated into the other 3, TIM, Vivo and Claro. So we have many years of churn, and I think we're going to see churn probably for the next 2 years. So we reached -- this year's peak churn in Brazil for us. But I think long term, if you read that CPI at 5% or 6%, lease-up at about 4%. It's high single-digit.

Yes. And I think that's something that we kind of lose sight of sometimes is that if we look at the U.S. business, you think long term, we should be growing at kind of that 5%, 4%, 5% level. But internationally, we should see that high single-digit level when things kind of normalize, which at some point, they will. Do you think those are the right way to think about the 2 parts of the business?

I think that's right. But even in the U.S., when we say 4.5%, 5% long-term growth rate, this is assuming a 3-carrier market. It doesn't take into account new use cases. So new use cases could be drone delivery services like they do in other market where I think GPS may be not precise enough, has too much latency. It could be self-driving car. It could be computing at the edge for inference data center. And I think the big question mark is what is Starlink going to do with the spectrum they just acquired. That spectrum eventually is going to make its way for the market. It's way too valuable not to be deployed. And I think if Starlink were to deploy in that band, I think that would probably mean a higher growth rate for us in the U.S.

Sticking with the 3 big carriers, it seems like a lot of them have kind of moved along with their 5G deployments, but they haven't really done as much of the densification as we might need. Do you still see a wave of colocation densification coming at some point? It seems like there could be different points in time when each does their own thing. But given what you see on your sites and how they're looking at their kind of networks, do you see that coming at some point?

Yes. They're all at different stage of development. I think T-Mobile was our most active carrier last year. They've stepped down this year. We signed a new 10-year master lease agreement with Verizon in November, and they've been very active. They are going to be our most active carrier customer this year. And AT&T signed an MLA with us in 2023. That's valid until mid-'28 and no business. So yes -- but densification is definitely ongoing. I think I don't know if it's fixed wireless access or other use cases, but the carriers have to add more capacity to the network, which is good for us.

And a lot of the, I guess, expansion of domestic tower portfolios has been done by private companies, but it seems like there might be more opportunities or conversations to have with carriers about build-to-suits domestically. Is that something that SBA might be more interested in? And I know it's probably not to a scale that will move the needle a lot, but every bit helps over time.

I think we still build towers in the U.S., and we have the muscle, we have the people. We know how to get, I think, the licensing done, the permitting done. It's just the rates that the big 3 carriers were offering for new BTS, new build-to-suits were not attractive. So I think we were not participating. But it looks like the dialogue is shifting a little bit and that -- those conversations are happening again. So I don't really know where it's going to lead, but I think we are more than willing to do our share and build for the right return.

And you kind of mentioned it earlier, like I think the way investors look at things now is on the traditional 3-carrier market in the U.S. But even with them, I think they're talking about both Verizon today and I assume AT&T tomorrow and that there might be other opportunities, not just their normal kind of wireless mobile service that you might see more deployments to the edge. Are your tower sites well positioned to kind of take on, I guess, new use cases, add more equipment and even maybe longer term kind of mini data centers are edge-deployed?

There's a lot of talk about edge data center. I think that's something the industry talked about a lot about 10 years ago and that didn't materialize. But I think in the age of AI, assuming you have an AI agent on your phone, on your tablet, I think latency is going to be critical because you want to make real-life decision and you're not going to get the data from a massive data center in Montana or Texas. You want that information to be right at the edge of the network as close as possible to the user.

A question, I don't have the answer to this, are you going to see edge data center in a metro, the 50,000 to 100,000 square feet facility in a metro that's going to be a few miles away from the tower. Is that going to be good enough? Or does the data center has to be right at the bottom of the site? I just don't know, but we have the space, we have the power for us. We are a passive infrastructure provider. We rent a vertical space on our tower for radios, and we rent horizontal space at the base of the tower for generator, batteries, routers, a fiber cabinet. So we're more than happy to make that space available to the carriers.

Yes. No, I think people forget how much equipment is actually on your tower and then also at the base of the tower.

No, actually, when I visited my first tower when I joined the company, I was really impressed by how much equipment there between the generator, the tank for the fuel, the batteries and so on. There's a massive amount of equipment there plus multiple fiber conduits going there for the various operators. So it's not an easy infrastructure to replicate, to be honest with you.

Yes. No. And it's so distributed over the geographic area that it would be hard to replicate, especially if you need that low latency infrastructure. I guess we talked a little bit about international, but I think people don't understand or realize how much of the international markets are reliant on towers and there's not as much of a fixed line infrastructure. Can you talk about, I guess, your Brazil, Central America assets, how, longer term, you see them playing as part of technology infrastructure?

Personally, I'm very bullish on Brazil. I have like 30 years of experience in Brazil in the various companies I worked for in the past. And I think Brazil is a large country with a very high GDP per capita. It's 4, 5x the GDP per capita of India. It's the largest country in Latin America. It's 15% of our total revenue. 5G is less than 50% deployed. It's a healthy carrier market now with 3 operators. You probably have around 4 towers per 10,000 people there versus 16 towers per 10,000 people in the U.S. It's a very young population, and those markets have really pretty much bypassed the fixed line market.

So I think the mobile market. And I think going -- having gone through the Oi consolidation, I think when we're going to come back at another year or 2 with 3 carriers, they need to -- they still have coverage requirement they need to meet, need to deploy 5G. I feel pretty good about Brazil long term. And the country is doing very well. Inflation is under control. Central Bank was very aggressive early 2025 in getting inflation under control. The country has a large positive balance of payment, exporting oil, commodities, mineral, agricultural products. So I feel pretty good about Brazil long term. And I think we're happy with our position there.

Yes. I guess one of your peers is kind of pulling back from the emerging markets, but it seems like you still see a significant amount of opportunity in your kind of emerging markets. Is that...

Well, it's -- we -- remember when Brendan Cavanagh became the CEO in January of 2024, he announced a portfolio review. And I think the screen that we use in any international market, we either want to be the dominant operator, one of the leading tower operator market in order to have a seat at the table when a carrier wants to deploy a new technology, expand coverage or in subscale market, either we try to be the leading carrier or tower operators or exit the market.

So applying that screen, we exited Colombia, we exited Argentina, we exited the Philippines, and we exited Canada. Canada was a great market for us, but with just a few hundred towers, we never had a seat at the table with the operators. So we did very well on the exit. And then we look at Central America, we were already in the region, not being a leading operators. And when Millicom put their towers up for sale, I think we saw an opportunity to be the leading tower company in a market where that has been fully consolidated already with Millicom and basically Claro part of the Carlos Slim empire, the 2 main wireless operators and signing a 15-year lease in U.S. dollars with a CPI escalator and a commitment to -- for 7,000 BTS. For 2,500 BTs, I think, really made it a very attractive market for us. So I think it's really on a case-by-case basis. We have expertise in operating, building and leasing towers. And if we see an opportunity to bring that expertise to bear, we are going to use it.

It seems like you've approached it from kind of a risk-adjusted basis where you feel like you have a leading position, but also not a hopeful growth opportunity, a kind of defined...

Contracted. Contracted.

Yes, contracted growth opportunity. And it seems like without that, you probably wouldn't have done the deal.

I think that's right.

Yes. That's great. I guess as you look at these portfolios that you have, are there any remaining that you might need to exit or right now, the...

We're still a few markets where we have a small position, and it's -- if we see an opportunity to maybe become a leading tower operator, we may exercise it or otherwise, we are very happy with the yield and the free cash flow that those markets are generating today.

Given, I guess, some of the changes in the U.S. market with EchoStar, I guess, maybe the growth has kind of been interrupted a little, but it seems like your leverage is coming down kind of regardless of that and will continue. Do you see a need to go to lower leverage? Or do you feel like that's just kind of the natural way the business is going to grow so that your leverage is going to come down as your existing markets kind of continue to grow?

I think we have been an operator at about 6.5 turns of leverage for the past 3 or 4 years. And I think it's the right leverage for us. I think S&P changed the methodology that they use for tower companies last summer, given the long-term nature of the business, the long-term MLA that we have with our customers. The fact that our customers are all investment grade, they basically came up with a new methodology. And if your leverage is below 7x, they rate you investment grade. So now we are investment grade at the corporate level with Fitch and S&P. And I think our next step will be to issue an investment-grade bond at some point this year.

Got it. And it seems like you don't need as much kind of debt reduction per se as we move forward over the next few years. As you have your build-to-suit, but it seems like if there are not good, I guess, reinvestment opportunities for the operating business, how should we think about your capital return profile over the next few years?

Yes. I think in terms of creating value for shareholders, obviously, we need to operate in a very efficient way, serve our customers, do a great job for our customers. But then capital allocation is also a key factor in creating value for our shareholders. So last year, we spent about -- with excess free cash, we spent about $500 million buying our share at an average price of about $200. Those numbers are public. I think I've used them in the past. If you really look at our guidance using round numbers, it's about $1.9 billion of EBITDA minus about $530 million of dividend, another $250 million of maintenance and growth CapEx, about $70 million of cash taxes and then about $500 million of cash interest expenses. That leaves you with an extra $600 million to allocate to either M&A, debt paydown or share buyback. And last year, I think given the level where our stock was trading, we spent $500 million in buying back our shares. And I think this year, I think we're probably going to index towards buying back shares as well.

And I think something that gets lost is that how much you're growing your dividend by. How should people think about the long-term growth rate of the dividend because it's not -- it's a significant amount, but it's not static?

Right. So I mean, last year, we increased the dividend by 13%. Our payout ratio is about 41%. And we believe that we could keep growing the dividend in low teens for the next few years. So I think probably low teens for the next 3 years is probably a good way to think about it.

It's interesting because you're growing your dividend double digits and you're buying back shares. It seems like there's this perception that the domestic tower business is not a good business anymore, whereas I think history has shown that it has been a very good business and probably should continue. What do you think investors are missing in viewing that domestic tower business today that they don't see in the future because there seems to be this big disconnect.

Well, I think it's -- it goes -- I've been in the wireless industry for 30 years and the cycle repeats itself. Carriers buy spectrum. They roll out a new generation technology. They get a 10x increase in terms of capacity. The cost per bit that they deliver gets cut exponentially. When they roll out the new technology, their CapEx as a percentage of revenue goes to 23% to 25% of revenue, and then they go to harvest mode. So if you look at 2022, 2023, CapEx as a percentage of revenue was about 25% for the big 3 operators in the U.S. Last year, it was below 15%. It's going to be below 15% this year again.

So even in this environment, I think the tower business is still a great business. You have auction of spectrum next year. The FCC by law has to auction off the upper C-band. That's going to happen in the first half of 2027. It's probably 18 months of clearing. And all the OEM have already 6G radios and equipment in the lab or in beta test. So I think 6G is coming to market. If you're a carrier, you need to keep delivering bits at a lower cost.

I mean, remember, 20 years ago, you used to pay $0.25 for a minute of voice and $0.10 for SMS text. The carriers at 45% EBITDA margins. Now it's unlimited. You could watch YouTube all day and pay $55 per month, and they still have EBITDA margins at 45% just because they have been able to lower the cost per bit that they deliver, and that's because of more spectrum and more radios on the towers and better technology. And they're going to have to keep doing it. Fixed wireless access is chewing up a lot of capacity.

I think we have 15 million fixed wireless access customers in the U.S., hundreds of millions of handset users, and those 15 million fixed wireless customers operate using 50% of the tonnage, 15% of the capacity on wireless networks today. The industry is going to add another 10 million fixed wireless access customers this year. So they are -- the carriers are going to have to build, I think, more colos, more densification, but also bring 6G to market.

So I think if you take a long-term view, between 6G in late '28, '29, maybe Starlink is deploying in the spectrum that they have, new use case like edge computing, drone delivery services, drone detection technology, self-driving car and so on, you're going to see more use cases and the 3 plus 3 minus 1 could be something much greater than that.

It's funny. I was on a fiber call earlier last week and the person was saying how much fiber is actually going into drones and it's not -- we don't see a ton of drones here today, but I assume we're just going to see more and they're going to need connectivity.

That's right.

Is that right? It's one of those things that I feel like the carriers have spent a lot on spectrum and their network, and we're kind of in this period where they don't -- they're using up their capacity, but all the spectrum auctions coming down the line and technology use cases that at some point, they're going to have to reengage in spending on their network. Is that kind of the way you look at things right now that we're kind of in this pocket of maybe lower new activity, but you see the new activity coming at some point?

I think that's right. '22, '23 was, I think, a peak of 5G deployment. The carriers are all in harvest mode. They have repaired their balance sheet. They're buying back shares. But at some point, they are going to have to spend money on next gen, and that's going to drive, I think, lease-up for us, more colos, more densification, more coverage.

And remember, this infrastructure has been built over the last 35 years. And it's almost impossible to replicate in a very -- I mean, you look at Florida, where we were headquartered, you look at Long Island, Connecticut, California, first of all, even if you could get the zoning to build a new site, the cost of the land is so high. If you're a carrier, it's always easier to just add another piece of equipment on a site where you have fiber going in, you have a generator, batteries, you have all your equipment. It's just very difficult and very expensive to build a new site in those highly populated area, which is where basically people need coverage and people need more capacity.

Yes. It seems like people keep thinking that the networks are built out enough, but they still have dead zones, they still have not great coverage everywhere.

The SEC kind of -- they approved the order for EchoStar to transfer its licenses. But with that, there came an escrow fund and then also a build requirement for AT&T for 600. How does SBA view those two things -- and how does that impact you?

Yes. So 600, we are currently in an MLA with AT&T signed mid-2023 until mid-2028. I think 600 will need more new equipment for AT&T. So I think we'll be able to -- depending on the timing where they deploy in the 600 megahertz band, we'll be able to monetize it at some point in the future.

As far as the escrow agreement with EchoStar is concerned, I think it's good that there's an escrow account and as a mechanism for resolving those claims, for us, it's not that material. I think we disclosed in the past that between unpaid leases and future lease commitment, we only have short-term leases with DISH and no lease-up planned for this year. So our exposure in terms of unpaid and future lease commitment is about $100 million. So we hope to recover as much as possible. But remember, I mean, any payment has to either be -- support of the settlement with DISH or approved by a judge. So we just don't know the mechanics of it very well yet, but we hope to recover as much as possible.

Yes, that makes sense. In terms of your services business, it's something that, I guess, was running at a high level has come down, but still is a decent amount. Can you tell us a little bit about the type of work you're doing and where you kind of see it going over the next few years? I know you don't have a ton of visibility all the time.

That's a business where there's not a lot of visibility beyond 1 quarter really. And it's really in the past was indexed towards one carrier. We're doing more work with a second carrier now, but that business is basically construction and engineering work. So I think it's a good business because it keeps us in a dialogue with our customers. We understand where they're going, and then we could basically do the work for them. It's a good margin business, but there's just not a lot of visibility in that business. But we think it's important for strategic reasons to be in the business. And it's a great business, about $200 million of revenue for us every year.

Got it. But it's not something you have to invest more in or...

No. It's no CapEx in that business.

Yes. It's one of those things where I see a lot of development, whether it is in housing or in kind of data centers, but a lot of growth areas of the economy are growing into new areas. Do you see more potential for tower activity as kind of we build out more communities, more areas of growth that aren't in the top 32 cities or...

Yes. I mean you could look in Florida, Arizona, where -- I mean, those exurbs keep going and growing. And we work with developers. We -- usually, they own the land, they have exclusive right to the land, but we work with them to build towers or even bring fiber to their development. So that's something we have a team that basically is directly involved with real estate developers trying to help out on that front. But it's a real fact of life. I mean developers are building tens of thousands of new houses to grow those communities, and we want to be part of it.

Yes. No, and I'm sure they want cell service.

They need cell service.

Yes. I guess the one thing we haven't thought about a little bit is the connectivity to your towers. A bunch of years ago, there was a big upgrade cycle where you had pull fiber to the towers and a lot of towers, if not most, you have some type of generator backup. Can you go through kind of what kind of connectivity level you have at your towers? What kind of backbone, I guess, of the network?

Yes. For us, I think we are a passive infrastructure provider. We lease vertical space on the tower and horizontal space. So the carriers are responsible for bringing the fiber to the site. So most sites are going to have 3 fiber connections. They lease space for a cabinet where they have basically the router for the fiber and space for the generator, batteries and so on. So we are providing the space. It's with all passive infrastructure provider.

Got it. And do you feel like they're kind of maximize that space at your towers at this point, but there's potential if we do see more edge capabilities that they could end up renting more space.

That's right. There's upside potential there. I just don't know when or how it's going to be materialized. But there's a lot of talk in the industry about edge computing.

Yes. But I guess of your tower portfolio, do you have a percentage or number that...

Yes, we've done the work. We're still doing the work. Not all of the sites have enough space or enough power for a small data center at the tower. So it's on a case-by-case basis.

But it's probably a significant amount.

