For SBA, winter isn't ending anytime soon

Tower giant SBA Communications does not expect US wireless network operators to resume spending this year.

"At this point, we're not necessarily forecasting a material pickup in activity. But to the extent there is that pickup in activity, it's mostly going to impact next year," said Brendan Cavanagh, the company's new CEO, during SBA's recent quarterly earning call, according to Seeking Alpha. Cavanagh was responding to a question about the company's outlook for tower deals in the US market.

Cavanagh's outlook clashes slightly with those of some financial analysts. For example, the financial analysts at Morgan Stanley wrote in a note earlier this year that "activity levels may have stabilized and are showing some early signs of improving trends."

The firm cited the results of its recent survey of cell tower operators in the US, which showed rising optimism amid improved sales. "These results are encouraging after a couple of tough quarters for the industry," they wrote.

The financial analysts at Wells Fargo also offered a more upbeat look on the US market in a recent note to investors.

Such outlooks follow a year when companies including SBA warned of a bigger-than-expected slowdown in spending among 5G network operators in the US. That slowdown is ongoing.

Related:SBA acknowledges 5G slowdown, but offers some hope

Indeed, company officials said SBA is embarking on a "strategic review" that could involve the company selling off businesses in either the US market or internationally. They offered few details or parameters around the effort, but argued SBA is working to focus on operations with a "stable growing cash flow stream."

"This ultimately means that we need to find a path to increase scale in certain markets or possibly exit a market. An example of this was our fourth quarter exit from Argentina," Cavanagh explained. "Not only was our market position subscale, but the economic instability in that country created operational challenges that were dilutive to the otherwise typically very attractive attributes of the tower business.

"We will pursue incremental investments to drive continued growth as we always have. But we will prioritize either an overall favorable shift in the quality and stability of our asset mix or an opportunistic investment that improves our standing and existing markets," he added.

Other Q4 takeaways

Despite those moves, SBA's fourth quarter earnings and 2024 outlook mostly matched with analyst expectations.

Interestingly, SBA officials said they're counting on a relatively small percentage of the company's 2024 revenues to come from Dish Network. "We do have some amount of growth in our model associated with Dish," Cavanagh said.

Dish remains in some amount of turmoil. The company has so far been unable to renegotiate the terms of its debt load, and Dish has been shedding top leadership. The latest: Sidd Chenumolu, VP of technology development, left the company.

Finally, SBA officials said they might be interested in purchasing tower assets from a network operator. But they said the company prefers acquisitions from independent tower companies. That's noteworthy considering both UScellular and Shentel, two relatively small US network operators, are selling their tower holdings.