SBAC Q3 2025: Verizon Agreement Locks in 10 Years of Growth Visibility

November 3, 2025 | By EarningsIQ Research

SBAC’s new 10-year Verizon master lease agreement (MLA) cements recurring growth and operational certainty, while disciplined capital allocation and portfolio reshaping signal a more resilient, investment-grade tower platform. Management’s outlook is underpinned by robust leasing demand, but international churn and capital market shifts remain key variables as the business scales beyond 46,000 sites and tightens its leverage policy. Investors should watch for further MLA expansion and continued portfolio optimization as the industry’s 5G and fixed wireless buildout intensifies.

Summary

• Verizon MLA Secures Multi-Year Growth: Long-term agreement guarantees minimum co-location activity, enhancing revenue stability.
• Capital Structure Tightens: Lowered leverage target and new investment-grade ratings unlock deeper credit markets and lower funding costs.
• Portfolio Optimization Accelerates: Central America expansion and Canada exit reflect sharper market focus and asset discipline.

Performance Analysis

SBAC delivered industry-leading AFFO per share, driven by steady U.S. and international leasing demand and a services business that surged 81% year-over-year, primarily from construction projects tied to carrier network expansion. The company modestly raised its full-year leasing and escalation outlook, citing sustained new co-location activity as carriers densify and extend their footprints. However, adjusted site leasing revenue guidance was tempered by the delayed closing of the Millicom acquisition and the earlier-than-expected sale of the Canadian tower portfolio.

Organic domestic leasing revenue grew at a gross rate of 5.3% (net 1.6% after churn), with Sprint-related churn remaining a drag but in line with prior expectations. Internationally, organic leasing revenue rose 8.5% in constant currency, though churn stayed elevated due to ongoing carrier consolidation, especially in Brazil. The company acquired 447 new sites during the quarter, primarily from Millicom, and now manages over 46,000 tower sites globally—up 40% since 2020. Share repurchases reached $325 million year-to-date, with $1.3 billion in remaining authorization, all while maintaining leverage at 6.2 times net debt to EBITDA, below the new 6–7x target range.

• Services Revenue Surge: 81% YoY growth in site development, reflecting peak carrier network investment activity.
• Portfolio Realignment: Central America expansion and Canadian exit sharpen geographic focus and align with leading wireless operators.
• Churn Headwinds Remain: Sprint and international consolidation continue to pressure net leasing growth, though largely as expected.

SBAC’s balance sheet remains robust, with ample liquidity and a shift to investment-grade debt status poised to lower future refinancing risk and extend maturities. Dividend growth outpaced 13% YoY, now representing 35% of the AFFO midpoint, signaling confidence in cash flow durability.

Executive Commentary

Strategic Positioning

1. Verizon MLA: Locking in Predictable Growth

The 10-year master lease agreement with Verizon is a watershed for SBAC, guaranteeing minimum annual co-location activity and amendments. Unlike the step-up/step-down structure of the AT&T agreement, the Verizon deal is “much more linear,” providing a stable, recurring revenue stream and operational efficiency for both parties. This contract not only underpins mid-single-digit domestic leasing growth but also positions SBAC as a preferred partner for future network expansions and overlays.

2. Capital Allocation and Investment-Grade Transition

SBAC’s shift to a 6–7x leverage target and new Fitch BBB- rating mark a strategic pivot toward lower funding costs and deeper credit market access. Management emphasized this will not constrain capital deployment, as strong cash flow and a $2 billion revolver preserve flexibility for share buybacks and opportunistic M&A. The company is also committed to reducing secured debt as maturities roll off, further supporting its investment-grade profile.

3. Portfolio Optimization and Geographic Focus

Exiting Canada and consolidating Central America reflect a deliberate strategy to concentrate on markets with the best carrier alignment and growth potential. The Millicom deal expands the international footprint, while the Canada sale capitalized on a valuation premium. Management remains open to further “portfolio review” but sees future divestitures as driven by strategic fit rather than cash needs.

4. Services Business as an Embedded Growth Engine

Services revenue growth, up 81% YoY, highlights SBAC’s ability to capture value beyond pure tower leasing. The business, historically weighted toward T-Mobile, is seeing increased activity from Verizon as part of the new MLA, suggesting potential for broader customer diversification and sustained high-margin growth if carrier network buildouts persist.

