Q3 2024 Crown Castle International Corp Earnings Call
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Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star and then two.
Note. This event is being recorded I would now like to turn the conference over to Chris.
Speaker Change: Hendon.
Speaker Change: Vice President of corporate Finance and Treasurer. Please go ahead.
Chris Hendon: Thank you, Dave and good afternoon, everyone.
Chris Hendon: Thank you for joining us today as we discuss our third quarter 2024 results with me on the call. This afternoon are Stephen Moscowitz Crown Castle's Chief Executive Officer, and Dan Schlanger Crown Castle's Chief Financial Officer.
Chris Hendon: To aid the discussion we have posted supplemental materials in the investors section of our website at Crown Castle Dot com that will be referenced throughout the call.
Chris Hendon: This conference call will contain forward looking statements, which are subject to certain risks uncertainties and assumptions and actual results may vary materially from those expected.
Chris Hendon: Information about potential factors, which could affect our results is available in the press release and the risk factors sections of the company's SEC filings.
Chris Hendon: Our statements are made as of today October 16, 2024, and we assume no obligation to update any forward looking statements and.
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Chris Hendon: In addition, today's call includes discussions of certain non-GAAP financial measures tables reconciling. These non-GAAP financial measures are available in our supplemental information package in the investors section of the company's website at Crown Castle Dot Com with that let me turn the call over to Steven.
Steven: Thank you, Chris and good afternoon, everyone.
Steven: I am pleased to report that for the third quarter, our teams delivered solid operating and financial performance across our towers and fiber businesses, including small cells and fiber solutions, which allows us to reaffirm our full year 2020 for outlook for adjusted EBITDA and <unk>.
Steven: We continue to expect consolidated organic revenue growth of approximately 5% for the full year 2024, which includes growth of four 5% in towers, 10% in small cells and 2% in fiber solutions.
Steven: Our results in this quarter validate our ability to continue to deliver for our customers and shareholders, while implementing the significant changes to how we operate and invest in our business that we announced in June.
Steven: Our performance also demonstrates our ability to generate consistent underlying growth through wireless generational upgrade cycles and the ongoing demand for broadband connections.
Steven: Looking out over the next several years, we continue to be excited about the prospects for continued demand of our assets since mobile devices have become essential tools for communication information Entertainment and we continue to see more data moving than ever before across wireless and wired networks.
Steven: TIAA the cellular telephone industry Association recently reported that U S. Wireless data usage surpassed 100 trillion megabytes in 2023, marking a 30% 36% increase from the prior year. This is the largest year over year increase in <unk>.
Steven: Absolute data usage in the history of the U S wireless industry.
Steven: Continuing three decades of robust growth in mobile data traffic.
Steven: With wired networks broadband usage in the U S is also experiencing a continuous surge as businesses embrace heavy data consumption and fiber optics continues to be firmly established as the leading wire technology to transmit greater amounts of data at the highest possible speeds.
Steven: With these trends before us and the industry forecasts, suggesting that wireless and wired data demand will drive significant network investments by our customers to keep pace.
Steven: We are confident that our towers small cells and fiber assets are positioned well to benefit from these data usage tailwind.
Steven: In addition to these demand oriented drivers, we expect to capitalize on future growth and drive value creation across <unk> across each of our businesses as we continue to strengthen our own market position and relationships with our leading carrier customers. We believe that our current efforts underway to mark.
Steven: <unk>, our organization and our strategy will ultimately bolster the long term strength and stability of our cash flows and enable us to capture incremental revenue growth.
Steven: Let me briefly outline some ways that we are evolving.
Steven: Starting with the tower business, we've recently announced an organizational change that I'm excited about we're welcoming back kathie Shea as leader of our tower business.
Steven: She will succeed Mike Cavanaugh, who is retiring after 14 successful years with Crown Castle and behalf of the Crown Castle team I want to thank Mike for his many contributions over the years and wish him the best in whatever future endeavors. He pursues.
