I'm Ana Goshko, and this is the Bank of America 2025 Leveraged Finance Conference. I am the high-yield credit analyst covering technology and telecom. We're thrilled to have SBA Communications with us today, Marc Montagner, the company's Chief Financial Officer. Marc, thanks so much for joining us. Thanks for having me. Good. Okay, I think we'll kind of just dive right into questions, but we'll see how much ground we can cover, but make sure we leave some time at the end to make sure that we've had a comprehensive view on what's going on with SBA. I wanted to start with, site development has been really strong this year for you guys. What's been driving that activity? The service business is obviously a little bit cyclical, and we are indexed towards one carrier, and the carrier has a coverage requirement that they need to meet by the second quarter of 2026. They have been very active, basically rolling up sites. That is on the service side. On the lease-up, I think we have seen a pickup of activity. I think we did $9 million of lease-up in the first quarter, $8 million in the second quarter, $10 million in the third quarter. I think the trend is going in the right directions. I think you have seen a large wave of CapEx in 2022, 2023, where the wireless operator rolled out 5G. They received a 10x increase in capacity, and now they just need to expand the coverage, deploy more 5G to a bigger coverage area, fill up some capacity gap that they have. I think we're very pleased with the level of application that keeps rising. The momentum is there, and we feel good about 2026. Okay. I think on your recent call, you guys talked about kind of seeing a greater proliferation of 5G use cases. If you can expand on that. Also, as part of that, obviously fixed wireless access is FWA, a part of the carriers, is clearly something that's expanding and has a lot of momentum. From your vantage point, how burdensome is the FWA on the networks, and how big a driver is that for SBA in terms of your growth outlook? I mean, I wish I could answer the question. I think we are a real estate company, so it's a passive real estate business. We lease site on the towers and vertically and site at the base for the equipment, optic equipment, the generators, the solar panel, batteries, and so on. For us, on the network, a bet is a bet. We do not really know. We have no visibility into the packets going to the network. I think that's what the whole industry talks about, that fixed wireless access is chewing a lot of capacity. Fixed wireless access users are probably using 20-25 times more capacity than a handset user. The industry, the wireless industry is going to add over 10 million new fixed wireless access customers this year. Obviously, that is putting a huge burden on the network, which is good for us. Okay. Probably related to that topic, to FWA, but you've talked about a push by carriers into more rural markets. Could you just talk about how rural are these markets, and is your hunch that it's really the fixed wireless access that's a key driver there? To be honest, we've seen the carriers expanding the coverage. I don't know if it's fixed wireless access, it's for handsets, but I think SpaceX getting into the business, I think, is good for us. They spent $20 billion buying a spectrum from DISH. I think long-term is going to be good because if you really look at the next generation LEO that SpaceX or Starlink is going to roll out, it's going to be even lower, orbit less latency, more capacity, a smaller terminal. The new mini terminals are really small. Suddenly you spend, I don't know, $200 buying a terminal, you plug it in, and within 10 minutes you could watch Netflix or get on a Zoom call. That's obviously in a rural area, it could be a competitor to fixed wireless access. That's probably going to push the carriers to expand their rural area. I feel good about, I think, SpaceX getting into the business because it's going to be a new actor, and it's good for the industry overall, I believe. Okay. You preempted really my next question, which is just there's been a lot of talk about the direct-to-device or direct-to-cell actually being a substitute for terrestrial wireless. It's really early stage, but it sounds like you kind of see a positive outcome rather than a negative outcome. Yeah, I think it's positive. If you're a carrier, I mean, 20 years ago, 10 years ago, the industry was regrowing. Now everybody has a handset. In order to compete, you need to be different, have something that your competitor doesn't have. To the extent you could sell a device with coverage through your terrestrial network or the satellite, I think it's probably a differentiator. I think it's just going to be good for the industry, and it's going to push everybody trying to expand the range of what they could offer. If you look at SpaceX, Starlink, spent $20 billion buying Spectrum. I don't know what the plan is. They talk about building hybrid network. If I look at what XM Radio, the satellite radio company, has done, it's a satellite radio company, but they've built thousands of repeaters in urban areas to basically send the signal into houses, garages, under the tree, under the overpass. If you're starting, if you really want to have a direct-to-cell, direct-to-device connectivity in urban areas, you're going to have a tree, you're going to have a building masking the direct line to the satellite. I think having some sort of probably hybrid network with cell towers probably makes sense. I don't know what the plan is. I'm just reading what you're reading in the newspaper. I think overall, long-term, it can only be good for the tower industry. There's an interesting kind of comment on one of the recent calls you guys have had, which was talked about the wireless hybrid networks, that it really gives the wireless carriers more insights into where they actually should be placing macro cells. That's right. That's what