SBA Communications Corporation (SBAC) Earnings

Management highlights

### Balance Sheet & Capital Structure Milestones - Successfully issued the company's first $3.5 billion unsecure investment-grade bond offering in three tranches: $1.35 billion due 2030 (4.78% coupon), $1.35 billion due 2031 (5.15% coupon), and $800 million due 2033 (5.45% coupon), with a blended 5.11% coupon and 5-year weighted average maturity - Proceeds from the bond offering were used to fully pay off outstanding Term B loans and the entire balance of the prior revolving credit facility; a new $2.5 billion unsecure revolving credit facility was established, leaving $570 million in cash on hand as of the call - Secured debt as a percentage of total debt is now below 50%, and S&P upgraded SBA's credit rating from BB+ to BBB, completing the company's transition to investment-grade status - Ended the quarter with ~$13 billion in total debt, with a net debt to adjusted EBITDA leverage ratio of 6.4x, which is near historical lows and within the company's 6x-7x target range ### Operational Progress - Q2 2026 FFO per share was $3.05, and the company declared a $1.25 per share cash dividend, consistent with prior payouts - The company completed integration of Millicum assets and built 99 new international towers in Q2, up from 75 in Q1, with build volumes expected to increase steadily over time; new tower builds consistently generate risk-adjusted returns above the company's cost of capital - Ongoing asset optimization: the company continues to exit subscale markets and expand presence in high-opportunity markets as part of a multi-year strategic effort - Ground lease buyout programs remain active, with the majority of new opportunities now concentrated in newer international markets (Central America, Brazil) rather than the U.S., as most high-value U.S. opportunities have already been captured ### Long-Term Growth Drivers - Upcoming FCC upper C-band spectrum auction (scheduled for April 2027) will create a 440 MHz contiguous mid-band superband, with strict automatic forfeiture build requirements that will drive incremental network deployment and co-location growth for SBA over the next 5+ years - Additional spectrum bands (2.7 GHz and 4.4 GHz) are under review for commercial repurposing, with future auctions expected to drive further long-term organic site leasing growth - Edge compute: growing demand for distributed low-latency architecture to support AI applications positions SBA's existing tower portfolio to capture meaningful incremental growth; roughly half of the U.S. portfolio is currently suited for edge deployments - Satellite direct-to-device (D2D): SBA views satellite as a complement to, not a substitute for, terrestrial wireless networks; D2D providers will need terrestrial infrastructure to deliver reliable coverage, creating growth opportunities for SBA ### Capital Allocation Strategy - The dividend remains one of the fastest growing among all REITs, and as a percentage of AFFO it remains low, preserving capacity for other capital allocation priorities - With leverage below the midpoint of the target range and completed refinancing, the company has ample liquidity; share repurchases are viewed as the best use of capital at current valuations, and buybacks will resume in H2 2026

Guidance

- Management modestly increased full-year 2026 guidance for site leasing revenue, FFO, and FFO per share from prior guidance, driven by higher straight-line revenues and improved net cash interest expenses - Prior full-year 2026 guidance for legacy print and EchoStar-related churn remains unchanged - The company continues to assume the $1.2 billion November 2026 ABS maturity will be refinanced at a 5.25% interest rate - Full-year 2026 new tower build guidance is ~600 total new sites, with most builds concentrated in Central America and Tanzania, representing a slight upward revision from prior plans - U.S. second half 2026 new leasing revenue contribution is expected to be lower than first half 2026, consistent with prior outlook set at the start of the year, with no changes to this expectation

Segment performance

SBA divides its site leasing business into two core segments: U.S. and International. In Q2 2026, the U.S. segment added approximately $9 million in new lease and amendment billings, driven primarily by new co-locations as carriers densify and expand their network footprints. U.S. tower cash flow margins reached just under 80% company-wide, with the U.S. segment contributing the bulk of this margin performance. The International segment added approximately $4 million in new lease and amendment billings in the quarter, representing approximately 30.8% of total new Q2 billings. International churn remains elevated due to ongoing carrier consolidations, carrier bankruptcy restructuring, and wireless network rationalization activities across the segment's markets.

Risks & headwinds

- Elevated churn in the International segment driven by ongoing carrier consolidations, bankruptcy restructuring, and network rationalization across key markets; only a small number of large customer churn restructurings remain, but timing of churn normalization is still uncertain - Litigation with EchoStar related to contractual churn claims, where EchoStar is seeking an 85% haircut to SBA's claims; SBA continues to litigate and is confident in its contractual position, but litigation outcome remains uncertain - Some U.S. carriers have undergone leadership changes and implemented headcount reductions with a renewed focus on cost control, which has modestly impacted near-term U.S. deployment spending levels - There is high valuation disparity between available U.S. M&A assets and SBA's own stock valuation, limiting attractive accretive acquisition opportunities in the core U.S. market - Competition for new tower builds in the U.S. has pressured returns, as some competitors accept returns that SBA is unwilling to pursue, limiting near-term U.S. build opportunities - Long-term growth from new spectrum, edge compute, and D2D satellite opportunities are early-stage, with no material near-term revenue impact expected, and development timelines remain uncertain - Less than 2-3% of SBA's tower portfolio consists of low-traffic rural fringe sites that could potentially be displaced by D2D satellite service, though this impact is expected to remain minimal, with potential new build opportunities offsetting any losses

Analyst Q&A

• Q: UBS asked for color on U.S. second half 2026 application volumes, and if new spectrum deployment will accelerate growth next year. /

  A: Application volumes in the U.S. are consistent with the first half of 2026, with mild cyclical rotation in activity between different carriers that is not unusual. Most growth from new spectrum auctions is a multi-year opportunity that will play out over five plus years, so no material impact on 2027 growth is expected at this stage, with further details to come later. (328 characters)

• Q: Raymond James asked what percentage of SBA's portfolio is rural fringe sites potentially at risk of displacement from satellite D2D service, and what the expected magnitude of impact is. /

  A: SBA estimates that potential at-risk fringe sites make up no more than 2-3% of the total portfolio. Even at that small scale, the ultimate impact is uncertain, and any small amount of lost sites will likely be offset by new infrastructure build demand from satellite D2D providers. (316 characters)

• Q: RBC Capital Markets asked how SBA is managing potential tower rent cost pressure from LATAM carrier expense control initiatives. /

  A: All carrier customers consistently focus on cost control across all markets, including LATAM. SBA offsets this pressure by delivering high-quality tower locations and reliable service that provides more value than the cost of rent. Most potential churn is isolated to unneeded sites, and ground lease buyouts can even reduce passed-through costs for customers in markets like Brazil. (365 characters)

• Q: Goldman Sachs asked whether SBA prefers holistic master lease agreements (MLAs) or a la carte pricing for large customer contracts. /

  A: SBA is indifferent to the structure itself, with decisions based on specific contractual terms. MLAs provide certainty for both carriers and SBA, streamlining deployment processes to improve efficiency, but SBA is willing to use a la carte pricing if MLA terms are not favorable for shareholders. (300 characters)

• Q: BMO Capital Markets asked how leverage will be managed during the upcoming share buyback program, and how close to the 7x leverage target SBA is willing to go. /

  A: SBA generates significant free cash flow that limits leverage impact from buybacks. Management expects to keep leverage near the middle of the 6x-7x target range over time, but would be willing to temporarily move closer to 7x for opportunistic repurchases during market dislocations. (295 characters)