SBA Communications Corp (SBAC) — Q3 2025 Earnings Call Transcript

Good evening, and thank you for joining us for SBA's Third Quarter 2025 Earnings Conference Call. Here with me today are Brendan Cavanagh, our President and Chief Executive Officer; as well as Marc Montagner, our Chief Financial Officer. Some of the information we will discuss on this call is forward-looking, including, but not limited to, any guidance for 2025 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, November 3, and we have no obligation to update any forward-looking statement we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website. And with that, I'll now turn it over to Brendan.

Thank you, Mark. Good afternoon. We are pleased to share another quarter of positive financial and operational results, including industry-leading AFFO per share. We continue to see strong leasing demand in both the U.S. and international markets. And as a result, we are modestly increasing our full year outlook for both new leasing activity and escalations. The bulk of the activity continues to come from new colocations as carriers both densify and expand their network footprints. And the backlog remains healthy as well, and it is steady compared to last quarter. Our services business also continues to perform extremely well, increasing revenue by 81% in Q3 compared to the prior year period, primarily from construction-related projects focused on network expansion. As a result of this activity, we are increasing the full year site development revenue outlook by $20 million. In addition to our strong operating performance, we have also had a number of other significant accomplishments since our last earnings report. We have recently completed the final closing of all remaining Central American assets under our purchase agreement with Millicom. The closings were slightly delayed from our prior assumptions due primarily to timing of regulatory approvals, but we are nonetheless very pleased with how this transaction went, and I'd like to thank our teams that worked tirelessly to get it done. We are excited about the future opportunities for SBA across the region. Also, subsequent to quarter end, we closed on the previously announced sale of our Canadian tower business earlier than anticipated. While the adjusted timing of both the Millicom acquisition and the Canada sale negatively impact our current site leasing revenue outlook, we are extremely pleased to continue to show progress related to our ongoing portfolio review that was originally announced back in February of last year. We continue to focus on being a leading tower company in each market where we operate and aligning ourselves more directly with the leading wireless operators in those markets. Pro forma for the Millicom and Canada closings, SBA owns a total of over 46,000 tower sites worldwide, representing an increase of 40% since 2020. Another recent significant accomplishment since our second quarter earnings report is today's announcement that Verizon and SBA have entered into a new long-term agreement that supports Verizon's continued network modernization plans. This new agreement builds on the long-standing partnership between our two companies and highlights the critical nature of our tower portfolio and our ongoing efforts to help our carrier customers achieve their network goals. As part of this agreement, Verizon has committed to a certain level of growth through new deployments across SBA's best-in-class tower portfolio. The agreement enhances operational efficiencies for both companies and the length of the agreement provides both companies with stability and more certainty for the future. I'm very excited about this enhanced partnership, and I want to thank all who worked to get this done. And if that wasn't enough, since our last earnings report, we took advantage of what we believe to be market dislocations, directing capital towards share repurchases. We spent $153 million at an average cost of $196.99 per share to repurchase and retire 776,000 shares. So far in 2025, in total, we spent $325 million to repurchase 1.6 million shares. As of today, we have $1.3 billion remaining on our authorization, and we continue to believe share repurchases play a significant role in creating shareholder value over time. We have been able to grow our portfolio and repurchase shares while still maintaining leverage below the low end of our previously stated range. As stated in today's press release, however, we are officially changing our financial policy and reducing our target leverage range to 6 to 7 turns of net debt to adjusted EBITDA. Marc will discuss these changes in more detail in a moment. So as you can see, there are a lot of positive things going on here at SBA. And the macro environment for mobile broadband growth is supportive of a bright future. Today, we are seeing a greater proliferation of 5G use cases, including fixed wireless access, which is nearing 15 million subscribers today with aspirations of over 20 million by 2028. Paired with increasing mobile data traffic, that's a heavy burden on today's networks. This will require ongoing network investment via overlays and densifications, including cell splitting, refarming of existing spectrum bands and newly acquired spectrum to meet those network needs. Looking further out, the recently passed federal spending and tax bill earmarks 800 megahertz of spectrum to help boost network capacity and support the next generation of wireless technologies, including 6G. The initial wave of upper C-band spectrum will be auctioned off by July 2027. And while there is still work to be done to identify which additional bands will ultimately be auctioned, upper mid-band frequencies such as 4.4 to 4.9 gigahertz and 7.25 to 7.4 gigahertz are currently being studied. These higher bands will not propagate as far and will require denser networks and new equipment at our cell towers. There is a lot to look forward to. Now before I turn the call over to Marc, I'd just like to take a moment to acknowledge Mark DeRussy. After 16 years with SBA and many more in the industry, Mark has decided to retire at the end of the year. This will be his last earnings call. Mark has done a great job representing the company to many of you over the years, and I appreciate his many contributions. Louis Friend, who is an SBA veteran and well known to many of you, will be taking over Mark's IR responsibilities after year-end. With that, I will now turn the call over to Marc Montagner.

