Latin America remains an important market for SBA Communications (NASDAQ: SBAC). Outside of Tanzania and the Philippines, the majority of the Boca Raton, FL-based tower company’s international sites are in Latin America where Brazil is its primary market. SBA also operates in Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Nicaragua, Panama and Peru.
At the end of 2Q24, SBA owned or operated a total of 39,744 sites, 17,461 of which were in the U.S. and 22,283 in other countries. During the quarter, the company spent $26.5 million for 117 sites, including 106 sites in international markets and 11 in the U.S. SBA also built 100 sites, 95 of which are in international markets. Subsequent to the second quarter, the company had purchased or was under contract to purchase another 106 sites in existing markets for $49.3 million in cash. These deals were agreed to during the quarter and are due to close before the end of this year.
SBA continues to evaluate potential acquisition opportunities. In February, the company acquired 61 sites in Peru from IHS Towers (NYSE: IHS), Inside Towers reported. At the end of 1Q24, IHS owned 7,663 towers in Brazil and 228 in Colombia and potentially could do similar deals in the region.
While 56 percent of its tower portfolio is international markets, SBA generated just 26 percent of its 2Q24 tower revenues outside of the U.S. International site leasing revenues for the quarter were $163 million, down nearly four percent on a year-over-year basis. The decline was due largely to weak foreign exchange rates.
The Brazilian real has been among the emerging market currencies that have weakened the most against the U.S. dollar so far this year. During 2Q24, 79 percent of SBA’s consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-US dollar denominated revenue was from Brazil, which accounted for 15 percent of consolidated site leasing revenues, BNAmericas reported.
Nonetheless, Brazil remains an important market for the company. During the company’s 2Q24 earnings call, Brendan Cavanagh, SBA CEO commented, “Obviously, [FX] introduces an element of instability that I would prefer not to have. However, we have a very good business down there. There’s a lot of good things that are going on in Brazil.”
América Móvil (NYSE: AMX) has become an increasingly important customer for SBA in Latin America. Over the past two years, the MNO’s contribution to SBA’s international site leasing revenues has grown to 21.5 percent, up from 20.3 percent in 1Q24 and 20.2 percent in 2Q23. In 2Q22, AMX’s share was 13.2 percent.
The greater contribution from América Móvil’s Claro branded operations has helped SBA minimize churn and adjust to FX impacts in Brazil. Claro recently won 5G licenses in Chile, Colombia, Argentina, Costa Rica and Uruguay, among others. Cavanagh pointed out that the deployment of new 5G spectrum with the next generation of wireless technology creates opportunities for increased organic growth.
“They [América Móvil] have been very active. They’ve probably been our most active leasing customer broadly across our international markets. With the FX decline in Brazil, they’re obviously a tenant there, but they have a presence in a number of our other markets, so they’re not as affected as some of the other carriers on that list that we share,” said Cavanagh.
Telefónica (NYSE: TEF) remains SBA’s top international client, accounting for 21.8 percent of international site leasing revenues in the quarter. But Telefónica’s revenue contribution has declined from 22 percent in the previous quarter and 23.4 percent in 2Q23.
The sale of Oi Móvel’s operations to Telefónica, América Móvil and TIM (NYSE: TIMB) in Brazil in mid-2022 impacted SBA’s business due to the decommissioning of Oi towers and the consequent cancellation of contracts. The company reported that churn in recent quarters in international markets, largely due to Oi’s consolidation, appears to be easing.
By John Celentano, Inside Towers Business Editor
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