Steven: With Cathy she brings significant sector experience, having started in the tower business way back in 2001, and she has deep institutional knowledge and strong relationships within crown castle's workforce and among crown castle's wireless customer base from her previous 12 year tenure at our company.
Steven: We have the benefit of having Kathy and Mike worked together over the next couple of months to ensure a smooth transition.
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Looking ahead, we are committed to building on the strengths of our company, particularly in serving wireless carrier customers as a trusted infrastructure partner built on quality service and integrity.
Steven: <unk> I heard from an executive at one of our large national wireless carriers that our teams are recognized for being thoughtful for being communicative and for being dedicated to meeting their needs feedback that reinforces our approach.
Steven: As we move forward critically important to our success in towers is revenue growth.
Steven: So we will be even more laser focused on securing new organic revenue opportunities.
Steven: One initiative that we are accelerating to help us to achieve our goal is digitizing our tower portfolio.
Steven: Using the latest and drone technology and enhanced automation of our it infrastructure. Our teams are capturing digital images of our towers, which allows us to visualize marketable space and access reliable data more efficiently.
Steven: We believe this will help us make faster and more informed commercial decisions make our sites more friendly for co location accelerate customer application to installation cycle time and speed up the customer construction and installation process, while keeping issues at our sites to a minimum.
Steven: All of this is expected to lead to improved project management capabilities. So it is more seamless for our customers to add equipment or co locate on our sites.
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Steven: We're also developing a new state of the art processing software tool that our tower field technicians, we will use for tracking and expediting customer service requests and site events to operate more effectively and efficiently across our vast footprint.
Steven: Refining our processes and leveraging technology will make it easier for our employees to deliver better for our customers all in an effort to be known as a trusted supplier. So we can win more business and drive profitability.
Steven: In addition to operational improvements. We also plan to continue relying on comprehensive MLA is with our largest customers.
Steven: By having these agreements in place we expected benefit from more stable and predictable revenue growth over time, while making it easier for our customers to budget their capital and operating dollars and also making it easier for our customers to access our sites promptly and with fewer hassles.
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Steven: When combined with our operating improvements we believe these agreements will help us win a greater share of the market going forward.
Steven: As we shift our focus to our fiber and small cell businesses I want to reiterate points from our last earnings call.
Steven: Our operational review of the fiber segment confirm that our assets are in excellent strategic locations and equipped with the capacity necessary to support both existing and expanding wireless and broadband customers.
Steven: Based on the virtues of our fiber footprint, we announced in June that we revised our operating strategy with a goal of maximizing financial returns on our investments.
Our revised strategy includes focusing on opportunities to capture market share by selling more new business within and near our existing footprints.
Steven: We believe this approach positions us to achieve higher returns in both small cells and fiber solutions and drives increased cash flow for our business.
Steven: So that end, we have completed successful discussions with our customers and identified approximately 7000 nodes in our contracted backlog that we along with our customers have mutually agreed to cancel.
Steven: These nodes, where largely greenfield builds and locations that had countless zoning and permitting delays.
Steven: Or in high cost markets that did not meet our investment parameters and required a higher than normal capital investment from our customers.
Steven: By removing these low yielding anchor nodes from our backlog, we expect to save about $800 million.
Steven: Future capital spend.
Steven: Okay.
Steven: So after making these changes our backlog now stands at approximately 40000 nodes.
Steven: With an improved risk return profile since most of this backlog or co locations, which allows us to add revenue with less capital investment.
Steven: We continue to believe that persistent growth in U S. Mobile data demand will necessitate additional network capacity and Densification that macro towers alone cannot provide particularly in densely populated areas where demand is most concentrated.
Steven: As carriers continue to deploy the mid band spectrum Densification will eventually play an increasingly vital role in enhancing network performance and looking ahead, we remain confident in the market potential for these low profile fiber fed cell sites.
