01—Abstract
Summary
Summary of the 10-K filed February 27, 2009. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation (SBAC) reported a net loss of $46.8 milliona for 2008, improved from $77.9 million in 2007, while total revenues rose to $474.9 million from $408.2 million.
Site leasing revenue of $395.5 millionb drove results, and site leasing contributed 97.6% of segment operating profit. Adjusted EBITDA was $269.2 million, up from $209.4 million. Operating cash flow was $173.7 million, and the company owned 7,854 towers at year-end, up from 6,220 at the end of 2007, largely through acquisitions including Optasite and Light Tower.
The central investor concern is leverage and refinancing risk. Total indebtedness was $2.55 billionc at December 31, 2008, against shareholders' equity of $491.8 million. About $2.0 billion matures or has an anticipated repayment date within three years, including the 2005 CMBS Certificates ($391.8 million, anticipated repayment November 2010) and the 2006 CMBS Certificates ($1.1 billion, anticipated repayment November 2011).
The filing states that if the 2005 CMBS Certificates are not repaid by November 2010, substantially all cash flows from 4,969 towers will be trapped by the trustee. The filing also notes that the credit market crisis has adversely affected access to capital. The company has never paid a dividend and expects continued losses.
Its largest customers are Sprint (23.2% of 2008 revenue), AT&T (21.3%) and Verizon Wireless (11.2%). Management plans to build 80 to 100 new towers in 2009 and has limited 2009 cash capital expenditures to $36 million to $59 milliond in total, a range it reports as $6.0 million to $9.0 million non-discretionary plus $30.0 million to $50.0 million discretionary.
02—Key points
Key Highlights
- Net loss narrowed to $46.8 million in 2008 from $77.9 million in 2007, aided by a $31.6 million net gain from extinguishment of debt and write-off of deferred financing fees.
- Total revenues rose 16.4% to $474.9 million, led by site leasing revenue of $395.5 million, which grew 22.9%.
- Adjusted EBITDA increased to $269.2 million from $209.4 million, primarily from higher site leasing segment operating profit.
- Total indebtedness of $2.55 billion versus shareholders' equity of $491.8 million; approximately $2.0 billion matures or has an anticipated repayment date within three years.
- The 2005 CMBS Certificates' anticipated repayment date of November 2010 carries a cash-trap risk affecting cash flow from 4,969 towers if not repaid.
- Customer concentration is significant: Sprint (23.2%), AT&T (21.3%) and Verizon Wireless (11.2%) accounted for 2008 total revenues.
- Lehman Brothers' bankruptcy caused the termination of a convertible note hedge covering 55% of the 1.875% Notes' underlying shares and a $50.0 million lender default under the senior secured revolving credit facility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 27, 2009Financial Statements
| Revenue | $474.95M |
| SG&A Expenses | $48.72M |
| Operating Expenses | $429.37M |
| Operating Income | $45.58M |
| Interest Expense | $105.33M |
| Net Income | -$67.16M |
05—Questions
Frequently Asked Questions
How much debt does SBA Communications carry and when does it come due?
Total indebtedness was $2,554.7 million at December 31, 2008. As of February 24, 2009, $2.0 billion had an initial or anticipated maturity within three years, including $391.8 million of 2005 CMBS Certificates (anticipated repayment November 2010), $1.1 billion of 2006 CMBS Certificates (anticipated repayment November 2011), $104.2 million of 0.375% Convertible Senior Notes due November 2010, $230.6 million under the senior secured revolving credit facility and $149.0 million under the Optasite Credit Facility.
What happens if the CMBS Certificates are not repaid by their anticipated repayment dates?
The interest rate on each component increases by the greater of 5% or the amount by which the ten-year U.S. treasury rate plus the credit-based spread plus 5% exceeds the original rate. If the 2005 CMBS Certificates are not fully repaid by November 2010, substantially all cash flows from the 4,969 towers securing the certificates will be trapped and applied to repay the certificates, leaving access to cash flow from roughly 2,900 remaining towers for other debt and corporate expenses.
Is the company profitable, and does it pay dividends?
The company reported net losses of $133.4 million in 2006, $77.9 million in 2007 and $46.8 million in 2008, and it expects to continue incurring significant losses. It has never paid a dividend on any class of common stock and does not anticipate paying cash dividends in the foreseeable future.
How concentrated is the customer base?
Sprint accounted for 23.2% of 2008 total revenues, AT&T for 21.3% and Verizon Wireless for 11.2%. Site leasing revenue is concentrated similarly, with AT&T at 25.3% and Sprint at 25.1%. The filing notes that the loss of any significant customer could materially decrease revenue.
What are the company's 2009 capital spending and tower growth plans?
Management intends to build 80 to 100 new towers in 2009 and expects to limit cash capital expenditures to non-discretionary spending of $6.0 million to $9.0 million and discretionary spending of $30.0 million to $50.0 million, citing current credit market conditions. Tower acquisitions are expected to be limited to stock deals that are immediately accretive.
06—Continue