SBA Communications CEO Brendan Cavanagh. This session is for Citi clients only, and disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand, push the button on your microphone to turn on the light. You can also go to live.qa.com and enter code GPC25 to submit questions. Brendan, with that, we're going to turn it over to you to introduce your company, your team, and provide any opening remarks. If you could please also tell the audience the top reasons an investor should buy your stock today, then we'll jump right into the Q&A. Okay. That could take up the whole thing, Mike, if I do that. It's nice to be here. Thank you for having us. It's a pleasure to be here. SBA Communications, wireless tower company, been a publicly traded company for over 25 years. Has been in business for over 35 years, and just pleased to be here. My team, I have Louis Friend, who's our Vice President of Finance, who's sitting over here, and is somebody who can always be of help to any of you if you have any questions about anything. In terms of why you should consider buying SBA's stock, I mean, there's a variety of reasons, but really what we offer is a very stable and constantly growing cash flow stream. It's perhaps one of the most stable businesses you would ever see. We provide space on our tower infrastructure to the wireless carriers. Our primary customers here in the U.S. are Verizon, AT&T, and T-Mobile. The need for wireless broadband continues to grow and expand, and I think we all know that as end users of their services, that the amount of capacity that we take up on our mobile devices continues to grow every year, and the only way to deal with that is to continue to deploy more spectrum and to deploy more equipment at cell towers, which is what we offer, and that therefore continues to drive growth at our sites. And it's one of those things that never goes backwards. It always seems to go up, so from a stability standpoint, I think you couldn't find something better. Great. So maybe just starting in terms of at the strategy level for the company. So as you entered the new role of CEO for the company, you talked about the opportunities to optimize some of the asset mix. Can you talk about where you are on that optimization, beginning, middle, end? And also, are there additional priorities that you've set for the company this year that investors should be mindful of? Yeah. So last year, I did lay out kind of a plan around the things that you just mentioned in terms of going through a strategic review, looking at all of our different assets at different markets where we operate, and looking for ways to further improve our positioning and stabilize our results in those markets. And one of the things that we had learned throughout our years of operating in these different markets, in particular, I'm going to focus on the international markets, was the best outcomes were typically when we were in the strongest position, when we were a leading infrastructure provider in those markets, either number one or number two in the market, and when we were aligned with the leading operators, the leading carriers in those markets. If you tended to align yourself with the weaker ones, that tends to bring challenges at some point down the road. We focus very heavily on looking at where we stood in each market, what was the opportunity set, were we at scale, is there an opportunity to get there and to improve our positioning. We've taken a number of steps along that path. One of those, I don't know if you're going to ask about it, Mike, but I'll jump to it, is we announced recently an acquisition of over 7,000 towers from Millicom across Central America. While in and of itself as an acquisition opportunity, it's very good and the returns are very good. It's an accretive day-one price that we're paying. It was really more than that. It improved our positioning in the market. It ensured that we would be the number one tower provider across the entire region indefinitely. It also allowed us to extend all of our existing leases with Millicom, who's the number one carrier in the region, across our existing portfolio, and sign 15-year non-cancelable agreements with them as a leaseback on those sites. It was all US dollar-denominated, obviously stable currency for us to help offset some of the currencies that are less stable in our portfolio and improve our positioning overall. In addition, we signed a new tower build program with them too that will allow us to continue to grow in those markets over the coming years and really kind of ensure that we stay in the number one position in that region, so that was a step where we improved our scale and improved our standing in the market and our alignment. On the other side of the coin, we had markets that were subscale that we determined that we didn't necessarily see a path to do something similar, and we've made the decision to exit some of those markets. We were in the Philippines. We've just exited that market. Colombia, we are under contract to exit our operations in Colombia as well. And a little over a year ago, Argentina was in that same bucket. And so we continue, Mike, to your question, to always look for ways to optimize. We have done a thorough review of our portfolio, not just the international markets, but all operations, and we will continue to do that. We're in the midst, I would say, of determining whether we'll be able to take certain steps to increase our scale in some markets, and whether or not that happens will determine other steps