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SBA Communications Corp SBAC

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Morningstar’s Analysis

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No Surprises in SBA’s Fourth Quarter; Sales Growth Set to Reaccelerate After a Slower 2020

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

SBA Communications’ fourth-quarter sales and operating margins were consistent with our expectations and reflected what we’ve heard throughout most of 2020 from each of the U.S. tower companies. Revenue growth in the U.S. was solid but lower than previous years due to a slowdown in new activity, particularly due to T-Mobile’s initial integration of Sprint. SBA has several catalysts that should reaccelerate growth in 2021 and 2022, and we expect its business to perform well. However, despite our intention to increase our $190 fair value estimate by $5-$10 and the significant pullback in SBA’s stock, we still see the firm as overvalued and generally favor American Tower’s geographic diversification and more conservative financial strategy.

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Company Profile

Business Description

SBA Communications owns and operates roughly 33,000 cell towers throughout North America, South America, and Africa. It leases space on its towers to wireless service providers, who install equipment on the towers to support their wireless networks. The company has a very concentrated customer base, with most revenue in each market being generated by just the top few mobile carriers. The company owns more than 16,000 towers in the U.S., which accounted for three fourths of the company’s total revenue in 2020. Internationally, SBA’s greatest presence is in Brazil, where it operates roughly 10,000 towers. SBA operates as a real estate investment trust, or REIT.

8051 Congress Avenue
Boca Raton, FL, 33487
T +1 561 995-7670
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 1,483