SBA Communications Lowers Revenue Forecast Again Amid Sluggish 5G Leasing

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Wireless tower operator SBA Communications (SBAC.O) made headlines on Monday by once again reducing its annual revenue forecast. This revision comes on the heels of the company missing Wall Street’s revenue expectations for the second quarter, signaling a slowdown in 5G leasing activities. Consequently, SBA Communications’ shares experienced a decline of more than 4% in after-hours trading.

The adjustment to SBA Communications’ revenue outlook reflects the broader challenges faced by the industry, particularly due to high interest rates. These elevated rates have prompted wireless carriers to tighten their budgets following the initial surge in 5G network deployment, thereby affecting demand for tower services provided by companies like SBA Communications.

In a statement, CEO Brendan Cavanagh acknowledged the ongoing challenges: “New business execution in the US continued at a similar pace to the levels we have experienced over the last few quarters, and internationally, we saw a pick-up in new leasing activity.” This indicates that while the domestic market remains relatively flat, there is some positive movement abroad.

SBA Communications, which leases space and manages tower sites for major wireless carriers such as AT&T (T.N), T-Mobile US (TMUS.O), and Verizon Communications (VZ.N), now projects its annual revenue will range between $2.64 billion and $2.67 billion. This is a revision from its earlier forecast of $2.66 billion to $2.70 billion.

The company had already adjusted its revenue forecast in April. SBA Communications competes with other tower operators such as Crown Castle (CCI.N) and American Tower (AMT.N).

For the second quarter, SBA Communications reported a revenue of $660.5 million, marking a 3% decline compared to the same period last year. This figure fell short of analysts’ average estimate of $665.1 million, according to LSEG data. Despite this, the company reported adjusted funds from operations—a critical cash flow measure for real estate investment trusts (REITs)—at $3.29 per share, reflecting a 1.5% increase year-over-year.

The site leasing revenue for the quarter was recorded at $626.5 million, falling below the anticipated $629.5 million.