I don't know the number, to be honest. We're still doing a lot of work there. It really depends how big a data center or a mini data center you need and how much power you probably need 3-phase power. Not all sites have 3-phase power. So it's -- there's a lot of bottom-up work that needs to be done there. And we need to understand the demand. It's still unclear what the demand is going to be.

Yes. I don't think people quite know yet, but I feel like it's an opportunity that would come down the line. Last thing I'd like to hit is that one easy way, buying back stock helps, but also buying ground leases kind of can help. What's the opportunity there? I know you do a certain amount each year, but is that something that you kind of push harder on? Or is it...

Yes. So I think we started this 10, 15 years ago, way before I joined the company. We have been very aggressive on protecting our, I think, our sites. And we probably have the best team in the industry, very aggressive, looking multi-years ahead. And I think any years, we spent between $40 million and $50 million buying ground leases to protect our site but also improve our margins. And that's something we're going to keep doing. We have a very, very strong team. The gentleman who run the team has been doing this for a very long time, and they look ahead and they create a lot of value for our company.

And you have a kind of a long pipeline of deals that you end up closing on.

Yes. Yes.

Okay. And with that, I'll leave it at that. Thank you for joining us today.

Thank you, Richard, for having me.

Welcome, and thank you for joining the SBA First Quarter 2026 Results. [Operator Instructions]

With that, I'll turn the call over to Louis Friend, Vice President of Finance and Capital Markets. Please go ahead.

Good evening, and thank you for joining us for SBA's First Quarter 2026 Earnings Conference Call. Here with me today are Brendan Cavanagh, our President and Chief Executive Officer; and Marc Montagner, our Chief Financial Officer.

Some of the information we will discuss on this call is forward-looking, including, but not limited to, any guidance for 2026 and beyond. In today's press release and in SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, April 29, and we have no obligation to update any forward-looking statements we may make.

In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website.

With that, I will now turn it over to Marc to comment on the first quarter results and 2026 outlook.

Thank you, Louis. Given the solid start of the year, we are increasing our full year outlook for all key metrics, including site leasing revenue, our cash flow, adjusted EBITDA, AFFO and AFFO per share as compared to our initial 2026 guidance. The primary drivers of these increases include outperformance during our first quarter, highest rate lag revenue and favorable foreign currency rates.

In the first quarter, we continued to operate efficiently, controlling direct costs and achieving company-wide Tower cash flow margins of approximately 80%. In the U.S. we added approximately $10 million of quarterly new lease and amendment billings year-over-year. The bulk of the activity continues to come from new colocations as carrier both densify and expanded network footprint. We would expect churn, our prior outlook for both Sprint and EchoStar related churn for the year remains unchanged.

With regard to EchoStar, we continue to litigate the matter in federal court and believe strongly in our contractual rights.

Internationally, we continue to see healthy demand for infrastructure and we added approximately $4 million of quarterly new lease and amendment billings year-over-year. International churn consistently elevated due to carrier consolidation, bankruptcy, restructurings and wireless operators network [indiscernible]organizations. We believe 2026 will be the peak year for international churn and expect improvement in our churn rate over the next several years.

Moving to balance sheet. In January, we paid off $750 million of ABS debt with our revolving credit facility and our outlook assumes that we will use our free cash flow to pay down the current outstanding amount on our credit facility over time.

Consistent with our outlook, we continue to assume that a $1.2 billion November ABS maturity will be [indiscernible] in November at 5.25%. We also continue to be committed to becoming an investment great issue and anticipate making our inaugural investment-grade bond issuance at some point in 2026, depending on [indiscernible].

We ended the quarter with approximately $3 billion of total debt. Our current level of 6.6x net debt to adjusted EBITDA remains near historical lows and within our target range of 6 to 7x.

During the first quarter, we declared and paid cash dividend of $135.2 million or $1.20 per share. And today, we announced that our Board of Directors declared our first quarter dividend of $1.25 per share, payable on June 17, 2026, to shareholders of record as of the close of business on May 22, 2026. This dividend represents an increase of approximately 13% over the dividend paid in the first quarter of 2025 and an annualized rate of approximately 41% of the midpoint of our full year AFFO guidance.

I will now turn the call over to Brendan.

Thanks, Marc. The first quarter was another quarter of solid financial and operational results, leading both in industry AFFO per share and year-over-year growth in our dividend.

Our customers around the globe remained busy deploying cutting-edge technology, expanding the footprint and deepening existing capacity to meet strong customer demand.

In the U.S., our customers continue to invest in their networks, expanding 5G coverage with new spectrum, including C-band, technology operate such as massive MIMO antennas and growth in fixed wireless access, which continues to add strain to carrier networks. The majority of leasing activity in the quarter came from new leases as carriers focus on coverage gaps and capacity needs.

Our backlogs also continued to steadily increase during the quarter, and we expect to see steady activity levels throughout the remainder of 2026.

Looking further out, we expect the driver's organic growth to include the upper C-band auction expected in mid-2027. 6G network architecture moving towards a more balanced uplink-downlink mix and new spectrum bands currently being studied for future auction. All of these items will require new hardware at the tower sites.

Today, you're starting to see the early signs of 6G with higher capacity radios and denser and more intelligent antenna configurations to send and receive growing volumes of data. Beyond towers, we continue to make progress and are very excited about the opportunities to leverage our existing portfolio to play a more meaningful role in mobile edge computing as edge workloads move closer to the end user. Macro tower compounds offer a cost-effective solution for edge compute needs, benefiting from strategically located sites with existing power, backhaul infrastructure and zoning protections. We are excited about the potential of this incremental revenue driver.

Internationally, we had a solid quarter as well. We've made tremendous progress integrating the Millicom assets and are seeing healthy colocation demand for these sites, exceeding our initial lease-up projections. We are also just starting to ramp up the number of new tower builds, building just over 60 towers in Central America in the first quarter, expectations to do much more over the coming quarters and years.

Between building towers and buying the land underneath, we intend to put capital to work in Central America at risk-adjusted returns that are expected to be well above our cost of capital. We expect that our leading position in Central America will enhance our overall international portfolio, reducing relative FX exposure, diversifying our customer base and extending lease terms, all with the overarching goal of improving the durability of cash flow over the long term.

Turning to capital allocation. Our dividend as a percentage of AFFO remains relatively low. This means the continuation of our shareholder-friendly remuneration policy while also preserving the flexibility to opportunistically invest in new assets in our existing markets. While we did not repurchase meaningful shares in the first quarter as we prioritize paying down our revolving credit facility with excess free cash flow, we expect share buybacks to remain an important part of our capital allocation strategy in 2026.

In the first quarter, leverage remained within our recently revised target levels even with the removal of all EchoStar revenue as of January 1, and we are well positioned to be an investment-grade issuer during this year. We expect that this shift to IG will reduce our relative overall cost of debt over time while providing access to the deepest and most liquid market in the world, improving our already solid balance sheet.

SBA is a truly remarkable company. We have solid financials, high-quality assets an established track record, the best people in the industry and perhaps most importantly, a drive and culture that continually pushes us forward to maximize outcomes for all of our stakeholders. The future potential for this company remains very exciting.

Before opening it up for questions, I'd like to thank our team members and customers for their trust in SBA. The company's ability to achieve our vision to be our customers' first choice provider and the industry leader in quality infrastructure solutions is only possible because of the incredible team members we have with SBA.

With that, operator, we are now ready for questions.

[Operator Instructions] Let's go to our first caller.

It's Rick Prentiss, Raymond James. Can you hear me?

Yes, we can.

I want to ask a couple of philosophical questions. When you -- can you help us understand what are the advantages and disadvantages of being a public company versus a private company as you look at competing for assets and tenants and capital? Just kind of help us lay it out long-term view, short-term view leverage levels. Help us understand kind of how you think about public versus private.

Well, I mean, Rick, I think for us, it's not really about public versus private. We focus on quality of assets that we have and providing the best service possible to our customers and the best meet their needs where they have them. And I think whether we're a public company or a private company, that will continue to be the case. There's, of course, differences in public and private companies in the way that they're capitalized and things that they have to talk about publicly, but otherwise, the business is the same.

Okay. The other philosophical question is you guys sold the Canadian tower portfolio. As you reviewed that Canadian sale, how do you stack up the priorities or criteria or the factors of price versus ability to close versus [indiscernible]? When we look at Canada, how do you kind of think of going through the potential list of buyers and what's important?

Well, rick, I mean, the approach with Canada was specific to Canada. We had come to the conclusion after being there for many, many years that our ability to get to a scale that would position us in the best place possible to continue to grow that business and meet customer needs there was not going to be achievable. And so we decided to explore monetizing those assets as a better potential outcome for our shareholders. And based on that process that we ran, we were able to achieve a price that we felt was attractive and appropriate and so we sold the assets.

And that's really no different than the way we've approached all of our markets. We've talked for the last couple of years about portfolio review that we're doing, trying to make sure that we're positioned in the best place possible in each of the markets where we operate in terms of our relative scale as well as our relative positioning to the leading carriers in those markets, and the Canada situation was no different than any other.

Okay. And then won operational question. Obviously, not meaningful stock buyback this quarter, but you said you want to still plan to do something in '26. How should we think about leverage level of buyback, M&A opportunities and how you're kind of balancing those use of your [indiscernible]?

Yes. So our leverage target we revised late last year to 6 to 7 turns of net debt to adjusted EBITDA, and we're obviously operating right in the middle of that range. And so we start with the leverage first. We make sure that we kind of maintain leverage in that target range and then prioritize what we think provides us the best opportunity at a given point in time among buybacks. Obviously, dividends are paid out and growing on a pretty steady basis and then new asset investments, mostly new tower builds and acquisitions. And that's not really that different than the way we've approached things historically.

I think from quarter-to-quarter, different opportunities come up and we spend time on those opportunities. And depending on what we're looking at, that may cause us to slow down buybacks or possibly increase them because we don't have enough other options to invest that capital, but it's our goal to stay levered at the same level that we've targeted. And as a result, that provides us a lot of excess cash flow to invest every year. And we look at all the options available and [indiscernible] to each other at a given time. But ultimately, I expect we're going to spend money on all of those categories over time just as we've done in the past.

Let's move on to our next caller. Please go ahead. State your name, organization, then question.

Mike Rollins from Citi. Two topics, if I could, please. The first on the leasing environment. The release referred to, I believe, it was a larger backlog in domestic leasing. Just curious if you could talk about the significance of that change in backlog versus maybe other historical first quarters and put that into perspective in terms of the type of leasing growth that you're expecting to deliver this year or in future years?

And the second question, maybe just taking a step back. As you talked at some conferences, the subject of your value versus private markets has come up. And curious, as you talk with investors about it, what you learned about how investors are valuing you in the public market, and what are the ways that SBA is trying to respond to questions about whether it's the business or the financial outlook in a way to improve that visibility and transparency for your future financial opportunities?

Yes. So first, the leasing environment. Our backlog did increase from [indiscernible] levels to March 31 levels. So that was a good sign. I'm talking about U.S. backlog specifically. I think that's what you're questioning.

And that increase, I would categorize as moderate. It wasn't extreme necessarily, but it definitely was an increase where we have more applications coming in than new business that we are executing. So it's actually replenishing faster and at a higher rate than it's being used. So that's a good sign in terms of the rest of the year and how the year should shape up in terms of leasing activity. I think from a historical standpoint, it's not necessarily an extreme outlier. And I would expect that this year's leasing activity in the U.S. will be relatively steady based on where we sit today. Obviously, things can change throughout the course of the year. But at this moment in time, based on our interactions with our customers and the way that the backlogs have grown, I would expect to see fairly steady activity levels.

In terms of how we position SBA. It's a little bit of a cryptic question, Mike. But I think our focus is on trying to be as clear as we can with our public investors about all the tremendous attributes of our business and sharing that information, clearly, in terms of the quality of our assets, the quality of our growth prospects and the quality of the cash flow that we produce on a very steady, consistent basis than we have, frankly, for decades. And so the more that I think we can share that message and evangelize it and then ultimately demonstrate our ability to execute, I think we'll be just fine. I can't speak to how every individual party might look at valuing this company if they're outside of the public shareholder base at this point.

All right. Let's move on to our next caller, Batya Levi UBS.

Great. Just a follow-up on the domestic activity. With the backlog -- the moderate increase in the backlog that you're seeing, is that across the board or specific to a company? I think one of your tents had been slowing down significantly. Do you see some uptick in their activity to maybe offset some of the slowdown you were exiting in the second half?

And a question on the mobile edge compute that you think could provide a new incremental revenue opportunity. What kind of investment do you think it would require to reset your sites? And when do you think that will start to flow into the P&L, both from an expense and a revenue perspective?

Okay. So on the domestic activity, and I don't like to necessarily share specifically what each customer of ours is doing. I will say that it was not necessarily completely even among our biggest customers in terms of backlog increases. We obviously have 1 customer where we've signed a recent agreement. And so we're starting to see an increase in activity associated with that. So that definitely has influenced it. But overall, that ebbs and flows generally over time anyway. That's what we've always seen historically. So in a given quarter, 1 quarter does not necessarily tell the story. So I would expect that we'll see all 3 of the primary customers we have in the U.S. be active at various points during the year.

On the edge compute side, we are kind of excited about the potential opportunity there. It's definitely emerged as something that I think there's going to be a lot of interest in specifically for AI inference and low latency environments that are going to be critical as AI just continues to infiltrate all of the applications that end users will eventually be using over these wireless networks. We are ourselves engaged actively with multiple companies exploring how we deploy some of these edge data centers at our tower sites. And we're in the early stages of that, Batya. I would say we have some that we've already done, a very small number. And so some of that is almost trial in nature. We expect some of those to come online shortly. So we've incurred some dollars as it relates to that.

I think I need to just punt a little bit on the timing for impact to the financials in any material way, but that's something that I'm sure we will be coming back to you with in future quarters because it's definitely starting to gain traction, and I think it will be a contributor down the road.

[Operator Instructions] Let's move on to our next caller, Brendan Lynch from Barclays.

Just a follow-up on the edge side. Brendan, can hear me?

Yes.

Just to follow up on the edge sites. Brendan, can you give any concrete examples of how AI being deployed at a tower site is advantageous relative to in a traditional data center. Just I ask this because it's largely been theoretical over the past several years. So maybe that sounds like there's some momentum and things are changing there. So any additional color you can give would be helpful.

Yes. I mean it's hard to give you exact. I mean, really, what we're talking about and what we're seeing is some of these applications that have a much greater amount of uplink versus downlink, which affects, by the way, the general architecture of the wireless network to itself is requiring in order to be active an even lower level of latency to make those solutions as effective as possible. And as a result, the closer that you can move the compute power to the edge of the network and closer [indiscernible] user, we're finding that folks think that that's going to make a real difference to the success of some of these applications. And as a result, there's a push to move that out. I also think there's a practical issue in that, in some ways, it may be easier to have this more distributed compute sort of network through these micro data centers versus just having the bigger facilities that are more centralized in terms of just power usage and other resources that are necessary to make these things effective that. To some degree, when you distribute it out on further basis, that's actually easier to achieve in some cases. So we'll see, Brendan, but I think as long as latency is a real issue, then edge compute is going to become more and more important.

Okay. Great. That's helpful. And then maybe just another question on the land purchase in Guatemala. Can you just kind of walk through some of those details and what the cap rate was that you paid?

Yes. So that -- we actually talked about that, I think, on the last call because we closed on that early in the year. We were able to buy out land under most of the towers in Guatemala that we acquired as part of the Millicom acquisition. I believe the multiple we paid was in 7-ish range. I'm looking for confirmation, I think it was about 7 turns was about what we paid for that. So pretty attractive and accretive in terms of valuation, but also helpful to us in terms of our relative positioning from a risk standpoint on all those properties and that we can control that land a lot better than, obviously, we could have before.

Our next caller is Nick Del Deo from MoffettNathanson.

So Brendan, you noted in your prepared remarks that the demand you're seeing for the Millicom towers has exceeded your expectations. I guess based on your conversation with those customers, is it your sense that this is like an initial burst that's happening as the sites have become available that may subside or does it strike you something that's more sustainable?

Yes. I think there's definitely an initial interest because these sites were obviously in carrier controlled hands before. And so now that they're kind of opened up more directly for colocation business than they probably were before. That's caused some inbound interest that I think is what you would normally expect when assets like this become available. But I do think that there is an opportunity to sustain the growth for an extended period of time. Because for one thing, there's a lot of sites. Two, we're just at the very beginning stages of having conversations with those other customers, and it's primarily 1 customer, many of these markets about the site. So based on the pent-up demand that we see and what they've expressed to us, I think we're going to see very attractive lease up for an extended period of time.

Okay. Okay. Great. And then maybe won about the U.S. market. One of your peers has commented that the big carriers might be more interested in working with the larger public tower companies to undertake more new construction opportunities. I was wondering if you've observed anything similar.