5. Navigating Churn and International Complexity

Churn from Sprint and international carrier consolidation remains a structural headwind, particularly in Brazil. However, management expects these pressures to abate over time, with Central America now largely rationalized and churn projected to decline over the next several years. The company’s ability to offset churn with new leasing and acquisitions will be a key determinant of long-term growth.

Key Considerations

SBAC’s Q3 marks a turning point as the company leverages scale, capital discipline, and long-term carrier partnerships to build a more resilient, growth-centric tower platform. The following considerations are critical for investors:

• MLA Expansion as Growth Template: The Verizon deal could serve as a blueprint for future agreements with T-Mobile and others, further derisking revenue and enhancing predictability.
• Churn Management Remains Vital: Sprint and international churn are baked into guidance, but further carrier consolidation or unexpected contract terminations could challenge net growth.
• International Growth Levers: Central America integration and potential organic upside from Millicom assets are early but promising; Brazil churn remains a watchpoint.
• Capital Allocation Flexibility: Share buybacks, dividend growth, and selective M&A are all enabled by strong cash flow and a more conservative leverage policy.
• Technology and Efficiency Gains: Use of new systems and minimal overhead additions in site expansion support best-in-class margins even as the portfolio grows.

Risks

Churn from legacy carrier consolidation (Sprint, Brazil’s OI) and potential contract renegotiations (notably with DISH and T-Mobile) present ongoing headwinds. Rising interest expense from debt refinancing could pressure AFFO, though management expects cost offsets via operational efficiency and technology. Regulatory delays in international M&A and evolving spectrum policy may slow future portfolio moves. The company’s ability to maintain best-in-class margins as it integrates new assets, especially in emerging markets, is a key execution risk.

Forward Outlook

For Q4 2025, SBAC guided to:

• Modestly higher full-year new leasing and escalation revenue, reflecting robust U.S. and international demand.
• Increased site development (services) revenue outlook by $20 million, driven by ongoing carrier network expansion.

For full-year 2025, management maintained guidance for:

• Mid-single-digit domestic organic leasing growth, with churn and portfolio adjustments fully reflected in the outlook.

Management highlighted several factors that will shape results:

• Verizon MLA guarantees a baseline of co-location growth through 2035, reinforcing long-term visibility.
• Dividend growth and share repurchases remain priorities, supported by new investment-grade debt access and stable leverage.

Takeaways

SBAC’s Q3 signals a maturing business model that blends recurring growth, capital discipline, and strategic focus. The Verizon MLA and investment-grade transition underpin a more stable, lower-risk profile, while international expansion and services growth offer incremental upside.

• Verizon MLA Sets New Baseline: The 10-year agreement secures a floor for future growth and operational efficiency, derisking the U.S. leasing business.
• Capital Flexibility and Portfolio Focus: Lower leverage and investment-grade status unlock cheaper funding and support continued buybacks, dividends, and selective M&A.
• Watch for MLA Replication and Churn Management: Future agreements with T-Mobile and continued churn offsetting will determine SBAC’s ability to sustain and accelerate growth in a consolidating industry.

Conclusion

SBAC’s Q3 results reflect a company at an inflection point, leveraging scale and long-term carrier contracts to drive predictable growth while tightening its capital structure and sharpening geographic focus. The Verizon MLA, investment-grade debt transition, and robust services momentum all point to a more resilient and attractive tower platform for long-term investors.

Industry Read-Through

SBAC’s long-term Verizon MLA signals a shift in tower-carrier relationships, with multi-year, activity-based contracts likely to become the new standard as carriers seek certainty and efficiency in network expansion. The trend toward portfolio optimization and capital discipline, seen in both acquisitions and divestitures, is likely to accelerate across the sector as public tower companies seek to align with leading operators and maximize return on invested capital. Elevated churn from carrier consolidation and the push for shared infrastructure in lower-ARPU international markets may weigh on net growth, but the ongoing 5G and fixed wireless buildout provides a multi-year tailwind for tower demand. Investors should watch for further MLA adoption, investment-grade transitions, and realignment of portfolios as the industry matures.

SBAC Real Estate Towers 5G Leasing Capital Allocation Investment Grade Portfolio Optimization