While SBA Communications CEO Jeffrey Stoops was presenting at the Deutsche Bank Media Internet and Telecom Conference this week, Inside Towers has had the privilege to meet many other SBA professionals at the South Wireless Summit. (I think Stoops got the wrong end of the deal, SWS is way more fun!) Stoops did have the chance the discuss when the newly purchased spectrum by the carriers will start to drive SBAC tower growth, domestic tower purchases and international markets, along with capital allocation strategies. Bill Stoller of Seeking Alpha reported the five key takeaways from Stoops’ presentation. Stoller noted that there were unexpected large deployments by AT&T that drove SBA’s 2014 outperformance, and that Stoops expects that AT&T will resume a “more typical pattern” during 2015, which suggests equipment deployments will increase as the year progresses. When it comes to the new AWS-3 spectrum being deployed by the carrier, Stoops thinks it will take some time to clear as it was previously used by U.S. defense agencies. Stoller explained, “Also, there is another new spectrum auction on the horizon, a 600 MHz (TV Spectrum) auction. Again, deployments resulting from the pending auction, will probably not begin “until the end of 2016, at the earliest,” [Stoops said]. A key point is that the only way the carriers are going to get a return on their investment is by monetizing the spectrum. Stoops feels this will generate a 4 to 5 year runway of spectrum driven capital deployment by SBAC’s major U.S. tenants beginning in 2017.”
When it comes to international markets, SBA is still integrating their recently acquired towers and bringing them up to company standards. Stoops said Central America has been a “grand-slam home run.” Domestic growth and capital allocation/REIT status are the final two takeaways. “While Stoops described SBAC as ‘ready if we choose to apply’ for REIT conversion, the company hopes to delay filing due to having another three to five years of NOL’s on the books,” Stoller explained. “SBAC continues to monitor evolving government policy and tax laws relating to REIT conversion. In the long-term SBAC will be a REIT and pay a dividend, however, there are absolutely no plans to institute a dividend currently.”
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