Yes. I think there is some of that. I mean, definitely, the dialogue that we've had with the MNOs as of late has been much more constructive towards new build opportunities here in the U.S. than it has been in the past. I mean really, if you kind of go back in history, and this isn't just SBA, but the other big tower companies as well, we're primary suppliers of new builds for many, many years. And then that obviously changed dramatically. You had a lot of smaller new companies coming up and the financial terms that were being offered were not really something we found attractive, and I imagine most of our peers -- our bigger peers did not as well. And so that's why you saw the level of what we're doing dry up.

But in this current environment, as we sign some of these master agreements, and we have broader reaching relationships that get established as well as the cost of capital increasing and the stability of the end [indiscernible] that the carriers are dealing with. It's becoming more and more important to them that there was somebody that they know that they can run on to be there for the long term. And I think as a result, you're going to see more opportunity for companies like us to do more new tower builds here in the U.S.

Moving on to our next caller, David Barden from New Street Research.

So I guess, Brendan, I just have to ask, like, do you -- the story that -- there were a couple of questions already about this, which is that there are multiple key firms circling, wanting to buy SBA, take it private. TMT Finance reported that they would do with a $250 a share. And I'd question whether you and Jeff, who is still determined would really want to sell. So could you kind of walk us through what would it take for this to actually happen? That would be kind of question number one. And then -- that's my question.

I was like, what's the next one, David?

Yes, sorry, Sorry, Brendan.

All right. Yes. I mean, listen, of course, I've seen, of course, these articles that have been out there for the last few weeks and, you won't be surprised to hear me say that as a matter of policy, which is our policy, we don't comment on speculation or rumors that get put out there in the press. I mean what I can say just more generally is that I've been with SBA for over 28 years. And during that entire time, we have always focused on evaluating all options and all possible routes we can take around various different things. in order to act in the best interest of our shareholders. And we do that still today, and I expect we will do that in the future. And so of course, we will always evaluate any opportunity that presents itself to us. But beyond that, I mean, I can't really comment on what somebody decides to put in an article without any real basis.

Would it be fair to say that if there was ever a moment in the last, say, 3, 4, 5 years on this constant evaluation has been happening, where you've bought back stock that you would never sell the company for a number that's less than the number that you bought that stock at?

Well, I mean I can't -- David, I can't really tell you what we would do or what we would not do in some hypothetical case. What we would do is always make a decision that we thought was best for the shareholders, whatever that was at that moment in time, and that's the decision we would make.

[Operator Instructions] All right. And that looks like that's all the questions we have for today.

Okay. All right. Well, thank you, Marilyn, and thank you, everybody, for dialing in, and we look forward to reporting our second quarter results to you next quarter. Thanks.

Thank you to our speakers and everyone in the audience for joining us today. The call has concluded. You may now disconnect.

Good morning, everyone. My name is Benjamin Soff. I'm an equity analyst here at Deutsche Bank, and I'm very pleased to welcome Brendan Cavanagh, SBA Communications President and CEO. Welcome, Brendan.

Thanks. Nice to be here, Ben. Thanks.

You reported 4Q earnings a couple of weeks ago. Looking back to 2025, what were some of the highlights? And what are some of the key areas of focus for SBA in 2026?

Yes. Thanks. Well, we had a very solid 2025, a number of good things that happened, engaged with all of our customers who are busy investing in their networks. We saw pretty good organic leasing activity, both domestically and internationally. And in particular, we signed a master lease agreement with Verizon late in the year, which we're very pleased with, a long-term agreement that we think is going to drive meaningful contributions to our organic growth over the next decade. So that was something we're excited about.

In addition, we closed on over 7,000 towers that we acquired from Millicom in Central America, which improved our positioning in that market. We're in the midst of integrating those, and that was another great accomplishment during the year. And the last thing is we finally got to the point where we had 2 rating agencies rate us investment grade late in the year. So it marks a transition period, I think, for SBA in terms of our capital structure and profile. So a lot of good things that happened.

It seems like the U.S. carriers are entering the later stages of their initial 5G coverage build-outs, and you recently guided to steady levels of leasing this year. What type of activity are you seeing from your customers today? And how would you characterize the demand environment as we think about 2026?

Yes. We're starting to see -- each carrier in the U.S. is in a different place, slightly different place. We've had a very busy last couple of years with T-Mobile. They were focused on a number of things, including meeting regulatory obligations that they had for certain rural coverage responsibilities associated with the original Sprint merger. So that's kept them very busy. They still have some of that, that they're working on.

In addition, fixed wireless access has been a major driver for them and for the industry as a whole in terms of additional densification of the networks and frankly, expanding the presence out to handle the increased traffic that's driven by that. And then you've got AT&T, who's recently acquired some additional spectrum from EchoStar. They've been busy deploying that recently. And then, of course, I mentioned Verizon before and the agreement we signed with them, we expect to see significant activity around the network going forward in this year from Verizon as they ramp up. They're focused on not only completing their mid-band C-band build-out, but readying themselves for the next phase of technology that we think will come with the new spectrum auctions that are on the horizon.

As you mentioned, you signed a 10-year MLA with Verizon recently. Can you talk about the benefits of this deal and what it means for leasing activity in 2026?

Yes. As I mentioned before, we're very excited about this deal that we signed with Verizon. It's a 10-year deal, as mentioned. It includes a minimum number of new lease colocations over the next 10 years that is at a level that is beyond what we have historically signed up with Verizon.

In addition, it provides certainty for them around pricing, but it locks in the ability to monetize all activity associated with new upgrades and amendments at our sites. So that's a good element as well. It secures the agreements that we have in place in terms of limiting terminations as well as extending terms on our existing agreements. So overall, we feel like we've locked in a very strong partnership with them for an extended period of time. We're meeting -- helping them meet their network needs and in exchange, they're giving us certainty around our relationships. So it's a very good deal.

Based on past commentary, it sounds like T-Mobile has been your most active customer recently. Can you talk a bit more about what you're seeing from them currently and what you think could drive further investment there going forward?

Yes. As I mentioned before, they have been our most active customer. We have seen them be active around things like the regulatory obligations that they had. I think the biggest driver is what I mentioned a moment ago around fixed wireless access. If you look at their growth in subscribers, and this applies, by the way, to Verizon as well, the primary and almost entire increase in subscriber growth is coming from fixed wireless customers.

And what's great about that is that the amount of consumption that affects the network through a fixed wireless subscriber is so much greater than the average mobile user. It's 15 to 20x greater. So it puts this additional stress and strain on the network, and it requires, frankly, more points of presence, greater densification of the network, and that's good for us because it leads to additional leasing opportunities.

There are a handful of moving pieces driving churn in the U.S. this year, Sprint, DISH, U.S. Cellular, can you help frame for investors what your exposure is to each of these situations and how you're thinking about churn overall in 2026?

Yes. So we have had elevated churn over the last couple of years, mostly due to consolidation, specifically the Sprint legacy leases. So when T-Mobile bought Sprint, obviously, you had a certain amount of overlap that existed in the network. We had fairly lengthy terms to the Sprint leases. And so we've just now gotten to the point where they're starting to hit the end of their terms and non-renewing basically.

This year, 2026, will be the last big year of Sprint churn. And I believe our outlook that we just recently provided at the midpoint was approximately $56 million of churn from Sprint. We will have less than $20 million of churn associated with Sprint left for all future years. And most of that will be next year. In addition, we had the event, which is somewhat of a rarity with DISH, where they have shut down operations. They've obviously announced that they're selling their spectrum. They've sold or at least entered into agreements to sell most of it thus far and are basically shutting down their operations as a stand-alone wireless network.

Unfortunately, they've taken the position that they do not have to pay the remainder of their rents that are due, which we vehemently disagree with, and we'll see how that shakes out. But nonetheless, given the fact that they're not paying it, and they're ultimately going away anyway, we've basically accelerated the churn associated with DISH. So every dollar of rent that we have with DISH, which is another $55 million or $56 million, we have recorded that as churn in 2026 as well. It was included in our recent guidance. So you have these 2 fairly large items that stand out and are really somewhat onetime in nature. And after this year, we will have most of that behind us. So I feel like this is kind of the bottom in terms of churn, and we will see significant improvements going forward.

The other one you mentioned is U.S. Cellular, which T-Mobile bought recently. And that we expect will actually go away over the course of time as the terms end. We have about $20 million of annual leasing revenue with U.S. Cellular. Even if all of it went away, I'm not sure that all of it actually will. But even if all of it went away, it would be spread over the next 5 years relatively evenly over that time period. The good news now that we've talked about all this negative stuff is that it's really behind us. We basically have had all the bad things that could happen have essentially happened here in the U.S. market. And we now have 3 very strong customers that are remaining. We have some additional opportunities, which maybe we'll get to in a moment with some of the questions you'll ask on the road. But I think we're going to see an improvement starting as we get into next year and in particular, the years that follow on after that.

Makes sense. Speaking of one of the priorities in this administration has been trying to find new spectrum bands to put into use for wireless. How do you view the spectrum pipeline in the U.S.? And what could that mean for tower leasing in the future?

Yes. Well, most of the time, when you have waves or phases of growth for our business, it starts with spectrum, new spectrum that's come into play that's in the hands of carriers that they need to get deployed, one, because they have obligations to deploy it, but more importantly, because they need it to supplement the new growth in their networks, the new technologies that are being put online and the amount of capacity that's growing or the capacity needs that they have that continue to grow.

So as we look forward, we're very pleased that the FCC's auction authority was returned to them. They have under the recent bill that was passed, the one big beautiful bill, as it's called, was recently passed required 800 megahertz of new spectrum to be auctioned, including 100 megahertz of upper C-band spectrum that will be auctioned by the latest middle of 2027. All of that, I think, will be very, very good. In particular, they're looking at spectrum bands that are a little bit higher in frequency than we've traditionally seen in the traditional macro networks. So in the 4.5 to 4.9 range as well as in the 7 gigahertz range. If that -- if those are the spectrum bands that are ultimately cleared and auctioned, they do not propagate as far, and that will require, again, greater densification in the network. And so I think it's going to be very, very good for us, and it will be really the foundation for what will ultimately be 6G deployments coming, I think, around the turn of the decade.

One of the questions investors have been asking recently is whether satellite broadband could end up competing with terrestrial wireless infrastructure or if it will mainly complement towers. How do you think about this question? And can you share any more detail on your rural tower footprint?

Yes. So it's been said by many, including us, that we see satellite service in terms of direct-to- sell service as a complementary component to traditional terrestrial networks. And we fully believe that and all research that's been done by us and by others supports that because there are so many limitations in terms of what can be provided through satellite as opposed to a terrestrial network. The latency is much greater. The speeds are much slower. And as you start to have more and more traffic and the types of traffic that will come with some of the newer applications, particularly as you get into AI-infused applications, the ability to service that through a satellite is not as great as it is through a traditional macro-based network.

Having said that, you don't have to take it for me. It was just recently reiterated at Mobile World Congress by SpaceX, who made it clear that it is complementary. And they are even talking about the potential of an MVNO type of relationship with incumbent carriers where they would have the carriers there to support them through a traditional terrestrial network that would be hybrid with satellite to cover some of those white spaces that don't easily get covered today because they're just frankly not economical to cover. So I think that's the way it's going to play out.

Although it was interesting that just after that, the CEO of T-Mobile mentioned at a conference that they weren't necessarily sure that they wanted to be an MVNO partner. And that could actually be the best of all worlds because if the satellite provider needs to move towards a hybrid solution, which they ultimately would if they want to compete in that space, and they need to do it on their own as opposed to partnering with the carrier. That's an opportunity that has been untapped and would be a new customer potentially for our industry. So a long way to go. We'll see how it plays out, but I actually think there may be more opportunity associated with satellite deployments than risk, which is a reversal of how people used to think about it.

When we put all these factors together, how are you thinking about the organic growth outlook in the U.S. over the medium to long term?

Well, we have the churn issues that we talked about before. And once we get beyond that sort of overhang, I think we will see ourselves returning to a more normal level of organic growth here in the U.S. And basically, that's somewhere in the 4% to 5% range in terms of U.S. leasing just from organic growth. And that's basically made up of roughly 3% that we get from fixed escalators that are baked into our contracts today. 2% to 3% is the typical range for new leasing activity, meaning new leases, new colocations and new amendments.

And then you have churn, which once we get beyond some of these outsized events, I would expect it to be closer to 1%. It's been typically in that 1% to 1.5% range. So somewhere in there. So if you had 3%, plus 2% to 3%, minus 1%, you're basically in a 4% to 5% range. And I think that's a reasonable expectation for the next decade in terms of where we'll come out.

Pivoting to your international business, where Brazil makes up the largest component, it sounds like you're pretty constructive on the fundamental outlook in that market. What are the main factors that get you excited about the tower business in Brazil?

Well, Brazil, it's interesting. In some ways, Brazil has gotten a bad wrap, and I know why. But Brazil has actually performed very, very well for us. We've had pretty good lease-up there, good organic growth. We have strong relationships with each of our carrier customers in the market. The challenge in Brazil has basically been 2 things: One, currency, the FX rate over the time that we've been in there has devalued. And as a result, it's been a headwind to our growth. Although we've seen that settle down, in fact, it's been a little bit of a tailwind coming into this year. But that item has been one of those items that we've had to work to determine ways to kind of offset it. And it's been a challenge because hedging is not cheap, but we've looked at other possible solutions to help mitigate that through some of the structuring that we've done.

The other issue is that Oi, one of the large carriers in the market has essentially been bought up by the other 3 carriers. So it's been divvied up. And so we've had another churn type of situation due to consolidation as well as their legacy wireline business, which has basically gone bankrupt. So as we've had to go through that, it's kept churn elevated over the last year or 2 in Brazil. But similar to the U.S., I would expect that as we kind of move beyond that and the carriers are now competing heavily on network quality, you have a stronger market in terms of the health of the 3 carriers that are there. I think it's going to actually continue to perform very well for us, and we think that we're going to see accelerated growth going forward, especially as new spectrum ends up getting auctioned down there, which is soon.

Do you have a sense for timing to get through that consolidation churn?

Yes. So this year, we've projected a lot of it. In fact, the Oi wireline churn, we basically accelerated all of it into 2026 as well. So that will be behind us. And we've worked out arrangements with 2 of the 3 carriers to help mitigate the impacts of the consolidation churn with Oi. There's one Claro is the only one that we have not done any sort of agreement with. So I would expect that over time, that would bleed in as well. But I think this is kind of our peak in terms of churn in that market.

You're now the largest tower operator in Central America after closing your deal with Millicom last year. What makes Central America an attractive tower market? And what did that acquisition unlock from a business standpoint?

Yes. So there were a lot of things that were great about that deal. So for those of you that aren't familiar with it, we bought over 7,000 towers from Millicom across Central America, 5 different countries in Central America. We already had a presence in Central America of roughly 3,000 or so towers. So we now have today over 10,000 sites across the Central American region. There are a lot of great things about it. One, we've been operating there for a long time. So we're pretty well established in the market. We have good relationships already today with the customers. But what we recognized is that it was important to have scale, and this applies broadly to our international markets. It's important to have scale and to be relevant to the carriers in the market. By having -- doing this acquisition, we positioned ourselves as by far the most dominant tower company in the region.

In addition, it's critical that you have strong relationships with the leading carriers in the market. Millicom is the leading carrier, the #1 carrier across most of these markets. So our relationship that we've now established with them is something that solidifies our position there. In addition, it opens up access to sites where they had a lead, frankly, in the market to the customers that are trailing. And in particular, Claro, who is the second carrier in many of these markets, has expressed interest in many of these sites. And so we think the growth will be very good. But the fundamentals of the deal itself were very, very strong. We paid a price that we felt was very accretive, around 11x. We also have U.S. dollar-denominated contracts across the region. So there's no FX risk at all. It's a 15-year leaseback with Millicom, so a long-term arrangement with them.

And in addition, we entered into a build-to-suit agreement with Millicom to ensure that we can continue to grow our portfolio down there. So they've committed to a minimum of 2,500 sites. We've started to ramp up our new builds. We started it last year, but it will be particularly big this year as we get into the full flow of building sites across the region. So a lot of good things about that deal. So far, we're actually ahead of schedule. It's a limited amount of time, but actually performing better than we expected in terms of the lease-up already. So I think it's going to actually be quite a success.

You've been conducting a review of your portfolio for a couple of years now and have exited a handful of markets. Can you discuss the goals of this review and how it reflects your priorities as a company?

Yes. So the goal in reviewing the -- we reviewed each of our international markets and each of our business lines to basically figure out, okay, what does the future look like for these operations? Where are we going to be 5 years from now, 10 years from now realistically? And what can we do to influence that in the most favorable way possible. And in particular, when you look at the international markets where we are subscale, we recognize what I mentioned before in talking about Millicom, which is that you need to have scale and be relevant in these markets in order to have improved success for the carriers to even, frankly, engage with you.

