Conference Transcript - SBAC 2026-09-09

Mike Ng, Analyst — Goldman Sachs

Great. Wonderful. Good afternoon, everybody. Welcome to the SBA Communications Fireside Chat at the Goldman Sachs Communicopia and Technology Conference. My name is Mike Ng, and I cover SBA and telecom services and infrastructure here at the firm. And I have the privilege of introducing Brendan Kavanaugh, who's the CEO and president of SBA Communications. First and foremost, thank you so much for being here today, Brendan. It's a privilege to have you here. Yeah, happy to be here, Mike. Thanks for having me. To start things off, I was just wondering if we could, you know, kick things off and talk about big picture strategy, overall priorities. You know, you spent a couple of years optimizing the asset portfolio. Maybe you can just walk through the opportunity set as you think about, you know, each of the regions and, you know, whether you see any specific, you know, market or segments that have a more meaningful modernization opportunity.

Brendan Cavanagh, CEO

Yeah, sure. First of all, we, you know, are fortunate to be in one of the better businesses that was ever created in terms of the stability and the profile of it. And so, you know, our focus has been on maximizing our core business, trying to strengthen it in the areas where we've had challenges. Some of those challenges have come from consolidation among our customers, both here in the U.S. as well as in our international markets. And so we've made a decision a couple of years ago to focus on trying to focus on the markets where we have a stronger position and either enhance our position in those markets where we're a bit subscale and be one of the leading tower providers in that market, aligned with the leading carriers or in some cases exit those markets and so we've done that in a number of cases in some of our subscale markets and so our focus um is really on bolstering and strengthening our core business making sure we're you know delivering service to the top customers carrier customers in those markets and uh can can be a leader in terms of organic growth opportunities in those markets and that'll be our focus i think going forward as well great um

Mike Ng, Analyst — Goldman Sachs

I was wondering if you could just characterize the current state of U.S. carrier activity. It seems like many of them are in the middle to later stages of their respective 5G coverage build-outs. What are you seeing from carrier activity more broadly, and what do you anticipate in terms of changes in activity as we head into the rest of the year and into 2027?

Brendan Cavanagh, CEO

Yeah, so activity in the U.S. has been relatively steady. I would say it's not necessarily the same across every customer. They each have their own kind of focus areas and the things that they're doing. And frankly, their cultures and the way that they behave in terms of network deployments have always been a little bit different from carrier to carrier. In this particular environment, we've seen one of our customers who we signed an MLA with last year be particularly busy over the course of this year in terms of new leasing activity. That's both amendments, upgrading existing installations, as well as infill with a lot of new leasing being done as well. So that's been the biggest part of our organic growth drivers during 2026. Some of the others have been a little bit slower. I think some prioritization of initiatives around fiber deployments and other initiatives have had it be a little bit slower than it's been in the last couple of years. But that's not that atypical. There's sort of a cyclical nature to some of these things, and I would expect as we move into next year and we start to see new spectrum getting auctioned, and you'll probably ask me about some of the upcoming spectrum auctions, but there'll be a large upper C-band spectrum auction that happens mid-year next year, and I think the outcome of that and who participates in a meaningful way, and I'm sure all the three incumbents will, we will see the next cycle of activity starting to build on that as well as some of the fallow spectrum they're holding today.

Mike Ng, Analyst — Goldman Sachs

Great. You know, I think that's a great segue. Maybe you can expand on that. As you think about that 160 megahertz of upper C-band that's going to come to auction next April, how would you contextualize that opportunity for SBA? You know, how quickly can that spectrum be cleared and deployed? What are your expectations there?

Brendan Cavanagh, CEO

Yeah, so it's hard to say exactly how quickly it will be cleared. It has to go through that clearing process after it is auctioned off. First of all, it's a large amount of spectrum. It's the largest amount of spectrum being auctioned at one time in many, many, many years. And so that's a good sign. And the speed at which it was made available to be auctioned was another positive. But on top of that, some of the rules that have been placed around spectrum auctions now by the FCC to help ensure the deployment of that spectrum and that it happens quickly and efficiently, including penalties, including the loss of the spectrum if you don't meet certain coverage objectives, I think will drive that activity maybe faster than it's been driven in the past. And so that's good from our perspective. Obviously, the clearing of the spectrum has to take place first. That sometimes can take a couple of years, but it might actually happen faster. In this case, I think there will be agreement around trying to make it happen as fast as possible. And I think there's an opportunity to possibly see activity starting maybe even as early as 2028 in terms of initial deployments related to that. That remains to be seen. So we'll see who wins it and how it rolls out. But I think there's an opportunity to see a clear amount of increased activity as we get towards the end of this decade.