Steven: Moving on let me provide you with an update on our fiber solutions business, which focuses on delivering high bandwidth communications connectivity to enterprise customers.
Steven: Our primary clients include wireless and wholesale carriers government entities healthcare providers educational systems financial institutions and other large organizations.
Steven: Like we have done in our small cell business. We have recently made changes to enhance the profitability and efficiency of our fiber solutions offering.
Steven: We are we are prioritizing co location activities within our existing footprint working closely with our customers to capitalize on what we call on net and near net opportunities in and around our networks.
Steven: This strategy is enabling us to grow revenues with reduced capital investment compared to previous years.
Steven: Since implementing these operational changes in June we've been encouraged by the early results in the third quarter, we delivered 2% organic growth excluding $4 million of prior period revenue adjustments and we expect to deliver 2% growth for <unk> for full year 2024, excluding the impact of some.
Steven: Sprint cancellations.
Steven: Our thesis is driven by emerging trends that indicate promising growth potential demand drivers, including from AI suggests that the need for data transport will continue to rise and our connection hubs in major cities are well positioned to meet this demand.
Steven: And our revised operational strategy should drive higher profitability, allowing us to capitalize on these positive demand trends to generate sustainable growth.
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Steven: Lastly, I'd like to provide a very brief update on the ongoing strategic review.
Steven: As I've mentioned before this process is active.
Steven: And we are diligently evaluating our options.
Steven: We are considering various paths, including potential divestitures.
Steven: Continued growth or partnerships with strategic or financial investors.
Steven: Our board of directors is committed to concluding this evaluation with the goal of unlocking the full value of these businesses.
Steven: As I conclude my comments I want to highlight three points first in.
Steven: And the business of creating value with long term assets and long term contracts with our carrier customers.
Steven: Changes don't occur so quickly.
Steven: The management team and I recently set some initial goals in motion and are making important decisions to change the trajectory of this company's success.
Steven: While it will take time, we believe we are on the right track as we reassess our businesses adjust our capital allocation strategies and improve how we operate.
Steven: Second as we continue to implement changes to our operating plans, it's crucial to acknowledge the effort of our employees the effort that they've put into delivering our third quarter results. Thank you to everyone for your hard work.
Steven: Lastly, we were also thinking about all of those affected by the devastation and loss from Hurricanes, Helene and Milton and I would like to give a special thanks to many on our Crown Castle team, who worked with great urgency through challenging conditions in some dealing with personal impacts.
Speaker Change: Hello, what color are you looking for?
Steven: But they stayed safe and they maintained our communications infrastructure, which is even more essential in connecting people communities and emergency services during and after these tragic types of events.
Speaker Change: Now I'll turn it over to Dan to walk us through the details of the quarter.
Dan Schlanger: Thanks, Steven and good afternoon, everyone.
Dan Schlanger: We delivered third quarter results in line with expectations as we continued to perform well while implementing the meaningful changes in our operating plan announced in June.
Dan Schlanger: Demand for our assets remains strong in the third quarter, allowing us to maintain our 2020 for outlook for site rental revenues adjusted EBITDA and <unk>.
Dan Schlanger: Sure.
Dan Schlanger: We did however, lower our 2020 for outlook for net income to reflect the impact of a $125 million to $150 million asset write off anticipated in the fourth quarter related to reductions in our small cell business.
Dan Schlanger: As part of the changes to our operating plan, we announced in June we have been working with our customers on reducing contracted nodes with higher than expected deployment costs that negatively impacted both our customers' economics and our expected returns.
Dan Schlanger: Consequently, we have mutually agreed to cancel approximately 7000 contracted small cell nodes previously in our backlog.
Dan Schlanger: These nodes, which were concentrated in a limited number of markets would have required more than $800 million of anticipated capital expenditures, primarily in 2025 and 2020.
Dan Schlanger: That was expected to generate.
Dan Schlanger: Average yields below our previous return thresholds of 6% to 7%.
