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Baron Asset Fund Comments on SBA Communications

- By Holly LaFon

Another top ten holding, SBA Communications Corp. (SBAC), is the third largest independent owner of wireless towers in the U.S., with a growing presence in Canada, Central America, and Brazil. SBA owns and operates over 25,000 towers in total. Because of regulatory and zoning requirements, supply is restricted, creating an advantage for existing tower operators like SBA. At the same time, demand in increasing as consumers use increasing amounts of wireless data bandwidth, forcing carriers to augment their networks. To increase network density, carriers lease space for equipment on towers. We think SBA can generate additional revenue from new lease and amendment activity, leading to strong cash flow growth. Given its strong balance sheet, we believe SBA has many opportunities to grow internationally, particularly in Brazil, where SBA has acquired over 5,000 towers.

From Baron Asset Fund first quarter 2017 shareholder letter.

This article first appeared on GuruFocus.