Mike Ng, Analyst — Goldman Sachs

Certainly appreciate your perspective there. And maybe just talking about the broader, you know, 800 megahertz that's been mandated to auction through 2034, you know, what additional bands do you think will make up the remainder that we don't know about already or we haven't spoken about yet? And, you know, does the deployment of that spectrum, you know, change, you know, differ in terms of that opportunity relative to, you know, what you just talked about as it relates to the upper sea?

Brendan Cavanagh, CEO

Yeah, well, there's a number of different bands that are being evaluated now for potential ultimate wireless usage. The 2.7 spectrum was recently approved for that by the NTIA, and I would expect that, assuming it gets through its approvals in Congress, it will be made available potentially for auction as early as 2028, so that's likely the next one that happens after this upper C-band auction. In addition, right now there's attention being paid to the 1.6 spectrum, the 4.4 spectrum, as well as the 7 gigahertz band. What's really good about some of the higher bands, if you get up to 7 gigahertz, that spectrum simply doesn't propagate as well as the historic low band and mid band spectrum. And so what that means from our perspective is, you know, you're going to need denser networks, equipment that's closer together, and that's an opportunity set for incremental leasing. So, you know, it's setting up well. There's a lot of spectrum that will certainly be made available because of this 800 megahertz that's been, you know, identified as the amount they need to get out there. And the more of it that comes in the bands that we just talked about, I think it will be a driver of incremental growth for, frankly, the next decade.

Mike Ng, Analyst — Goldman Sachs

And then you mentioned at the onset there may be an opportunity for, you know, currently fallow spectrum or maybe some, you know, spectrum licenses that the carriers have that have yet to be deployed, whether that be, I guess, AT&T's recently closed, you know, 600 megahertz spectrum acquisition from DISH or some of the, I guess, lower upper C-band that, you know, had been acquired but not yet deployed. I just would love to have your perspective on when do the carriers actually go and deploy this stuff and when you might be able to see some tailwinds.

Brendan Cavanagh, CEO

Yeah, I think we'll see. First of all, AT&T has not, on our sites at least, and I think broadly, has not yet started to deploy the 600 megahertz. We do believe that will require incremental equipment, so it's an opportunity down the road. And I think we'll probably start to see that. My guess would be next year, sometime that that would be starting, but we'll see how it goes. T-Mobile is still sitting on C-band spectrum. They have not deployed any of that yet either. I do think that they probably are waiting on the outcome of the upper C-band auctions, and it will be a more coordinated roll out of that spectrum band, both pieces, the mid-band and the mid-C-band and the upper C-band together. in the future. So that timing on that probably remains to be seen until after the next Spectrum auction, and we'll get a better picture then. But again, the clock is ticking on those bands as well, and in order to hang on to them, they're going to have to get moving on them pretty soon. And they have every incentive for their network quality as well. Great. Super helpful.

Mike Ng, Analyst — Goldman Sachs

Where are we in the U.S. as it relates to, you know, 5G deployment and, you know, additional densification? And then, you know, as you think about, you know, 6G, will there be a similar dynamic as you described as it relates to the 7 gigahertz where is 6G going to operate in, you know, a band where the propagation characteristics would result in a need for dense networks. Yeah.

Brendan Cavanagh, CEO

I think on the 5G progress to date, the carriers are fairly far along. They're not all at the same level, but they're getting towards the latter days in terms of the upgrading their existing network for 5G mid-band spectrum, which is how we kind of measure it. How many of their sites that they have with us, have they upgraded with that mid-band spectrum? And if it's been, you know, 90% of those, then I would say they're pretty far along with completion of that. And they're not all at that level. One of them is closer to 65, 70%. That's probably the lowest one. So there's a little bit of upside still left, but, you know, by and large, we've seen a lot of that get done. On the 6G side, a lot of the spectrum bands that we just talked about a moment ago, I think will be key components to ultimate 6G deployments. And I think about 6G as being defined, in my mind, by AI-enabled applications being the biggest driver of the usage of a 6G technology. And given that dynamic, it will result in a much greater percentage of the total traffic that's occurring happening on an uplink basis as opposed to downlink. Today, you have roughly 90% or more of the traffic is downlink as opposed to uplink, and I think we'll start to see that shift. Some people have said as much as 50-50, but even if it's, you know, 45, 40, 60, something like that, it's a huge shift, and that will require a lot of incremental equipment at the tower sites to make that happen. And so I think that dynamic will be very, very positive for our industry. and that's not going to happen tomorrow but it does set up the trajectory very well over the longer term Could you just expand a little bit on what the increased uplink capacity means for towers, is that just different types of equipment that would be needed?