Dan Schlanger: After meeting these canceled nodes, we now have approximately 40000 small cells in our backlog more than 70% of which are co location notes.
Dan Schlanger: We believe our revised backlog is sufficient to enable us to deliver double digit organic revenue growth over the next several years, while the improved proportion of co location nodes will generate expected returns in excess of the returns we've generated historically.
Dan Schlanger: Moving onto our results in the quarter and turning to page four in our earnings materials.
Dan Schlanger: Excluding the impact of sprint cancellations, we delivered five 2% consolidated organic growth in the third quarter, consisting of four 3% from towers, 25% from small cells and 1% from fiber solutions.
Dan Schlanger: I want to point out two things that impacted our organic growth in the quarter.
Dan Schlanger: First our small cell growth included $15 million of previously disclosed nonrecurring revenues primarily related to early termination payments.
Dan Schlanger: Without which we would have grown the business a little over 11%.
Dan Schlanger: And second our fiber solutions revenues were negatively impacted by $4 million due to adjustments related to prior period revenues.
Dan Schlanger: Excluding these out of period adjustments fiber solutions organic growth was 2%.
Dan Schlanger: Seeding the expectations outlined when announcing the changes to our operating strategy in June.
Dan Schlanger: Adjusted EBITDA increased 3% compared to third quarter 2023, as revenue growth and cost savings related to the reduction in force we implemented as part of our revised operating strategy were partially offset by noncash items and onetime costs, including a $49 million reduction in straight line revenues in prepaid.
Dan Schlanger: Amortization in.
Dan Schlanger: $6 million of additional advisory fees, primarily related to our recent proxy contest.
Nonrecurring net revenues primarily related to early termination payments without which we would have grown the business a little over 11%.
Dan Schlanger: On page six our expected organic contribution to full year site rental billings remains unchanged with consolidated organic growth of 5%, excluding the impact from sprint installations.
And second our fiber solutions revenues were negatively impacted by $4 million due to adjustments related to prior period revenue.
Excluding these out of period adjustments fiber solutions organic growth was 2% exceeding the expectations outlined when announcing the changes to our operating strategy change.
Dan Schlanger: The 5% consolidated organic growth consists of four 5% from towers compared to 5% in 2023 <unk>.
Dan Schlanger: <unk>, 15% from small cells as we expect 11000 to 13000, new revenue generating nodes in 2024 compared to 8000 nodes in 2023, and 2% from fiber solutions compared to flat in 2023.
Adjusted EBITDA increased 3% compared to third quarter 2023, as revenue growth and cost savings related to the reduction in force we implemented as part of our revised operating strategy were partially offset by noncash items and onetime costs, including a $49 million reduction in straight line revenues in prepaid rent.
Dan Schlanger: As announced in June to small cell organic growth of 15% includes a $22 million increase in nonrecurring revenues primarily related to early termination payments.
Amortization.
And $6 million of additional advisory fees, primarily related to our recent proxy contest.
Dan Schlanger: Excluding this impact small cell organic growth is expected to be 10% this year.
Dan Schlanger: Moving to page seven we continue to expect to deliver $108 million of <unk> growth at the midpoint, excluding the impact of sprint cancellations and the noncash decrease in amortization of prepaid rent.
On page six our expected organic contribution to full year site rental billings remains unchanged with consolidated organic growth of 5%, excluding the impact from sprint cancellations the.
Dan Schlanger: Turning to the balance sheet in August we raised $1 $25 billion.
5% consolidated organic growth consists of four 5% from towers compared to 5% in 2023.
Dan Schlanger: Long term fixed rate debt, allowing us to end the quarter with an average maturity of seven years, 90% fixed rate debt and approximately $5 $7 billion of availability under our revolving credit facility with only $1 2 billion of debt maturities through 2020 for us.