Thank you, Brendan. The slight delay in closing of Millicom compared to our prior assumption around timing impacted the third quarter by $4 million and $3 million site leasing revenue and total cash flow, respectively. Adjusting for the timing of Millicom, our third-quarter results were in line with our expectations. Third-quarter domestic organic leasing revenue growth over the third quarter of last year was 5.3% on a gross basis and 1.6% on a net basis, including 3.7% of churn. $11 million of the third-quarter churn was related to Sprint consolidation, which we anticipate to be $51 million for the full year 2025. Our previously provided estimate of aggregate Sprint-related churn over the next several years remains unchanged. Non-Sprint related domestic annual churn continues to be between 1% and 1.5% of our domestic site leasing revenue. Turning to DISH. We currently have approximately $55 million of annualized revenue. Based on lease agreements, we expect approximately $25 million of churn in each of 2027 and 2028 with some small amount before and after these years. During the third quarter, 80% of consolidated cash site leasing revenue and 85% of adjusted EBITDA was denominated in U.S. dollars. International organic leasing revenue growth for the third quarter which is calculated on a constant currency basis was 8.5% on a gross basis. Total international churn remained elevated in the third quarter, mainly due to ongoing carrier consolidation. During the third quarter of 2025, we acquired 447 sites for total cash consideration of approximately $143 million, mostly related to the acquisition of sites from Millicom. Subsequent to quarter end, we closed on the remaining approximately 2,000 sites related to the Millicom transaction. Switching to the balance sheet. We have ample liquidity from both available cash in our $2 billion revolver, which as of today has a balance of $385 million outstanding, drawn mostly to fund the purchase of towers from Millicom and for share buyback. At the end of the third quarter, our weighted average interest rate was 3.8% across our total outstanding debt and our weighted average maturity was approximately 3 years. Including the impact of our current interest rate hedge, the interest rate on approximately 96% of our current outstanding debt is fixed. As you may have seen in our press release, I'm pleased to share with you our new updated financial policy and what it means for SBA going forward. Given the rising rate environment over the past few years and the lack of actionable M&A opportunities at attractive valuations, we have been operating below our steady target leverage of 7 to 7.5x net debt to last quarter annualized EBITDA. In the past few years, we intentionally opted to allocate excess capital to pay down debt and delever our balance sheet to minimize interest expenses and grow AFFO per share. Having operated with leverage in the 6 for several years now, we have concluded that 6 to 7x is the right leverage range for SBA for several reasons. First, it will have no meaningful effect to our future capital allocation strategy. Given our predictable strong cash flow, remaining leverage capacity and revolving credit facility, we'll still have plenty of flexibility to continue our share buyback program and to pursue attractive M&A opportunities. While operating in a target leverage ratio for the past 3 years, we have successfully pursued both options, including $625 million of share repurchase and $1.2 billion of M&A, all while staying below 7 turns of leverage. In short, our capital allocation strategy will remain virtually unchanged with a long-term goal of deploying capital to create high-quality FFO per share. Second, our revised financial policy will create a path for SBA to move towards issuing investment-grade debt. As you may have seen this evening, Fitch just issued their corporate rating on SBA at BBB- at both the corporate level and issuer level. This is now a second investment-grade rating. Pairing Fitch's new investment-grade rating with S&P, SBA has a clear path towards raising debt capital in this new deeper credit market. As part of this transition and with our commitment to staying inside the newly revised target leverage rate, we will seek to reduce our percentage of secured debt to total debt as existing secured debt maturities come due or inside their par call window. We have already engaged with the rating agency and are highly confident that they are in full support of our new stated policy and next step. The third and final reason for this new policy is related to our dividend. We expect our dividend to grow over time, and we believe that it is financially prudent to operate our company at a slightly lower leverage to protect our dividend from potential future fluctuations in interest rates. In summary, the investment-grade bond market is the deepest and most robust credit market, which we expect will provide us with many benefits. This includes reducing our overall cost of debt over time, lowering future refinancing risk and extending our weighted average maturity, all while maintaining our ability to pursue a robust share buyback program and be opportunistic on the M&A front. I am excited about this new phase for SBA, and I look forward to providing you with further updates on the topic. Let me now turn the call over to Mark.