that we might take subsequently. Thanks. That's very helpful. Maybe switching gears to the domestic business and to leasing activity, maybe you could just remind us of how 2024 ended up in recognizing there's sometimes differences between what's happening in leasing activity from a bookings perspective to what's actually happening in the revenue dollars? How does this play out in 2025 and over the next few years in terms of the opportunities to organically grow this domestic segment? Sure. Well, we've seen in the U.S. over the last few years, I would say, a relatively low level of leasing activity, perhaps historically low level of new lease-up activity. And throughout 2024, we started to see that increase as we got into the back half of the year. Our customers are starting to recognize a couple of things. One, there's greater congestion on their networks. It's something that they have to deal with. And given the fact that there's very little new spectrum coming available in the next several years, probably the only way to do that is through further densification of their networks. And so we're seeing a shift to more new colocations. We still have some upgrades that are going on around C-band and mid-band spectrum, but we're also seeing the introduction of a lot more densification, which results in new lease agreements, which ultimately is very good for us because it's not only higher dollars per piece of paper that you're signing, but it also is more points of presence and allows you greater opportunity, I think, in the long term to see upgrades at those sites. So that's one thing that's going on. In addition, you've got T-Mobile as a specific example who has certain regulatory requirements that were put upon them as part of the Sprint acquisition to provide coverage in certain more rural areas. But it's not just coverage. It's also about downlink speeds that they had to provide. And as a result, their densification of those areas is required to be much greater. And so we're seeing a significant step up in the application backlog for new lease agreements in those areas from them. And that's starting to drive greater lease-up as well. So we've started to sign up more business each quarter. The last couple of quarters, it's continued here into the first quarter thus far. But the application backlogs have also continued to grow as we moved through last year and into this year. So that gives us great confidence that we'll continue to see increasing activity. And maybe the last thing to say is just to kind of echo what Mike was alluding to, which is the time that you sign business up to the time that you actually start to see it hit your financial statements in terms of revenue recognition, there is a little bit of a delay. The more you do new leases, the delay is a little bit longer. So on a typical new colocation agreement, it's about a six- to nine-month lag from the time that you actually execute the lease to when you see that revenue commencing on your financials because it's tied to when the installation starts usually. And so where we are now, even though we've seen this uptick in activity, we've really not seen much of an impact yet to the financials in terms of a step up. But I would expect as we move through 2025, every quarter we will contribute more to the growth, the organic growth, quarter-over-quarter than the previous quarter. Every quarter will be higher as we move through the year. And that should bode well as we head into next year and beyond. But I'll reserve any projections around that until we get towards the latter part of the year. And from a densification perspective, you called out the requirements for T-Mobile, but are you seeing densification broadly from all of the big three? We are. Yeah. I called out T-Mobile because they're probably the furthest into that camp. In the case of AT&T and Verizon, they're both still certainly doing C-band upgrades on their existing sites. So you have a mix of amendment activity that's primarily related to that and new colocations that are more tied to broader densification. But we are seeing greater new lease activity from all three of the carriers. As the mid-band upgrades play themselves out, are you hearing from customers that there's a potentially next phase of upgrades separate from spectrum where there's some new antenna technologies that they can employ and that helps SBA for potential amendments? Is that another opportunity going forward to extend leasing growth for the business or have things quieted down on that front? I guess there are a variety of things that are pushing the increased activity. I guess that's one of them. I would say that it's really more the a gold network congestion that has elevated. For certain customers of ours, for instance, fixed wireless access has been the primary driver of subscriber growth and as a result, and the amount of capacity that the average fixed wireless subscriber uses on a network versus the average mobile user, that's starting, I think, to have an impact on network congestion, network quality and it can certainly be solved. It is being solved, but it's being solved through enhanced densification of the networks and so I think that's a driver. All of these items are drivers of it, but it always tends to come back to, if not a regulatory requirement, it comes back to just a general capacity issue on the network. The fact that there's less spectrum available means that the equipment needs are an even more critical part of that. Just thinking about the mix