SBA's per-share target rises as U.S. tower rents fall
Lower routine spending supports the outlook as lost carrier contracts weigh on U.S. revenue.
SBA Communications bought back $300 million of stock in Q3. That leaves fewer shares to divide into its annual earnings forecast, giving each remaining share a larger slice of a nearly unchanged total.
The wireless tower owner now expects annual adjusted funds from operations of $12.15 to $12.37 a share, versus $11.95 to $12.40 in August. The floor rose, the ceiling fell slightly and the midpoint increased by about nine cents.
AFFO, the adjusted earnings measure, removes real estate depreciation and selected other items while deducting routine capital spending. It keeps the cost of cash interest.
What happens if the share count stays the same?
SBA's forecast for total AFFO rose just $2 million at the midpoint, to $1.296 billion. Its assumed average share count fell from 106.3 million to 105.7 million.
| Annual forecast | August | November |
|---|---|---|
| Total AFFO, USD billions | 1.270–1.318 | 1.284–1.308 |
| AFFO per share, USD | 11.95–12.40 | 12.15–12.37 |
| Assumed average shares, millions | 106.3 | 105.7 |
Research by Ticker Byline shows that applying August's share count to the new total puts the midpoint at about $12.19 a share, rather than $12.26. Most of the per-share increase comes from dividing the earnings among fewer shares.
Lower expected spending also helps. SBA reduced its annual maintenance and corporate capital-spending forecast by $7 million at the midpoint and net cash interest by $4 million. Its growth-investment forecast went the other way, rising $20 million.
The U.S. rental business is still shrinking
Domestic cash leasing revenue fell 3.7% from a year earlier to $453.6 million. This measure removes noncash adjustments that spread rental income across a lease's term.
SBA's annual forecast still includes roughly $55 million to $56 million of lost revenue from Sprint network consolidation and $56 million from EchoStar. In that forecast, new leases and contractual rent increases do not fully offset those losses.
International cash leasing revenue rose 12.7% to $207.4 million. Currency movements supplied 3.5 percentage points of that growth; the portfolio also includes acquired and newly built towers.
For the group, Q3 AFFO fell 5% to $337.3 million, and AFFO per share fell 3.3% to $3.19. GAAP net income attributable to SBA was $231.3 million, versus $236.8 million a year earlier.
Selling some towers, building others
SBA completed the sale of its towers in Chile and Ecuador on September 10. Its agreed sale in Peru remains pending regulatory approval, with closing expected in Q4.
The company also built 213 towers during Q3, up from 109 in Q2. The next results will show whether that investment and new tenant leases can contribute more while U.S. revenue continues to absorb the lost contracts.
The SBA Communications company profile follows its leasing results, cash flow, updated forecasts, tower sales and financing.