SBA Communications Corp at Cowen Communications Infrastructure Summit

Aug 13, 2019 PM UTC 查看原文
SBAC.OQ - SBA Communications Corp
SBA Communications Corp at Cowen Communications Infrastructure Summit
Aug 13, 2019 / 05:00PM GMT 

==============================
Corporate Participants
==============================
   *  Jeffrey A. Stoops
      SBA Communications Corporation - President, CEO & Director

==============================
Conference Call Participants
==============================
   *  Colby Alexander Synesael
      Cowen and Company, LLC, Research Division - MD and Senior Research Analyst

==============================
Presentation
------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [1]
------------------------------
 Okay. Good morning. My name is Colby Synesael. I'm the communications infrastructure analyst here at Cowen. For this presentation, we have SBA. And from SBA, we have the company's CEO, Jeff Stoops.

 So before we start, I want to give you the background because I think it's really important. So in January of every year, we write a report, our top 10 predictions for the coming year. And the premise of that is it's things that have a less than 50% chance likelihood of happening, and they're really meant to be more thought provoking than anything else. And we always have the last one be one that's a little bit more personal. And this year, my prediction was that SBA, after covering them for 8 years, would finally send one of their senior executives to one of our conferences to participate in one of our conferences.

 So, ladies and gentlemen, this is the first time that we have SBA at a Cowen event. So I want to thank Jeff for being here. And it proves that if you were to call out a management team in your research report, you might actually get something out of it. But thank you very much for being here. Really appreciate that.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [2]
------------------------------
 Well, happy to be here. It's a pleasure to allow you and your wishes to not be skunked again this year. So you at least have one, so that's good. It's a success. Happy to be here.

==============================
Questions and Answers
------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [1]
------------------------------
 So we're going to start off talking about the U.S. business. So in the second quarter of 2019, domestic net organic leasing growth accelerated to 5.6% -- it was 5.1% in the first quarter -- which is the highest level since 2015. And you said you expect this strength to continue into 2020. Somewhat similar to the comments we heard out of Crown Castle as well. What do you attribute the step-up in demand to?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [2]
------------------------------
 Well, keep in mind that when we report that metric, it's a trailing 12-month metric. So we were aided in our most recent report by getting past some late year 2017 and early 2018 favorable comps. And that's going to continue. So as we move through the year, that growth rate should continue to look good.