In addition, you need to be aligned with the stronger customers, the stronger operators in those markets. And so as we've looked at each of the markets where we operated, we had to make some decisions. Are we going to be able to achieve that or are we not? In the case of Central America, we determined that we could achieve it through the deal that we did with Millicom, and it changed the whole profile of our makeup there, and I think has put us in a much stronger position to generate outsized returns.

On the other side of the coin, we had markets where we didn't see that possibility. So in markets like the Philippines and Colombia, Argentina and even Canada, we made the decision that it was better to exit, monetize what we had. And in the case of Canada, we monetized it at a valuation that was much higher than where we trade. So we felt that there were ways for us to be opportunistic. We have some remaining operations, both international markets and other businesses that we're in, that we're continuing through this process. There's no rush. There's no absolute time line that we have to finish something by. But we're going to continue to go through that process with each operation and make sure that we're well set up for the future. And if we're not, then we would look to potentially exit.

You recently updated your leverage target from 7 to 7.5 to now 6 to 7, and you were upgraded to investment grade by 2 major agencies, as you mentioned. I know you've already been operating at these lower levels. So what does this change in leverage target and the ratings upgrade mean for the company?

Yes. It signifies a transition in our maturity life cycle. In terms of actual operations, it's very limited in its impact. You just mentioned the fact that we've been operating there. We've been operating in this new target leverage range for the last 3-plus years. So there's no change in the way that we operate and the way we think about things. What it does, though, is it opens up for us the potential to access a new financing market that is, frankly, deeper than the markets that we've had available to us and should be slightly cheaper than even the secured debt that we've accessed in the ABS market traditionally. So I would expect that, that will shift our positioning.

What's great about it is that we're still at an adequate leverage level to allow us to continue to invest in the business because we produce so much cash flow and we typically grow our EBITDA year-over-year, we're increasing our leverage capacity naturally. So if we keep our leverage the same, we'll have well over $1 billion to deploy into the business. Our priorities would be to invest that into new assets ideally. But if we don't see those opportunities because they're either too expensive or they're simply not available, we're more than happy to return capital to shareholders. And we've done that through the fastest-growing dividend in the industry as well as through share buybacks.

Last year alone, we bought back $500 million worth of shares, and it's very accretive. It's immediately accretive to shareholders, to our AFFO per share. And given where we've been trading, which frankly, we believe is below intrinsic value, there's an opportunity set there that exists for us that doesn't exist for some of the private companies. And so we're taking advantage of that.

How do you view the M&A environment at this point? And what types of assets and markets might be interested?

Well, the M&A environment is really tale of 2 stories or tale of 2 cities, I messed up my analogy. But it's the U.S. market where you've got a limited amount of opportunity. The supply and demand is a little bit imbalanced. There's a lot of demand for tower assets in the U.S. There's a lot of private money that is chasing those assets. And because there's not that many available, the valuations are very, very high. And in many cases, while we participate in every deal that comes to market, we have not seen our way clear to be successful in winning a lot of those. There are a few here and there, but for the most part, the price points have just been at levels that we found to be way too dilutive.

And again, when you're comparing that against the alternative of buying your own stock back and it's valued substantially lower, sometimes less than half the value of these assets that are trading in the private market, it's hard not to go that direction. But our preference would be to continue to grow our portfolio because I think we're one of the best operators of these assets and we can extract the most value. So that's what we'd like to do, but we're going to be disciplined about what we spend. That's the U.S. market. And I do think, ultimately, that should shift. And we've already seen a little bit of a shift. I think some participants have found that the returns have not met the threshold that they assumed when they went into it, and that's maybe caused a little bit of softening, but not enough yet to make a material difference.

Internationally, it's a different story. We've definitely seen a softening in values. There's a lot of assets that are available to purchase, and we are exploring all of those. But we're able to be selective. I still think there's a little bit of a disconnect between buyers and sellers on appropriate valuation. So you've seen very few deals actually get done. They haven't necessarily happened at low enough prices. They definitely come down in prices. But what's happened is you basically have seen a quieting of the entire ecosystem out there. That will only last for so long. We've tried to be opportunistic.

The Millicom acquisition is an example of that. There have been some other smaller deals. We're mostly focused on markets where we currently have a presence and seeing if there are ways to supplement the portfolios that we already have to improve our positioning. In terms of other markets, we look at other markets all the time, but we're going to be very selective. We're going to have to see a lot of things line up in terms of the profile of that market going forward, the risks, frankly, of consolidation. One of the issues internationally has been consolidation like it was here in the U.S. In places like Central America that we've seen most of that already happen. So now we're beyond it, and it gives us a good runway going forward. So as we look at new markets, we evaluate that as well.

Can you remind us what you're guiding to for AFFO per share growth in 2026 and maybe highlight the important moving pieces to get to that outlook?

Yes. Well, it's actually not growth in 2026 over last year. It's actually a decline. And it's -- we're basically guiding to roughly around the middle of our range that we've given in our outlook, a little over $12 a share for this year. And it's been weighed on because of the churn items that we mentioned before, taking the DISH churn forward, taking the Oi churn forward in the last big year of Sprint in addition to financing headwinds. Those are really the 2 issues. Otherwise, operationally, we're doing fine, and I would expect we'll continue to grow.

Our AFFO per share, excluding financing headwinds, will grow high single digits as we get into 2028, 2029. Financing is really the big overhang for us. We had a lot of success with the financings that we put in place over the years. I believe our next 3 maturities, including the one that just matured in January, all had a one handle on the coupon. So you can imagine, as you go to refinance that debt today, it's closer to 5% or 5-plus percent. That's a big difference when you're talking about multiple billions of dollars of refinancing. And so that's where we are in the cycle. We would love to see interest rates come down a little bit quicker. And hopefully, we will see that take place. But nonetheless, we'll have to deal with those refinancings, and it will slow the growth. But we'll still see growth in AFFO per share. I just think once we get beyond the financing, you'll see it return to the levels it's historically been at.

Going back to the U.S. market, it sounds like you're expecting the carriers to start doing some equipment upgrades for certain established spectrum bands. In your view, what are the factors that drive an equipment upgrade cycle? And what does that mean for leasing activity?

Well, yes. So the carriers today are sitting on spectrum in some cases that they've not fully deployed. And so that has been a driver of some of our organic leasing. We've obviously had the C-band spectrum that's been rolled out by Verizon and AT&T. Verizon is a little further along than AT&T. AT&T has probably upgraded roughly 60% of SBA's sites or leases that they have with us. So there's still some runway for that.

And T-Mobile, interestingly enough, owns a swath of C-band spectrum as well, and they've not deployed any of it at all. So I think that will be a potential driver of additional upgrade activity. But beyond that, the spectrum auctions that we talked about earlier will be a driver, I think, as we move later the next several years and particularly into the next decade and will be an underlying factor for 6G. And what I really mean by that, when we talk about 6G, not everything has been fully defined yet, but 6G will be, in my view, sort of defined by that AI-infused applications, right? Not only will AI affect the way that networks are deployed and the way that they're monitored and managed, it will also obviously affect the way end users are using their devices and using the wireless networks. And as that happens, you will see a shift.

Today, you have roughly 80% of the traffic over the wireless network is downlink, 20% is uplink. And as you move to more of these AI-oriented applications, you'll see a shift towards a greater evening out of that. I think it will move more towards 50-50 uplink versus downlink. And what that means for us is that there's a need for additional equipment at the site, more massive MIMO antennas or extreme MIMO antennas, MIMO antennas, additional radios, different frequency band, so you'll have more FDD type of deployment that allows for a greater definition of uplink and downlink traffic. And as that happens, it requires changes at the tower sites. New equipment is being developed today that will be deployed at our sites. We'll have to make changes across the existing footprints that our carrier customers have with us, and that will be a huge driver. But that's all predicated on new spectrum being available in order to roll out those new applications.

And maybe just to wrap up, you mentioned 6G. The industry is starting to talk about it. It seems a little early to me, but there you go, a little early.

You got to be ahead of the game, though, Ben.

That's right. Do you have any initial thoughts on what spectrum could get used for 6G and when you'd expect that activity to start picking up more meaningfully?

Well, I think it will certainly be the spectrum, at least initially, it will certainly be the spectrum that's been talked about as part of this 800 megahertz that's going to be auctioned off over the next couple of years. And so we talked about some of those bands earlier, the 4.5 to 4.9, some of the 7 gigahertz band spectrum that's being evaluated. We'll have to see what it actually is because a lot of that is being reviewed today. It will have to be cleared. There's some interdepartmental struggles that take place around that in the government between the DoD and FAA and others as to what is the appropriate band of spectrum to make available.

But all of that will get worked out. And I think one thing that's clear, and it's not a partisan issue, it's a bipartisan is that we need to be a leader when it comes to 6G. I think there's a sense that perhaps we were not the leader that we should have been as it related to 5G relative to the Chinese. And I think as a result, you're going to see a commitment to doing whatever can be done in order to unleash the American leadership in that space. And ultimately, that's great for us because we're a fundamental component of supporting the development of all those new networks.

All right. Thanks, Brendan.

Yes. Thank you, Ben. Appreciate it. Thanks for hosting us.

Okay. So let's get started. Cameron McVeigh, the communications infrastructure analyst here at Morgan Stanley. Ben Swinburne, the communications infrastructure, media, telecom, cable analyst and Marc Montagner, the CFO of SBA Communications. Welcome, Marc.

Thank you.

Before we get started, let me read this. For important disclosures, please see the Morgan Stanley research disclosure website. If you have any questions, please reach out to your Morgan Stanley sales representative.

And with that, we will get started. So Marc, to start I wanted to get your thoughts on the growth outlook, the broader power industry and what you consider the main growth drivers for the industry today?

Well, I think if you really look at our business specifically in the U.S., you have a colocation authentication or extra coverage and amendment for the existing equipment.

So that's really driving the growth on -- in terms of revenue growth. But just step back a little bit, right? The catalyst in this industry, I mean it's an industry for 30 years, key areas by spectrum and they roll out next-generation technology. They get about a 10x increase on the capacity versus the prior generation and an exponential cut in terms of the cost per bit in terms of delivering a cost over the airway if you just cram more bits per. And that's really been the driver for the industry for the past years.

I mean, 30 years ago, EBITDA margins for the wires carriers of about 45% on a mature network and is still 45% today, but they were charging $0.25 a minute for voice or $0.10 for SMS $40 for a gig of data, and now it's $55 or $60 all you could eat, traffic is still growing at double digit every year. And the EBITDA margins for the carriers is still 45%, just because they have been able to take down the cost a bit tremendously.

So the next catalyst, I think, for our industry. And then when you look at CapEx as a percentage of revenue, they roll out a new technology, they get a 10x increase and they go to harvest mode for a few years. So the carriers goes between paying 15% of revenue on CapEx to 25% when they deploy new technology. 2022, 2023, they were running close to 25%. '24 and '25, they are running below 15% of revenue.

So we were at the trough now and they are in the harvest mode. The next catalyst for our industry really is going to be [indiscernible] and the FCC is probing to auction the C block in 2027. And it's probably 18 months clearing period, the manufacturer, Samsung, Ericsson, Nokia or [indiscernible] equipment for 6G, marketing this aggressively.

So you could see a rollout of 6G in '29, 2030 time frame, and it's going to be a catalyst for growth again. In 2023 we did $78 million of lease up and lower guidance midpoint 35. So you could receive the delta at the trough, we're still growing, but not growing as rapidly. And at the peak, you could see an increase in the top line growth rate.

Great. So it's a long answer for short question. I'll take it. And I wanted to ask specifically in -- on the earnings call last week, it was -- '26 is characterized as the right at the bottom in terms of domestic growth at 2%. That's below what we've seen in the 2% to 3% lease-up expectation.

I guess what gives you confidence that this is truly the trough for the year? And what do you think needs to happen to see growth reaccelerating the shortterm.

Yes. So I think we -- if you look at -- especially in the U.S. we always see 4% to 5% growth, 3% will come from the accelerator on the existing leases and 2% to 3% growth from amendment and colocation and as I said, CapEx as a percentage of revenue right now is really at the trough less 15%.

We see the majority of the new revenue is not coming from a [indiscernible] coming from co-location, densification coverage. So it just means that the network is still -- the carriers still have double-digit growth in terms of traffic and the need to meet that demand.

So we feel pretty good at 4% to 5% growth rate, probably closer to 5% on a normalized environment, closer to 4% at the trough.

Great. That's helpful. I want to ask about fixed wireless. It now accounts for 50 million subs and more than half of the overall network capacity. How directly are you seeing FWA translate into the leasing activity for the towers? And do you expect this to be a meaningful driver into 2026.

Yes. So I think I've seen research report showing that 50% of traffic on network today comes from fixed wire access. We have hundreds of millions of handsets and 50 million fixed wire access customers. So you could just imagine how much tonnage is going on those customers. So it's definitely driving colocation for densification. For us, we have a passive infrastructure. We lease space to the carriers. We know they have visibility and the equipment for fixed wireless access or connectivity to a device is the same thing, a bit is a bit is a bit on the RAN network.

So we don't have that type of visibility. But -- it's clear that fixed wire access is going to drive more colocation.

Got it. Marc, you mentioned the shift to colocation. Is there any difference in how we think about the timing between when those leases are signed and when they actually hit the P&L compare with colo to amendments.

Yes. So the cycle book-to-bill cycle on the [indiscernible] is closer to 3 months on a colocation is closer to 6 to 9 months.

Okay. You guys also mentioned on the earnings call, and we had Verizon yesterday here at the conference in AT&T this morning that you've got a lot of contracted activity with Verizon in 2026.

Talk a little bit about the growth outlook there and why you think that MLA is a sort of strategic positive for SBA?

I think if you look at the industry, the industries oligopoly, 3 major carriers, 3 large publicly traded company, a power company. I think the carriers have long-term network needs, they're growing the top line at mid-single-digit clearly don't need to control their cost over the long term for us.

We have 3 customers, and we want to lock in a minimum growth rate. So there's healthy dialogue there where I think it makes sense for all of us to agree and try to predictable outcome for the next 10 years. So we signed an agreement with Verizon. We're very pleased with the agreement. It's a 10-year agreement with escalated minimum volume commitment and exchange they have certainty on the pricing. And I think it's going very well, and we're very pleased with the way they are. We are working together. At the end of the day, we want to support our customers. We want to make it easy for them to deploy. T-Mobile was, I think, largest generator of new revenue last year.

They had build-out requirement as part of the acquisition of Sprint, they need to meet a 95% coverage of pulp and some densification need. Now they have kind of deployed 5G on over 85% of the SBA towers. So they're pretty much slowing down in 2026. Horizon is picking up the [indiscernible] Verizon is going to generate is going to be our most active customers in 2026 in terms of new revenues.

Sticking with the big 3. I think you guys also said that AT&T would probably be a bit of a first half versus second half story. Maybe just talk a little bit more about what's driving the trend line with that customer in '26 versus '25?

Well, AT&T is, I think, is steady. We have a 5-year agreement with them. We signed that in mid-2023 to structure agreement, helping them really roll out, deploy 5G. Make it easy for them to deploy. So it's basically following the term of the agreement.

Great. I wanted to ask about -- EchoStar has been in the news everyday. Yes. Perhaps could you explain to the audience how we got to the situation where we are today and maybe potential next steps on the legal process and path to recovery?

So we -- I mean DISH was starting a fourth carrier in the U.S. They needed basically towers to deploy their equipment. We signed agreements with them, lease agreement, it's about $56 million of annual revenues. Last year, we did $37 million of lease up, $2 million were with DISH, almost nothing in the second half. And the stopping. So we have basically a $56 million revenue contracted with DISH in 2026. We assume it's going to be 100% churn for 2026. We have short-term contract with DISH. So the to exposure under the term of the leases that we have is slightly above $100 million. The runoff at the end of '27 and '28.

So Arturo exposure is about $100 million, and we filed a lawsuit basically in order to protect our legal rights. So there's not much I could comment beyond the fact that we are a lawsuit, and we're going to pursue all legal revenues trying to basically collect as much as we can under the contract.

On the topic of churn, I wanted to ask about Sprint. You mentioned on the last call that the expectation for Sprint churn in '26 has raised a bit. Can you help us think through potential timing of Sprint churn over the next couple of years?

So it's $56 million this year and going forward is going to be less than $20 million over the next few years basically. So it's really minimum exposure going forward.

Okay. Great. And let's switch a bit to the international markets. Brazil represents almost, I think, 15% of your site leasing revenue, 12,000-plus towers but there's some near-term headwinds with the OE consolidation and FX volatility, not to anything you don't already know. What needs to happen for Brazil to transition more to a growth story? What do you think is the realistic time line?

Well, I think Brazil is a very interesting country of [indiscernible] experience in Brazil from multiple companies. And I'm always very bullish in Brazil, 200 million people, large exporter of food commodity, minerals, oil and gas, balance of payment is positive. I think they exported more than like by $4 billion in January alone.

