SBA Communications (SBAC) Q3 2026 earnings review
SBA Communications resumes buybacks, but US tower revenue still falls
SBA Communications, an owner of wireless towers, is shrinking in the United States while expanding in its largest international markets. Total revenue dipped 3% from a year ago as antenna installation work dropped by more than a third and past carrier mergers kept reducing US tower rents. Cash flow per share fell 3%, though chief executive Brendan Cavanagh raised the full-year per-share outlook slightly after buying back $300 million of stock.
| Site leasing revenue | $665.4M +1.4% from a year ago (+0.4% ex currency) |
|---|---|
| Cash flow per share (AFFO) | $3.19 -3.3% from a year ago |
| US site leasing revenue | $454.4M -3.4% from a year ago |
| Full-year AFFO per share outlook | Raised $0.08 middle of the range: $12.26 (-4.5% from 2025) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the ongoing drop in per-share cash flow outweighs the portfolio cleanup. Selling towers in Chile, Ecuador, and Peru while issuing unsecured bonds leaves a simpler business with less secured debt. The bad news: by our math, the updated plan still points to fourth-quarter cash flow per share falling 6% from a year ago as cheap debt comes due in November.
The question now is whether resumed share buybacks and future wireless spectrum auctions can overcome higher interest rates and carrier cancelations. If US mobile carriers keep holding back on tower upgrades while another $2.4 billion of cheap debt reprices in early 2027, cash flow per share will keep shrinking despite a smaller share count. Management's first 2027 outlook next quarter will show which force wins.
🐂 Bull Case
Unsecured Bonds Cut Secured Debt Leverage
SBA Communications, an owner of wireless communications towers, wants investment-grade borrowing terms to lower its funding costs. In July, the tower landlord issued $3.5 billion of senior unsecured notes at a 5.113% blended interest rate. It used the cash to pay off its $2.2 billion term loan and $1.0 billion credit line, which recorded a $20.1 million debt payoff loss.
The company also replaced its credit line with a $2.5 billion unsecured facility and set up a $2.5 billion commercial paper program for short-term borrowing. Because it swapped debt backed by specific towers for general corporate bonds, secured debt fell from 4.9 times to 3.1 times yearly Adjusted EBITDA, a profit measure excluding interest, taxes, and depreciation.
What to watch: the interest rate on the $1.165 billion of tower securities due November 9, 2026. A rate below the 5.25% assumed in the full-year outlook would show that the new commercial paper program and unsecured credit line are lowering borrowing costs.
SBA Exits Sub-Scale South America and Doubles Builds
Chief executive Brendan Cavanagh has been selling towers in smaller countries while building more where the company already has a large network. In September, the group sold all its towers in Chile and Ecuador and agreed to sell its sites in Peru, "completing our exit from the region outside of Brazil, while more than doubling our new tower builds in the markets where we have scale."
- International towers built: 210 in Q3, up from 109 total builds in Q2
- Sites sold or decommissioned: 1,358 in Q3, bringing the total portfolio to 45,252
- International site leasing revenue: $211.0 million, up 13.3% from a year ago (9.8% excluding currency moves)
- Blended tower cash flow margin: down 0.7 percentage points to 79.7%
Because international towers carry lower profit margins than US sites, faster overseas growth pushed the direct cost of operating and leasing land under towers up by 0.7 percentage points of leasing revenue. What to watch: regulatory approval and closing of the Peru sale in the fourth quarter, which is not yet removed from the full-year outlook.
Buybacks Resume With $300 Million Spent
After pausing share buybacks during the first half of the year to pay down its credit line, management returned to repurchasing stock. "Since our last earnings release, we have bought back $300 million of our stock," Cavanagh said. The Florida-based group retired 1.7 million shares at an average price of $179.68, leaving $800 million on its repurchase plan.
Those buybacks reduced the diluted share count by 1.8% from a year ago, which cushioned the drop in per-share cash flow and helped lift the full-year per-share outlook by $0.08 at the middle of the range. What to watch: share count in the fourth quarter, because the company's outlook assumes 105.7 million shares and no further buybacks this year.