 In terms of the level of operational activity, things have been steady at a very good level probably since the end of 2018. So don't mistake the financially reported growth rate, which is a trailing 12, with what's going on operationally, which has been pretty steady at a high level all year, and see no reason why that will change as we move into 2020.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [3]
------------------------------
 Okay. And do you have a sense whether most customer activity is adding capacity to their LTE networks? Or are you seeing a ramp-up now truly in the build-out of their 5G networks?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [4]
------------------------------
 It's both. It's both.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [5]
------------------------------
 And the other driver of net organic growth is obviously churn, and you talked about some of this already. But based on your guidance, do you think that will be at around 2.5% this year? Is that what's implied?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [6]
------------------------------
 I believe so. I would -- Mark is giving me the thumbs up, so I think that's the right answer. Mark is our -- he's going to keep me square today on all the specific data metrics.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [7]
------------------------------
 And I think historically, you guys had talked about between 1% in 2% churn, so obviously 1.5% being the midpoint. Based on what's driving your churn in 2019, is there an argument that could be made that it should come down modestly or to some degree in 2020?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [8]
------------------------------
 It should because we don't expect any T-Mobile-Sprint churn to really hit in 2020. We are going to have some churn coming out of Central America, with the combinations that are going to hit Guatemala and El Salvador down there with the América Móvil purchases of Telefonica, but they're not going to be that material. So that's a long-winded way of saying yes.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [9]
------------------------------
 And I want to shift over and talk a little bit about DISH to the extent that you can. But as part of the agreement reached with the DOJ to help accelerate DISH's time-to-market, new T-Mobile will make available to DISH greater than 20,000 cell sites that are, arguably, part of that 35,000 they had called out previously that have plans to decommission. Is it fair to assume that you'd be willing to let new T-Mobile transfer some of this license to DISH?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [10]
------------------------------
 Well, I caught the tail end of the last panel, and Alex had the right answer, which is, of course, yes. I mean you have to get to the point where you understand the terms and conditions. I think it's a bit unlikely that DISH is going to have a need for exactly what was on that particular lease. Remember, we treat all of our leases site-specific. So for DISH to say I need that height, that equipment, that term -- I mean, if they do, sure. We're going to be very interested in that. But I think the bigger issue is we're going to have a great interest in facilitating T-Mobile's needs to rationalize their merger, and we're also going to have a great interest in helping DISH move this forward as quickly as possible. Now whether they're exactly the same leases that get transferred over perfectly, that remains to be seen.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [11]
------------------------------
 Okay. You've noted that you're working with DISH to help them put up some sites for its IoT network on your towers. Will you let them shift those financial obligations to new leases tied to the more traditional networks that they now intend to build?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [12]
------------------------------
 Sure. Sure, under the right terms.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [13]
------------------------------
 And I appreciate it's early days, but to what degree, if at all, have you seen any change in activity from DISH or maybe in terms of conversation where they're actually now generally planning to build this new network?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [14]
------------------------------
 Well, we're pretty close to them. We were doing a lot of work with them on their narrowband IoT network, which they continue to kind of hold in abeyance. They're -- as you would expect them to do, take advantage of the tolling that has been afforded them under the pending transaction. But they are actively working and planning and in discussions on the new 5G broadband network as well.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [15]
------------------------------
 And just shifting over a little to T-Mobile and Sprint. So assuming the deal is approved and closes in the first quarter of 2020, how quickly do you think we'd see the investments being made by new T-Mobile and DISH start to show up in your results?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [16]
------------------------------
 I also heard the last panel speak to that, and I disagree with that -- their answer on that. On pretty good authority, I know that both Sprint and T-Mobile today have set up a white room, which is permitted under antitrust regulations, to be working on network planning. If you think about it, there is no way in the world that T-Mobile would have committed itself to those aggressive build-out requirements if they thought they'd have to take a year off for network planning. That deal gets approved, they're going to be Katy bar the door, going to work right away. So I think it's going to be a lot of work immediately upon final merger approval.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [17]
------------------------------
 We're of this view that if the deal goes through, we should see a further acceleration in growth rates, not just for SBA, but really for the sector broadly in 2020 and then, I would argue, even beyond. And that if the deal does not go through, growth is likely to decelerate in 2020, and that's based on our view that AT&T is moving quickly through its FirstNet build and that Sprint would likely rein in its spending because of its own financial situation. Do you agree with the framework that we're kind of under -- that we're using?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [18]
------------------------------
 Yes. I do, particularly if the deal doesn't get approved because I think you'll have somewhat of a status quo. You will not have the same time pressures facing T-Mobile? They'll still have a lot that they'll want to do. But the big wildcard will be Sprint, who will have to certainly, I think, pause and decide what the future will hold.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [19]
