$115.03
$262.93
bear $115.03
base $205.10
bull $262.93
margin of safety $135.00
market price* $187.06
SBA Communications owns and leases space on wireless towers: about 17,400 sites in the United States and its territories and about 29,000 abroad, mainly in Brazil, Central America (Guatemala, El Salvador, Honduras, Nicaragua, Panama, Costa Rica), Chile, Peru, Ecuador, South Africa and Tanzania. The vast majority of revenue is site leasing under long contracts with built-in annual rent increases (about 3% a year in the U.S., inflation-linked in most foreign markets). A tower costs little to keep standing, and once it is up, each additional tenant is almost pure profit, which is why the business throws off a lot of cash relative to its size. The weak points are customer concentration (the three U.S. national carriers pay the majority of domestic revenue) and the fact that when carriers merge or quit, the duplicate leases disappear. How we measure earnings. We start from operating cash flow, strip out working-capital timing swings and stock-based pay, and subtract only the spending needed to keep the existing towers running. SBA reports that figure itself (tower maintenance plus general corporate spending, about $55-58 million a year), and we use it instead of a formula, because the rest of its capital spending is clearly discretionary: new tower construction, land purchases under existing towers and tower acquisitions. The consequence is that we give no credit in any case for growth that comes from new builds or acquisitions, since we have not charged for that spending. We also make one adjustment the reported working-capital line hides: SBA spends roughly $12-25 million a year to extend ground leases under its towers and books it as a prepaid expense, which our standard working-capital adjustment would add back. That is a recurring cost of keeping sites, so we deduct $20 million a year from the earnings level in every case. What changed since our previous analysis, and why the value fell. Our previous estimate valued the cash left for shareholders after interest and never subtracted SBA's roughly $12.8 billion of debt, which implicitly assumed that debt would roll over forever on today's unusually cheap terms. Much of it will not: about $3.6 billion falls due between November 2026 and April 2027, and several securitized tower notes carry coupons of 1.6-2.6% that must be refinanced at today's rates (SBA's July 2026 bond sale priced at a 5.11% average). We now value the whole business first, before any interest, and then subtract what it owes. That is the main reason our estimates are materially lower than before. The business stream. Adding back cash interest, the business generated about $1.73 billion in 2023, $1.74 billion in 2024 and $1.80 billion in 2025. We anchor on the median of 2023-2025, $1.74 billion, less the $20 million ground-lease cost, or $1.72 billion. We use these three years because they describe today's portfolio after the 2021-2022 Brazilian acquisitions and after the run-off of old acquisition amortization; the 2025 purchase of about 7,000 Millicom towers in Central America (already paid for) and the 2025 sale of its towers in the Philippines, Colombia and most of Canada roughly offset each other. The business stream grew 3.5% in 2025, while cash after interest was flat because interest paid rose from $395 million to $467 million. Our base case assumes 2.0% growth over the next year, below that 3.5%, because 2026 carries about $168-176 million of lost lease revenue: EchoStar (formerly DISH Wireless) stopped paying in December 2025 and is disputing its contracts in federal court (about $56 million a year), the last of the Sprint overlap leases are running off, and international customers are rationalizing networks. U.S. site leasing revenue fell 3.7% year on year in the second quarter of 2026. Maintenance spending is also guided up to $65-75 million for the larger portfolio. Base case. After 2026, the only growth we credit is contractual rent increases plus new leases and equipment amendments at roughly the current pace (about $13 million of new annual billings a quarter), minus normal churn of about $60 million a year. That nets to about 2.25% a year for years two to five and 2% for years six to ten. After year ten we hold cash flow flat forever, with no further growth: towers are long-lived, hard to permit, and the spending needed to keep them standing is already charged, but we cannot point to evidence that rent increases will keep beating churn once today's master lease agreements are renegotiated. On this path the business is worth about $33.9 billion ($318.88 per share). It owes about $12.57 billion net of surplus cash (including finance leases and a signed $28.8 million purchase of 58 sites). Because about $12.1 billion of its fixed-rate debt pays less than our 6% benchmark until it matures (the 2021-3C tower notes at 2.593% run to October 2031, the 2021 senior notes at 3.125% to February 2029), that cheap financing is worth about $0.48 billion, so the effective debt is about $12.09 billion ($113.78 per share). Shares are worth about $205.10. Bear case. Churn stays elevated: no new growth for four years as EchoStar's leases are lost for good, international carriers keep consolidating, and U.S. carriers hold back new leasing. Growth then resumes at only 1.5% a year through year ten, and after that consolidation, which has already cost SBA the Sprint, EchoStar and Oi leases, keeps shrinking cash flow by 2% a year for thirty more years, with nothing credited beyond that. Refinancing happens at 6.6%, the rate SBA paid on its 2022-1C tower notes, for seven years after each maturity. The business is worth about $24.7 billion ($232.45 per share) and effectively owes about $12.48 billion ($117.42 per share), leaving about $115.03 per share. Even here cash flow covers interest about 3.5 times, so we see no refinancing crisis. What the bear case captures is heavy leverage (about 6.4 times annual cash operating earnings, as the company measures it) turning a moderate business shortfall into a large drop in share value. Bull case. Churn normalizes within the one to two years management describes, rent increases and amendment activity return to the pace of the early 2020s, and cash flow grows 3.5% a year for five years and 3% for the next five, then 1.5% a year for ten more before leveling off. We also credit a partial recovery of about $150 million from the EchoStar dispute, since EchoStar has received large proceeds from selling its spectrum. The business is worth about $40.0 billion ($376.72 per share), less the same $12.09 billion ($113.78 per share) of effective debt, or about $262.93 per share. We did not credit new tower construction (about 600 builds guided for 2026, and a seven-year right to build up to 2,500 sites for Millicom), further acquisitions or share buybacks in any case, because each depends on future spending we have not deducted. What could make this wrong. More than half of the value in every case comes from cash flows beyond ten years, so the result depends on towers staying the way wireless networks reach customers. Satellite-to-phone service and further carrier consolidation are the long-term threats. Currency matters too: roughly a fifth of revenue is earned in Brazilian reais, South African rand and other local currencies. Because the debt is large compared with the equity, a 10% change in the business's value moves the share value by about 15%. Margin-of-safety price. The downside case sits at roughly $115 and the base at roughly $205. Given the leverage, the ongoing churn and a value that leans on long-dated cash flows, the margin-of-safety price is about $135, which leaves room for much of the bear case while the base case implies a strong return from that price.