SBA Communications (SBAC 0.81%), a leading owner and operator of wireless communications towers, announced results for the second quarter on August 4, 2025. GAAP revenue was $698.98 million, above the expected $671.15 million (GAAP) and up 5.8% year over year. Diluted earnings per share (GAAP) were $2.09, above the $2.13 consensus (Non-GAAP) EPS estimate, but net income jumped 41.5% year over year. Adjusted Funds From Operations (AFFO) per share came in at $3.17, though declining from the prior year. Management raised financial guidance for full year 2025 across all key metrics, reflecting strong domestic demand, accelerated site acquisitions, and favorable leasing trends. The quarter showed solid progress in several business lines, despite margin pressures and increased interest costs.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Diluted (GAAP) | $2.09 | $2.13 | $1.51 | 38.5 % |
| Revenue | $698.98 million | $671.15 million | $660.48 million | 5.8% |
| Adjusted EBITDA | $475.5 million | $467.1 million | 1.8% | |
| AFFO per Share | $3.17 | $3.29 | (3.6 %) | |
| Tower Cash Flow | $511.2 million | $503.9 million | 1.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding SBA Communications and Its Business Model
SBA Communications owns, operates, and leases wireless tower infrastructure to mobile carriers and other wireless service providers. Its primary business is renting antenna space on its towers, a model that delivers stable, recurring revenue. Site leasing generates most of its operating profit, while the company also provides site development services, such as construction and network upgrades, to wireless carriers.
In recent years, SBA Communications has focused on three major areas: expanding its international tower footprint, maximizing tower capacity by increasing colocation (multiple tenants per tower), and securing long-term control of the land under its towers. The company also closely follows wireless technology trends, like the rollout of 5G networks, as these drive demand for more tower space and additional equipment installations.
Quarter Highlights: Growth Drivers and Strategic Moves
In Q2 2025, site leasing remained the core of SBA Communications' business, accounting for 97.4% of segment operating profit. Domestic site leasing revenue grew to $469.8 million, up 1.4% from a year ago. International site leasing revenue was $162.0 million, a slight decrease on a reported (GAAP) basis, but up 4.0% when adjusting for foreign currency movements. The tower cash flow margin, a key indicator of profitability for tower operations, held steady at 81.0% (non-GAAP).
The services segment, which includes site development, saw rapid growth as revenue nearly doubled to $67.2 million. This surge reflects increased carrier investment in network upgrades and new infrastructure. However, these projects have lower margins compared with core site leasing -- the spike in services revenue contributed to an overall decline in company-wide Adjusted EBITDA margin compared to Q2 2024.
The company accelerated the integration of more than 4,300 newly acquired sites from the Millicom deal several months ahead of schedule. This brought the total tower count up to 44,065 as of June 30, 2025. It also advanced plans to sell its Canadian tower assets, entering into an agreement on July 21, 2025 to sell all 369 towers and related operations in Canada, with the transaction expected to close in Q4 2025, expecting this divestiture to be immediately beneficial to AFFO per share after closing, as stated by management in the earnings release. These actions demonstrate a strategy of growing internationally while exiting less efficient markets to focus on higher-return regions.
Capital allocation remained active, with 799,000 shares repurchased and $1.45 billion authorized for future buybacks. Quarterly dividends held steady at $1.11 per share. The company maintained a high level of debt, with a net debt to adjusted EBITDA ratio of 6.5x, and net cash interest expense rose 23.2% year over year from Q2 2024 to $111.5 million. Management emphasized that the balance sheet remains strong.
Strategic Business Areas and Their Impact
Site leasing continues to dominate company profits, supported by the recurring nature of tower rental agreements with wireless carriers. This stability is underpinned by long-term contracts. SBA Communications closely monitors lease churn and seeks to add new tenants through strategic marketing and infrastructure upgrades.
International expansion is a core strategy. While most new towers come from acquisition -- as with the Millicom deal -- the company also constructs new sites in regions where wireless networks are maturing. Diversifying across 13 countries insulates SBA Communications from market-specific risks and taps into growing demand for wireless infrastructure in developing regions.
Maximizing tower capacity is another focus. By increasing the average number of tenants per tower, SBA Communications boosts revenue from existing assets with limited additional cost. About 75% of new U.S. leasing activity in Q1 2025 derived from colocations, which generate higher incremental revenue than simple contract amendments. Often prompted by requirements to meet 5G coverage mandates.
The company also invests in long-term land control through ownership and long-term leases. This provides operational security, cost predictability, and margin protection well into the future. About 72% of tower sites are on land with over 20 years of control remaining as of December 31, 2024, and the company reported ongoing spending to extend lease terms where possible.
Looking Ahead: Guidance and Market Trends
Management raised its full-year 2025 financial outlook, expecting total revenue (GAAP) to reach $2.78–2.83 billion, AFFO per share (non-GAAP) of $12.65–13.02, and adjusted EBITDA of $1.91–1.93 billion. These increases reflect strong current leasing backlogs, robust site development, early benefits from the Millicom site acquisition, and positive foreign currency effects. The Canadian asset sale, which is still pending, is not yet included in the outlook. But overall commentary remains constructive for continued growth in the U.S.
Key risks highlighted this period include margin pressures, flat-to-slow international organic growth due to carrier churn in markets like Brazil, and persistently high debt levels that heighten interest expenses. Nonetheless, strong domestic leasing demand, expanding service backlogs, and high levels of tower colocation suggest ongoing near-term growth. SBA Communications does pay a dividend, and the current quarterly dividend remains at $1.11 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