------------------------------
 Want to talk about amendments a little bit. So a lot of demand that you and the group have continued to see over the past year is coming from amendments. You noted I think 80% on your second quarter call. To start, can you give us a sense what the average amendment is in terms of dollars and how that might compare to just a few years ago?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [20]
------------------------------
 Well, you're not going to like this answer because the range is particularly broad. It literally ranges from $150 a month to over $1,500 a month, given the wide range of sites that we have and all the different customers that are amending and the various different needs within each customer. So it's a wide range of dollars. It's -- and even though you might focus on the high end of that is pretty robust, it's still not as robust as it was back in the 2013 to early 2015 period when we were in the throes of the 3G to 4G amendment stage, which I still believe was the most equipment-intensive that we've seen in our industry's history, where we literally had some amendments that were over $2,000 a month.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [21]
------------------------------
 One of the things that people, I think, are excited about, including myself, in terms of opportunity for amendments is tied to massive MIMO. And actually, the panel that we just had, which you've referenced, it was interesting because David Weisman was noting that it's not as big of an opportunity as one might think because it's not necessarily the antenna that's actually going to be this huge antenna. It's other types of equipment. Do you think that when we actually start to see massive MIMO being deployed on the towers that there's going to be a step-up, if you will, in terms of growth that we see from amendments?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [22]
------------------------------
 I do. We're -- and our experience so far is mostly with the Sprint 2.5G massive MIMO antenna, which I believe is the only real massive MIMO equipment on the antenna side that's really available today. And it is bigger, and it is heavier, and it does command more pricing. And my understanding is a little different than David's, which is that the physics behind the mid-band spectrum and the massive MIMO, we're talking the 64 by 64, is going to be a bigger, heavier load.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [23]
------------------------------
 Is that, you think, a more meaningful step-up we see in '20 based on where we are in terms of the development of that equipment? Or do you think that, that's still even further out than that?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [24]
------------------------------
 Well, I think a lot of it is going to depend on when the entire ecosystem is ready. I was talking to someone earlier, and there's a lot of people in this room who will know the answer to this better than me: When is Apple going to start putting out a 5G phone? I think that's going to drive a lot of when all the stuff gets deployed. I don't think -- if past history is an indication, I don't think our customers are going to get too far ahead of when they can really start to monetize through the ecosystem being ready. I know some of the antenna manufacturers are working on other mid-band spectrum antennas, but we really haven't seen much in the way of things beyond Sprint's 2.5G spectrum. There might be some of our customers who are waiting for the C-band. I think that's going to be a very big catalyst for the 5G rollout. But obviously, you want to have some devices. You want have some folks actually being able to use this stuff.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [25]
------------------------------
 Want to shift over again and talk about overbuild. So within the U.S., across each of the big 3 tower operators, we're seeing a lot of activity coming from amendments, which you've discussed, and fewer from new builds. In fact, outside of M&A, you're all actually decommissioning more towers than you're building. However, at the same time, private operators like Tillman are building hundreds of new towers. Is this because you are not interested in building new towers at the terms that are being offered to you? Or is it that they're not even offering these opportunities to you based on their contention that they might have with the pricing on other legacy assets?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [26]
------------------------------
 Well, I think it's a combination of terms and I think our customers are interested in seeing other providers and ecosystems being developed outside of the 3 publics and a few other providers.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [27]
------------------------------
 And I mean when you look at the terms that are being offered now in the marketplace from the carriers for these newer builds, I mean, are they attractive to you?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [28]
------------------------------
 They are not.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [29]
------------------------------
 And is it that they're not attractive relative to what you're getting now or even on a stand-alone basis in terms of what you believe their proper return should be for the investment being made that you're just not able to get to that threshold?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [30]
------------------------------
 The latter, yes.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [31]
------------------------------
 Are you at all concerned that over a long period of time, the carriers will be able to migrate a large enough portion of what they perceive as high-rent sites with you to another tower to a point it actually has a material impact on your financial results?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [32]
------------------------------
 We're not. It's hard to build towers. Takes a long time. It's a lot harder than people think it is. And a lot of people's goals are generally not met in terms of annual production. And particularly a relocation tower is very hard because anytime you relocate a cell site, it affects 3 to 5 cell sites around it. So there are very limited options that are available. And the operators hate it, particularly the ones who are on the operational and network tuning side of things. So you have that operational issue. And then you have the zoning issues, which make it very, very difficult to do.