The population is [indiscernible] 5G is less than a 50% deploy and the country is now in oligoply you have 3 carriers, Vivo, Claro and TIM. And traffic keeps growing. So I think we're indexed towards oil, which has been basically carved out into the other 3. And the Oi wireline is going out of business. We have $14 million churn from Oi wirelline company is going to disappear basically. And then we have a little bit more churn coming from Oi wireless going forward. But is the peak years in terms of churn in Brazil. The Central Bank has done a phenomenal job in terms of drawing inflation.

And the key areas, really very few towers have been built in the last 2 years just because short-term interest rate, we're collecting 15% interest on our checking account in Brazil today. The cost of capital is clearly high teens, 20%. And that's what -- when we look at a new BTS, a new tower that an operator wants to us to build that's kind of a high-teens hurdle rate we look at.

So we really have cut down the build in Brazil tremendously. And so have the other carriers in summary, I think it's a much healthy market for the tower company because the wireless operators have to keep deploying in terms of color, in terms of new towers and 5G is less than 5% -- 50% deployed, and the churn is basically what the tailend of the change.

So I feel pretty good about Brazil over the next few years.

Got it. I also wanted to ask about the -- some of your African markets, which it seems like they have some of the highest returns on invested capital. Do you expect to expand -- continue to expand your footprint in these markets or deepen some of the existing positions.

So in 2 markets in Africa, South Africa and Tanzania. I think we've got in early at the right valuation. We have done extremely more earlier. It's the 2 countries with the highest return on invested capital into the double digits. And Tanzania is still growing. The government is really pushing coverage, wires is probably the only physical telecom infrastructure that's working well.

Africa was a high-growth market for many years. And kind of slowing down a little bit now. But I think we like our position in Africa. I don't see us expanding into New African market at this stage. I think -- I like where we are right now.

Great. Just on that topic, in terms of portfolio rationalization, it's been a focus recently. How should we think about some of the markets in which you have less scale versus others? Maybe just take us through a dynamic where it would lead you to become more of a skilled player.

Right. So I think when Brendan became CEO, he announced, I think, in his first earning call in February '24, portfolio review. And we look at the 15 markets where we operate and we realize that the markets where we're doing where, where the market, where we're at scale. Some operators to roll out a new technology, they come to you because you know you could add them deploy fast and at scale, also gets you better margins because SG&A are pretty much fixed cost. And you need to be in the market where the economy is healthy. The economy is healthy, corporate or hiring people, they need wireless connectivity.

People have jobs, they spend money on their wireless device. You need a healthy economy. And you need to be in an economy where you don't basically invest in front of churn. We've seen like Brazil going from 4 to 3, the U.S. with spring being consolidated way, you need to be in a market with an oligoply and scale is important. So on that basis, we exited the Philippines, we exited Colombia.

We sold our operational Argentina and we sold our exploration in Canada. We love the market, but we only had a few hundred towers in a very large country and didn't make any sense. So we sold to a P-firm at an attractive multi. And then we look at the markets where we operate in Central America, we much consolidated to 2 operators, Millicom and Claro very healthy operators investing in the network committed to 5G. 5G was under deployed. And when Millicom decided to sell 7,000 hours, we struck a deal with Millicom. So we -- so 50 new contracts in U.S. dollars with escalator newbuild commitment we're working in an upper single-digit growth rate and low-risk, healthy market, growing very rapidly.

So the bulk of the towers we will build in 2026 will be building Central America and we had operations in the regions. So with people in the ground. This is a business with -- we don't need that many more people to operate in new sites.

You touched on 6G a little bit earlier. I wanted to kind of bring 6G and AI together and just hear you discuss how you think those standards are coming together, how AI plays into the opportunity and help us -- I know it's early, but how does how does the 6G opportunity compare to what you've seen in previous generation cycles for the tower business?

Right. So I think it's still early to say. But I think if you think about -- I was listening to the CEO of AMD this morning at 7:00 a.m. who is talking about AI and she or he see demand for AI chip for inference data center closer to the urban center where the applications are going to resign. I think if you want to make real-time decision using AI app, latency is going to be very critical. And for that, you need to be close to the user if the user is going to use a mobile device, you need to be close to the site.

People are saying is a small data center inference data center coming to the base of the sites, the wireless sites. I don't know, but a lot of people are talking about it. I think the other thing AI is just going to generate much more I think, traffic on the network, probably more uplink and 6G is going to just mean more new equipment at the site, heavier equipment at the site, and it's going to be positive for the operators and then you look at some other countries now are using wireless sites to help for drone delivery services in terms of securing more precision.

I think it could be helpful in and clear where autonomous vehicle or they're going to need some local signal. Today, most of the processing is being done in the car, but is a line change or not or they're going to need more connectivity to the cars. Some countries are using wireless sites for drone detection. It's cheaper and more precise at doing it the way we're doing in the U.S. using radars. Is that going to come to the U.S.? I don't know. But I can see that wires infrastructure that's really difficult to be -- to replicate because it took 35 years to build, you have zoning laws.

Now you have power at the site, you have fiber going to the site, you have a generator, you have batteries. It will fully robust site, you're protected. And you could see how it could support a number of new use in applications going forward.

Yes. That's interesting. In addition to AI, another big topic, this week has been direct to sell satellite connectivity. I'm sure you probably are aware, probably starting last August, I think EchoStar was talking about their plans and they introduced the idea of carriers using satellite instead of tower capacity, at least in rural markets. I know this is not a new question you've got, but it would be great to get your updated view on how satellite fits in to the overall. Especially U.S. market you think that impacts your business, if at all?

Sure. So I think satellite is great for coverage, not great for capacity. So I think it's really a complement to the terrestrial wireless network. If you really look at the wireless network in the U.S. covers about 95% of the population, but only 2/3 of land mass. 1/3 of the landmass is not covered by wires networks. So if you have a dual mono handset with the right form factor, dual chip, dual radio, community execution with a satellite and terrestrial network, I think, is basically the killer app.

And then if we look at starting. So they bought spectrum from DISH, but also they got the MSS spectrum, which is 40 megahertz of a global ban and knowing Elon he thinks big. So it's probably thinking of a global play, not just the U.S. So I think it's going to be a great complement to the wires network. As you look in terms of capacity, you probably need 10 satellites to have the capacity of 1 base station.

We probably have 150 to 200 sites in the U.S. alone. So you can put 1 million satellite in orbit or replicate that it's just not cost effective. And it's interesting because I've been having that question from investors for 6 months and today, at the World Mobile Congress in Barcelona, I think one of the SVP for starting basically confirm and now we won't have the capacity. It's a good complement to the terrestrial wireless network, but it's not something that is going to cannibalize it.

It's more of a complement can never get the capacity and the scale.

Marc, it seems like the private tower market valuations are much higher than the public valuation and it seems like the disconnect has limited some of the M&A activity recently. If the gap persists, how should we think about capital allocation priorities buybacks, acquisitions and debt reduction.

Yes. So there's a disconnect because it's just a scarcity of large tower portfolio for sale in the U.S. and two, there are multiple large productory infrastructure franchising those opportunities, sorry. They could basically fund the acquisition in the ABS market, putting 12 tons of leverage at attractive rates. And the way they got committee is probably saying I could buy this for 35, 40 times today. And market it to another PE for in 5 or 7 years at 25 to 30x and justify a multiple and that mass has worked for the last 35 years.

So I'm not saying the math is wrong. It's just something that's worked really well for the last 35 years, just make it very difficult for us to compete. So if you look at our capital allocation strategy and also public numbers, it's about $1.9 billion of EBITDA , $525 million for the dividend, about $490 million for cash interest expense, $70 million of cash taxes. And then you have another $225 million, maybe $250 million for gross CapEx and maintenance CapEx. That leaves you about $650 million of extra cash to allocate. And then this is as a management team and our Board, this is how who could create value by being disciplined on how we allocate that capital.

So in 2024, we spent $250 million M&A, $200 million buyback, and we paid our debt in a rising interest rate environment. Last year, we did a $1 billion deal with Millicom accretive at 11x EBITDA. And we bought $0.5 billion of stock at an average price of $200. Going forward, I think buyback is at this level, makes sense. And we don't see -- I don't see ourselves buying a large portfolio in the U.S. given the valuation, and I don't see us entering new emerging markets. So I think we're probably going to index towards buyback.

Great. I wanted to -- we have a couple of minutes left. I want to see if there's any audience Q&A. You guys can think about it. Marc, the tower industry has faced a persistent valuation multiple compression recently, SBAC trading at a mid-teens to AFFO versus a 10-year average below 20s. What do you believe the market may be missing or what catalysts might drive some more multiple expansion?

Well, I think, as I said, CapEx is a percentage of revenue for our customers oscillate between 15% and 25%. We at the trough, '25, '26, we're running below 50%, although historical low but the traffic keeps growing at double-digit, fixed-wise access is using 50% of the capacity. The industry is going to add another 10 million sub this year. The $15 million that they have were already using half of the capacity, you're adding another 10, just imagine the demand on the network. So I think CapEx as a percentage of revenue is going to grow 6 years around the corner, AI, I think phone detection, autonomous vehicle. So many, I think, applications. The world is going wireless, wires growth is never going to go away. And I feel really good about our industry. And then you look at the tower industry, it's really difficult to think how you could replicate that infrastructure, recently visited a tower down close to headquarters that was built in the '90s.

The Crete lab base probably is, round slab of concrete, the size of this room, going 60 feet into the ground, you have those steel rolls going 40 feet down and you have a 200 feet tolerant half of it with tons and tons of equipment, generators, fuel tanks, batteries for the operators, fiber coming in. [indiscernible] in a very dense environment where the zoning law would never let you basically replicate that infrastructure.

So look at the geography where you live in California, Connecticut, Resisted County, the coast of Florida, Long Island it's almost impossible to build there. And if you're wise operators, you need to bring more and more traffic to this community. So the only way to do it is cheaper to just pay your tower operator to put another piece of equipment on the tower than trying to find a way to build new towers.

So I think that infrastructure has been there for 35 years is going to be the 35 years from now in an industry that's growing traffic at double digit. So I feel pretty good about our industry going forward. I feel pretty good about the barriers to entry and the exclusivity that it provides just to factor given the zoning laws and the cost to replicate that industry.

So I think people always look at it. Again, you're only growing at 5%, only growing at 4%, but that's a trough and it's very stable. It's contractual, and I feel pretty good about our prospects going forward.

Great. It seems like a good place to end. Marc, thank you so much.

Thank you. Thanks for having me.

Good morning, and welcome back to Citi's 2026 Global Property CEO Conference. I'm Mike Rollins with Citi Research, and we're pleased to have with us SBA Communications and CEO, Brendan Cavanagh. This session is for Citi clients only and disclosures have been made available at the corporate access desk. [Operator Instructions]. Brendan, we'll turn it over to you in just a moment to introduce your company and team to provide any opening remarks. And if you can share with the audience the top reasons an investor should buy your stock today, and then we'll get into Q&A.

Thanks, Mike. Nice to be here. Thanks for hosting us again. So as you said, I'm Brendan Cavanagh, the CEO of SBA Communications. I have with me today Louis Friend, our Vice President of Capital Markets and Finance.

So it's always an interesting question. What's the top reason to buy our stock? I think I hate to say this, but in part, the reason is that it's valued much way below where it should be in our view. And -- that's something that we typically historically would never comment on because that's really for you guys to figure out. But we see where assets like ours are valued in the private markets, and there's quite a disconnect. And we recognize that our valuations are below historical norms and also below where they really should be in terms of the predictability and steady cash flow that we can continue to produce and will continue to grow over time and our ability to provide shareholder remuneration. And part of the way we've been capitalizing on that phenomenon recently is just through increased share buybacks, and that's something we'll probably continue to do while we're valued at these levels.

Thanks. And maybe building on the points that you just made, can you share with us the priorities for SBA this year and how that's going to drive over time the growth in revenue and cash flows?

Sure. Yes. So our priorities aren't really all that different than they've been historically. One of the great things about our business is that it doesn't change that much over time. The critical nature of the assets that we own for the wireless carriers continues to be the same as it was a decade ago. And so our focus is really on making sure that we're building strong relationships with the carriers. One of the things that has changed a little bit is that there's been some consolidation among our customer base over the last so many years, which I think most people are well aware of. And that has made it even more critical that the strength of the relationship that we have with our customers remains a top priority. So that's something we're focusing on.

But beyond that, it's really the allocation of capital in the best way possible. We've always prided ourselves on being very strong allocators of capital. And really, there's a few different buckets that we evaluate, and those haven't changed that much either. The first one is to continue investing in new assets, both new tower builds and acquisitions. That's ideally where we would like to prioritize our spending. But given the disconnect that I mentioned before between the private markets and public markets, that's made that more challenging. And so it's moved us more into that second bucket, which is the share repurchases. Right now, we're seeing the opportunity to buy shares at immediately accretive prices, and we have great confidence in the future. So it seems to us like it's the best investment available to us.

And of course, I didn't mention it. We have a dividend that we're continuing to grow at a very high level. We're the fastest-growing dividend in the industry, and that will continue, I think, to be the case for many years to come.

And so maybe digging into this a little bit more. When you talk about the financial flexibility you have, just to help our group here, can you frame the financial flexibility this year, whether you -- in dollars or size of market cap that you can use for, whether it's asset opportunities, build-to-suits, repurchases. And how that -- how you're thinking about those priorities of spend? Obviously, you just had your earnings and you gave us an update on some of those projects.

Right. Yes. So first, we start with our leverage target, which is something that we've recently changed, although we changed it to a level that we've been operating at for the last several years. So our target leverage range is 6 to 7 turns of net debt to adjusted EBITDA. Today, fourth quarter, we finished the year at 6.4 turns, so kind of right in the middle of that range. And given that we historically have always seen our EBITDA grow year-over-year, that creates increased capacity.

But in addition, we're generating $1.3 billion of AFFO each year. So that's just available cash to be redistributed into the business. And within that context, we're able to take that amount plus the additional capacity that's created through EBITDA growth and keeping our leverage the same and invest it into all the items that I mentioned before, ideally, a mix of new assets that we add to the portfolio as well as share buybacks and dividends. And I think those will be the primary areas that you'll continue to see us invest.

We will occasionally look at other things that are complementary to what we do, and we've done that at times throughout our history, and I think we'll continue to do that if we see something that fits well with our skill set and complements the assets that we have. But the first few buckets are really the primary areas where we'll invest that capital.

As we maybe jump into the operating businesses and leasing trends, on the earnings call, you gave some updates in terms of churn, both within the domestic business and in the international businesses. So can you talk about how you see these churn events in terms of a possible clearing opportunity for SBA to sort of get back on serve and get back to more of the organic growth rates that have been underlying this business for some time?

Sure. A moment ago, I referred to some of the consolidation that's taken place with our customers in each of our largest markets. And as a result of those consolidations, it's caused some amount of churn. The Sprint churn, obviously, T-Mobile buying Sprint years ago. We're kind of in our last big year of churn that we're recognizing related to that consolidation. There still will be some -- a little bit left, somewhere in the $15 million to $20 million range into the future over the next several years. But really, the bulk of it has gone after this year.

In addition, we, of course, had the situation with EchoStar/DISH, who sold much of their spectrum earlier this year and has essentially said that they're moving out of the wireless business. I'm paraphrasing, but that's basically what's happening. And so given the situation with them and the fact that they frankly stopped paying their bills, we pulled forward all the churn related to our contracts with them into this year as well. So we had a heavy amount of U.S. churn, primarily driven by those 2 items.

And internationally, the other big one was in Brazil, where Oi, which was the fourth carrier down in Brazil, was essentially bought -- their wireless business was bought and split up among the other 3 incumbent carriers in Brazil. We've seen some churn related to that. In addition, they're shutting down their wireline operations, of which there was a big wireless component, and we had a number of leases. And so that churn has also been basically pulled forward into this year. So that makes this year a little bit rough in the way that it looks, but the idea is to essentially pull all that stuff forward, clear it out and allow us to get back to a little bit more of a normalized growth level in future years. And so that's essentially what we've done.

And since you mentioned the EchoStar churn, what are the potential paths or remedies that you have to try to get your contract value from your customer? And is regulatory an option? There's been some press and some filings with the FCC on meetings regarding this topic. I'm curious if that's a possible remedy or opportunity to make forward progress.

Well, it's certainly a possible remedy. And our belief is, and this is not just SBA, but our industry as a whole, believes that the FCC ideally should make the approvals of these transactions contingent upon the -- making the vendors that made it possible for DISH to be in a situation that they are to be made whole. And we've made that case to the FCC and to other officials. And we hope that they will help step in and do what's right because otherwise, there's a chilling effect to future investment potentially. There's a lot of spectrum that's about to be auctioned off by the FCC. And if they expect infrastructure companies and services companies and fiber providers to all step up and to be there to support any new build-out of that, we have to know that they're going to support enforcement of contracts and that there can't be some windfall to a party based on the spectrum that they were they were fortunate enough to acquire years ago.

