SBA Communications Corp. (SBAC
) owns and operates cellular communications towers. All the major domestic wireless carriers lease space on SBA's towers to house key elements of their transmission networks. SBA's share price rose during the quarter, and throughout 2012, as the company's cash flow continued to be driven higher by the secular increase in data usage by smart phone customers.As consumers demand more wireless data bandwidth, carriers must augment their networks by placing more transmission equipment on towers, which generates high-margin, incremental cash flow for SBA. The company also has operations in several fast-growing international markets, and it just announced its first acquisition in Brazil. In addition, SBA may choose in the future to pursue conversion to a real estate investment trust (REIT), which we believe would lead investors to assign a higher multiple to the company's cash flows.
From Baron Funds' fourth quarter letter.