SBA Communications CEO Jeff Stoops participated in his last quarterly earnings call for the company yesterday. Stoops, who has led SBA for 22 years, plans to retire at the end of the year, and Brendan Cavanagh, SBA’s chief financial officer, will take over as CEO at that time.
Yesterday, Stoops was asked what he thought the future holds for tower companies in relation to the current state of the wireless industry.
Stoops said, “I would say over my 25, 26 years, there’s been a steady connection between growth in wireless demand and necessary infrastructure. And I think that really has its roots in the laws of physics and the way radio spectrum works. We’ve seen cycles that have repeated themselves over time. The current cycle feels like it’s going to be a bit more elongated than perhaps some of the prior cycles, as I think our customers are demonstrating.”
He said that even though the carriers have always exercised fiscal prudence over the years, it seems to be a particularly high priority right now. But of course, they own spectrum, which they will deploy at their chosen pace.
“The basics haven’t really changed that much,” said Stoops. “We haven’t seen any technology that really will obsolete the basic tower business model. We watch satellites and things like that, and we watch small cells. And the macro site really continues to be the backbone of wireless communications”
In terms of the current lull in wireless investment in the U.S., SBA’s Chief Financial Officer Brendan Cavanagh reiterated that there's still quite a bit of spectrum that has to be deployed on SBA sites. “There are some deadlines out there for certain of our customers that they need to meet. And just based on conversations that we have with them, suggest that there's still a ton of work to be done.”
Cavanagh said that roughly 50% of 5G-related spectrum owned by its customers has been deployed on SBA towers.
FCC auction authority
Stoops was asked about the expiration of the Federal Communications Commission’s auction authority. He said, “I think the FCC spectrum authority issue has to be resolved here soon. At the same time, the FCC has lost their spectrum authority, the White House and other governmental agencies are trying to plot and figure out long-term spectrum availability. Everybody knows it needs to get done, and it will. And I believe, by the time it has been done or will be done, the dual-band 3.45 and C-band equipment will be ready to go. So that's absolutely something that we think will contribute to next year's leasing.”
In terms of the company’s numbers for Q3, SBA reported total revenues of $682.6 million compared to $675.6 million in the prior year period, an increase of 1.0%. Site leasing revenue in the third quarter was $637.5 million, comprised of domestic site leasing revenue of $468.4 million and international site leasing revenue of $169.1 million.
Cavanagh said domestic operational lease revenue “was up materially from the second quarter, primarily as a result of the AT&T master lease agreement signed in July.”
“Excluding the impact of the AT&T MLA, third quarter activity levels were similar to the second quarter,” he said. “All major carriers remain active with their networks. However, agreement execution levels continue to be slower than a year ago.”
But he said there is still a long way to go for U.S. 5G network investments based on the number of sites that remain to be upgraded with mid-band spectrum by the major mobile network operators.