So yes, hopefully, there will be a regulatory result. But either way, whether there is or there isn't, the contracts are what they are, and it's our intention to enforce to the extent that we can. I think I mentioned on the last call that we have filed a suit against DISH/EchoStar to basically enforce our rights and their obligations under those agreements. And so we'll pursue that as far as we can. And really, there's not much else I can say about it at this point, but we'll see how it shakes out. In any case, we've taken the churn, as I mentioned, for the full year. So any recovery at this point as it relates to our numbers would be upside in terms of reporting.

Very helpful. So maybe getting into domestic leasing. Can you talk about the leasing activity that you're seeing for your portfolio and what's embedded into the guidance for 2026?

Sure. Yes. So we're seeing -- well, let's start with the U.S. We are seeing activity from all the carriers. There's obviously different situations that each one is in. So I'll start with Verizon because we signed a master agreement with Verizon late last year, at the end of the year. So we're just now starting to get into activity under that agreement as we've gotten into the beginning of this year. And we're very pleased with that agreement. We're very pleased with our relationship with Verizon. They have a lot of work to do. It's very heavily focused on new siting activity, which is great for us in the sense that not only are those touches worth more than the average amendment in terms of their value, but they're also creating more points of presence across our portfolio of assets. And we think that's great in terms of enhancing the value of the portfolio, but also the future opportunities for upgrades and the introduction of new spectrum bands down the road and the ability for that to contribute to growth for us for a long term. And it's a long-term agreement. So I think there'll be a lot of opportunity there, and we'll start to see that grow throughout this year. We're already seeing it in our backlogs.

AT&T is also quite busy. We have a different structured agreement with them that goes back a number of years. And so for the time being, it's -- the difference with AT&T is that when they acquired, in particular, the 3.45 spectrum from DISH, although that transaction has not been approved, they were able to essentially sublease that spectrum for the time being. They kind of shifted focus on overlaying their network with that spectrum. I think that's a timing issue, and we'll start to see them shift back to some further densification in the future. So it's been a little bit slower for us really because of the structure of our agreement with them, which is not allowing us to capture as much growth from amendments because they essentially paid for it upfront through bonus escalators. So it's just a different structure. But as they get back more to new leasing activity, I think that will be a positive contributor for sure going forward.

And T-Mobile has been extremely busy over the last couple of years. I'd say that there's a little bit of pause there as they reset, but they have a tremendous amount to do as well as they're integrating the U.S. Cellular assets that they've acquired. They're dealing with certain regulatory requirements as well. We expect to see them continue to be the strong market participant that they've always been and our relationship there is very, very strong.

So when you pull all that together, how do you see that long-term algorithm for domestic organic site leasing growth?

Yes. So you basically have 3 components to organic growth. I think I mentioned this actually on our earnings call last week. You have the built-in escalators that are built into the contracts that in the U.S. average about 3% annually. So that's kind of a fixed component of growth across our U.S. business.

The second piece, of course, is new lease-up activity in the form of both new leases and amendments to existing leases. That's typically the most variable component of the 3. And we expect that, that will be over the long run, somewhere in that 2% to 3% range, and it may vary from year-to-year and period-to-period depending on what activity the carriers are undertaking, what new spectrum they have in hands, all those things. So that's the second piece.

And then the third piece is the negative item, which is any churn that we experience. The churn, as I just mentioned a moment ago, is elevated for this year. But once we get beyond this kind of what I would call more specialized consolidation churn and we get back to a more normal level, that's typically been historically for us, somewhere between 1% and 2%. And I believe that as we get a little bit further down the road, given the consolidations that have happened and a lot of the clearing that's taken place, that we'll be a little bit closer, we should probably normalize out somewhere closer to 1%. So basically, you have 3% plus 2% to 3% minus 1% in the long term. And so somewhere in that 4% to 5% range.

And we're getting questions just about some of the changes from some of your carrier customers this year, some cutbacks, layoffs, cost cutting as they're responding to the competitive landscape. Are you seeing any adverse indications on how that rolls down to their network spending plans and the leasing activity, even if it's on a temporal basis?

Yes. I think it's probably a little bit different for each one. But I would say that there's been some impact. It's hard to draw the direct correlation because there's always been -- throughout my history, I've been at SBA for over 28 years and I have seen many different cycles. But there's always been this tug and pull between the needs of the network and the constant additional strain that's been placed on it through consumption, particularly broadband consumption versus costs and how do we manage the financial side of the house. And so at various points in time, one side tends to win a little bit more. It's kind of like a tug of war and then the other side tends to have to step back in.

And I think as we start to see growth in applications like fixed wireless access, in particular, we're going to see the network needs increase again and put pressure on the ability of the network to perform, and therefore, the carriers will have to continue to invest to create that additional capacity and to densify their networks.

And just thinking about this, the decision for Verizon, for example, to do a colocation comprehensive deal with you that you're describing earlier is different than the traditional types of comprehensive MLAs that we've seen from these big 3 carriers over time. Is there something more significant that investors should be mindful of when thinking about that agreement and what that could mean for future comprehensive deals that you could enter into with the carriers?

I don't know. I think in this particular case, they had their specific needs that they foresee over the next decade because it's a 10-year agreement. And they recognize the need for increased points of presence, whether that's driven -- and you really have to ask them, whether that's driven by fixed wireless access as one item or just general densification over time or further expansion into rural or really all of those things, which is what I think it is. It's a mix of everything. They recognize that they had a need for a lot more locations. And I think it's just -- the agreement was built around what their needs were. It's not driven by us. It's driven by really what they need, and we try to meet them there and come up with an agreement that is mutually beneficial for both parties.

And as we think about the addressable market for revenue, you've talked about the historical and continued interest to expand through build-to-suits and acquisitions. What are the opportunities in the U.S., whether it's from either of those 2 activities or other things that you could do to just help grow your revenue pie and squeeze a little more juice out of the lemon.

Yes. So there are assets that come available, not as many as there used to be in terms of the acquisition landscape. And I think the biggest challenge, of course, is that it's very competitive out there because you have a lot of private money that is heavily invested in this business and continues to look for ways to grow as well. And quite frankly, as a private company, are able to stretch more and to do things that are dilutive and the early days. That's much harder to do as a public company. And so you've seen, I think, all of the publics be less acquisitive in the U.S. And that's not -- I can assure you -- and I'm sure this is true for our peers as well. That is not because of a lack of desire. That is really just the economics of the situation. And so that's been more of a challenge. But having said that, we do have strong relationships with a number of developers. We've done many deals historically. And there are a lot of people that I'm proud to say prefer us, even we will take a little bit less money because they know that they can count on us to get the deal closed, to do it right, to not change things at the end. And so we'll continue to lean into those relationships where we can.

And on the new build side, it's been a little bit more challenging historically, and this is over the last several years because the carriers have had much more leverage in that capacity, and they've offered up arrangements that weren't necessarily all that attractive. But because of the desire for growth in assets in the U.S., they were able to get it from some smaller players. I think, though, that there is a recognition now with some of the things we just talked about a moment ago, for instance, with Verizon, that there's a need for more siting, more points of presence and the ability to rely on established companies like ours to make sure that it gets done and gets done well and on time is starting to matter a little bit more. And so actually, I am hopeful and optimistic that we will see an increase in the number of new tower builds we're able to do here in the U.S. over the coming years, and it's something that we're going to focus on internally quite a bit.

Shifting to the international markets and specifically Latin America, you mentioned earlier that you pulled forward some churn. And so what's the opportunity now for that portfolio to get back to growth in 2027 and beyond? And how does that growth compare to what you anticipate out of the U.S.

And when you say that portfolio, you mean internationally broadly. Yes. Well, there's plenty of opportunity. In fact, the primary reason that we're invested internationally is really because it is so far behind in many of the markets that we're in, so far behind the U.S. in terms of the network development in those areas. And so what it allows for is a much greater runway in terms of growth. And we've seen it play out here in the U.S. We have a good sense of what's needed to support each of the new generations of technology and each of the spectrum bands that are becoming available in these various markets. And so I would expect that the growth over time will be much greater than it is in the U.S. in terms of organic growth. It really should be because of the needs.

So I'm kind of excited about that the challenge has been recently, and it was, by the way, if you go back to the earlier days of our investment in these markets, you saw that it clearly grew faster. And I think we will get back to that. Really, what's offset that is a lot of the consolidation that has happened in a number of these markets. And when you had markets that were a fraction of the size of the U.S. and they had more national carriers than we did here, that dynamic was not going to last long term. And so we've seen that happening, and so it's put pressure. Our lease-up has actually been pretty decent, but the churn has kind of offset that. And even the lease-up has been somewhat negatively impacted over these couple of years due to the consolidations because the carriers have had to focus their attention on integrating those 2 networks into one combined network. And so as we start to move beyond that, I think we will see a return to an increased pace of growth in these markets. And we're excited to get back to that, and I think it will happen in the coming years.

One question that we're asking all the companies attending this conference is how you're approaching AI within your company and the mix of building or buying or partnering for AI solutions. And how do you decide if you want to build a solution yourself or buy it in from the outside?

Yes. Well, we're certainly adapting AI-based solutions within our organization for our own processes and systems and just operating efficiencies. Some of those -- many of those are internally facing, but some are starting to become externally facing and things that we can offer to our customers, too, in terms of a view of what's happening at the tower sites with their equipment, with their network, something that we can do more real time and more electronically, it's actually reducing the number of site visits and tower climbs that have to happen.

But internally, the way that we're approaching it at this stage is a little bit more of a broad-based approach. We're not getting too specific into using just one particular tool. We use a number of the top name tools that you're familiar with. And for different purposes, each one is applied differently based on where we think it is most capable of being helpful. And I think over time, it will allow us to make more informed decisions about what we use. The reality is things change. Something that's the best today may not be the best tomorrow because something new seems to come along. The rapid pace of change is quite significant in this space. But for us, it's really just about kind of being selective where we introduce it and also being disciplined in it. We're not just jumping in without kind of understanding what the risks are. And I think we'll start to see operating efficiencies and synergies that we gain over these coming years that will start to become quite impactful actually.

Another question that we get is regarding satellite. And there's 2 ways we get the questions. And so one way is what is the risk that satellite LEO constellations can start to take the place of towers, particularly whether it's in rural areas or emerging market areas that are not well populated. But the second side of it, and it's something that I think that you've been asked before is are you seeing any interest also in leasing from these companies to try to bolster their networks?

Yes. I think -- I definitely think there's opportunity, and we have been having some conversations with some of these folks to understand what their needs are. And I think the truth is that they're still very much in the planning phase and trying to understand what's possible and what companies like us can offer. And I'm encouraged by how some of those early conversations have gone. And I do think it may be a hidden opportunity that people weren't really thinking about early on because, as you said, most folks look at it and think of it as a threat. I don't really see it as a threat. The places that you're talking about where it may displace a traditional terrestrial solution are ones where it's not that cost effective to provide that terrestrial solution today typically. And so it's really a financial decision because the quality of what can be provided is not nearly as good through a satellite solution.

But if you're talking about a sparsely populated area or providing broad-based coverage for basic functions, then sure, then that may be the way to do it, and it's probably less expensive than trying to have all of these individual locations out there. And frankly, we've seen that for years. Anyway prior to the satellites coming along, there were a lot of places that just aren't covered at all because they weren't financially accretive investments. And so that already existed. So this may provide, I think, more of a complementary solution to cover those areas.

In terms of the more densely populated areas, though, what is needed to provide the types of solutions, and it's growing, by the way, as we move into the world of AI and the types of uplink capacity that will be needed to support more generative AI solutions, the satellite solution is just simply not going to be able to provide it with the same kind of latency, low latency that's required and the speeds that are required. So I feel pretty good about our positioning in this, and I'm hopeful in terms of the growth potential from it as these networks are potentially developed and you have a complementary sort of hybrid solution that's a mix of terrestrial and satellite coverage.

You mentioned earlier in the conversation, the contrast, actually a couple of times of private companies versus public companies. And so just curious what your perspective is on the opportunity for SBA to consider alternative forms, whether it makes sense to be a private company, whether there's financial capacity to be a private company over time? And do you think about some of those pros and cons maybe differently today versus the way you would have looked at it previously?

Yes. I mean I would say it's not a top of mind thing that we spend a lot of time on because we have enough to do in our day job trying to run the company that we've got. I think there are moments where we see the benefits that certain private parties have, but there are also benefits that we have as a public company as well that sometimes they don't. So I think there's trade-offs in both directions, but it's not, frankly, something that I spend a ton of time thinking about.

And so a question that we've received from our group here today is they're asking about the debt rolling off over the next 2 years, your incremental cost of debt and how much of a drag on AFFO growth or AFFO per share growth of that could be? And maybe it's an opportunity to kind of frame the underlying growth of AFFO per share and then maybe unpacking some of the headwinds that might be slowing it down over this period.

Yes. Well, really, outside of this year with this elevated churn that we talked about earlier, the primary drag on AFFO per share growth is interest cost. I think our next 3 maturities or maybe counting the one that just matured, all have a one handle on the coupons that we have in ABS paper that we hold. And I think our high-yield debt that's coming up, the next 2 high-yield pieces of paper both have a 3 handle on them. So when you look at that relative to where we could finance today, where the market is, obviously, the interest costs are going up. And so that certainly is a headwind to AFFO per share growth. And I think any of you that are looking at a model on SBA know that. You can simply take -- all of it's disclosed. You know exactly what our debt is, when it matures and what the interest rate is, and you can probably make a fair assumption about what the cost of debt would look like to refinance that debt. So you will see that there's significant increases to our interest cost for the next couple of years. If it weren't for the interest expense headwinds, if you normalize that, I think as we get into the next couple of years, you'd see very nice returning to that kind of mid- to high single-digit growth in AFFO per share.

But the next couple of years, we will have definitely a headwind. But really, once you get out, I'd say, about 2 years or so from now, that will start to normalize out because we'll start to get a number of these refinancings behind us. And hopefully, knock on wood, maybe interest rates will come down a little bit quicker between now and the time of some of these refinancings and it will actually improve from what today's projections might be.

What is your services business inferring about the leasing activity? And what are you seeing in terms of that trajectory that it's on?

Yes. So our services business has been very strong in the last several years. Last year, 2025 was actually the second biggest services year in our history. So we saw a lot of activity that was correlated with that. So there is a correlation to some degree, although we're very focused in terms of the work that we do. It's really focused on 2 of the carriers primarily. So sometimes it doesn't tell you everything that's going on, but it definitely gives you a sense with those particular customers. As we look forward into 2026, we've guided to a range that is below what we did last year, although above what we guided to at the beginning of last year because it ended up being much better than we thought at the beginning of the year.

And so it's still very strong by historical standards, and that is an indicator that the carriers still have a lot of activity going on, and we would expect that to translate at least in part into leasing growth. There are some level of services activity that we do that isn't necessarily one-for-one with new leasing activity, but it is an indicator. And we do services work across the industry. It's not all just on our towers as well. So we get a good sense of what's happening broadly with the networks.

You're ready for our rapid fire?

I guess I thought we were already doing rapid fire. All right. Go ahead.

What will be the most pertinent same-store growth KPI for your property sector overall, not your company, in 2027? And do you have a prediction of what that will grow at?

In 2027. Well, we historically always look at AFFO per share as being kind of the key item. But I think to some degree, AFFO per share, excluding the impact of interest headwinds is probably the most important thing because it's an indicator of the steady state long term.

And do you have a prediction on the growth rate for the category, not for your company?

Yes. Well, everybody -- you have to take out the interest cost because everybody is in a different place and timing. But I think if you do that, somewhere in that mid- to high single digits percentage range.

Great. And will your property sector have more or fewer or the same number of public companies a year from now?

I assume the same.

Thank you so much for joining us today.

Great. Thanks, Mike. Appreciate it.

Great to see you.

All right. Good morning, everybody. I'm Ric Prentiss, Head of TMT Research at Raymond James. And my definition of TMT was towers, and we've got Marc Montagner from SBAC here with us today. Media. We just literally jumped off the Warner Bros. Paramount call. Brent was able to ask the question for me because I had to run up here. And then telecom and satellite services. And 47 years of Raymond James Institutional Investor Conference, my 30th conference. So glad to see everybody here. And as I've always said, it's never dull and I'm still standing. And boy, is it never dull. So Marc, thanks for joining us.

Ric, thanks for having me, and congratulations on an amazing run.

Yes.

Keep going for another 20 years.

Yes. As we think about the tower industry I think on the earnings call last week, gosh, it was just Thursday, I guess. You mentioned that we're close to the carrier consolidation churn probably being done in the United States. And I know it's an awkward topic, but why don't you just update people in the room and on the webcast, where are we at with SBAC and DISH just so we know kind of to set the stage.

