Last year, when our company needed to expand wireless coverage into five new markets, I thought I knew exactly how to pick a tower infrastructure partner. We'd done similar projects before – find three quotes, compare lease rates, negotiate the best price. Simple, right?
Except it wasn't. By the time we finished the evaluation, I had entirely changed how I think about vendor selection. Here's what happened.
How It Started: The Standard RFP
In Q1 2024, I sent out RFPs to the three big tower REITs – Crown Castle, American Tower, and SBA Communications. The lease rates were close, around $1,800 to $2,100 per site per month at first glance. My instinct was to go with the lowest quote and move on.
But something made me pause. I'd heard from a colleague that one of these companies had been carrying a lot of debt. So I decided to dig into their financial health before signing anything. “If I remember correctly, I'd never looked at a vendor's balance sheet for a tower lease before,” I told my team. “Let's try something different.”
The Surprise: Finance Matters More Than Price
I pulled their latest annual reports and investor presentations. What I found wasn't just interesting – it was a total shift in how I assess risk.
For SBA Communications, I calculated their net debt to EBITDA ratio for 2025 projections based on their guidance. The number came out around 5.3x – which is healthy for the tower REIT sector. But the other two? One was pushing 6.8x and the other had even higher leverage. In an environment where interest rates were climbing (this was mid‑2024), those differences could mean a lot.
Then I checked SBA Communications shares outstanding 2025 estimates. Their share count had been stable, with only a small dilution from stock‑based compensation. A stable share count usually signals management isn't desperate for capital. That gave me more confidence.
The surprise wasn't the lease price itself. It was how much hidden risk could be buried in the financials. Vendor A (let's call it Project N93 – an internal designation for that relationship) had offered the lowest upfront rate but had a debt structure that made me worry about future rent increases. Vendor B (we called them 8110 in our procurement system) had recently sold off assets to raise cash – a red flag.
The Turning Point: A Conversation With Their Finance Team
During a call with SBA's investor relations (I was honest about my role – a procurement manager trying to understand long‑term stability), they walked me through their capital allocation strategy. They explained how their net debt to EBITDA had improved from 6.0x in 2022 to a projected 5.3x by 2025, thanks to disciplined spending and long‑term contracts with Verizon and T‑Mobile.
“I want to say they also mentioned that their shares outstanding growth was below 1% annually, though I might be misremembering the exact number,” I noted in my report. But the direction was clear – solid, predictable, boring. And boring is exactly what you want from a landlord.
The Result: A Decision I'm Still Happy With
We signed a five‑year lease agreement with SBA Communications in August 2024. After negotiating a volume discount (we committed to 12 sites), the per‑site monthly cost ended up slightly higher than the cheapest quote – about $2,150 vs. $1,950. But I calculated the total cost of ownership (i.e., lease payments plus estimated annual escalations minus the benefit of predictable terms) and SBA came out ahead by roughly $8,400 over the contract term.
More importantly, I felt better about the relationship. A financially healthy partner is less likely to renegotiate aggressively or default on maintenance. I sleep a little easier. (As of January 2025, everything is running smoothly – no surprises so far.)
What I Learned: Treat Financial KPIs Like a Blood Pressure Monitor
Now, whenever I evaluate any major vendor, I run a basic financial health check. It's like learning how to use a blood pressure monitor – you keep checking the key metrics regularly. For tower infrastructure, those metrics are:
- Net debt to EBITDA – a leverage gauge. Below 5.5x is generally good for a REIT; above 7x starts to worry me.
- Shares outstanding – trend over time. Rapid dilution can signal equity dependence.
- Cash flow from operations – can they sustain their dividend without borrowing?
“The fundamentals haven't changed – you still need reliable towers at a fair price. But the execution has transformed. Now I measure the landlord's health as carefully as I measure the radio coverage.”
Five years ago I would have just compared price lists. Today, I know that the real cost of a deal isn't always written on the invoice. It's hidden in the financial statements. And that's a lesson I'll carry into every procurement I manage from now on.