15% from small cells as we expect 11000 to 13000, new revenue generating nodes in 2024 compared to 8000 nodes in 2023, 2% from fiber solutions compared to flat in 2023.
As announced in June the small cell organic growth of 15%.
Dan Schlanger: In addition, we ended the third quarter with leverage at five five times net debt to EBITDA a reduction from five nine times in the second quarter of this year.
<unk> includes a $22 million increase in nonrecurring revenues primarily related to early termination payments exclude.
Dan Schlanger: We expect to remain close to this level the remainder of the year as we continue to benefit from solid organic growth and operating cost reductions.
Excluding this impact small cell oriented growth is expected to be 10% this year.
Moving to page seven we continue to expect to deliver $108 million of <unk> growth at the midpoint, excluding the impact of sprint cancellations and the noncash decrease in amortization of prepaid rent.
Dan Schlanger: Lastly, our 2020 for outlook for discretionary capital remains unchanged at one two to one 3 billion.
Dan Schlanger: Our $900 million to $1 billion net of $355 million of prepaid rent received.
Turning to the balance sheet in August we raised $1 5 billion.
Dan Schlanger: To wrap up the business continues to perform well delivering solid organic growth and keeping us on track for our full year outlook.
Long term fixed rate debt, allowing us to end the quarter with an average maturity of seven years, 90% fixed rate debt and approximately $5 7 billion of availability under our revolving credit facility with only $1 $2 billion of debt maturities through 2025.
Dan Schlanger: We remain encouraged by the early results of the operating plan changes, we announced in June and the progress we have made with our customers to prioritize on and near net opportunities in small cells and fiber solutions.
In addition, we ended third quarter with leverage at five five times net debt EBITDA.
Dan Schlanger: Specifically, we are on track to deliver $65 million of operating cost reductions compared to the $60 million, we had originally forecast.
Reduction from five nine times in the second quarter of this year, we expect to remain close to this level the remainder of the year as we continued to benefit from solid organic growth and operating cost reductions.
We have been able to generate better than expected fiber solutions growth, while changing the focus of our fiber sales team to improve the capital efficiency of the business.
Dan Schlanger: We believe we will deliver to deliver on our expectation to reduce our 2024 net capital expenditures by $300 million.
Lastly, our 2020 for outlook for discretionary capital remains unchanged at one two to $1 3 billion.
Compared to our initial full year 2024 outlook and we have mutually agreed with our customers to cancel approximately 7000 contracted nodes, reducing our future capital requirements by approximately $800 million.
Our $900 million to $1 billion.
Net of $255 million of prepaid.
Prepaid rent received.
To wrap up the business continues to perform well delivering solid organic growth and keeping us on track for our full year outlook.
While improving the expected returns in the business.
We remain encouraged by the early results of the operating plan changes, we announced in June and the progress we have made with our customers to prioritize on and near net opportunities in small cells and fiber solutions.
Dan Schlanger: These results are in line with or better than what we had announced in June and are a testament to how dedicated our teams are to deliver for our customers while implementing these meaningful changes.
Dan Schlanger: Looking ahead, our focus remains on maximizing shareholder value by continuing to progress the fiber strategic review and delivering operational and financial results across our portfolio of tower small cell and fiber solutions assets.
Specifically, we are on track to deliver $65 million operating cost reduction compared to the $60 million. We had originally forecast we have been able to generate better than expected fiber solutions growth, while changing the focus of our fiber sales team to improve the capital efficiency of the business.
Dan Schlanger: With that Dave I would like to open the call for questions.
We believe we will deliver to deliver on our expectation to reduce our 2024 net capital expenditures by $300 million compared to our initial full year 2024 outlook and we have mutually agreed with our customers to cancel approximately 7000 contracted nodes, reducing our future capital requirements by approximately $800 million.
Speaker Change: We will now begin the question and answer session to ask a question Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star and then two are.
While improving the expected returns in the business.
First question comes from Ric Prentiss with Raymond James. Please go ahead.
