SBA Communications Corp Stock

SBA Communications Corporation operates as an independent owner and operator of wireless communications infrastructure, including tower structures, rooftop, and other structures that support antennas used for wireless communications, which the company collectively refers to as ‘towers’ or ‘sites’.

The company’s primary business line is its site leasing business. In its site leasing business, the company leases antenna space to wireless service providers on towers that it owns or operates; and manages rooftop and tower sites for property owners under various contractual arrangements. As of December 31, 2016, the company owned 26,197 towers, a major portion of which have been built by the company or built by other tower owners or operators who, such as the company, have built such towers to lease space to multiple wireless service providers.

The company also managed or leased approximately 5,500 actual or potential sites, approximately 500 of which were revenue producing as of December 31, 2016. The company’s other business line is its site development business, through which it assists wireless service providers in developing and maintaining their own wireless service networks. The company’s principal operations are in the United States and its territories. In addition, the company owns and operates towers in Canada, Central America, and South America.

Site Leasing Services

The company’s primary focus is leasing antenna space on its multi-tenant towers to various wireless service providers under long-term lease contracts in the United States, Canada, Central America, and South America. The company’s site leasing business is classified into two segments, Domestic Site Leasing, and International Site Leasing.

Domestic Site Leasing

As of December 31, 2016, the company owned 15,922 sites in the United States and its territories. In the United States, the company’s tenant leases are generally for an initial term of 5 to 10 years with five 5-year renewal periods at the option of the tenant. These tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods. The company’s ground leases in the United States are generally for an initial term of five years or more with multiple renewal terms of five-year periods at its option and provide for rent escalators, which typically average 2-3% annually. The company derives domestic site leasing revenues primarily from AT&T Wireless, T-Mobile, Sprint, and Verizon Wireless. Wireless service providers enter into tenant leases with the company, each of which relates to the lease or use of space at each individual site.

International Site Leasing

The company continues to focus on improving its international site leasing business through the acquisition and development of towers. As of December 31, 2016, the company owned 10,275 towers in its international markets, including Canada, Central America, and South America. Approximately 28% of the company’s total towers are located in Brazil and approximately 3% of its total towers are located in each of its other international markets (each country is considered a market). The company derives international site leasing revenues primarily from Oi S.A., Telefonica, Claro, and TIM.

In Canada, the company’s tenant leases are generally for an initial term of 5 to 10 years with five 5-year renewal periods at the option of the tenant. Tenant leases in its Central American and South American markets typically have an initial term of 10 years with multiple 5 year renewal periods. In Central America, the company has similar fixed rent escalators to that of leases in the United States and Canada while its leases in South America escalate in accordance with a standard cost of living index. In Brazil, tenant leases are typically governed by master lease agreements, which provide for the material terms and conditions that would govern the terms of the use of the site. Tenant leases in South America typically provide for a fixed rental amount and a pass-through charge for the underlying ground lease rent. The company’s ground leases in Canada, Central America and South America generally have similar terms and conditions as those in the United States, except that the annual escalators in its South American ground leases are based on a cost of living index.

Domestic and International Expansion

The company expands its tower portfolio, both domestically and internationally, through the acquisition of towers from third parties and through the construction of new tower structures. In its tower acquisition program, the company pursues towers that meet or exceed its internal guidelines regarding returns. As of December 31, 2016, the company had built or acquired 10,003 towers.

Site Development Services

The company’s site development business, which is conducted in the United States, is complementary to its site leasing business and provides the company the ability to keep in contact with the wireless service providers who generate its site leasing revenue and to capture ancillary revenues that are generated by its site leasing activities, such as antenna and equipment installation at its tower locations. Site development services revenues are earned primarily from providing a range of services to wireless service providers or companies providing development or project management services to wireless service providers.

The company’s services include network pre-design; site audits; identification of potential locations for towers and antennas on existing infrastructure; support leasing the location; assistance in obtaining zoning approvals and permits; tower and related site construction; antenna installation; and radio equipment installation, commissioning, and maintenance. The company provides site development services at its towers and at towers owned by others on a local basis, through regional, market, and project offices. The market offices are responsible for various site development operations.

Business Strategy

The company’s primary strategy is to continue to focus on expanding its site leasing business due to its attractive characteristics, such as long-term contracts, built-in rent escalators, high operating margins, and low customer churn (which refers to when a customer does not renew its lease, or in limited circumstances, such as in a customer bankruptcy, cancels its lease prior to the end of its term) other than in connection with customer consolidation or cessation of a particular technology (iDEN).

Major elements of the company’s strategy include improving use of tower capacity; disciplined growth of its tower portfolio; capitalizing on its scale and management experience; controlling its underlying land positions; and using its local presence to build strong relationships with major wireless service providers. The company’s strategy is to delegate sales efforts by geographic region or to those employees of the company who have the best relationships with its customers.

Competition

Domestic Site Leasing: In the U.S., the company’s primary competitors for its site leasing activities are the national independent tower companies, including American Tower Corporation and Crown Castle International.

History

SBA Communications Corporation was founded in 1989. The company was incorporated in the state of Florida in 1997.