Thanks, Marc. We ended the quarter with $12.8 billion of total debt and $12.3 billion of net debt. Our current leverage of 6.2x net debt to adjusted EBITDA remains near historical lows. Our third quarter cash interest coverage ratio of adjusted EBITDA to net cash interest expense was a solid 4.3x. During the third and fourth quarter, we repurchased 958,000 shares of our common stock for $194 million at an average price per share of $202.85. We currently still have $1.3 billion of repurchase authorization remaining under our $1.5 billion stock repurchase plan. In addition, during the third quarter, we declared and paid a cash dividend of $119.1 million or $1.11 per share. And today, we announced that our Board of Directors declared a quarterly dividend of $1.11 per share payable on December 11, 2025, to our shareholders of record as of the close of business on November 13, 2025. This dividend represents an increase of approximately 13% over the dividend paid in the fourth quarter of 2024 and approximately 35% of the midpoint of our full year AFFO outlook. As Brendan mentioned, after 16 years here at SBA and over 25 years participating in the tower industry, I have decided to retire from SBA. This decision had been in the works for a while and was part of our overall succession planning process. Louis Friend, who many of you know already has been my partner for the past 12 years, and I'm confident that I'm leaving you in good hands. He knows the company inside and out and will certainly be a joy to work with. I would like to express my sincere gratitude to my teammates at SBA as well as my friends and colleagues in the investment community for your support and friendship for all these years. And with that, I'm ready to open up the call for questions.

Great. Mark, you'll be missed. I do want to start with the Verizon MLA question. Can you provide a little bit more color in terms of how that could impact new leasing revenue going into next year? Does it have amendment, colocation components as well? And also to the extent that they acquire more adjacent spectrum, how would that be MLA capturing that incremental revenue? And then maybe a quick follow-up on DISH. One of your peers has disclosed that they have received a letter from the company to be excused from future payments. Can you just address if DISH is current with you now and if they're also looking to exit the contract earlier than the renewal rates?

Okay. Sure. So first of all, on the Verizon deal, we are really, really pleased with this agreement because it is one that we think is going to be a contributor to our growth for a long period of time. It is building on a very strong partnership that we have with Verizon. In terms of the specifics, I can only share certain details with you. It definitely has components that are built around both colocations and amendments. There is a minimum commitment around co-locations really for the next 10 years. So that will lock in a certain amount of growth that we can count on going forward. And amendments are still a part of the mix, and they will be driven based on activity and what's happening at the tower site. So we'll be able to capture that growth. And Verizon will get out of it, the ability to have access to our sites with certainty around what those costs are and ease and efficiency of doing business that will help them move quickly to expand their network and meet their objectives. So I think it really is a win-win, and we're particularly excited about that opportunity to work together for a long time to come. In the case of DISH, first of all, they are current on their rents with us. And under our agreements with them, we expect them to honor those agreements and to pay their rents going forward. We have had some correspondence between the two companies back and forth. But I think at this point, it's best for me to keep that to ourselves between us and DISH, and we'll continue to have those conversations. But we feel good about our agreements and expect them to honor them through the balance of the term.

I have a quick follow-up on Verizon. Is the structure similar to what you have with AT&T, where there was a step-up and then a step down throughout the contract duration? Or is it more linear?

No, it's much more linear. It is not similar to the AT&T deal. That was kind of a one-time special structure that was particular to the situation with AT&T, but it is very different than that.

Okay. Great. And Mark, good career, great career. Your math is wrong though, it's almost 27 years. We co-authored that seminal lease cycle and communication tower battle.

Yes, we did, Rick. We got a lot done. Didn't we? You might have checked out a few years, right, Rick.