These results are in line with or better than what we had announced in June and are a testament to how dedicated our teams are to deliver for our customers while implementing these meaningful changes.
Ric Prentiss: Thanks, Good afternoon everybody.
Ric Prentiss: Correct.
Ric Prentiss: Glad to hear your team made it through Hawaiian and Milton Okay.
Looking ahead, our focus remains on maximizing shareholder value by continuing to progress the fiber strategic review and delivering operational and financial results across our portfolio of tower small cell and fiber solutions assets.
Speaker Change: Storms, Florida based firm Raymond James needed to so we always are thankful thankful for those of us on the Gulf Coast and we made it okay. So glad to hear your team's got it.
Speaker Change: Questions. Thanks for all the detail on the small cell.
With that Dave I would like to open the call for questions.
Speaker Change: 7000 cut for mostly Greenfield stock so it sounds like Theres no early termination fee for you guys to cancel it would be if a carrier canceled because the carriers are going to get some savings two words like they don't have to pay as much upfront capital reimbursement for building, even though does that kind of the right way to think about why the carriers agreed.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two.
To this reduction.
Our first question comes from Ric Prentiss with Raymond James. Please go ahead.
Speaker Change: It's somewhat difficult for us to get ahead of the carriers and tells you why they did something but I believe that we wouldn't have been able to mutually agreed to a cancellation if it didn't help them and didn't help us in a way that we both sell value.
Thanks, Good afternoon everybody.
Alright.
Glad to hear your team made it through Helane.
Okay.
Tough storms, Florida based firm Raymond James needed to so we always are thankful thankful for those of us on the Gulf Coast. We made okay. So glad to hear thanks guys.
Speaker Change: We did not pay any early termination fees I can definitely I can agree to that and say that that's true.
Speaker Change: But what I would take away from this is there is going to in this case, what we're looking at is.
Questions. Thanks for all the detail on the small cell.
Speaker Change: In certain areas. The overall cost of getting these nodes built was higher than anybody would have expected, which impacted both our returns and anticipated impacted their economics, as well, which led them to get to the conclusion, we got two which was better it was better in all of our interest not to continue with these specific nodes.
Cut for the emotional Greenfield.
So it sounds like Theres no early termination fee for you guys to cancel it like it would be if a carrier canceled because the carriers are going to get some savings to where it's like they don't have to pay as much upfront capital reimbursement for building, even though does that kind of the right way to think about why the carriers agreed to.
Speaker Change: They are in places, where we've just been taking so long because of the zoning and permitting issues and other.
To this reduction.
Speaker Change: Other issues, we were running into that just didn't make sense to try to pursue these anymore and I think that that was the same concepts at our customers had as we had and we just mutually agreed that these were not good things to continue to try to do.
It's somewhat difficult for us to get ahead of the carriers and tells you why they did.
But I believe that we would've been able to mutually agreed to a cancellation if it didn't help them and it didn't help us in a way that we both saw value.
Speaker Change: Okay. It makes sense and it looks like combined between the $800 million of avoided Capex I.
We did not pay any early termination fees I can definitely I can agree to that and say that that's true.
Speaker Change: I guess I had 125 to 151 is a lot of probably capex that went to work in progress.
But what I would what I would take away from this is there is going to in this case, what we're looking at it.
Speaker Change: <unk> might have looked like they were costing like over 130000 per node is that a way of thinking about it.
In certain areas. The overall cost of getting these nodes built was higher than anybody would have expected, which impacted both our returns and.
Speaker Change: Yes, I had been built the math you did is right yes.
Speaker Change: What I would say is like like we mentioned these were in some pretty high cost areas. So the fact I cant.
Anticipated impacted their economics, as well, which led them to get to the conclusion, we got two which was better it was better in all of our interest not to continue with these specific nodes.
Speaker Change: <unk> had a really hard time trying to get to an average cost per node, that's a difficult concept across the country, but I would say these are on the high end of the of what we would experience to build.