Mike Ng, Analyst — Goldman Sachs

Different types of equipment different antennas, certainly different radios and I think it's just a sheer increase in the number actually, very helpful Starlink and satellite has obviously been very topical for the industry you know could you just talk a little bit about you know whether or not that's a positive or a negative for the industry for SBA you know could you know the satellite be a substitute for you know future rural densification do you worry about you you know, femtocell terrestrial deployments as something that replaces macro towers.

Brendan Cavanagh, CEO

Yeah, I don't worry about that to answer that last question. I think it remains to be seen how the satellite direct-to-cell market develops, and it could go any number of different ways, obviously, and so I don't know for sure how those will shake out, but as I look at the range of possibilities, it's, in my view, worst case for us and our industry, it's a neutral. But the best case is there's a meaningful contributor to increased organic growth. If you have true competition being brought to the existing incumbents through one of these providers where they're providing direct-to-sell, I'm 100% certain that there is a terrestrial component that will be needed as part of those networks. I do not believe that femtocells are the answer to that. Maybe there's some element of it that's in there, but in terms of it being the wholesale solution, I'm highly skeptical of that based on everything we've seen throughout our entire history, and it's been tried before. So that, to me, says that there will be a macro-based terrestrial component of those networks, And basically, it provides us a whole new customer potential. Now, it may not be three customers going to four. It might be three going to three and a half effectively. But still, it's all incremental and would be a meaningful growth driver. That's, of course, if they're going to compete as a true standalone competitor. And that's what they've indicated to date. And so take at least SpaceX at their word that that is their intention. And there are other providers, by the way, who this applies to as well. It's not just them. So we'll have to see. But if it doesn't go that way and they end up with some kind of partnership or MD&O relationship, which I know has been said by our existing customers that that's not something they're going to do, but if it should ever go that way, I think at a minimum it's a positive in the sense that it drives incremental traffic through these networks and that at least around the margins is certainly favorable to us. It's definitely not a negative. We're in no lesser position than we are today. And I think we're modestly better off. So to me, that's sort of the downside case as it relates to our industry. But the upside is quite promising if it goes in that direction. Great.

Mike Ng, Analyst — Goldman Sachs

You know, very clear and appreciate your perspective there. Maybe shifting to international, last year in 2025, you closed on approximately a 7,000 tower acquisition in Central America from Millicom. And I think at the time, the co-location demand for those sites was running ahead of some of your initial lease up assumptions. Maybe you can just talk a little bit about Central America, Milicom, and those assets and how things are pacing.

Brendan Cavanagh, CEO

Yeah, so we were pretty pleased with that transaction, and we were primarily pleased with it because what we were trying to accomplish is what I was alluding to earlier with your first question is to strengthen our position. We were already in these markets in that region, Central America, and we were looking to make sure that we were in the position as the leading tower provider across the entire region. And through that acquisition, we were able to do that. Plus, we aligned ourselves with the number one carrier in the region, which was Millicom, and we have long-term lease arrangements with them. were locked in hand-in-hand for a minimum of the next 15 years with all-or-nothing renewals, which effectively makes this an even longer commitment from them. It's all U.S. dollar-based, so there were a lot of good things that came out of it. But one of the things that we think will be promising going forward is that anybody that wants to challenge Millicom, and America Movia is the leading, Claro is the leading competitor in most of these markets, But the quickest way to close the gap is to now come and make themselves take advantage of these assets that are already there where Millicom has taken the lead in some of these markets. So we're starting to see that develop, and we think it will actually be a driver of nice growth. So we feel very good about that investment and the price point that we went in at, and we continue to build more sites down there. We've done a bill-to-suit agreement with them as part of that. And so that will be a driver of continued growth in that region, and I think it will work out very well for us for the coming years.

