SBA Communications (NASDAQ: SBAC) is showing growth across all of its operations. For 1Q22, top line site leasing revenues reached $559 million, up 11 percent on a year-over-year basis from $505 million in 1Q21. At $433 million or 77 percent of the total, domestic site leasing revenues grew 7 percent YoY. By contrast, international revenues grew 25 percent YoY to $126 million, spurred by organic lease-up of existing tenants, increased inflation-based escalators, and new tower acquisitions. SBAC expects these elevated leasing activities to continue through 2022 and into 2023.
The U.S. market remains strong with each of SBAC’s mobile network operator customers signing up new leases and amendments and investing in their 5G network deployments with new spectrum bands. T-Mobile continued its nationwide rollout of 2.5 GHz and 600 MHz spectrum, although SBAC expects about $27 million in Sprint churn in 2022. Verizon and AT&T increased their 5G-related signings to focus on C-band deployments. DISH signed new lease agreements to support its nationwide 5G Open RAN network build-out.
These four MNOs accounted for roughly 95 percent of SBAC’s domestic site leasing revenues in 1Q22. T-Mobile, SBAC’s biggest customer, accounted for 40 percent of the total. MNO activity also drove meaningful service revenues with backlogs in site acquisition and construction.
Internationally, the company exceeded its own expectations for organic tower leasing and new build activity. During the quarter, SBAC generated 49 percent of new international revenue from new leases and 51 percent through amendments to existing leases. With consumer price index-based escalators increasing in many markets, this leasing activity drove strong organic international revenue growth.
SBAC progressed with the integration of its new Tanzanian tower operations and continued to build new towers in the Philippines. It recently acquired a data center in Sao Paulo to serve as a hub for tower edge data centers and C-RAN deployments for SBAC’s Brazilian MNO customers. With spectrum auctions now complete, the company expects MNOs in Brazil and South Africa, its two largest international markets, to accelerate their 5G deployments.
During 1Q22, SBAC acquired 1,807 communication sites for $215 million in cash, including 1,445 sites under the previously announced deal with Airtel Tanzania for $176 million. Only nine sites were acquired in the U.S. Prior to 1Q22, the company had purchased or is under contract to purchase 358 communication sites and one data center for a total of $177 million in cash. The company expects to close these acquisitions by the end of 2022. SBA also built 86 towers during the quarter with 85 of those in international markets.
As of March 31, 2022, SBAC owned or operated 36,017 communication sites including 17,363 in the U.S. and 18,654 internationally. Note that this is the first time the number of SBAC’s international towers exceeded domestic sites.
Capital expenditures for 1Q22 were $253 million, comprising $241 million of discretionary capex (new tower builds, tower augmentations, acquisitions, and purchasing land and easements) and $12 million of non-discretionary capex (tower maintenance and general corporate investments). SBAC also spent nearly $9 million to purchase land and easements and to extend ground lease terms. The company points out it is still a tower company, and that investments in infrastructure such as rooftops, small cells and data centers are not contributing materially to its results.
With a productive first quarter, the company raised full-year 2022 mid-point guidance for site leasing revenues to $2.28 billion, Adjusted EBITDA to $1.71 billion, AFFO to $1.31 billion and discretionary capex of $625 million.
Jeff Stoops, SBAC President and CEO comments, “These activity levels have allowed us to increase our 2022 outlook on all important metrics and give us tremendous confidence in strong organic leasing growth over the next couple of years. We believe the future is very bright, and we are excited to support our customers in the advancement of wireless networks across all of our markets.”
By John Celentano, Inside Towers Business Editor
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