Or they are in places, where there's just been taking so long because of the zoning and permitting issues and other.
Because they were in high cost areas and it led to the conclusion for both us and our customers that these were okay to cancel is because they were such a high cost.
Other issues, we were running into that just any sense to try to pursue these anymore and I think that that was the same concept that our customer had is we had and we've just mutually agreed that these were not good things to continue to try to do.
Speaker Change: Makes sense second question for me is on the strategic review I know Theres not a lot you can talk to you there yet but can you help us understand Steve you've been on board gosh, six months seems like forever, I guess, but just six months.
Okay. It makes sense and it looks like combined between $800 million of avoided Capex I.
I guess 125 to 150 miles of a lot of probably Capex that went to work in progress.
One of the long poles in the process to getting the strategic review over the finish line and also has there been any like major or any conditions and have changed as you guys have looked at the process. It's been almost a year probably in that.
<unk> might have looked like they were costing like over 130000 per node is that a way of thinking about it.
Yes, I had been built.
The math that you did is right yes.
I would say is.
Like I like I mentioned these were in some pretty high cost areas. So the fact I cant.
Speaker Change: Certainly.
Speaker Change: I mean, there's obviously a number of things that have changed over the last year and first and foremost is.
We had a really hard time trying to get to an average cost per node, that's a difficult concept across the country, but I would say is are on the high end of the of what we had experienced the bill.
Speaker Change: We got a lot of good information from the operational review.
Because they were in high cost areas in Atlanta.
Conclusion for both us and our customers that these were okay to cancel because they were such a high cost.
Speaker Change: And that helped set us up to make some key decisions.
Speaker Change: In the spring and the summer to help drive more profitability to those businesses.
Second question for me is on the strategic review I know Theres not a lot you can talk to there yet but can you help us understand Steven about gosh. It seems like Robert just six months.
Speaker Change: All along as we were engaged with conversations with.
Speaker Change: Potential suitors.
What are the long hauls and the process to getting the strategic review over the finish line.
Speaker Change: So there is also inflation that started too.
Speaker Change: We reduced our debt interest rates.
And also have there been any.
Speaker Change: We have started to subside a little bit I mentioned the change in our capital strategy. So there were a number of different things that have occurred over the year and all of that to some degree plays in our thought process as we're trying to evaluate.
Major any conditions that have changed as you guys have looked at the process. It's.
It's been almost a year probably in that.
Certainly.
I mean, there's obviously a number of things that have changed over the last year and first and foremost is.
Speaker Change: The best possible outcome for our shareholders with.
Speaker Change: With making final decisions on on this process.
We got a lot of good information from the operational review.
Speaker Change: Okay any other long hauls to the town as far as thinking when the review would be something we on the outside will get here about.
And that helped set us up to make some key decisions.
In the spring and the summer to help.
Drive more profitability to the businesses.
Speaker Change: I'd say that there's a lot of polls.
All along as we were engaged with conversations with.
Speaker Change: Maneuvering through Rick This is a very complex.
Potential suitors.
So there is also inflation that started too.
Speaker Change: Situation and we're just trying to do our best to make sure.
We reduced interest rates.
Speaker Change: When we make the best possible decision to create the <unk>.
Darted subside a little bit I.
Speaker Change: Best long term outlook for our shareholders.
I mentioned the change in our capital strategy.
Speaker Change: That's the key for all of Us.
So there were a number of different things that have occurred over the year and all of that to some degree plays in our thought process as we're trying to evaluate.
Speaker Change: So I really can't.
Speaker Change: You can provide any type of timing, but we'd like to get this done as everybody in our company, we'd like to get this done as soon as we can.
The best possible outcome for our shareholders.
With.
With making final decisions on on the process.
Makes sense and glad to young teams all well through the existing natura.
Natural disasters and appreciate on roofing, maybe to keep our networks working thanks, guys. Thanks, Thanks and Youtube.