I appreciate the comments on DISH. While there's not much to say, it's good to know the current situation. Are your contracts structured so that payments are made at the beginning of the month? So, are they currently paid for October and through November? Is there an unusual payment structure in place?

They're typically paid at the beginning of the month. So for the most part, they're paid through November, I guess, at this point, but yes.

Okay. That's good. And on the Verizon deal, at the Park City Summer Summit, we heard some of the carriers, including Verizon talking about wanting to address high-cost sites, escalators, but on the other side, really focused on a lot of rural expansion. Did you guys bring in high-cost sites into the equation did you touch on escalators, which has always been kind of one of the sacred cows of the tower business? But help us just understand a little more nuance, maybe whatever you can on that Verizon transaction?

Yes. No, I mean this is mostly about future growth. So the existing base wasn't really touched at all other than to ensure some extensions to the length of the terms around those agreements. But in terms of the actual financial terms, they really weren't touched.

First of all, Mark, again, going to miss working with you and really appreciate all your help over the years.

Yes, I appreciate it, for sure.

Brendan, kind of returning to the Verizon MLA, you noted a moment ago that the deal is much more linear than the AT&T 1 was. So I just wanted to clarify that a little bit. Were you suggesting that the commitments for new leasing activity are relatively linear over the 10 years or something else? No. What I was suggesting is that it's more closely related to activity, while AT&T was more of a wholesale bonus escalator for access. So there wasn't as much direct correlation. In the case of the Verizon deal, we expect a certain minimum amount every year, but they could certainly exceed that. This could lead to earlier growth, but it will depend on how they use their rights under the agreement.

Okay. And how should we think about all that from like a straight-line perspective, prospectively?

I don't know that it means a lot. I mean there will be some extensions to terms that I would expect to take place over time that would push up straight line in the early part of the agreement if, in fact, they're active with that. But otherwise, it would just follow along with as any new agreement that's being signed on a site would traditionally trigger.

Thanks for the question, and Mark, obviously, we will certainly miss you. So maybe just touching on the new leasing outlook, we're almost at the end of the year, probably a decent visibility kind of heading into early '26. And it looks like you'll be run rating at about, call it, $40 million-ish of domestic leasing going into '26. So I guess how do you feel about that level, obviously, given that DISH or EchoStar will presumably be zeroed out next year? And what kind of activity levels are you seeing at the big 3 in terms of colos versus amendments?

I believe it's a bit premature to comment on that. We'll provide our outlook for next year during our next earnings call, so I don't want to get ahead of myself. We'll also assess how the year concludes. The carriers have been proactive, and the new agreement with Verizon will certainly boost our expectations for them moving into next year. T-Mobile has been quite active, and our master agreement with AT&T is solidified. Therefore, we anticipate the effects from new leasing activities will likely remain within the current range, but we need to see how things evolve in the coming months. Regarding DISH, their contribution has not been significant for us; this year, their impact on new leases and amendments was around $2 million, mostly in the first half of the year. Their contributions towards the end of the year have been minor, so their influence on our run rate is minimal. They did contribute, but in a limited way this year. We'll have to take that into account as we approach next year since we expect their contribution to be negligible.

Yes. Understood. And maybe just as a follow-up, a lot of spectrum transactions announced recently between EchoStar and AT&T and SpaceX. So maybe you could just talk about monetization opportunities with some of the new spectrum that has been announced. I know you have an MLA with AT&T that could potentially limit how much upside you have. But what about some of the satellite spectrum that is being discussed. Do you think there's opportunity on terrestrial networks to maybe deploy that in metro areas where satellite coverage is harder to reach into our areas?

Yes. I think there is potentially opportunity, but it's really premature around the satellite piece of it. We have been doing some work. We certainly have had even some very, very preliminary conversations with Starlink about what their plans are. But I think they're also trying to map that out. So it would be premature for me to talk about what may happen from a terrestrial network standpoint with them. I don't think they've necessarily made that decision. And I'm sure you'll hear more from them, and we'll be following up closely on that in the future. So that remains to be seen. In terms of the spectrum that ended up in the hands of AT&T, I think there are some limitations for sure under our agreement. I know that they've said that a lot of the upgrades they're going to do around the 3.45, in particular, would be more software upgrade oriented. So we'll have to see how that pans out. If they do decide to deploy the 600 megahertz, the timing at which they do that and the magnitude of what that requires will have an impact on what we're able to see in terms of monetizing it. And as of yet, there hasn't been anything. So I don't really have an answer on that today. But that's something that we will certainly be in conversation with them about and we'll be monitoring. But right now, it's a little early to say whether there's much upside there. But I'm hopeful around some of these items because I do think there's a lot of work to be done. And if we've got parties that are looking to spend and to really enhance the networks that are out there through the use of the spectrum, that will be a positive for us.