of colocation versus amendments, when you have amendments, it's a captive audience, right? The carrier comes to you to upgrade what's on that tower. When carriers are looking to do densification, are you seeing any change in the competitive landscape where to win that business, it's more competitive, or is it still a situation where the deployments they want tend to be unique to one specific tower provider? Yeah. I think there is a little bit more, particularly if you talk to so I'll go back to T-Mobile as an example, not to pick on them, but because the nature of that regulatory commitment is a little more focused on more rural areas, they typically have a little more flexibility, right, in how they design their network and where they go. And as a result, that gives a carrier more options. And so the type of relationship that you have, how you work together, the agreement that you strike to do that becomes a little bit more relevant as opposed to places that they are, they've got to do an upgrade, they're already a captive audience. It's a little bit of a different dynamic. And so we have seen a little bit of a shift in the way that we interact on some of these items. It's not that the broader business is necessarily different. You still have assets that are very exclusive in many ways, and the dynamic there is one way. But as you have this greater expansion into areas that weren't the original areas of focus, the denser population areas, I think there's a little more optionality, perhaps, in the way that we have to approach that as a provider to them is different as well. And so we're adapting accordingly. Are you finding that you're able to get your fair share or more than your fair share of those opportunities? Yeah. I think I would say we get our fair share. It's hard to say we get more. I mean, I think in some cases we probably do. But broadly speaking, among the bigger tower companies that exist, they need all of us. The carriers need all of us. And for the most part, we're in spots where we don't have sites right next to each other, generally speaking. And so it's really more of a, "Hey, how do we do what we need to do from a network standpoint and who serves that need in a particular spot the best?" That's what they're making a decision on. I will tell you, though, that the bigger tower companies are definitely, I think, in a better position than some of the smaller folks because when you have a major initiative like the T-Mobile initiative, they're looking for speed and scale, and they want to know that they have certainty as to how this is going to work. And somebody who's in a much smaller position can't provide them that the way that we can. And so I do think they're a little more skewed towards doing those build-outs where they have choices to make around the bigger guys because it's just more efficient for them. Any updates on the likelihood for SBA to enter into additional comprehensive MLA agreements with other national wireless carriers? It's certainly possible. It's something we've not really done what we characterize as holistic agreements. We've always had master agreements of some form or fashion, but in terms of like, "Hey, you pay a certain amount that's fixed in a bonus escalator or that sort of thing, and you get a certain amount of capacity rights to upgrade at our sites." We've only done that once. That was with AT&T about a year and a half or so ago. We haven't historically done that. We haven't necessarily found it to be important to do, and I don't know that it necessarily was going to be advantageous to us to do that in general. But that doesn't mean that we're opposed to it. It really just comes down to the terms and the economics of the arrangement and what's the specific need of the carrier, what's our view on what they need to do going forward. So what are we potentially giving up in exchange for what we're getting committed to, and how close are those things to each other? And I think if they're pretty close to each other, we'll be inclined towards the MLA because it just makes the interactions much easier and smoother, and there's more of an alignment on how it works. If there's a disparity, though, and we think we're going to be economically disadvantaged, then obviously we're not inclined to do that. And that, in the past, has been the case at times, but I wouldn't rule it out. I think it's just a one-by-one situation. One of the elements of the business that the domestic portfolio and the international portfolio seem to have in common right now is just digesting some merger-related churn and changes in industry structure. Can you just frame that headwind and the speed at which you can get through that headwind over the next few years? Sure. Well, in the U.S., it's primarily around the Sprint T-Mobile merger. On our earnings call a week or so ago, we gave our expectations as to the impact of that. It's most heavily concentrated in this year and next year on that one. Just over $50 million of churn impact to our P&L from Sprint this year and approximately $50 million next year. And then after that, there's, I think, a total of, we believe, roughly $20 million of headwinds. Probably most of that takes place in 2027, but it could spread out over an extended period of time. But it's really these next two years is the bulk of that. Once we get beyond that, though, I would expect churn on our domestic portfolio to actually be probably near its lowest point in terms of our historical rules of churn because there's not much left. Churn