🐻 Bear Case
US Carrier Cancelations Outweigh New Leases
"Demand for our tower assets remains strong as wireless carriers continue to expand and upgrade their networks," Cavanagh said. The US numbers tell a tougher story, because lease cancelations are still bigger than new equipment additions. Domestic site leasing revenue fell 3.4% from a year ago to $454.4 million, and domestic tower cash flow dropped 4.6% to $380.6 million.
- Expected 2026 US new leases and rent escalations: $85 million to $87 million
- Expected 2026 Sprint merger cancelations: $55 million to $56 million
- Expected 2026 EchoStar unpaid rent removal: $56 million
- Expected 2026 regular US cancelations: $22 million to $24 million
Because total US cancelations of up to $136 million outweigh new leasing and annual rent increases, the full-year bridge points to US leasing revenue shrinking by about $46 million at the middle of the range. What to watch: the initial 2027 domestic churn outlook next quarter, which will show how much Sprint cancelation remains.
Refinancing Low-Rate Debt Squeezes Cash Flow
SBA measures its bottom-line cash generation using Adjusted Funds From Operations (AFFO), which adds back property depreciation to net profit and subtracts routine tower maintenance. In the third quarter, AFFO fell 5.0% from a year ago to $337.3 million, or $3.19 per share, down 3.3%. Net cash interest expense rose 3.8% to $118.9 million as older, cheaper debt was replaced.
The pressure builds in the fourth quarter. The company has $1.165 billion of tower securities due November 9, 2026, and the outlook assumes it refinances that debt at a 5.25% interest rate. By our math, the full-year plan leaves fourth-quarter AFFO per share at $2.99 at the middle of the range, down 6.3% from a year ago.
What to watch: fourth-quarter net cash interest expense, which the full-year outlook puts at about $125.6 million by our math, up from $118.9 million this quarter. A higher figure would mean the November refinancing cost more than 5.25%.
Construction Services Revenue Dropped Over One-Third
Alongside renting space on its towers, SBA runs a site development business that helps wireless carriers design networks and install antennas. Revenue in that division fell 36.0% from a year ago to $48.6 million, down from $51.4 million in the second quarter, and segment operating profit fell 20.1% to $10.7 million.
The drop reflects slower carrier installation work compared with a busy third quarter last year, and SBA cut its full-year site development revenue outlook by $5.0 million at the middle of the range, to $190 million to $200 million. What to watch: fourth-quarter site development revenue, implied at $47.8 million at the middle of the range by our math, as a gauge of carrier construction activity.
Risks this quarter didn't answer
Three standing financial and legal risks received no update in the third-quarter earnings release and await the conference call or quarterly filing.
- EchoStar legal dispute: the outlook still removes $56 million of unpaid EchoStar rent, with no update on the lawsuit or escrow recovery.
- International rent relief: the bridge expects $37 million to $39 million of international cancelations, without stating whether carrier rent-relief talks in Brazil have settled.
- Joint-venture buyout cost: redeemable noncontrolling interests rose to $92.9 million from $78.3 million at year-end, with no payout date disclosed.
👓 Other Themes
New Spectrum and Edge Compute Remain Early
Cavanagh highlighted future demand from the upcoming upper C-band wireless spectrum auction and 6G network upgrades, while noting that SBA is "seeing new opportunities from satellite and edge compute providers that value the reach and infrastructure of our portfolio." Framing satellite operators as tower customers pushes back against fears that satellites will replace rural towers, though neither satellite nor edge computing carries disclosed revenue yet.
💲 Other KPIs
Net profit attributable to shareholders edged down 2.3% from a year ago, or $2.19 per diluted share vs $2.20. The headline drop came from currency accounting on loans to foreign subsidiaries, which caused a $1.6 million loss this quarter against a $25.5 million gain a year ago. Excluding currency swings, diluted profit per share rose 9.0%.
By our math, cash from operations of $325.1 million minus $72.8 million of capital spending on tower construction, upgrades, and maintenance left $252.3 million of free cash flow, down 2.2% from a year ago. Operating cash flow rose 2.2%, but construction and upgrade spending rose 21.2% as international tower building sped up.
SBA paid $131.3 million in cash dividends during the quarter and declared another $1.25 per share payout for December. The quarterly dividend rate is unchanged from the first two quarters of 2026 and up 12.6% from $1.11 a year ago, absorbing about 39% of third-quarter AFFO.