Congrats to Mark and to Louis. Good to hear from you guys. I guess I'd like to pick up on that last comment, Brendan, if you're willing to, I know we can't speculate too much of what Starlink might want to do with a hybrid satellite-terrestrial network, but maybe you could talk a little bit more high level about what that kind of structure might look like as it relates to SBA. Is that something you think could work in the market could be a bigger opportunity for anyone who's got spectrum that operates both over satellite and terrestrial networks since that would be a pretty interesting development?

It would be interesting, but then I have to punt on that question for now because this is really, really early. And I would be just truly speculating at this point. But as I said, when you see a significant amount of wireless spectrum end up in the hands of a new party, it's something we'll have to watch closely and evaluate what their next steps will be and what role, if any, we can play in that. So we'll watch it, and I'm sure we'll have more conversation down the road at some point about it.

Makes sense, but I tried anyway. Maybe just turning to the international business. I know you guys have been navigating carrier consolidation and dealing with some elevated churn. It's been kind of a moving target. Any update on how we might want to think about international churn as we look out over the next couple of years relative to what we're seeing in 2025?

Yes. I mean we've had quite a bit of consolidation that's taking place across our markets. And so that's certainly weighed on it. We've also had some challenges in Brazil, in particular, with Oi, not only the consolidation of Oi and their wireless operations into the existing three carriers that were there, the other three carriers that were there, but also their wireline business and their financial challenges. And so we have to kind of get through that, and I'm not being evasive because it's a constant moving target and the conversations are constantly ongoing, so we'll have to see where that shakes out. But I think once we get beyond those particular items, I would expect a significant step down in churn. But those couple of things that are still out there weigh on us. If we're outside of Brazil and you look at Central America, we've kind of gone through that already. We had a lot of that consolidation that happened in rationalizing among the carriers. And now we're in a place where it should be very minimal going forward. So each market is in a little bit of its own place. But certainly, over time, I think if you look out a couple of years, I would expect the international churn to be much, much less than it's been here these last year or two.

Got it. Okay. And maybe just one last one back to Verizon. You touched on it briefly, Brendan, just sort of the benefits that they accrue from entering a contract like this. But I'm wondering if you could talk a little bit more about what Verizon gets out of it, what motivates them to sign a comprehensive MLA with you guys as they think about moving forward with their network just to help us think about their goals and how this could be a win-win for both companies?

I suggest you discuss this with them, as they can better explain the benefits they gain. During our talks and negotiations regarding the agreement, it became clear that they have significant network plans for the future and a strong interest in expanding into new areas. To execute this efficiently, they need insight into costs and timelines, allowing them to strategically plan their deployments. A comprehensive agreement is crucial for them to avoid the traditional approach of negotiating each amendment and lease application individually. This will save them time and energy, making the deployment process more uncertain and valuable. Additionally, I believe they appreciate that we are easy to work with, and connecting their early efforts to SBA offers them a competitive edge. Furthermore, our services business has historically focused on T-Mobile but has been increasingly active with Verizon as well. Having a single company provide streamlined end-to-end service options simplifies their deployments. All these factors contribute to the value they saw in the agreement.

I just want to also extend my congratulations to Mark on your career and the upcoming retirement and Louis for you for taking over the role. So congrats to you both. Two topics, if I could. Just circling back to the Verizon deal again. If you think about the leasing opportunities that you have on a multi-year basis. So looking beyond just '26, how does this deal influence your conviction on what you described previously in terms of those mid-single-digit domestic leasing growth opportunities on an annual basis? And then the second topic is you mentioned on the regulatory side, there were some delays in closing the latest acquisition for the regulatory reasons. And I'm just curious as you've engaged with regulators, maybe not just in this country but in several of the Latin American countries that you're in, what have you learned about the opportunities to more readily and flexible basis, pursue additional consolidation of the markets you're in versus markets where you may be getting to the point where it's tougher to do incremental deals?