Mike Ng, Analyst — Goldman Sachs

On the international markets more broadly, I was just wondering if you could talk about what's happening as it relates to carrier consolidation and churn. I know that that's led to a little bit of an elevated level of churn in some markets. So any just, like, incremental visibility on, you know, the current state of churn and when it will improve and just kind of mark to market on what you're seeing there?

Brendan Cavanagh, CEO

Yeah, we've had, you know, we went through our first 10 years or so in the international markets that we're in with virtually zero churn. But over the last couple of years, we've seen consolidation of some of the carriers in these markets. And we've seen a few others that were some of the weaker carriers have not survived in the markets. And so that's driven elevated churn in some of those markets. And we're kind of in the midst of that now. This year is a fairly high year in terms of churn percentages in our international markets. And I would expect that that probably continues into next year as well. It's not an absolute certainty because we're still working through arrangements with some of the carriers in Brazil in particular. So we'll have to see how that gets finalized, but I would expect that next year would be similarly elevated, similar to this year. But as we get that completed through that time period, it definitely will improve meaningfully, in large part because we'll have a lot of it behind us, similar to the U.S. with the challenges we've had with the Sprint churn related to their consolidation with T-Mobile and then the DISH thing on top of it. the good news is is once it's done it's done it doesn't repeat so um we kind of get it out of the way and i think we're getting to a more stable position now right makes perfect sense um how do you think about uh emerging markets as part of your you know broader portfolio you know as you mentioned you're um you know building some new sites in central america you have um i think some

Mike Ng, Analyst — Goldman Sachs

meaningful contributions from Tanzania, you know, at least one of your peers is doing a little bit less in emerging markets. So maybe you can frame the returns you're generating in those markets and explain, you know, what makes that opportunity attractive, certainly relative to some of the risks that you may have to deal with as it relates to FX and things like that.

Brendan Cavanagh, CEO

Yeah, we, and we're not necessarily focused on emerging markets as a target of something that we want to go invest meaningful capital into. It's really more specific to the individual opportunity that is available to us at a given time, in particular in markets where we already have a presence. And so the Central America example was we were already in those markets, and the acquisition that we did and some of the new builds we're doing there are improving the positioning of our company in that region, which makes us much stronger to withstand any challenges that occur in the future. So that's really more the thinking there. In the case of Tanzania, it's a market that we've been in for a number of years, and it's actually growing like crazy. It's probably our best-performing, highest-returning market anywhere. And if you look at what's happening just from a big-picture standpoint in that country, you've got exploding population growth. It's probably going to double the population there in the next 10 years. You've got everything moving towards wireless. Obviously, all the banking, everything else is done through wireless devices. They don't have the same embedded landline type of infrastructure that we have here. And so it is a critical function. And as a result, the government is very supportive of pushing for more and more wireless network development. And so we're basically feeding off of that. We're working closely with the leading customers, and it's allowing us to continue to see very high levels of growth, both in terms of assets and organic lease-up on those assets. So I think when we have those specific situations, particularly when we already have a presence there, We're going to lean into that and take advantage of the strength of our positioning, which is not the same as saying we're going to go and just pick an emerging market and invest there. That's not likely to be the case. We're mostly going to focus on enhancing our position in markets where we already have a presence.

Mike Ng, Analyst — Goldman Sachs

That's very clear. I wanted to ask about your expansion strategy. You know, how do you weigh new builds versus, you know, tuck in M&A, ground lease buyouts? And, you know, if you could, you know, just offer that perspective as you think about domestic versus international, you know, that would be helpful.

Brendan Cavanagh, CEO

I mean, there's really only a few buckets, obvious buckets for capital allocation within our business. And the first, of course, is expanding our portfolio through both acquisition and through new builds. That would be our preferred use of available incremental capital that we have. But it's really an economic analysis. And what is the return potential of those assets? Unfortunately, new tower acquisitions and even new tower builds, particularly in the United States more than anywhere, has been competitive at price points that we've just not found to be attractive and to make any sense, frankly, to us. And so as a result, we've not done that much of it lately. We do a small number here or there where we can be selective, but it's limited. And so as a result, it leaves us looking at the other potential pockets of where we can invest. And we've largely, and Millicom is an example of where we do this internationally, But in many cases, we've determined that new assets have not been the best use in recent days of incremental capital, and we've turned towards share repurchases, and we do more stock buybacks. And frankly, if you just look at our valuation relative to where these private assets are valued, there's such a disconnect that we have the option. Some of the private folks that we compete with do not have the option to buy themselves back. We do at a much cheaper rate, and so we might as well take advantage of that. So you're going to see us continue to lean into that as a meaningful use of capital. And, you know, we've done a little bit of delevering and stuff, but I think we're at a good leverage level now. So I would expect a mix of the other two as a primary use. I didn't mention the dividend, but that kind of goes without saying. We obviously continue to prioritize our dividend growth.