🔮 Guidance
Cut. The middle of the range fell by $13.0 million, pointing to 3.1% growth for the year. However, selling the towers in Chile and Ecuador removed $10.0 million, and a weaker Brazilian currency assumption (5.32 to the dollar vs 5.10 previously) took off $5.0 million; excluding both, the plan rose $2.0 million. By our math, the outlook leaves fourth-quarter leasing revenue at $665.1 million, down 0.2% from a year ago as last year's Central American acquisition enters the comparison base.
Cut. SBA trimmed the top end of its construction services outlook by $10.0 million after holding the range steady for three quarters. At the $195.0 million middle of the range, full-year revenue would fall 20.2% from 2025. By our math, that leaves $47.8 million for the fourth quarter, down 10.5% from a year ago.
Cut. The middle of the range moved down $18.0 million to $2,845.5 million, or 1.1% full-year growth. Excluding the South American tower sales and currency changes, the total revenue outlook slipped $3.0 million because of the softer construction services forecast. By our math, fourth-quarter total revenue is implied at $712.9 million, down 0.9% from a year ago.
Cut. The middle of the range dropped by $10.5 million, reflecting a $6.0 million reduction from the Chile and Ecuador sales and $4.5 million from currency moves. Excluding those two factors, the outlook was unchanged. By our math, after generating $1,570.8 million in the first nine months, the plan leaves $519.7 million for the fourth quarter.
Cut. The middle of the range declined $7.0 million, driven by $4.0 million from the South American tower sales and $3.0 million from foreign currency; underlying operating profit expectations held flat. By our math, the outlook leaves $475.7 million for the fourth quarter, down 2.1% from $486.0 million a year ago.
Cut. Expected cash interest expense fell $4.0 million at the middle of the range ($1.5 million excluding currency moves and tower sales), following a $2.0 million reduction last quarter. Even with the lower full-year forecast, by our math the plan implies $125.6 million of cash interest in the fourth quarter, up 7.6% from a year ago as the November debt refinancing takes effect.
Cut. Routine tower maintenance and corporate spending fell $7.0 million at the middle of the range ($6.0 million excluding currency and divestitures). Having spent $42.6 million in the first nine months, the plan leaves $20.4 million for the fourth quarter by our math.
Raised. Total cash flow available for distribution moved up $2.0 million at the middle of the range, and $5.0 million excluding currency and the South American sales, helped by lower cash interest and lower maintenance spending. By our math, the outlook leaves $312.6 million for the fourth quarter, down 8.2% from a year ago.
Raised. The middle of the range rose $0.085 to $12.26 ($0.11 excluding currency and divestitures) as third-quarter buybacks lowered the assumed share count from 106.3 million to 105.7 million. It is the third raise this year (+$0.09, +$0.02, +$0.085), yet the plan still has full-year cash flow per share falling 4.5% from 2025, with the fourth quarter implied at $2.99, down 6.3% by our math.
Raised. Spending on new tower builds, upgrades, acquisitions, and land purchases rose $20.0 million at the middle of the range, following a $25.0 million raise last quarter. The increase funds faster international tower construction and 69 sites under contract to close in the fourth quarter for $17.9 million.
❓ Key Questions
How will SBA refinance the November tower securities?
The $1.165 billion 2021-1C tower securities reach their repayment date on November 9, 2026, just seven days after the release, yet the company stated it had not finalized its plan. Whether it uses commercial paper or long-term bonds sets 2027 interest costs.
What are the proceeds and profit impact of selling Peru?
SBA collected $145.8 million from asset sales in the third quarter when it exited Chile and Ecuador, and it agreed to sell Peru in the fourth quarter. Management has not disclosed the Peru sale price or how much revenue and cash flow those towers generate.
When will US new leasing outpace carrier cancelations?
Domestic site leasing revenue fell 3.4% from a year ago as $111 million to $112 million of combined Sprint and EchoStar cancelations weighed on the 2026 bridge. Investors need to know how much Sprint churn remains for 2027 and whether US carrier activity is picking up.
How much of international churn is rent relief in Brazil?
International regular cancelations are forecast at $37 million to $39 million for 2026, more than half of the company's total regular churn. How much of that comes from resetting rents lower for Brazilian carriers determines when international churn will calm down.