SBAC CEO – “Need for and catalyst for network investment continue on and we see no end in sight”

Disclaimer– This article is for informational purposes and does not constitute financial advice.  Please consult with your financial advisor before making any investment decisions.  Please read full disclaimers here.  Author of this article owns SBAC stock.

SBA Communications (SBAC), a leading wireless tower operator in the United States, reported strong first quarter results, and management provided a positive outlook for the tower industry on their earnings call this morning.  See our prior write-up on SBAC here.

Tower investors have been concerned about a lull in activity from AT&T and Sprint, but despite the slowdown in spending from AT&T, SBAC increased their 2015 organic revenue and adjusted cash flow from operations (AFFO) guidance.  This is a testament to the strength in the business.  Even when one of the major US carriers has temporarily slowed spending, the strength elsewhere in the business is still leading to SBAC outperforming their financial targets.

Jeff Stoops, CEO of SBAC, said “We think the 1Q and 4Q lull in activity is an aberration.”  Referring to a quarter in which organic guidance was raised as an “aberration” suggests that Stoops believes growth can be even better than it is today.

Speaking on the deployment of the public safety network, Stoops is “optimistic and hopeful that by the end of 2016, we will start to see some activity.”  As discussed in our prior write-up on SBAC, the deployment of the public safety network will be a major source of new business for the tower industry.

Summing up Stoops’ bullish view on the tower industry, Stoops simply states, “…need for and catalyst for network investment continue on and we see no end in sight.”

I continue to believe SBAC has a long runway for growth as carriers continue to invest in their network to keep up with growth in wireless data demand.  Growth in smartphones, wireless applications, and now mobile video streaming will all serve as catalysts to push for continued wireless network investment.