Mike Ng, Analyst — Goldman Sachs

You know, one of the, you know, potential new business opportunities is edge compute. so I was just wondering if you could share how you may leverage your portfolio to be an edge compute provider what have you done today what are interest levels like what are some of the obvious use cases for edge compute that may not be fulfilled by a traditional data center I think edge compute has been one of those topics that's been talked about for quite a long time I've unfortunately been around I'm old enough to have been around a long time to have heard this talked about for probably the last 15 years at least.

Brendan Cavanagh, CEO

And there was a lot of hype around it in the early days, and it never quite developed. And so I'm always a little cautious about it as a result of that. But having said that, I do think at this point in time it has more promise and potential than it's had at any point in our history of becoming a reality. And I think there's a couple of different drivers. The one thing that was always talked about and still continues to get mentioned but I think is actually secondary is the idea of reduced latency, all these new applications that are coming along where you need to push the compute further and further out to the edge. While I think that that certainly matters and will be a benefit to having this distributed compute, I actually think that it's not the primary driver anymore. I think the primary driver of the potential now is some of the challenges that exist around the larger data centers, which power being the number one issue that's raised nowadays. If you can come up with a more disaggregated, distributed approach to compute, you are by default coming up with a more disaggregated, distributed approach to power consumption. And if you can do that, you can perhaps create the same amount of power capability, but on a more spread-out basis. And that's something where we're well positioned to do that. We obviously have all these existing locations today. We have power. We've enhanced power at a number of the sites. That's one of the things that we've done to better position ourselves. And the other issue, by the way, for the big data centers is, of course, NIMBYism. Nobody wants these things built, it seems. Well, we already went through that as a tower industry. Nobody wanted the towers in their backyard either, and now we have these facilities that are already there, and if you take those existing facilities and you place smaller edge compute-type facilities there, it really avoids and goes under the radar of all those issues because we're already set up for that. These facilities already exist. So I think I'm talking about it in fairly simplistic terms. There is a lot more complexity to it, but I do think there's real opportunity, and I don't expect anybody to accept it as an absolute today. It probably has to be proven. It's a bit of a show-me story, but I'm excited about the potential of it, and I think maybe a year from now we're going to have a whole different conversation on it, either about how great it is and how it worked out or how it's just another one that didn't happen again. But I think there's a lot more promise in the potential of it this time around.

Mike Ng, Analyst — Goldman Sachs

Yeah, I mean, that's super interesting, and I appreciate, you know, what felt like a very, you know, honest and candid assessment of the opportunity. And, you know, we certainly are seeing more, you know, distributed AI training, but these are like megacampuses to megacampuses. Are, you know, any of the major players, whatever, hyperscalers, AI labs, in your mind, thinking about, you know, what you just described, which I guess is more distributed, I'll call it like microcomputer, like edge computing. yeah there are some there are we can leave it there maybe just to wrap up could you just talk about key areas of focus execution wise milestone wise that you're focused on in the next one to two years yeah I think actually some of these things that we talked about today including

Brendan Cavanagh, CEO

the edge compute that we just discussed and even the hybrid terrestrial components of satellite networks, all of those things are new potential avenues of growth. And so I would expect over the next couple of years that we will be fully exploring those opportunities as well as other things that we did not talk about because I think as great as our business is, it is certainly a little more mature. And as a result, the potential for incremental growth, while there still is potential because of the incremental spectrum is coming along, you know, it's also limited. And I think some of these other paths that may supplement our growth profile will be the most meaningful thing that unleashes extra value that is available within our equity and our company. And so we'll spend a lot of time around that going forward, but we also have to do the best we can to protect the core and support our core customers just as we always have and provide top-level service and maintain a very strong culture. So those are the things that I prioritize every day, and so does our leadership team.

Mike Ng, Analyst — Goldman Sachs

Well, Brendan, thank you so much for participating in our conference. It's been a privilege to have you on stage here. I appreciate it. Thanks, Mike. Thanks for having me.