we heard from one operator saying that suddenly we could see a lot of pings from satellite in a region where we have no coverage. It probably makes sense to build a tower right now because there's demand. Yeah, it's helping the other way. Okay, great. Okay, so another topic. SBA recently announced a new MLA or long-term agreement with Verizon. A lot of questions around it, I think, on your most recent call. Just to summarize, you also have an MLA with AT&T, right? That was signed in 2023. One, are these MLAs, how similar or how different are they? I know part of it is probably under nondisclosure, but if you could just talk about the structures. Really, what's the benefit of these agreements to SBA and what do you give up? Yeah. I think if you really look at the structure of the wireless industry today, you have three wireless operators, and top-line growth rate is a single digit. They need to build more capacity, expand the coverage. They're going to have to do 6G. Having a holistic MLA with a tower company like us makes sense because in exchange for volume commitment, they get basically better pricing, but also from our standpoint, you get a minimum growth rate going forward. They can control their cost. We could basically put a floor on the growth rate, and it's always upside for us in case they need more capacity. I think also allows them to roll capacity or coverage much faster in the next generation because you have a price list, you know how much it's going to cost you to get on a tower, you know what it costs for an amendment, you know what it costs you for a new lease. It basically makes life easier for all of us in terms of the relationship. It's more of a partnership than suddenly a vendor relationship where each time they come to a tower, you need to negotiate a new lease. It just makes life easier basically for all of us. Okay. Another just kind of last question on maybe the U.S. business before we switch to international. What is SBA's exposure to DISH? One of the things that's come up in one of our sessions earlier was DISH trying to kind of back out of tower leases, and there's been some lawsuits by some of your peers there. Where are you guys in terms of that exposure? For us, it's about $55 million a year, a very little lease-up in 2025. We assume zero for 2026. We have short-term contract with DISH, so it will be about $25 million of churn in 2027, $25 million of churn in 2028. The total exposure on the contract is $110 million. I think, and they're current on the lease right now. I think for us, it's a non-event, I think. Okay. They have been trying to get out of their leases, but I think that there is going to be lawsuits over that. Yeah, I can't comment on this, obviously, but I think our exposure is limited. I think we're okay on that front. Okay, great. Switching to international. You recently closed on the last part of the acquisition of the Millicom towers in five Central American countries. I think those are Guatemala, Honduras, Panama, El Salvador, and Nicaragua. Now you are the largest tower operator in Central America. That's right. Yeah. Why was this the right deal for you guys? And given your size now in Central America, what's the growth potential, either organically or inorganically? Yeah. I think those are we were already a tower operator in the region. We liked the region because it has been consolidated to two wireless operators, Millicom and Claro, which is basically the Carlos Slim company. The 5G is still at a very low rate of deployment. We negotiated with Millicom a 15-year lease in U.S. dollars with escalator and BTS commitment. We have locked in basically mid to high single-digit growth rate in a market where we operate already with the largest operator in the region. We pay 11 times EBITDA. I think it is a creative deal at a great valuation with a great partner, I think. We are doing very well so far in terms of integrating the assets. We are very pleased with this transaction. Okay. What about the potential for inorganic growth in that region? I think obviously. Or like in tangentially, or is there? Oh, you mean M&A? Yeah. We are not really looking to expand through M&A in emerging markets at this stage. I think we really like our position in Central America. We look at our business. It's about 80% domestic, 20% international, out of international, 15% is Brazil. Brazil, I think I'm very bullish Brazil for the long term. The country is a large exporter of mineral, agricultural product, and oil. It's always going to be a growth market. GDP per capita is very high for an emerging market. It's the largest economy in Latin America. We are going through basically a consolidation. Oi, the wireline operator, is going bankrupt, and the wireless operator is being parceled out to the other three wireless operators. We face churn in the last few years, and we're going to see more churn in 2025 and 2026. Long-term, 5G is less than 50% deployed. Brazil, I think, is going to be a growth market for us. It is just a question of going through the next couple of years. Long-term, we feel good about Brazil, but I do not see us doing more M&A in emerging markets at this stage. Okay. What about developed markets? It would be like Europe, for example, internationally. I think we like Europe. You could assume that whenever a portfolio of towers is being sold somewhere, we sign an NDA, we look at it. I think my personal issue with Europe right now is that most of the market have four carriers, and they're getting considered into three, the French market, the British market, probably the Italian market. With rent sharing, you're probably going to go from four wireless operators to two wireless operators. I think if you're a PE firm, private company, you could probably buy asset at a very attractive valuation with leverage. You probably get a really good return. It's very difficult for public company to buy into churn because then you report every quarter more churn. You dilute your top-line growth rate. I think we obviously look at Europe, but we haven't found the right opportunities. I think rather buy an asset like Millicom where you're locking a mid to high single-digit growth rate, 15-year contract in U.S. dollars that going into market where you know you're going to see churn. We learn that whenever an operator is being consolidated, like in Brazil or the U.S. with Sprint, you're looking at three to five years of churn. It takes time. It's good for the long term of the industry, but we're not going to step in front of a consolidating market. Got it. Okay. Kind of putting it all together. 