was usually made up of some of these consolidations of smaller carriers and that kind of thing or old technologies, even paging customers. Believe it or not, we still have paging customers, and so that stuff, though, has dwindled down, and so the opportunity for that to happen is even less, so I would expect much less churn post-Sprint as we get out there over the next couple of years. Internationally, you're right in that there's some similarities. It's a little bit of a different mix. We had very little churn for most of our initial, I would say, 10 years in our international markets. It's picked up over the last couple of years. The biggest driver is consolidation. What you're seeing is, in a number of these markets, they frankly have more carriers than we had here in the U.S. And so naturally, they don't all survive. They're much smaller markets. Of course, they're not going to have more providers than we do here. And so we've had consolidations that have taken place. We've also had some companies that haven't survived. In Panama, for instance, Digicel was a customer of ours, and they basically closed up shop. And so that creates a churn headwind. But we're starting to get through some of those rationalizations in certain markets. Central America, which I referred to before with the Millicom deal, is one where we're largely beyond most of the consolidations and the consolidation risk. We've absorbed that already. The biggest one for us is really Brazil. Brazil is our largest international market, and so it has the biggest impact. You've got what were four carriers there that are now three carriers. And unlike in the U.S., where you had two combined, you have the one that went away being absorbed by the other three. They're each getting parts of it. And so that's a bit of a different dynamic, and it makes it a little bit harder for us to be able to predict exactly what the churn impacts are. And perhaps you've seen a little bit of that because I will admit it's been a little bit worse than we initially thought in terms of its impact. Although we're still making predictions there, we're not absolutely sure in all cases as to how it all shakes out. But I think where we are now, we're more confident we're on the high end of what it would be. And part of the reason for that is they're still figuring it out as well. They're all trying to figure out how to rationalize their networks in the best way possible. Then you combine that with other dynamics. Believe it or not, we're just now getting the churn associated with Claro's acquisition of Nextel International in Brazil, which took place many, many years ago, but it's now just starting to take effect. In many ways, Sprint lease is going away most heavily today, even though that merger took place five to six years ago. It takes a while for them to go through and figure that out. I think over the next few years, we probably have some elevated churn in Brazil, similar level to what we put out there for this year. But after you get through that, I do think long-term, Brazil in particular, will be in a much better place because you'll have three stronger carriers that will be competing heavily on network quality, and that's the best dynamic for us. So yeah, some headwinds for the next couple of years. In the big picture, it's a small percentage of revenue. Unfortunately, as a percentage of incremental organic growth, it's more meaningful and should be similar to what we put out this year internationally for the next couple of years. When you get through these churn headwinds, you mentioned the opportunities for better growth. Can you frame that? It feels like for some time, the international markets, I think the bullet points are basically opportunity to upgrade technologies. They're behind developed markets on that 3G, 4G, 5G transition. There's more densification opportunities relative to the number of subscribers in those markets and maybe usage opportunities. How does all of that play into the opportunity for SBA to capture a certain level of what we'll call normalized organic growth, kind of excluding this episodic merger and industry structure-related churn? Yeah. I think it goes back to the original thing I was talking about when we were talking about the strategic objectives, which is if we are in a position of strength in the market in terms of our relevance to their network deployments, and we're, of course, dealing with the stronger carriers in the market, those post-churn that are left, then I think we're set up very, very well for that because in many ways, we become a necessary component of their network development. All of the things that you mentioned are real drivers of growth opportunities over time. In fact, the opportunities are actually much greater because, as you said, they're much further behind the US. So there's an opportunity, and it's much less mature. So the opportunity to see enhanced lease-up growth is really greater in our international markets than it is here in the US. The only counterbalance to that, I would say, putting aside the churn, which we're talking about post-churn, the only counterbalance to that is that economically, they're not in as strong a position as the carriers here in the U.S. So their ARPUs aren't as strong, and their opportunity to turn that around and reinvest into the network is a little bit inhibited by that. But the network needs are much greater, and I think the opportunity set as a result to see a material amount of increased investment as a percentage of