SBA Communications (SBAC) is a small player in a big and growing market. It’s the third-largest cell phone tower operator in the country after American Tower (AMT) and Crown Castle International (CCI).

The cell phone tower business basically prints money. Wireless carriers need more and more space on towers to transmit the exploding amount of data their customers call up on their smartphones and tablet computers.

With the carriers in the midst of launching fourth generation (4G) services, their demand for tower space should keep right on rising. SBA offers leases that range in duration from five to 25 years. The leases have price escalator clauses, so revenue growth for the company is virtually guaranteed.

The company is increasing its capacity. Its tower count increased 12 percent in the third quarter from a year earlier, a multi-year high for its growth rate.

As the smallest major player in the business, SBA still has plenty of room to expand. Its sites generally have more ground space, use younger towers, and have lower lease costs than its competitors, according to Morningstar.

Balanced growth

SBA also has the capacity to make acquisitions domestically and abroad. It recently picked up tower assets in Canada and Central America, which now account for almost 5 percent of the company’s total. Morningstar forecasts that the company’s future growth will be split equally between the United States and overseas.

SBA’s operating income totaled $27.6 million in the third quarter, up 33 percent from $20.7 million a year earlier. Revenue gained 11 percent to $175.6 million.

Standard & Poor’s analyst Jim Moorman has a four-star buy rating on SBA shares. “We view SBAC as one of the leading wireless tower operators, with attractive ownership and operation of sites mostly in the eastern part of the U.S., and consistent operating performance and increasing cash flow generation,” he wrote.

“We believe SBAC can boost its enterprise value as it increases gross revenue per tower and launches new markets.”

The company next reports earnings Feb. 23.