Right. So DISH...

Who reported this morning on top of everything else.

Okay. I haven't -- I didn't follow that. But DISH basically for us is about $55 million of revenue every year. Last year was only $2 million of lease up and ongoing commitment, we have short-term contract with DISH ongoing commitment, you total all their commitment, it's slightly over $100 million. So it's a very limited exposure. And they stopped paying late last year. So we basically have a lawsuit ongoing. So I won't comment on the lawsuit, it's public. People could just read it. But basically, for us, the exposure is minimum, about $100 million through the end of '28.

And it was removed from the...

So we removed about $56 million of revenue from our guidance for 2026. It stopped paying basically.

Any settlement negotiation litigation would be upside to that from a standpoint of somewhere on the income statement balance sheet. It would just be cash coming in.

That's correct.

We also then look at the remaining big 3. So we've got a stable operation in the United States, 3 carriers, well-capitalized carriers that can spend money. There's been some debate trying to understand Verizon, who you have an MOA with now and what they've publicly said about their CapEx. How do you kind of take a look at what activity you're expecting from Verizon versus CapEx? And I know it's not a perfect indicator. CapEx is not a perfect indicator to tower leasing.

Well, for us, we signed an M&A agreement with Verizon last year. It's a 10-year agreement. We're very pleased with the agreement. I think we make it easier and faster for Verizon to deploy. And basically, they have minimum commitment with us. Verizon is going to be our biggest, I think, contributor to new revenue in 2026, and we're very pleased with the relationship. So I think for the next 10 years, I think we have very good visibility with Verizon.

So it feels like increasing activity from Verizon this year versus what you've seen over the last 1 or 2 years.

I think that's correct.

One of the other carriers that was more rural focused, maybe reducing efforts a little bit in the short term. But if we think of the big 3 and broaden out the scope beyond just '26 guidance, philosophically, how should we think about escalators, new lease activity and churn over the long term in the United States?

Yes, sure. Let me just go back through 2026, right? So 2027, new colocations and amendment were about $37 million of new revenues. DISH was about $2 million of this. The midpoint of our guidance for 2026 is $35 million. So it's flat year-over-year. So it's steady. I think the mix is changing. T-Mobile basically had the coverage requirement as part of agreement to buy Sprint. So they're getting to the end of the rural coverage there and densification is getting close to the end as well. But Verizon is picking up the slack. So overall, it's steady. It's just the make is changing, more exposure to Verizon, less to T-Mobile on new leases. And long term, if you just go back, I've been in that industry for over 30 years, just like you, we've seen the cycle repeat itself. Carriers buy new spectrum, they roll out a new technology. They get a 10x increase in terms of capacity. They then harvest that capacity. And eventually, they need to do more colos densification and eventually, they get a new band of spectrum and roll out a new technology and the cycle repeats itself.

So in the peak of the CapEx cycle, CapEx as a percentage of revenue runs anywhere from 22% to 25% of revenue. And in the harvest mode, it's about 15%. So last year, it was slightly less than 15%. If you go back 20 years, it's one of the lowest ever. It's going to be around the 15% mark this year. But 6G is coming. The upper C-band auction is probably going to take place sometime in 2027, 18 months clearing period. So we could see a 6G rollout by '28, '29, and that means new equipment. So I think in a normalized environment, I think escalator on the lease agreement is about 3% and then new lease activity in a normalized environment is 2% to 3% top line growth rate. And non-Sprint non-discharge is about 1%. So you saw for about 4% to 5% top line growth rate in a normalized environment.

Yes. And when you think about transferring that conversion rate from revenue, gross margins to EBITDA and free cash flow, more importantly, for a REIT adjusted funds from operations, how do we think about the bottom line kind of growth rates that 4% to 5% long-term normalized revenue growth rate might equate to?

Right. Remember, this is a high fixed cost, low variable industry with very high margin, 85% gross margin, 7% EBITDA margin. So that 4% to 5% top line growth rate should -- if you exclude refinancing headwinds, should be high single-digit growth rate.

Per share might be even better than because you look at what you do with the excess cash. So walk us through one of the beauties of the tower business is you make a lot of money. And then I always tell people, a top thing for executives is capital allocation. What do I do with that money?

Right. I think you're right, Ric. The way to create value for the long term is really capital allocation. And we need to be disciplined there. So if you look at our business, and those are public numbers, it's about $1.9 billion of EBITDA, $250 million of growth CapEx and maintenance CapEx, about -- guided about $500 million, $490 million of cash interest expenses, $525 million of dividend, $70 million of cash taxes, and you're left with about $600 million or $700 million of extra cash every year. So what did we do with that extra cash? In 2024, we bought back shares, $200 million.

We did about $200 million M&A, and we paid down debt. Last year, we -- I think given the way our stock has traded, we thought that there's real value at that level. We spent $0.5 billion buying our shares at an average of about $200. And in 2024, we signed a deal to buy Millicom towers in Central America, 7,000 towers for about $1 billion. So we increased that a little bit, but I think we like our leverage at about 6.5x now. And going forward, I think into looking at 2026, I think share buyback has to be an important component of use of excess cash basically.

And the remaining program, if I remember right, was it $1.6 billion is left on the program?

I think there's $1.1 billion.

$1.1 billion because you did spend some of those.

That's right.

And as we think about potential acquisitions, it sure seems like private multiples are staying well above public multiples. How is your ability to compete for or even want to win at those kind of prices?

Yes. So I think the issue in the U.S. domestic market is a scarcity of large tower portfolio available [indiscernible] and then we compete with private capital. And they -- there's a lot of private capital chasing that industry because of the economics of it, it's a very attractive business. And they have the ability to put 12 turns of leverage in the ABS market. And the way they run the model, probably assume an exit at 25, 30x in 7 years. For us as a publicly traded company, levered 6.5x, it's very difficult to compete. So we have developers that we have been working with for years. So we buy a smaller portfolio, 3 towers of dozen tower, 2 dozen towers. But the large portfolio, I think the math just doesn't work for us.

You mentioned 5G going to 6G. When we think about 5G, fixed wireless has certainly been a good application. It seems like -- and I think you guys on the call talked about mobile data usage. I'd like to call it just wireless network usage because we have both fixed and mobile. As you think about what's happening at the networks, how many more -- where are we at in the 5G cycle, and then we'll come back to 6G.

Right. In terms of -- I mean, we can only look at the deployment of the big 3 on our portfolio. And I think T-Mobile is pretty much done on their 5G rollout, about 85% rollout in the 2.5 band. They haven't rolled out in a C-band at all. Verizon is probably at around 80% mark and AT&T 50% to 55%. So there's still room from Verizon and AT&T to deploy. And 6G, I think, as we said, the upper C block is probably going to be auctioned in 2027 and be deployed before the end of the decade.

Yes. And of course, T-Mobile done with the Sprint stuff, but the C-band haven't seen a lot yet, but maybe it's coming.

Well, I can only speculate. They haven't -- as far as we know, they haven't rolled out in the C-band. Maybe they are just waiting for the auction of the upper C-band and just what equipment to cover the existing C-band and the new one, they may get in the auction. I don't know -- I'm just speculating, but we haven't seen any C-Block rollout by T-Mobile yet.

I mean a lot of carriers like to do the one climb, touch type thing more efficient. We were talking with John Saw, CTO of T-Mobile the other day before their Investor Day. And John said he's already working on 6G from his side as the CTO. When we asked what he was thinking of, he said, we got drones. We have robotics. We have wearables, we have AI, we have edge. You guys obviously meet with consultants and try and think of where we're headed. What are you seeing from 6G that would get you excited from activity at the tower level?

Right. I really think that the -- if you just go back to all the generation, I live 1G, 2G, 3G, 4G, 5G. And to me, remember, ARPU in the wireless industry has always been around $55, $60. You used to pay $0.25 a minute for a voice call and then $0.10 for SMS text and then $40 for 1 gig of data. And now it's basically all you could eat. And during that time, EBITDA margins for the wireless operator has still been at around 45%. And why is this? It's because each time they roll out a new technology, they get an exponential reduction in the cost per bit that they deliver. And I think to me, 6G is just going to give them a 10 to 20x basically reduction in the cost per bit that they're going to be able to deliver to their users. So just give them more data, more speed, less latencies and just sell more services and be able to keep increasing mobile traffic at double-digit rates and still maintain a 45% EBITDA margin.

So to me, it's all about the cost per bit but if you look at the application, AI eventually is going to be at the handset. We assume there would be live application to make real time decision and latency, low latency is going to be a critical factor there. And that means that you need to have probably data center servers at the edge on the network. So I don't know if they're going to be in metro area close to the users, if they have to be at the base of the base station. It's too early to say, but you could just see the trends going forward with the cost per bit being taken down another 10 or 20x more capacity coming, less latency, more power in the handset or the iPod, I really think that you're going to see an uptick in mobile wireless data usage again.

At the Park City Summer Summit, the fiber data center tower carriers, everybody there felt that kind of this AI impact on wireless, mobile and towers, probably by 2030 was kind of the consensus saying, okay, it's not '26, '27, but it's coming.

I think that's right. I could see it. And people are always thinking in terms of capacity, you have to think in terms of latency. Latency is very, very important. You don't basically need to make a real-life decision and wait 1 second for an answer. You need to get it right away. And that means like more capacity closer to the base station.

And it's been the debate of when will AI come to towers. So people kind of forgot about it, whereas data centers, AI is front and center. So it's -- for the people in the audience and on the webcasting, it's coming. It definitely feels more real whereas a couple of years ago, we weren't sure when it was coming. It feels like it's kind of gelling around that concept.

I think that's right.

We also hear a lot and Brent did a video one the other day using Sora for us. It feels also like there might be more upload coming rather than just download and that might affect the networks. Are you seeing the same thing or hearing?

That's what we're hearing. I think today, if you look at the download, upload ratio, it's probably 80% download, 20% upload. I think what we're seeing now is that it's -- traffic going forward is going to be more mixed 50-50, and that means probably I think you need more antennas on the receiving end. So I think different type of equipment, more equipment. 6G basically means new equipment at the tower, and that's positive for the tower industry.

One of the things, and Brent and I, we were in Paris back September 15 when EchoStar had the big event that led to the headwinds. But a lot of people in September and October, particularly were talking to us about, gosh, Ric, aren't satellites going to replace wireless? Aren't satellites going to replace tower? I don't want to prejudice you, but how do you all look at that question from a generalist set?

To us or to me, at least, and there's still a lot of unknown, but satellite is probably going to be a complement for the tower industry because I think in the rural area, some people are probably going to use it for broadband, just replace the fixed broadband that they have also for coverage. But latency is always important. And if you want to minimize latency, I think starting today's latency is probably 45 millisecond. If you want to take it down to 20, 25, you probably need to need more downlink in order to get that traffic connected to IP Internet backbone and that means equipment on the site to receive that traffic. So I probably see it as a complement at this stage. I don't really see -- there's no way you could replicate the capacity and the latency that you have on the terrestrial network. So I think satellite is probably going to be a complement and a positive to the tower industry.

And it also feels to us like it's more going after the white space that in the U.S., we think, oh, our phones work, but maybe 1/3 of the U.S. land mass is new Continental U.S. land mass is not covered. And it's economically not right to cover it with terrestrial. That seems like a natural spot for satellite.

I think that's right. The day you could have a dual-mode handset with the right form factor, the right battery life, the right cost entry level, I think you're going to see more dual-mode handset. But I just think it's a complement. In an urban environment, suburban environment, you're always going to have a tree, an overpass, a tall building, blocking access and the terrestrial network is always going to be your primary, I think, access network.

I remember the day when satellite radio was a big incremental tenant on the towers because satellite radio wouldn't work in your car if you're in an urban environment because it looked like Canyons.

That's right. When you think about it, XMSirius has thousands of repeater on the ground sites basically where we broadcast -- their satellite signal into your car, into your garage into -- under the overpass. And I think I don't know what starting plans are, but if you spend the type of money they have buying spectrum, if you want to utilize that spectrum eventually probably makes sense to get more capacity and coverage in urban and suburban environment by deploying in that spectrum.

And one other thing is a lot of people use their mobile devices inside, inside buildings, inside homes and satellite doesn't penetrate very well into structures either.

Yes, that's why you won't penetrate. And if you have another 20 floors on top of you, there's no way you're going to get the satellite signal there.

Let's go international for a second. You guys have expanded dramatically with the Millicom transaction, but it's U.S. dollar, right? So help us understand risk adjustment, how you look at investing globally and let's look at Millicom.

Yes, that's a good question because if you really look, I think we have about 14, 15 market internationally, -- and when Brendan became CEO in January 2024 in the first earnings call, he announced a portfolio review. And I think we look at an international portfolio and look at return on invested capital and look at market where we've done very well and market that really needed some improvement. We realize that in order to be successful, first of all, you need to be in an economy that's doing well. If the economy is doing well, businesses are doing well, people have jobs, they spend money on the wireless network, businesses need a mobile application. The economy is growing. So I think that's number one.

Two, it's important to not step in front of wireless consolidation. We've seen in the U.S. with Spain. We've seen it in Brazil with Oi. Once you have consolidation, it just meets churn. You go from 4 to 3. And it's not like it's a 1-year event. It takes 4, 5, 6 years for the churn to work its way through because when you buy an operator, you have ongoing tower basically leases and you cancel them, you don't renew them. So it's like a 3, 4, 5, 6-year basically pain for the tower company. So not stepping in front of wireless consolidation is important. And every scale is important because if you have scale, when a new -- an operator needs to roll out a new technology, you're in a dialogue, they need to talk to you because they need to roll out fast and want to sign basically M&A with a tower operator with a good presence.

So going through this, we realized that some market was subscale. So we sold the Philippines, we sold Argentina, we sold Colombia and we sold Canada. Canada is a fantastic market, but we only had a few hundred sites. We didn't have any scales. We're not in the flow, and we sold for a very attractive multiple to a PE firm. Central America, we have a 15-year agreement in U.S. dollars with Millicom. Those markets are very stable. You have 2 dominant operator, Claro and Millicom, very well-capitalized company. We have a 15-year agreement in U.S. dollars with Millicom. They gave us a commitment. We're building 2,500 BTS new sites for them in the region. And we locked in a high single-digit return in U.S. dollars. So we're very pleased.

The team down there are very busy integrating the asset, getting basically the zoning rights to build, securing the land. And we are very pleased -- I'm very pleased with how well the team has delivered so far and they're very busy.

Other regions or other markets that might be interesting?

Well, I'm very bullish on Brazil. Everybody in the office knows me as the bull in Brazil. I've been involved in Brazil for over 30 years from Nextel back in the '90s, 2000 to my prior job, we had a huge operation in Brazil. Brazil is a very large economy, high GDP per capita for an emerging market. I think it's 5x GDP per capita of India. It's a large exporter of food, minerals, energy. I think the exports were above imports in January by over $4 billion. So the country is doing very well, mostly exporting to China. And the Central Bank has done a phenomenal job getting inflation under control. The currency has done very well.

So -- the only issue for us is Oi consolidation. We index towards Oi, but that's -- I think we have another $14 million of Oi wireline churn this year, but I think we've reached peak churn in Brazil. And going forward, 5G is less than 50% deployed. And we have 3 operators, TIM, Claro and Vivo. It's a stable environment. We have scale. We have 12,000 towers. So I feel pretty good about Brazil going forward.

You mentioned a while back about interest refinancing. And you also mentioned, I think one of the large private tower companies recently did an ABS with, I think, 12.5x net debt to EBITDA, slightly below 5%. Help us look at your balance sheet. What are you thinking as far as refinancing costs? And when do you get to where that headwind from refinancing kind of tapers down?

Yes. So we have -- I mean, we had an ABS mature in January, $750 million, another $1.25 billion maturing in November. Those are ABS with one handle on them. And we are going -- and we said publicly that we are now -- we have been upgraded to investment grade with 6.5 turns of leverage. I think we made a commitment to stay below 7. The rating agencies, S&P last summer changed their methodology on tower companies given the fact that our customers are investment grade. We have MLA long-term contract, given the stability of the free cash flow in that business. I think S&P at below 7.25 turns of leverage, you could be investment grade. Fitch is below 7. So we're at 6.5 and making the commitment to becoming an investment-grade issuer.

In order to do that, we need to take our ratio of secured debt to unsecured to below 50%. So we will look sometime this year to refinance our Term Loan B and also the ABS maturing in November in basically in the investment-grade market. And we should be able to refinance in the investment-grade market slightly inside what we will get in the ABS market. So we -- the advantage of the investment-grade market, you could issue longer-term securities, but also that market is always open, even if there's a financial crisis, there's always a price point at which you could finance in that market. The leveraged finance market, I think, is a very attractive market, but it's a little bit tougher sometimes.

And so duration of long-tenured debt as an investment grade, are we thinking 7, 10? What type of duration?

It's going to be a mix. It's going to depend on market conditions. So all of this will be decided later on this year.

