SBA Communications expects roughly $56 million in revenue from DISH Network this year — money the tower company effectively counts as churn — while it waits on a 6G spectrum auction it hopes will restart US carrier leasing in late 2028 or early 2029.

Executive Vice President and Chief Financial Officer Marc Montagner laid out the timeline at an RBC communications infrastructure session. The Federal Communications Commission is expected to auction 160 megahertz of spectrum in the first half of next year. Clearing that spectrum will take about 18 months, he said, which pushes meaningful deployment activity — and the tower leasing that follows it — into late 2028 or early 2029. He suggested the auction could draw more than three bidders and potentially attract satellite operators.

The comment cuts to the core of the US tower market's current softness. Montagner described a familiar cycle: carrier capital spending rises after operators acquire spectrum and deploy a new technology generation, then falls during a subsequent "harvest" period. Capital expenditures at the three major US carriers have historically peaked at about 25% of revenue and dropped to roughly 15% in slower phases.

"In 2022, 2023, we were right at a 25% mark. Last year and this year, we were at about the 15% mark," Montagner said.

Growing at the trough

Even at the bottom of the cycle, SBA keeps adding leasing revenue. Montagner estimated domestic organic growth of about $35 million this year, down from approximately $78 million in 2022 but still positive in a market where carriers are cutting network budgets.

Carrier behavior is mixed. SBA's 10-year agreement with Verizon, signed last year, is performing well. The master lease agreement with AT&T runs through April 2028 and has been steady. T-Mobile has slowed somewhat this year as it prioritizes free cash flow.

Edge data centers: power and fiber in place, demand unclear

Montagner also pointed to edge computing as a longer-term opportunity. SBA believes about half of its tower sites could host a small data center at the base of the tower, where tenants would tap existing power, fiber and low-latency connectivity. Companies have already raised capital and are negotiating leases for mini data centers, he said.

But the demand picture remains vague. "When I ask them, 'Have you signed any, basically a retail customer or people are going to use that compute?' I get very fuzzy answers," Montagner said. He expects actual demand could emerge over the next year or so.

SBA plans to stay a passive infrastructure provider, leasing vertical tower space and horizontal ground space, and will supply power to edge tenants where requested because those facilities need relatively little of it.

Brazil consolidation and the Millicom build

Brazil accounts for about 15% of SBA's revenue and 15% of its tower cash flow. Montagner called the company bullish on the country long term but flagged churn from carrier consolidation in 2026 and 2027. 5G deployment in Brazil remains below 50%, and regulators impose coverage and deployment requirements on carriers. SBA holds about 12,000 towers there and does not expect to expand through mergers and acquisitions in that market.

Central America is a different story. SBA built 7,000 sites for Millicom last year under a 15-year, US-dollar-denominated contract that escalates with US CPI. Millicom has committed to another 2,500 build-to-suit sites, and the arrangement locks in high-single-digit net growth in dollar terms, Montagner said. He also agreed it could make sense to consolidate the portfolio and seek buyers for certain non-core smaller markets.

DISH exposure

Beyond the $56 million in expected DISH revenue this year, SBA had about $100 million in short-term leases with the operator and roughly $100 million in unpaid payments, for which it has filed a claim in bankruptcy court. "I have no idea what the recovery is going to be," Montagner said, calling any recovery immaterial to SBA. Equipment DISH left on SBA towers has been deemed abandoned: SBA removes and re-leases the space when demand appears, and otherwise leaves the gear in place.

Buybacks over debt paydown

SBA generates about $600 million of excess capital annually, Montagner said, based on roughly $1 billion in EBITDA against $250 million of maintenance capex, $530 million of dividends and $500 million of cash interest expense. The company paid down about $70 million of debt in 2023 and repurchased about $500 million of shares last year.

The arithmetic currently favors buybacks. SBA's AFFO per share is about $12, giving repurchases a yield above 6.5%, compared with debt recently raised at 5.25%. "Right now we're indexing towards share buyback," Montagner said, though he added the company will stay flexible depending on its share price, master lease opportunities and interest rates — a stance that could shift again once 6G spectrum deployment draws carriers back to tower sites toward the end of the decade.