what they have is much greater there. Thinking both about domestic and the international markets, how do you view the expansion of LEO satellite constellations in terms of how that impacts demand from your carrier customers for macro-site leasing? I don't really see it as any kind of threat. It's really mostly complementary, so today, what's being talked about in terms of you're talking about a direct-to-cell type of solution from satellite is very limited in what it can provide, but where it's a very good solution are in places where it's just not economically feasible to provide coverage through a traditional terrestrial type of network, and so you're talking about maritime solutions, maybe aviation, certainly more rural or national park type of geographies where you just can't get the traditional type of coverage, so that, I think, is what you will see develop further over the next couple of years. There are very big limitations, though, on its ability to truly compete with the existing networks that we have today. There are limitations certainly around spectrum. The power in the handheld devices is not capable of the type of support that would be necessary to provide the sort of uses that you all are used to getting with your wireless devices. If you want to have just basic texting and very basic data, that you could get, perhaps, but you're not going to be able to stream something or go to social media. If there's anything like that, it's a whole different ballgame. Plus, the cost impact is quite significant because I like to say when you think about all the changes that happen to our tower sites all the time where equipment is constantly being changed, the antennas being added and radios changed out, and all this kind of stuff. If you could come up with a way to deliver this from satellite, you're going to face the same thing because technology is constantly evolving, and the type of solution that you have to adapt to will require changes there as well. It's not the same. It's a totally different deal now. If you have to make those changes with a satellite, you basically have to launch a new satellite. The cost of that is tremendous. The relative return on it doesn't make it make a lot of sense. I think if you talk to most of the satellite providers, they don't look at this as a displacement. It's more of a complement, and that's what we see as well. Is there any change helpful or hurtful in terms of the translation from service revenue change and organic growth to what flows down to the EBITDA line with respect to the operating leverage in the business? And can you remind us how, over time, that should pace? Yeah. Well, typically, most of the new leasing activity that takes place where you sign up new leases or amendments on a tower, I would say, generally speaking, falls 100% to the bottom line, to the EBITDA line or even the AFO line for that matter. There's very little incremental cost on existing sites to add new customers. So the leverageability is great from that standpoint. Our margins today, our EBITDA margins are, I believe, 71%, a little north of 70%, but that is actually impacted by our services business, which carries a much lower margin. If you normalize for that, it's in the high 70s%. And it generally continues to grow every year for the reason I just mentioned, as most of the adds, certainly the organic adds, are margin-enhancing. And I would expect that that will continue to be the case. The only way that it gets offset is sometimes we add new sites in, and they obviously start at a lower margin, and so that affects it, but in terms of the existing base, it's not really any different than it's ever been, but it continues to operate the way that it always has, and it's one of the things that makes it a great business. And just to that point, if you can remind our group here today, so in terms of then the capital intensity, if you take out the build-to-suits and you just look at the capital intensity, whether it's dollars or% of revenue, to get to that organic growth and that high incremental margin, what's that fair level of intensity? And is there anything that could change that over time? You get out, you have to do some redevelopment or some reinforcement of your structures? Yeah. I mean, at an individual site, there might be something that's more material in a given case, given what that particular situation is. But on average, our non-discretionary CapEx, which is basically the back office stuff and what we call maintenance CapEx, kind of the things we have to do at the towers to make sure that they're maintained, we guide it to, I think it's. I should have Louis up here. I think it's $53 million to $63 million for this year is the total range on all of that, what we call non-discretionary CapEx. And I think the CapEx you're referring to, Mike, is what we consider discretionary because it's only spent because we decide to spend it to facilitate some additional organic growth, is augmentation CapEx at our towers. And that's somewhere around $40-ish million, probably over the course of a year across our entire portfolio. but it's very sporadic. There's a lot of sites where it's zero, of course, and there are some sites where it does require an enhancement because it's already pretty full and it structurally needs to be augmented to handle the incremental lease-up on that site. but it's a pretty low percentage as a whole. Great. And then maybe just shifting gears to capital allocation. We're getting some questions from our group here today. So