Sure. Regarding the Verizon deal, we were attracted by the long-term nature of the agreement, which ensures steady and reliable contributions that we find very predictable. This gives us confidence in expecting these benefits over an extended period. While there is a possibility that they may become more active sooner than anticipated, our expectation is that the implementation will progress smoothly throughout the agreement. This aspect of the deal reinforces our confidence in achieving mid-single digits growth in organic performance with Verizon. As for the regulatory delays related to mergers and acquisitions, they have been primarily tied to international matters, specifically concerning Millicom. It’s an important factor to consider, particularly in markets where our market share is significant; pursuing additional acquisitions becomes more challenging in those scenarios. However, we encountered delays even in markets where we don’t have a presence, indicating that not all issues were straightforward. This has affected our timing predictions. Overall, we understand where we can add more sites without issues and where complications may arise, and that influences our approach to potential deals. While it’s not a major obstacle, it is a consideration in our process.

I was wondering if you could maybe talk about on the financial side, heading into next year, clearly, interest expense will be a headwind to AFFO. Maybe talk a little bit about any cost saves you contemplate that might partly offset that? Or do you feel like you're sort of at the right cost level right now?

You mean cost savings specifically around the financing costs.

No, no, in terms of OpEx.

The interest expense will be a challenge for us due to refinancings of low-cost debt. Nonetheless, we are continuously seeking ways to operate our business efficiently. I believe we will keep identifying opportunities for improved efficiency. While some of our peers mention finding efficiencies, as the smallest of the three public tower companies in the U.S., we have historically maintained the highest margins. This indicates we have been quite efficient in managing our overhead costs, though it's an area we still examine closely. A key focus has been on utilizing technology and implementing new systems to enhance efficiency. As we expand in certain regions, we can do so with minimal additional overhead. For example, with the Millicom deal, we added 7,000 towers in Central America and made some overhead adjustments, but the increase in overhead is very minor compared to our existing operations. We will continue to find ways to grow efficiently while adding little in terms of overhead, particularly through the application of technology. I believe you will see us maintain our leadership in terms of margins.

Can you provide an update on Millicom since the acquisition? What is the current outlook for organic growth over the next couple of years compared to what you anticipated when you were assessing the deal?

Sure. Yes. And it's and I will give you an answer, but it's very, very early. Obviously, almost half of those sites were just closed in the last few weeks. So there's no real experience time on that. And the bulk of the rest of it was closed a few months ago. So our time frame to evaluate that is very limited. But thus far, having said that, we have seen a lot of interest, particularly from the other leading carrier in the market in accessing those sites. And I expect that we'll continue to see that grow. And my belief is that we're going to do better than what we modeled based on everything that I'm seeing and we'll let you know. I think a year from now, I'll have a much better sense of that. But I'm feeling very confident about that based on the early conversations as we're now getting to closings on these sites.

I guess, first, Mark, wishing you well in retirement. It's been great working with you. Maybe from an M&A standpoint, now that you have the deal with AT&T and Verizon, how are you thinking about the one with T-Mobile, where I guess you don't have one? And does this deal with Verizon potentially to become a template there?

That remains to be seen. Every carrier has specific priorities and network needs, so we will see how that conversation progresses. We have a strong relationship with T-Mobile, who has been our leading customer for some time. We have an agreement with them that is set to expire in about a year, so now is the time to be having discussions with them. I am confident that we will reach an agreement because our working relationship has been very positive. We will need to discuss what is important to them and what works for us. I am hopeful we can achieve a win-win situation similar to what we did with Verizon. It is too early to determine how much of the Verizon deal will apply here, as each negotiation stands on its own. I expect this will be the case with T-Mobile as well.

And then maybe just on the services business. How are you thinking about the sustainability of the recent trends there? And then it sounds like you touched a little bit on potentially doing more with Verizon there. I just wanted to check in on that and just the ability to maybe broaden the relationships you have on the services side to do more there?