And as far as rough price, I mean, interest rates, anybody that knows interest rates perfectly, owns their Caribbean island. But what are you thinking as far as interest rate kind of goalpost that you're thinking of?

You mean for SBA? I think in the investment-grade market, depending on basically the maturity will go out, it's going to be between 5% and 5.25% in that range.

You touched on stock buybacks. Let's talk dividends, too. We didn't touch on that earlier. You raised your dividend almost 13% payout ratio, I think, is like 41%. Walk us through kind of what that shareholder return aspect of dividends look like for you guys over the long term.

Yes. So given the growth going forward in FFO per share and a payout ratio at 41%, we see a dividend increase in the double digit for the next few years.

And where would payout ratio kind of stabilize? What do you want to -- where would you want to take it up to in the 70s, 80s?

I don't know yet, but we -- I think by raising dividend in double digit for the next few years, you probably get to 50 -- mid-50s payout ratio. So we have a lot of room to -- plenty of room to grow the dividend here.

We got about a minute left. You guys bought back a lot of stock in fourth quarter, which then meant a big buyback in calendar '25. What do you think investors are missing in 1 minute in your story?

Listen, it's a fantastic industry. And we are on a trough in the industry in terms of CapEx as a percentage of revenue. It's a cyclical business. So right now, we -- I mean, probably trending more towards a 4% top line growth rate. But on 6G comes, AI application come to market, maybe more, I think, data center closer to the base station or the base of base station, I think you're going to see a pickup in the top line growth rate and at 85% gross margin, that flows straight to the bottom line. And I think I feel comfortable about upper single-digit AFFO per share growth going forward. So if you take a long-term view, that industry is going to do very well. And it's impossible to replicate that industry, that infrastructure, look how difficult it is to build in an urban, suburban environment given zoning law and carriers have generator, batteries, fiber going to the base of the base station. It's always easier for them to put more equipment on an existing base station that search for a new site.

It's a great thought there. I was reminded talking to Tom Bartlett the other day, retired CFO, then CEO of American Tower. When you're at NAREIT, the real estate conference, we asked -- somebody asked the question, what would cause your revenues to go down in a true cyclical nature, some industries can go up 10% or down 10% in revenues. What you're saying is your cyclicality is how much revenue you grow?

I think that's right. I think that's right. It's hard to see, especially in a consolidated industry with 3 carriers, it's really hard to see negative growth. It's which is an escalator at 3% and demand, you're always going to be in probably around mid-single-digit grower.

Great. We'll wrap it there. Thanks, everybody. Have a good day.

Thank you Ric.

Welcome, and thank you all for joining the SBA Fourth Quarter 2025 Results. I'll now hand over to Luis [indiscernible], Vice President of Finance and Capital Markets. Please go ahead, sir.

Good evening, and thank you for joining us for SBA's Fourth Quarter 2025 Earnings Conference Call. Here with me today are Brendan Cavanagh, our President and Chief Executive Officer; and Marc Montagner, our Chief Financial Officer. Some of the information we will discuss on this call is forward-looking, including, but not limited to, any guidance for 2026 and beyond.

In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, February '26, and we have no obligation to update any forward-looking statements we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website. With that, I will now turn over the call to Marc to comment on the fourth quarter results and our 2026 outlook.

Thank you, Luis. The fourth quarter will sorry finish to the year. Results for the quarter were in line with our estimates, even with higher than forecasted bad debt expenses related to EchoStar. In the fourth quarter, FFO per share was $3.19 and with a cash dividend of $1.11 per share, an increase of 13% compared to the fourth quarter of 2024. Operationally, we added approximately $10 million domestic new leases and amendment billings. The bulk of the activity continues to come from new colocations as carriers both densify and expand their network footprint. Our service business also continues to perform well, increasing revenue by 13% in the fourth quarter compared to the fourth quarter of 2025. This was mostly due to construction-related project focus on network expansion.

With respect to churn, we are getting closer to the end of consolidation churn in the U.S. The sprints related churn of approximately $17 million in the quarter. Internationally, we continue to see healthy demand, adding approximately $6 million of new lease and amendment billings in the fourth quarter. International churn continues to be elevated, and we lost approximately $8 million of revenue in the quarter from per consolidation, bankruptcy restructuring and wireless operators network optimization. The team has been working around the cloud to integrate a newly acquired site for Millicom in Central America. We're also ramping up our new build program in the region sending up our business for future success as a leading independent tower operator in Central America. In the quarter, we deployed significant capital to buy back our shares spending $213 million to retire 1.1 million shares at an average price of $191.7. In total in 2025, we spent $500 million to repurchase 2.5 million shares. And as of today, we have $1.1 billion remaining on our share buyback authorization. We continue to believe that share buybacks play a significant role in creating shareholder value over time.

Today's earnings press release includes our initial 2026 outlook. Domestically, our 2026 outlook reflects a similar level of new revenue growth from [indiscernible] leasing activity to what we experienced in 2025. The outlook also assume a range of $55 million to $56 million related to spring churn, which is slightly higher than we have stated last quarter. The increase is due to timing, and we now expect [indiscernible] in 2027 and beyond to be less than the $20 million previously provided. In addition, our churn outlook removes all future recurring revenue from EchoStar. We'll continue to pursue legal rights to recover these revenues from Ecostore. For our International segment, our outlook reflects a full year contribution from the acquisition of Millicom in Central America.

The outlook also assumes selling network investment from our customer in 2026, and we're guiding to a range of $19 million to $21 million for new leases and amendments, up slightly from 2025. Our outlook is in a range of $36 million to $40 million related churn. The current churn range includes $14 million related to or wireline, which will not continue into 2027. [indiscernible] foreseen, we expect international churn to trend down over the next couple of years.

Turning to services. We are guiding to a range of $190 million to $210 million in revenue higher than our initial outlook for 2025 and lowered the extremely strong results we delivered last year. Our services backlog are supportive of continuous care network activity in 2026. Regarding our balance sheet. In January, we successfully paid off $750 million ABS debt with our revolving credit facility and our outlook assumes that we will use our free cash flow to pay down the current outstanding demand on its credit facility over time. We also assume that our $1.2 billion in November ABS maturity will be recognized in November 2026 at 5.25%. The [indiscernible] community to be coming an investment-grade issuer and we look to make our initial inaugural investment-grade bond at some point in 2026, depending on market conditions. During the fourth quarter, we declared a cash dividend of $118.2 million or $1.11 per share. And today, we announced that our Board of Directors declared a first quarter dividend of $1.25 per share, payable on March 27, 2026, for shareholders of record as of close of business on March 13, 2026. This dividend represents an increase of approximately 13% over the dividend paid in the first quarter of 2025 and approximately 41% of the midpoint or above full year FFO outlook.

Please also note that our outlook does not assume any further share repurchases were positioned beyond those which as of today, point contract expected to close by the end of the year. However, we anticipate that we'll invest in additional assets or share buyback of both during the year. This will potentially have an impact on our full year outlook. I will now turn the call over to Brendan.

Thank you, Marc, and good afternoon. Today, I want to share our perspective on SBA's near- and long-term outlook and the opportunities ahead, starting with the U.S. market and the key drivers of future growth. For our U.S. customers, and stabilized 3 carrier markets, maintaining a high-quality end user experience remains paramount. Offering superior network quality, reliability and speed that meet the needs of today and tomorrow requires significant ongoing investments. We've seen this demonstrated in numerous cycles over the last several decades, and it is perhaps even more the case today. Mobile data use continues to climb as Americans rely on their devices across everyday experiences. According to CTIA, in 2024, Americans consumed more than 132 trillion megabytes of mobile data, up 35% compared to the prior year, marking the single largest jump in history. Way to keep up with this level of demand remains relatively unchanged. It typically starts with a wave of amendments to efficiently upgrade existing towers, deploying new spectrum bands, if available, adding or swapping equipment followed by a shift toward densification.

Today, we are still seeing upgrades, but with certain customers have seen a clear increase in new colocation activity tied to both densification and expansion. On the amendment side, we see new technology upgrades such as massive MIMO, largely tied to new spectrum, including C-band and DoD and are starting to see initial massive MIMO deployment and legacy AWS and PCS band, significantly increasing network capacity. With regard to colocation activity, our customers work to address coverage gaps in the U.S. meet regulatory requirements and support 5G use cases like fixed wireless access. On fixed wireless access, growth and adoption have been impressive with total subscribers of approximately $15 million initially driven by excess 5G capacity. Today, it's estimated that more than half of overall wireless network capacity is being used to support fixed wireless access, a figure that could increase over time as carriers look to grow their subscriber base and lean further into convergence, bundling home Internet, mobile and enterprise services.

As 5G continues to build out, we expect further support from the upper sea band auction, adding another growth driver for our industry. At least 100 megahertz of upper C-band is expected to be actioned by mid-2027. Now looking beyond the near term, we're increasingly excited about 6G. We've already seen legislative tailwinds, including restoring the FCC's auction authority and 800 megahertz of spectrum to be studied and eventually auction, including the aforementioned 100 megahertz of upper C-band in 2027. Other bands currently being evaluated include 2.7 to 2.9 gigahertz to 4.9 gigahertz and 7.25 to 7.4 gigahertz. These new bands will require new radios and likely a denser footprint given the higher band properties creating future growth opportunities for SBA. Beyond spectrum, we see a fundamental shift in the network architecture, most evident in the transition from 5G to 6G. With 5G, traffic follows an 80-20 downlink to uplink mix as users primarily consume data, streaming videos, shopping, connecting on social media or gaming online. Looking ahead, we anticipate a more balanced figure with 6G, driving significantly more data upstream to support increasingly AI-driven interactions. Technology that seamlessly integrates into everyday experiences with data interpreted in real time is what will truly differentiate 6G. Many of these use cases are likely to emerge first in-the-home or enterprise using WiFi or private networks.

Eventually though, migrating outdoors for a fully mobile experience reliant on the terrestrial network. We expect a wide range of use cases. Today, we are starting to see the early signs of the preparation for 6G. AI is beginning to move from the core to the rand, but true 6G cannot be done with just software. It will also require physical component. That means more compute at the tower site with higher capacity radios and denser and more intelligent antenna configurations to send and receive growing volumes of data. With regard to the compute element, the specifics are really still just starting to develop, but rapid advances in AI and particularly as it becomes more performative we believe will drive the need for compute to be closer to end users, where devices rely on real-time, ultra-low latency environment. We believe our large distributed U.S. portfolio makes this a real opportunity for SBA.

Turning now to our international markets. Let me start with Brazil. With a portfolio of over 12,000 sites, Brazil remains our second largest market. We intend to continue to harvest and grow cash flow organically in Brazil. We believe the country itself is very well positioned to be a leader in Latin America over the coming years. It's a commodity superpower with meaningful exports of food, energy and metals. It has a population of over $200 million and a younger demographic that drives higher mobile data usage. Operationally, we performed well in Brazil. so we faced elevated churn, largely driven by industry consolidation and network rationalization. In the Brazilian wireless market more broadly, we see several opportunities. As operators continue to rationalize their networks, reducing redundant infrastructure while increasing tenancy, there's a clear opportunity to improve both the carriers and the tower companies return through site consolidation and increased colocations. We're actively working with our customers to find more efficient ways to help them meet their network needs. This is a key focus area for SBA in 2026.

Another structural opportunity is network density. According to a UBS research report from October 2025, Brazil has an estimated 4 sites for 10,000 people compared with roughly 16 sites for 10,000 people in the U.S. We see that gap providing a meaningful opportunity for additional colocations as carriers densify their networks. And lastly, there is spectrum. The government is planning to auction both 450 megahertz and 700 megahertz spectrum bands. While the timing remains uncertain, recent estimates suggest this could happen in 2027. Each of these factors gives us confidence in the long-term prospects for Brazil. In the meantime, operators continue to invest in advancing 5G coverage.

Beyond Brazil, Central America and Africa offer diverse customer bases, attractive opportunities to deploy capital through new site builds and organic growth as these markets remain earlier in the 5G deployment cycle. As we've discussed previously, the Millicom transaction has positioned us as the leading independent tower company in Central America supported by long-term master lease agreements with the leading carrier. We expect that agreement to drive predictable operating results and durable cash flow. Our select African markets have continued to deliver superior risk-adjusted returns as well and our highest return on invested capital across our company. In addition to strong operational and technology indicators, we feel good about the future due to the strength of our balance sheet and capital return profile. As discussed on our prior earnings call, we have recently achieved investment-grade ratings in 2 major rating agents and operated comfortably between 6 and 7 turns of leverage for the last 3 years. While investing meaningfully in new assets and share repurchases, we still delivered the fastest growing dividend in our industry. We believe the strength of our capital structure will allow us to consistently provide meaningful and growing shareholder remuneration going forward in the form of share buybacks and dividends while also preserving the flexibility to opportunistically invest in new assets in our markets and minimizing the cost of debt.

In summary, SBA is very well positioned to play a meaningful role in future network deployments, helping our customers meet their network needs. Our towers remain the backbone of the network and offer a truly turnkey option, the ground space, power and most importantly, locations. Before opening it up for questions, I'd like to thank our team members. We strive to be the industry's leader in digital infrastructure, and it is only possible because of the incredible team members we have at SBA. I'd also like to thank our customers for their trust in us. And lastly, I'd like to thank our shareholders for their ongoing support. And with that, operator, we are now ready for questions.

[Operator Instructions] Let's go ahead and move on to our first caller, Richard Choe from JPMorgan.

You want to expect to see domestic colocation revenue growth through this year? And can you give us a sense of what the carriers are looking for?

Yes. Richard, Well, so in terms of our domestic colocation expectations, we obviously gave our outlook for the full year, which assumes a $35 million of incremental revenue added through new leases and amendments in the U.S. We would expect that will be contributed perhaps slightly heavier in the beginning of the year, but we would expect activity levels with the carriers in terms of new business being signed up to be pretty steady throughout the year. That's our assumption. And based on the way things are starting, that's what we think will continue to happen. And it will be a mix, as we said in some of our prepared comments of densification as well as expansion of coverage.

And one quick one on Brazil. As we look at the buckets of growth that could drive your revenue there, how should we think about the difference that we may build operating to, I guess, 5G densification and spectrum over the next few years? Like where do you expect to see kind of most of the growth to come from there eventually?

Yes. I think we're not building that many sites down there. So most of the growth is going to come organically through new lease up. In terms of the drivers of that new lease up, some of that will be just new spectrum that's going to be auctioned off, we believe, over the next couple of years. And some of that's going to be just further expansion and densification of the network. I think if you heard in the prepared comments, one of the things we pointed out was a statistic about the amount of sites per person in Brazil, and they're basically they are 4x more in the U.S. than there are in Brazil. And so with that sort of dynamic, it leads to the need for increased investment in the network and expansion of the network by each of the remaining carriers. It's been, I'd say, a little bit muted over the last couple of years since the consolidation of [indiscernible] into the big 3 carriers that are remaining there. As they work through sort of the rationalization of that, that's been a big focus. But as we kind of get on the back end of that, I would expect significant investment into expanding the network and competing on network quality..

Moving on to the next caller, Batya Levi, UBS.

A follow-up on the domestic activity. When you look at the range you provided, the low end would suggest a slowdown, can you provide more color on how much visibility you have for the year ahead versus maybe last year? And what could drive that low end and also, the Verizon MLA that you recently signed, how does that impact the trend against the lower CapEx that they're guiding to?

Sure. On the overall range that we're guiding to, we have pretty good visibility. We obviously give a range because it's not set in stone, and there's a certain amount, particularly at the beginning of the year that we have to see how the first half of the year, in particular, goes in terms of new business being signed up. So that's why we give a range. And obviously, if slow out of the gates, you could be towards the low end of the range. But we're typically focused on the midpoint as our best estimate of where we expect to be. And so it's a little bit less than last year. It's about $2 million less than last year, although we did actually have $2 million of lease-up contribution from DISH last year. So excluding that, which is 0 now, it's basically flat. I will say that there's a different sort of mix among the big 3 carriers in terms of the relative contribution of [indiscernible] that we expect. And to kind of pivot to your second question because it's related to that, we do expect to see more of a contribution from Verizon because of the MLAs that we signed with them late last year.

In terms of their comments around CapEx, I know they have a number of things that they're focused on in terms of controlling costs. But our agreement is pretty well set in terms of minimum commitments that they have. And so for the most part, our assumptions are built around those minimum commitments as well as existing backlog that we have with them. And our backlogs have grown quite a bit over the last couple of months, as you might expect after we signed that agreement. So we feel pretty good that we're going to see increased contributions from Verizon due to that agreement starting this year.

Moving on to Ric Prentiss from Raymond

A couple of questions. One, thanks for giving the cleanest SKU, we're taking just out of the guidance. But can you update us as far as what's the process could you guys file a lawsuit, have you terminated the contract? And just how do you see kind of the time line or how this might play out?