we'll start with these and we'll broaden the topic out. So one of the questions that came in is after the transactions, all of that are pending and announced for this year, where does your leverage go to, and how does that compare to your target leverage? Yeah. So our leverage, I would expect by the end of the year, based on what's under contract, and this includes the Millicom transaction that I mentioned earlier, which is close to a $1 billion acquisition, will be, I would guess, 6.3 turns or 6.4 turns, somewhere in that range. So somewhere between 6 and 6 and a half at the end of the year. Obviously, something significant was spent along the way that changed that. That's not included in my thinking. But that is certainly well below what our historical targeted leverage has been, but it's in the range of where we've been the last close to two years now. And I think that's a reasonable place for you to expect us to be. Historically, our targets for probably the last 10 to 15 years has been 7 to 7 and a half turns. And in the current environment, with a higher cost of capital, frankly, a bigger disconnect considering that cost of capital between the value of what private tower acquisitions are trading for in the U.S. in particular and where publics are valued, it makes the opportunity set a little bit less. And so as a result, I don't see us probably levering up significantly for that. Although I would like to, if we got the right opportunity, it just feels less likely. So that leaves us, from a capital allocation standpoint, primarily with new builds, which we're doing a bunch. But the big things are, what do we do with stock buybacks and debt paydowns? And I think the expectation should be for a mix of those two things going forward, barring some other significant asset opportunity that we find valuable. And within that, I still expect we'll be in a similar leverage range because we produce a tremendous amount of free cash flow every year. Long term, it will eventually come down because we naturally delever. I get asked. I'll jump to a question you might ask about investment grade. People ask that all the time. Well, why don't you go investment grade? And eventually, we will. It's naturally going to happen in the not-too-distant future. But for the time being, the primary benefit of being an investment-grade company is, in theory, the cost of the debt to us. And the difference, given our use of the secured markets, the ABS market in particular, is very little difference. I think at this moment in time, to try and lock in longer-term debt at what I hope is a higher point in terms of debt pricing today, it doesn't feel like the right thing to do. I think having the flexibility to consider some of these other investment opportunities that periodically come up is a better place to be. Eventually, that's what's going to happen. We're a maturing company, and we're moving in that direction. Invariably, our leverage will drift lower, and we will become an IG company, and that will become the new normal for us. And just to that point, I feel like in past years, you had your leverage target, and when you weren't doing acquisitions, you were using share buyback to keep yourself into that target range. And so it sounds like, though, going forward, it's a little different. You want to keep a little bit more flexibility than maybe in the past in this mid-sixes. But does that also mean that with that maybe new level over the medium term, could there be share repurchases in this year 2025 for SBA? Yes, there could be. Sure. And I think I'm obviously not going to specifically say that there will be or won't be, but it's a part of our capital allocation expectations. And so it will be part of the mix, I would expect, barring something else that comes along that takes precedence. If you look back over the last year, some people say, "Well, you haven't really bought much stock." We did buy some back in the spring of last year, and we haven't bought any since then. But what I think sometimes is missed from the outside looking in is the other things that we're looking at and considering doing, some of which happen, such as the Millicom deal getting signed up, but others don't happen. There were a number of other things that we looked at and considered, and some we considered very strongly that didn't happen. They either traded to somebody else or they didn't trade at all. And in those periods of time, you have to be cognizant of what you're doing from a capital allocation standpoint and retaining enough dry powder for that. And so it may look like you're deciding not to make a decision on buybacks at a given point in time, but it's not really about that. It's about the other things that are going on. And so I think I would expect over time, you will see a good mix of all of these things, and buybacks will be a meaningful component of that. Some years, it'll be more than other years, but it hasn't really changed from a philosophy standpoint. Thanks. I think that'll bring us to our rapid fire. Oh, God. So the first one, what will same-store NOI growth or tower gross profit growth be for the tower property sector overall, not your company, next year in 2026? It will be mid-single digits, I would say. Okay. And then secondly, will your property sector towers have more, fewer, or the same number of public companies a year from now? Same. I can't imagine it would be different. Thank you so much for joining us today. Oh, that was good. Thank you. Happy to be here. Thank you. Thank you.