2025 consolidated site leasing organic revenue growth guidance, I believe is about 2%. That still includes some outsized Sprint churn. With the Millicom towers now in the mix, the Sprint churn starting to abate, the new Verizon MLA, what's your target for organic revenue growth going forward? If you just look at the U.S. market, we always talk about the 3 + 3 - 1. 3% growth rate from escalator, another 3% growth rate from lease up, and 1% churn from non-Sprint churn. You should probably think of a mid-single-digit growth rate in the U.S. Central America is probably mid to high single-digit. Brazil right now, I think we obviously have churn in 2025, 2026, but you pass the next two or three years, I think you are probably looking at a mid to high single-digit growth rate in Brazil as well. Okay, great. EBITDA margin. It is in the 68% area. No one's complaining. I think it is very enviable. You guys are just the tower industry now, and you guys are really efficient in terms of how you operate. Is there potential for further profitability enhancement? Yes, absolutely. I think, first of all, remember bad debt hit USD and ASL. That ticks with some bad debt due to some bankruptcies, both in the U.S. and outside of the U.S. That's going to get flushed out. Two, our service business is very strong, and the service business doesn't have a 70% EBITDA margin. It's more 15%-20% EBITDA margin. This has grown faster than anticipated. That's put a lot of pressure on the overall business. The Central American business has slightly lower margin right now, but with lease up, you have basically 100% or close to 100% flow through to the bottom line. I think that's going to drive EBITDA margin up again. I think there's an upside on the margin there as well. Okay. What about potential for more divestitures? You recently sold some Canadian towers. Yeah. We, Brendan, when you became the CEO, I became the CFO back in January of 2024. We announced a portfolio review, and it's ongoing basically. You look at every single market, and you realize in the market where you have scale, you have better EBITDA margins because you have a dialogue, a better dialogue with the operators. Obviously, you fix costs on the G&A side, gets cover better if you have a bigger footprint. We sold Argentina, we sold Colombia, we sold the Philippines, we sold Canada. We just had a few hundred towers. At this stage, I mean, if we still have a few markets where we have a minimum footprint, they're massively free cash flow positive. If we could monetize it for the right price, we may do it, but there's no action really. I think we like where we are right now with mostly Central America and Brazil as the bulk of our international footprint. Okay. Switching to cap structure. You recently changed your net leverage target. It was 7.0-7.5. It is now 6.0-7.0. Notably, you were already in that 6%-7% or 6-7 times range, I think since late 2022. By three years. Basically three years. Yeah. All you're really doing is lowering your target to where you've been, maintaining that leverage for the past three years. Further, you're saying that you are planning to transition to being an investment-grade issuer. I've got a couple of questions around that. A year ago when you were here, and I think when you kind of first started in the role, SBA was pretty clear that you didn't want to chase an investment-grade rating because you like the flexibility of not having to commit to investment-grade requirements, which is what the agencies always want. The rating agencies want to hear like, "We're committed to IG." You would like to have the flexibility on M&A and shareholder returns. You were happy with your cost of capital. You do have unsecured debt with 3% area coupons. Though admittedly, that was issued in a lower rate environment. It was 2021 when money was free. Overall, why the change from this idea that you wanted to maintain flexibility to basically now saying you want to become an investment-grade issuer? Yeah. I think investment-grade status came to us. We did not chase it. I think we have been operating below the seven turns for three years now. S&P changed the methodology that they use for tower company in the spring. They really look at the tower industry, basically three customers and the long-term contract. Those three customers are investment-grade, generate the bulk of your revenue. Basically, their guidance is that if you are below seven turns of leverage and if your mix of secure and unsecured debt is below the 50% ratio, you basically get an upgrade to investment-grade. The upgrade is at the corporate level to investment-grade. It is really, as we look at this, I think we have been operating below the seven turns for the past three years. In the current interest rates environment, I think we could raise investment-grade bond at 75 basis points better than non-investment-grade bond. We used to finance in the ABS market, but right now, an investment-grade bond would probably be cheaper than an ABS security. There is a cost advantage in going investment-grade. It does not really take away a lot of financial flexibility because we have been operating below the seven turns for the past three years. We did a $1 billion deal for Millicom that only increased leverage by 0.2 turns. We bought