 So in our experience, and I guess this has been happening now for a year or 2, there's only about a handful of states and even limited areas within those states where there's no zoning where this can really occur. And the overbuilders' actions have been 80% to 90% limited to these areas. So no, it's not a material impact, and we don't think it ever will be.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [33]
------------------------------
 So I mean it certainly seems like the noise level on this is louder than it has been in terms...

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [34]
------------------------------
 Way beyond the materiality to the results of the companies.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [35]
------------------------------
 I mean, we had Tillman, as an example, who was here earlier today. And they noted that greater than half of their -- not greater, half of their builds are for overbuild. And they're building hundreds of towers per year at a point where they noted that within a few years, they anticipate being the largest private tower operator, which would imply they're going to pass over vertical bridges, which is about 4,000, 5,000 sites. If half of those are overbuilds, it seems like that by themselves just one company, Tillman, enough that it would have some type of material impact. So I'm trying to figure out where the disconnect is between these things.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [36]
------------------------------
 Well, if that in fact comes to pass, they're going to have a lot of towers in a handful of no-zoning states, which -- good luck.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [37]
------------------------------
 Fair enough. Want to shift over to your international business. So last quarter, international same-store net tower growth accelerated to 10.2% from 9.8% in the first quarter of '19, with Brazil growing at 13.6% on a constant currency basis. What's driving the healthy level of growth in Brazil? And how sustainable do you believe it is into 2020?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [38]
------------------------------
 Brazil's economy has improved since the last presidential elections. Still got a ways to go, but it's improving. And the carriers have a lot to do. I mean their networks are still behind and have a long way to go for years to come.

 The other thing that has helped us down there is we have a really good team, and we do work with all the carriers down there. They rely on us a lot. We've been down there now since 2012, and this just worked out very well for us. And we have good feelings about Brazil in the future.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [39]
------------------------------
 And we talk about Brazil a lot when we talk about your international business, because it's the largest component by far. But what are some of the other trends? You mentioned a few of the other markets where you're seeing or expect to see some kind of acceleration in consolidation churn, but what are the opportunities for expanding your presence in some of these other markets like in Guatemala?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [40]
------------------------------
 Well, all of the markets that we're in outside the United States, I would characterize as 5 to 10 years behind the U.S. in terms of their development. None of them are ready yet for 5G. They'll all ultimately get there, but they're years off. And some of them are just beginning to get to 4G. So you have -- you're going to repeat a -- the amendment cycle that we have now enjoyed here for many, many years. But even more than that, there's still a lot of capacity work that's being done in these markets. And you're going to have some many more new build opportunities and actually acquisition opportunities in these markets.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [41]
------------------------------
 To that point, I think last quarter, about 18% of your total revenue came from your international site-leasing business. Do you have a certain threshold that you prefer not to cross? Or is it really a function of chasing down the best opportunities and, thus, less of a concern in terms of what percentage international makes up of total revenue?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [42]
------------------------------
 Yes. I think when people think about our international business, they think about it differently than we do. You characterized the business outside the U.S. When we really think about it from a risk perspective, we think about what's denominated in other than U.S. dollars. So all of our Central American business is in U.S. dollars. Ecuador is in U.S. dollars. Some of our South American business is in U.S. dollars. So because we are funded entirely in U.S. dollars, that's really the risk element that we focus on. And we've said historically, and we continue to say today, that we wouldn't want to be more than 25% to 30% of our total site leasing revenue to be in other than U.S. dollars. So that 18% is actually closer to 13% when you look at it on a non-U. S.-dollar basis and pro forma for our South African -- deal, that moves to about 14.5%. So we still would have fair amount of room.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [43]
------------------------------
 I've historically thought that the return profile in the United States is -- target return, call it, 10%; in Lat Am, 12%, 14%; and then as you go into parts of Africa and so forth, it goes up into the high teens. Are you still looking for a higher return in your South American countries even if it's being denominated in USD?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [44]
------------------------------
 A little bit more, but that's the biggest variable that we look at. I mean when you look at wireless infrastructure around the world, deployment's pretty much the same. I mean the equipment is still either Nokia, Ericsson, Huawei, ZTE. Those are the 4 global providers. Networks are deployed similarly. In some parts of the world, you're not on grid power. We're not really in those parts of the world. So you really then have to assess more geopolitical and currency risk, which is why you would change your rates of return.