Yes. I think given the needs of the carriers in terms of the network needs, the growth needs that they've got, that it is something that we can hopefully sustain. I mean, we've had great success although to put it in perspective, this year, assuming we finish in alignment with what we've given as our outlook for the full year, this will be the second-best year in the company's history for services. And so I don't know whether that's necessarily sustainable indefinitely because for the most part, we largely have three customers in that business. And depending on what's going on with any one of them at a given point in time, that can influence that. But I do think that our ability to deliver, some of our peers getting out of the business, and the fact that we've been able to help them accomplish their goals continues to put us at the top of the list in terms of being a provider. And in the case of Verizon, what I mentioned earlier, is just simply as we signed this master lease agreement, while it's primarily about the leasing business, services was a component of that and what we can offer to them through our services business is something that I think they see value in. And I hope that as a result, we'll have a broadening of our customer base in that business that will include a lot more Verizon contributions than perhaps it has in the past.

Congratulations to you and Louis. I'm looking forward to working more with you. Could you provide some background on the negotiations with Verizon, including when they began? Also, you mentioned carriers considering expanding FWA into more rural areas. Are you currently having active discussions with the carriers, or is it more about anticipating their potential moves?

Yes. Regarding the fixed wireless aspect, we are observing some activity where agreements are being signed in areas that had not been targeted before. It’s difficult for us to determine specifics since the deployment tends to resemble traditional 5G mid-band setups. Our insights come largely from conversations with our customers, so it's more anecdotal at this stage. We anticipate continued growth in fixed wireless, as it plays a significant role in subscriber growth for our clients, pushing them to expand into new communities where they currently lack coverage. As for the Verizon deal, we have been in discussions with them for most of the year, but I can't share too much more detail. These negotiations usually take time, and while both parties were eager to finalize the deal, the process did not happen overnight.

Great. I think one more maybe on Verizon. You mentioned minimum commitments and then linear. How different is that minimum commitment relative to what you've been generating from Verizon in terms of new leasing I just want to get a sense, it doesn't sound like there's any sort of really big incremental step in leasing as we're thinking about next year. Just wanted to double-check. And then, Brendan, any more sort of portfolio pruning or review that you guys are doing? And just how we should be thinking about cash from any more portfolio work being done, getting used?

Sure. Regarding the Verizon deal, I don't want to provide specific numbers, but you can assume that we wouldn't enter into an agreement if we anticipated receiving less than what we would on a stand-alone basis. We're confident about what this deal secures. Concerning the portfolio review, we've eliminated some markets while increasing our investment in others. The Central American acquisition aimed to enhance our position in those markets, and we continue to assess markets that may not be performing optimally or aren't aligned with top carriers to strengthen our presence there. As for your question about cash proceeds, it’s likely too early to comment. If we were to make changes, it wouldn't be solely to generate significant cash. The only exception was the sale in Canada, which was a more opportunistic move that allowed us to achieve a higher valuation than reflected in the public markets. The rest of our actions have focused on sharpening our strategy in those areas, and we will keep evaluating the remaining markets over time. There’s nothing specific in the pipeline at the moment.

I come back and Mark, you're taking off.

Glad to have you back, Dave.

He mentioned he was leaving because you returned.

I can sense the positive energy, and I want to congratulate Louis. As you know, we have discussed the distinction between investment-grade and high-yield in the past. There was a time when you could choose to be either the highest-grade high-yield borrower or the lowest-grade high-grade borrower. Recently, S&P shifted its perspective when they upgraded you in July, which seems to have come to you rather than you seeking it out. Could you provide some insight on how this influences the refinancing costs in your model for 2026, 2027, and 2028, and how it might be perceived from a financial standpoint? Additionally, Brendan mentioned something intriguing about the Verizon deal, particularly regarding their expansion into new areas. There’s a concern that the direct-to-sell or direct-to-device satellite initiatives from Verizon, AT&T, American Tower, and T-Mobile's partnership with Starlink might lead carriers to limit their investments in previously untapped locations. Can you share your perspective on whether that concern is valid or if it’s misguided?

