Last week AT&T CEO John Stankey expressed some “skittishness” over supply chain issues potentially impacting C-band gear, but equipment delays aren’t top of mind for SBA Communications looking ahead this year and in 2022.
“We haven’t really seen any supply issues yet,” SBA CEO Jeff Stoops said during the tower company’s first quarter earnings call Monday, according to a transcript. “That’s not to say, if somebody says that they are out there and they are, we haven’t seen them yet.”
SBA signs tower agreements before revenue or rents start to show up in financial results, which Stoops said doesn’t happen until a until a certain contract date or once the equipment is actually installed, whichever is earlier.
“So we are all rooting for fast equipment available and dates of install that are earlier than the specified the end date in the contract,” he said, noting if that happens SBA starts generating more revenue earlier. “But I mean right now, as we think about life and how this year and next year is going to play out, we are not really thinking about equipment delays.”
Crown Castle doesn’t appear to have bumped into supply chain issues yet either. And the tower company’s chief executive Jay Brown emphasized last week that shorter-term, quarter-to-quarter changes typically don’t have a major impact on overall revenues.
“We haven’t seen anything at this point that would suggest to us that the number that we have out there are not going to be achievable,” Brown said regarding supply chain issues, speaking on Crown Castle’s first quarter earnings call. If that changes, the company will update expectations, he added.
Similar to SBA, Crown Castle has “a pretty long lead time” in terms of commitment for revenues and when they start to show up in results.
“We have a lot of visibility into what we will do in 2021 and feel good about where the forecast is,” Brown said. “But I think the supply chains will resolve themselves over time and don't expect that to have an impact in terms of our growth.”
Verizon already announced the start of equipment installations with Samsung and Ericsson gear, even though C-band spectrum won’t be cleared until later this year. AT&T expects to turn on initial 3.7 GHz markets starting in late 2021, with more deployment happening in early 2022.
Earlier this month, SBA reached a Master Lease Agreement (MLA) with Verizon for its 5G expansion, including C-band equipment starting with existing tower sites. It inked an MLA with Dish Network in late February.
“On the heels of our newly signed agreements with Verizon Wireless and Dish, we have seen substantial increases in our domestic new lease and new amendment application backlog,” said SBA CFO Brendan Cavanaugh in prepared remarks Monday. So while leasing activity in Q1 was lower than in the fourth quarter, he said the backlog bump supports the view of significant increases in U.S. operational leasing activity for the rest of 2021.
MoffettNathanson analyst Nick Del Deo noted that SBA indicated its backlog is more than double what it was in 2020 and higher than historical levels.
“What SBA is seeing with respect to C-band interest and applications is also giving it additional comfort that the deployments will be fairly broad (there have been concerns that the poor propagation attributes of C-band will make it more challenging to deploy outside of urban areas, which is where most of SBA’s towers are located),” wrote Del Deo in a Monday note to investors.
SBA didn’t change its outlook for 2021 organic growth, but upped full-year guidance for an additional $33 million in site leasing revenue and $15 million in site development revenue. For 2021, SBA now anticipates total revenues between $2.22 billion and $2.26 billion, a $48 million bump since its outlook at the end of February. SBA increased expectations for Adjusted EBITDA by $11 million and AFFO by $14 million.