 So yes, we do that. But obviously, if you're getting all your revenues and your expenses, and you'll never get your expenses all in USD, but you can get your revenues, and that would take a big chunk of that risk profile out.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [45]
------------------------------
 Shifting over to Atlas Towers, which is the acquisition or consolidation you just noted. So on your earnings call a few weeks ago, you also announced that in the third quarter of '19, you'll increase your stake in South African tower operator Atlas, which was previously an unconsolidated JV. You're going to end up taking 94% ownership, I assume the founders take the other 6%. But what initially attracted you to the South African market? And how would you compare the growth potential and returns there versus those in Lat Am and where you already have a presence?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [46]
------------------------------
 Well, we've known Nate Foster forever. He was an SBA employee probably when I joined there 22 years ago, and he does remarkable work. So when he proposed going to South Africa, we said, all right, we'll take a look with you. And we...

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [47]
------------------------------
 When was that, roughly?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [48]
------------------------------
 Five years ago, 5 years ago, maybe. And over time, we've come to see South Africa as what I think as the jewel of Africa in terms of its population growth, its GDP, its multiplicity of carriers that are relatively equally competitively positioned. It has grid power, which is a big difference from a lot of the rest of sub-Saharan Africa. And we think it's going to be a very good market that's going to rival our Lat Am markets in terms of returns. And as you can see from the numbers that we put out there in terms of our cost versus our EBITDA contribution, it's already a grand slam home run. I mean it's greater than 10% ROIC even after adjusting for FX. It's mostly a new build portfolio using all of the talents that Nate learned while he was with us and used our systems moving forward. So we couldn't be happier to be there, and we think we're going to have some really good growth there going forward.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [49]
------------------------------
 Do you view this as a unique one-off situation because of the relationship with Nate? Or should we take this to imply you're increasingly willing to expand into new markets?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [50]
------------------------------
 Well, they're all unique, but we're always also willing to expand into new markets under the right circumstances. I think that's what our investors pay us to do, to find those Atlas opportunities. But they have to be the right opportunities, and they have to be the ones that are going to provide superior shareholder value creation and not just growth for tower portfolio growth's sake.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [51]
------------------------------
 I mean it's interesting and it's a great situation for you to be in is that when you think about your target leverage ratios and how much cash the business is already throwing off, you somewhat have to deploy your capital. And I know buybacks is always an opportunity. But based on the good fortune that you're in today, does that put more pressure on you to find more of these situations like what you found with Atlas just to kind of put the money to work?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [52]
------------------------------
 I spent the last 20 years saying no a lot more than I've said yes. I mean, one of our -- the things that we're most proud of is the discipline that we've shown over the years. And we don't let the money burn a hole in our pocket and don't feel like we need to spend anything just for the sake of spending it.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [53]
------------------------------
 We looked through your old 10-Ks, and you never mentioned Atlas, at least not that we saw. With that said, are there other tower companies you've invested in that are similar to Atlas you could one day look to consolidate?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [54]
------------------------------
 There could be, and you'll know it when the time comes out.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [55]
------------------------------
 That's provocative. Okay. Fair enough. I'm sure people will ask you follow-up questions to that for the next 6 months.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [56]
------------------------------
 And they'll get the same answer.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [57]
------------------------------
 Fair enough. I want to shift over and talk about the dividend and buybacks. And then I'll open it up to the audience to see if there's any questions as well.