Yes, you're correct to some extent that the rating has shifted towards us, partly because our leverage has been significantly lower. We officially announced a change in our target leverage range today, but we've actually been operating within that range for three years now. This approach has allowed us to function similarly to an investment-grade company and is part of our maturation process. We believe it's wise to take this step at this point in our lifecycle. It mainly means we need to reduce our share of secured debt, but we don't need to alter our operations significantly. We see this as beneficial for various reasons. One aspect you mentioned relates to costs. While the impact on costs is relatively minimal, it's a consideration. In the past, we hesitated to make this move because we preferred to maintain extra leverage capacity for investment opportunities that could generate higher returns for our equity. However, the reality is that there have not been many avenues to invest that capital, and since we have now reached a lower leverage point, we have more capacity. Therefore, we will take advantage of the slight cost differences. When comparing investment-grade bonds to high-yield bonds, we anticipate savings of approximately 50 to 75 basis points, which, while minor, is still meaningful given our level of debt. The difference in the ABS market is narrower but may still offer slight advantages. Even if these adjustments appear small, they positively affect our capital costs, market depth, and the terms we can secure, which will ultimately benefit us and our shareholders. Regarding your question about rural sites and direct-to-sell, we have observed some carriers increasingly targeting rural markets. Fixed wireless access plays a significant role in this shift, along with certain regulatory pressures. There's a clear interest in serving previously unserved areas. However, “rural” covers a range of locations from small towns to very remote areas with minimal populations. Carriers will apply financial prudence to their decisions and may avoid economically unfeasible areas. Direct-to-sell opportunities will likely fill the gaps in those locations, and we are already witnessing this. Carriers are partnering with satellite providers to address these needs. Recently, a customer shared an interesting insight with me; they noted that satellite offerings in direct-to-sell services are highlighting areas where there's concentrated usage. This information indicates the need for traditional macro towers or terrestrial solutions in these locations. The satellite service is revealing where demand is significant, suggesting that these areas would be better served through conventional means. I am optimistic about future expansions into some of these regions, though certain areas will likely remain economically unviable, and that's acceptable.

Once again, congratulations to Mark and congratulations, Louis. Wanted to drill down a little bit on LatAm. Vivo talked about, on their earnings call, the opportunity to optimize leasing costs. And America Movil talked about potential carrier M&A in Chile. I'm just wondering if you could talk about kind of potential implications for SBA from kind of developments in LatAm, such as those and maybe others?

Yes. The challenge in some of these markets is that the average revenue per user is significantly lower than it is in the U.S. While carriers here are cost-conscious and do see returns on their investments, in other markets, the returns are much tighter. This leads to a heightened sensitivity to operating costs, including tower costs. In the case of Vivo, they mentioned a need for greater sharing of infrastructure, which we completely agree with. This is important because in Brazil, they can share ground rents, which are pass-through costs. Having more customers at a specific site allows for shared costs, which is why they advocate for this. We support their efforts and want to push for efficiency in shared infrastructure. The idea of relocating sites to achieve this seems counterproductive. We're committed to creating an efficient operating environment through shared infrastructure, as it benefits everyone involved. We are collaborating closely with our customers in these markets to optimize and enhance the use of infrastructure for mutual benefits.

On the U.S. market, I'm curious about the multiples being discussed in the private sector. Do you have any thoughts regarding the idea of divesting rather than making tuck-in acquisitions? Would this be something you oppose philosophically, or do you have any insights on the matter?

Yes, I wouldn't say I'm against it. It's not really what we typically do. We're not looking to sell our assets, but we would consider it if we could achieve a significant valuation advantage. However, there are many practical issues to consider. Our current financing structure has limitations, and the broader master lease agreements we signed have certain implications. We would need to carefully work through these aspects. I'm also somewhat skeptical about how the market might perceive us as sellers, given that we've generally been known as serial acquirers. This is certainly a topic we discuss because there's a noticeable disparity in valuations that seems illogical to me. While some may argue that certain prices are too high, I believe our valuation is considerably low. Hopefully, over time, this gap will narrow, and it won't remain as significant an issue as it has been recently.

Great. And Mark, congrats and Louis congrats as well. Maybe just 1 question for me. The FCC is considering auctioning 180 megahertz in, I think, it's 3.9 to 4.2 gigahertz band. Are there any carriers that would be able to acquire the spectrum and deploy it via software upgrade based on the spectrum that they currently have deployed?

I don't think the answer to that is yes. This is somewhat related to the upper C band, and we would need to see incremental deployments from most of our customers, likely involving massive MIMO, to proceed. However, there is still a lot of work to be done to determine what that entails. Our current view is that it would necessitate additional antennas and radios. Thank you all for being on the call, and we look forward to sharing our year-end results with you next time.