SBAC Q3 2025 Analysis: International Growth Fuels Revenue as Rising Costs Squeeze Profits

SBA Communications Corp (SBAC), a leading owner and operator of the wireless towers that power our mobile lives, recently released its financial results for the third quarter of 2025. This latest 10-Q filing offers a detailed look into the company's performance, revealing a story of strong top-line growth, particularly from international expansion, tempered by the pressures of rising costs in a high-interest-rate world. Let's dive into the numbers.

Revenue Growth Fueled by International Expansion

For the third quarter ended September 30, 2025, SBA Communications reported total revenues of $732.3 million, a healthy increase from $667.6 million in the same period last year. This growth was driven by solid performance across all its business segments.

The following flow diagram provides a visual breakdown of the company's revenues and expenses for the quarter.

The company's core business, Site Leasing, which involves renting out space on its towers to wireless carriers, continues to be the primary profit engine, contributing 97.5% of the total segment operating profit. Here's how it breaks down:

• Domestic Site Leasing: Saw modest growth of 1.1%, reaching $470.3 million. This reflects steady organic growth from new leases and escalators, though partially offset by the non-renewal of leases from Sprint.
• International Site Leasing: Was the star performer, with revenues jumping to $186.2 million. On a constant currency basis, this represents a significant 13.9% increase. This surge was largely driven by the acquisition of 5,133 towers since July 2024, including a major deal for 5,090 sites from Millicom.
• Site Development: This smaller segment, which provides services like network design and antenna installation, saw a massive 81.2% revenue increase to $75.9 million, indicating a pickup in activity from wireless carriers.

The Rising Cost of Doing Business

While revenue growth is strong, it didn't fully translate to the bottom line. Total operating expenses climbed from $292.0 million to $358.2 million year-over-year. Two key areas stand out:

• Interest Expense: This was a major headwind, increasing by 25.5% to $120.2 million. The rise reflects a higher average debt balance and the impact of higher interest rates, a common challenge for capital-intensive businesses today.
• Asset Impairment and Decommission Costs: These costs rose significantly to $20.3 million from $12.7 million last year. These charges are taken when the company determines that the future cash flows from certain towers may not be enough to recover their value on the books.

This combination of factors led to a decrease in quarterly net income, which came in at $240.4 million ($2.20 per share), down from $255.9 million ($2.40 per share) in the third quarter of 2024.

Strategic Moves and Shareholder Returns

SBAC is actively managing its global portfolio. The massive Millicom acquisition substantially expands its international footprint. At the same time, the company has been divesting assets, selling off its towers in the Philippines, Colombia, and, just after the quarter ended, in Canada. This suggests a strategic realignment to focus on core, high-growth markets.

Despite the pressure on net income, the company continues to generate strong operational cash flow. Management uses a non-GAAP metric called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to measure this operational performance. For the quarter, Adjusted EBITDA grew 4.0% on a constant currency basis to $493.3 million.

SBAC also remains committed to returning capital to shareholders, repurchasing $154.1 million of its stock during the quarter and maintaining its quarterly dividend of $1.11 per share.

Looking Ahead

SBA Communications' latest report highlights the dynamics of the current economic climate. The company is successfully executing a growth strategy through significant international acquisitions, leading to impressive revenue gains. However, the high cost of capital is a powerful counterforce, squeezing profitability. Investors will be closely watching how SBAC balances its ambitious expansion with the crucial task of managing its debt and navigating a challenging macroeconomic environment.