 In conjunction with earnings a few weeks ago, you announced your first quarterly dividend of $0.37 a share. How big of a role did your leverage falling below your target of 7 to 7.5, it was 6.9 in the second quarter, and the strength of your stock year-to-date, suggesting maybe buybacks are less attractive, play in you deciding to offer a dividend now?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [58]
------------------------------
 We didn't really know that we were going to be below 7 until probably after the quarter ended. So that didn't play into it. We've been talking about starting the dividend early for a while because as we analyzed it, we came to realize that starting the dividend earlier and smaller actually has a ton of benefits. It allows us to manage our NOLs better, extend them longer. It gives us the ability to grow the dividend at a higher rate, albeit off of a smaller base. There are some advantages to the law of smaller numbers. So by doing that -- and it uses up less of our AFFO than would have otherwise been the case had we waited until we had to pay the dividend because our net income at that point was projected to be much higher, requiring a much higher payout. So now we have a lot more firepower for what we really love to do, which is portfolio growth, and secondarily, stock repurchases. So it all made a lot of sense, and it gives us a head start on joining that dividend aristocrat club.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [59]
------------------------------
 It is a club. While your dividend payout ratio is only 18% today, you expect to grow your dividend at greater than 20% over the next several years, as you've noted. Do you plan on increasingly -- excuse me, increasing your dividend every quarter or every 4 quarters? So American, just to put it in perspective, increases that every quarter.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [60]
------------------------------
 I mean that's a very good question, and there are pros and cons for each. And you will get the answer in about 90 days.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [61]
------------------------------
 Fair enough. I don't even have a retort for that. Your Board of Directors also approved a new $1 billion stock buyback program, and you bought back $95 million last quarter. How should we think about the threshold for your buyback -- excuse me, for you buying back stock going forward? Should we assume a target leverage ratio of 7 turns, and if you're going to go below, we should just fill that up with buyback in our own models?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [62]
------------------------------
 I mean we're going to buy back stock, for sure. With interest rates being where they are, we've got a lot of additional value yet to create. So I can't tell you -- well, I will tell you that you should think that 7-ish x, particularly with the lower dividend, is where we want to maintain our capital structure, and that is going to go first to portfolio growth, as it has for the last 20 years. But if we can't find good portfolio growth, it's going to go to stock repurchases.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [63]
------------------------------
 I thought it was interesting that on the last panel, we were talking about M&A and multiples, and we were noting how we've seen in the public tower operators, particularly with SBA, over the last, call it, 10 months of the expansion, you seem to now, call it, mid-20s in terms of multiple. And I thought that, that would have gotten you close to where the privates are, which is where I've always thought they've traded, in the mid-20s. And the response that I got from Alex was that those multiples have also gone up and, therefore, there's still a delta between the privates and the publics. Is that what you're seeing as well? And I guess really where I was going is, with your multiple expansion being what's happened, has it made you more interested in using perhaps your own currency for transactions or M&A?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [64]
------------------------------
 Well, we value our currency dearly. I can't remember the last time we issued stock for anything to buy things. We're much more interested in reducing the float than expanding it. I would say the gap has shrunk some, but I would agree with the panel that there's still a bit of a premium on the private assets.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [65]
------------------------------
 Why do you think that, that is?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [66]
------------------------------
 Well, there's better students of general business out there than me. But I think for the first 10 years where the publics had a bit of a valuation gap over the privates, I think that was probably a bit of an anomaly. I think if you look at most businesses, there is a private to public premium.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [67]
------------------------------
 We've clearly seen that in other coming communications infrastructure assets.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [68]
------------------------------
 Yes. I'm not sure the way the world exists today is that unusual.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [69]
------------------------------
 Fair enough.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [70]
------------------------------
 I think what's happened recently is the world is starting to adjust to the reality that we're going to be in for low interest rates for a very, very long period of time. And I think that as much as anything is impacting SBA's valuation, particularly given where we choose to capitalize and leverage the company. But I also think the great -- much greater recognition and influx of a traditional real estate investor, the fact that S&P changed the GICS code, which then led to Vanguard changing their indexes. And just yesterday, we were added to 2 major Cohen & Steers indexes. I mean all those things matter.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [71]
------------------------------
 Fair enough. Are there any questions from the audience? No? Oh, there you go.

------------------------------
 Unidentified Analyst,    [72]
------------------------------
 Where do you see the small cell business for SBA?