back as of earning in late October, $325 million of stock this year already. We have plenty of capacity for the dividend and keep increasing the dividend and buying back shares. I think we feel pretty good about the move to investment-grade. Okay. So you've got like $750 million of these 1.88%. So also like free money, securitized notes. I think the anticipated repayment date, which is January 2026, right? So the ABS market likes when you meet those anticipated repayment dates, even though it's not a hard maturity, right? Right. Are you going to refinance those as unsecured? Is that sort of part of the deal with S&P that you just kind of lower the amount of securitized? Yes. It is coming up early in January. At some point next year, I think we will do a large investment-grade debt deal in order to take our ratio of secured to unsecured to below 50%. We have a $2 billion revolver, and we are probably going to just tap the revolver sometime in January to refinance that ABS. At some point in 2026, do a large IG debt deal to take out basically the terminal and pay out the revolver. Okay. And then you recently got your first IG ratings across the board from Fitch. They were first-time issuer. And oftentimes, Fitch serves that role. Companies will go get the IG rating from Fitch. That kind of like starts the ball rolling. But Moody's is still, so they've got you mid to low double B, so Ba2 issuer, Ba3 unsecured. So what's going on with Moody's? Have you talked to them about this? Yeah, we talked to them. I think I can't comment on this, obviously, but I think they have their methodology. They have to stick to their methodology and maintain their, I think, the way they're looking at things. We have a dialogue with them. I don't know what's going to come out. I can't comment on this, but we have two investment-grade ratings, and that's enough to tap the investment-grade market at this stage. Okay. You did talk about you do not believe it is going to constrain your shareholder returns. Right now, the annualized dividend is about $475 million. How much are you budgeting for share buybacks? Let's just peel the onion, right? It's about $1.9 billion in the last two or three years, $1.9 billion of EBITDA. Last year was $375 million of cash interest expenses, $435 million this year. The dividend, $475 million, $35 million of cash interest expenses, $15 million of maintenance CapEx, $200 million of growth CapEx. You're left with about $700 million of extra cash every year that could be used for share buyback, paying down debt or M&A. In 2023, in a raising interest rate environment, we spent $600 million paying down debt, and we spent about $100 million in M&A. Last year, we spent $200 million on share buybacks, $300 million on M&A. This year, I mean, as of the earning days, we spent $325 million of share buyback. We like the valuation at this level. I think the goal, and we spend a lot of time with our board looking at capital allocation, what you do is that extra $700 million of cash that is being generated after dividend, after basically cash interest expense and CapEx. That is how you create value for the long term. If you find an attractive M&A opportunity, we are going to deploy capital. That was the Millicom deal. Currently, domestic M&A is extremely expensive because of the competition from the private equity firms and the scarcity of assets. We think our shares are attractive. Going forward, I think our payout ratio is about 35%. We are probably going to keep increasing the dividend at double-digit growth rate for the next few years. As long as our shares are trading at this level, I think buybacks are very attractive. Okay, great. Okay. With about two minutes left, I think let me just ask you to just say what you can about the outlook for 2026, what you're most excited about. Is there anything that we haven't touched on that you think you want to leave with the audience? Yeah. Outlook for 2026, we'll give guidance late February at the next earnings call. In terms of the business itself, this business has been around for 35 years. It's going to be around another 35 years. You look at some of the towers that were built in Connecticut, Long Island, Florida, California, the zoning laws are very strict. The carriers need more capacity, more coverage. It's a fantastic business. I would say after the Google search business, it's probably the best business around. Right now, the industry is probably facing three headwinds. One is a raising rate environment where you refinance, as you say, one coupon ABS deal. The one in January is another $1.25 billion ABS in November with one handle on it. You refinance that at the 5%. That creates headwind to FFO and FFO per share, but eventually, that's going to work itself out. Second one is the Sprint churn. You had consolidation in the U.S. from four to three, and that put pressure on the top line growth rate. The third one is really the CapEx wave, right? When you look back 30 years of wireless industry, CapEx as a percentage revenue goes between 25% and 15% of revenue. The cycle is always the same. The wireless operators buy spectrum. They deploy a new generation technology. They get a 10x increase in capacity. They cut CapEx. They fill it up. The cycle starts again. I think we are now probably CapEx as a percentage revenue this year is probably 14.5%. It's the lowest it has ever been for the big operators. 6G will come. The FCC is going to auction up a C-band in 2027. The wireless operators are going to have to roll out a new technology because the world is going wireless with fixed wireless access, with AI and TikTok and whatever. I think I feel good about the industry. Those three headwinds, the CapEx wave, the churn, interest rate environment, all of this is going to go away in the next two or three years. I feel very bullish about the tower industry for the long term. Okay, great. Great note to end on, Marc. Thank you so much for being.