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [73]
------------------------------
 Where do you see the small cell business for SBA?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [74]
------------------------------
 Usually, that would be Colby's first question. The small cell business is going to be a busy business, and it's going to be one that there's going to be a lot of action. But when we decided not to buy ExteNet, we made the conscious decision that it was not going to be a business that we would play in, in a big way. And the reason for that is it's a fine business, but it's not the tower business. And inside one public company that is capitalized and levered a certain way, it's hard to do. And you will see a number of private companies who are in both, but they don't do it in the same companies. And they never will. And it's about different valuations. It's about different investors, about different SG&As, different execution strategies. To be big in fiber, by necessity, you probably have to have an enterprise business, which is a very, very different business. It's just different. And we tend to stick with the stuff we know. We tend to focus on execution and margins and kind of meat and potatoes kind of folks. And it's -- I think it's served us well over time.

 If we can find small cell opportunities that have the exclusivity and barriers to entry that have really been the hallmark of SBA, that come renewal time, we know what we have and will serve us well for 10 and 20 and 30 years, we'd be interested in those. But that's generally not the...

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [75]
------------------------------
 Those are more venue-oriented typically.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [76]
------------------------------
 Yes, correct.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [77]
------------------------------
 Maybe just to pivot off of that, what are you guys doing on the innovation edge side of things? I know that you guys are involved there, but it's obviously nothing that's showing up in revenues. So what are you doing there? And what are your thoughts around that?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [78]
------------------------------
 We're dedicating a lot of resources. We have a trial in Massachusetts with Packet right outside of Gillette Stadium. We're seeing some good traction there. We're actually going to hook up some CBRS wireless transmission facilities there to see how that actually plays out. We have one of the few CBRS trial licenses, I think, granted by the FCC. And we're excited in the sense that if something happens there in years to come, which we believe will be the case, that we will be ready to monetize that. For us, having all the tower sites and the real estate, we have a choice to make: Are we going to be landlords and just rent out space to the ultimate operators of the mobile edge computing sites? Are we going to do something in the middle, where we own the shells and then let the active electronics be operated by someone else? Or are we going to jump in with both feet and be the actual operators and sellers of the data center services? And I think we're going to have the time to figure all that out before there's a real business.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [79]
------------------------------
 My guess would be you're going to be the former opposed to the latter based just on the dynamic of the company and how you guys just historically operated.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [80]
------------------------------
 We might get to number -- I mean 1 or 2 would be probably at this point a greater likelihood.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [81]
------------------------------
 And that's simply leasing space out at the base station of your towers? Or is it beyond that?

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [82]
------------------------------
 Well, that might be an area where owning the fiber inside our compound or the different other utilities and things that would be necessary for the actual end owner and operator of the mini data center would be required to use, all that kind of stuff would be value-added where we could create additional value for our shareholders.

------------------------------
 Colby Alexander Synesael,  Cowen and Company, LLC, Research Division - MD and Senior Research Analyst   [83]
------------------------------
 Got it. Any other questions from the audience? Great. With that, we will conclude. Thank you very much, Jeff. Appreciate it.

------------------------------
 Jeffrey A. Stoops,  SBA Communications Corporation - President, CEO & Director   [84]
------------------------------
 Great. Thanks. Happy to be here.




------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the 
Transcript has been published in near real-time by an experienced 
professional transcriber.  While the Preliminary Transcript is highly 
accurate, it has not been edited to ensure the entire transcription 
represents a verbatim report of the call.

EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional 
editors have listened to the event a second time to confirm that the 
content of the call has been transcribed accurately and in full.

------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other 
information on this web site without obligation to notify any person of 
such changes.

In the conference calls upon which Event Transcripts are based, companies 
may make projections or other forward-looking statements regarding a variety 
of items. Such forward-looking statements are based upon current 
expectations and involve risks and uncertainties. Actual results may differ 
materially from those stated in any forward-looking statement based on a 
number of important factors and risks, which are more specifically 
identified in the companies' most recent SEC filings. Although the companies 
may indicate and believe that the assumptions underlying the forward-looking 
statements are reasonable, any of the assumptions could prove inaccurate or 
incorrect and, therefore, there can be no assurance that the results 
contemplated in the forward-looking statements will be realized.

THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2019 Thomson Reuters. All Rights Reserved.
------------------------------