Okay any other long poles to the tender as far as thinking when the review would be something we on the outside we will get to hear about.
Speaker Change: The next question comes from Simon Flannery with Morgan Stanley. Please go ahead.
Because a lot of holes.
That's fair.
Rick This is a very key.
Simon Flannery: Great. Thank you very much good evening.
Complex.
Simon Flannery: I was interested in the carrier activity levels. It looked like the services business had picked up some from the first half of the year and obviously dish copter extension from the FCC, we saw Ericsson, calling out some increased spend by AT&T. So how are you thinking about the level of activity.
The situation and we're just trying to do our best to make sure.
Again, we make the best possible decision to create.
That's a long term outlook for our shareholders.
That's the key for all of Us So I really can't.
Sure.
You can provide any type of tie.
Simon Flannery: This year and then just conversations about.
Timing, but we'd like to get this done.
Simon Flannery: Continuing to densify.
Has everybody our company, we'd like to get this done as soon as we can.
Simon Flannery: How to do more.
Simon Flannery: On that side and then just a housekeeping item I think John you said, 11% to 13000, New notes. This year is that a good run rate from here with that 40000 backlog or is that impacted by the 7000 cancellations. Thanks.
Makes sense I'm glad again teams all well through the system.
Natural disasters and appreciate on roofing, maybe to keep our networks.
Thanks, Thanks in Utah.
Speaker Change: Yes, so I'll address that.
The next question comes from Simon Flannery with Morgan Stanley. Please go ahead.
Speaker Change: I'll address the first part of your first question I will answer your second question I'll kick it just even over for for more of the activity levels.
Great. Thank you very much good evening.
Speaker Change: Youre right the services level.
I was interested in.
Speaker Change: Gross margin did pick up in the third quarter.
Carrier activity levels look.
Speaker Change: A lot of that was kind of timing related pulling in some things from the fourth quarter into the third quarter.
Like the services business have picked up some from the first half of the year and obviously <unk> got their extension from the FCC, we saw Ericsson, calling out some increased spend by AT&T. So how are you thinking about the level of activity.
Speaker Change: We did not change the range of what we thought our services.
Speaker Change: Our services gross margin will be for the year.
Speaker Change: And what I would say is that happens in that business. So we expect to kind.
And then just conversations about.
Speaker Change: Kind of a run rate similar to what we've seen in the past and I'll, let again I'll, let Stephen talk to activity levels in the second I just wanted to do the housekeeping items of 11% to 13000.
Continuing to densify.
To do more on that side and then just a housekeeping item I think Daniel said, 11% to 13000, new nodes. This year is a good run rate from here with that 40000 backlog or is that impacted by the 7000 cancellations.
Speaker Change: We still believe that 11 to 13000 is an appropriate goal and outlook for 2024.
Speaker Change: Can't really speak to what the what the right run rate will be going into 2025, but we will give guidance in three months and clarify that when we do so for 2025, great yes, okay.
Yes, so I'll address it.
So the first part of your first question I'll address your second question I'll kick it to Stephen over for for more of the activity levels.
Simon Flannery: Simon so a little bit of color I guess on on demand I mean, this year from our perspective is playing out pretty much as we expected.
Right the services level.
Margin did pick up in the third quarter.
Lot of that was timing related pulling in some things from the fourth quarter into the third quarter.
Simon Flannery: With active kind of moderate application in leasing volume.
We did not change the range of what we thought our services.
Simon Flannery: And it is this type of steady state activity that is more consistent with what we saw in the second half of last year.
Services gross margin will be for the year.
And what I would say is that happens in that business. So we expect to.
Simon Flannery: Today, we're in the beginning actually of our stages of budgeting for next year. So our commercial teams are out speaking with their counterparts at the carriers.
And have a run rate.
To what we've seen in the past.
And I'll, let again I'll, let Stephen talk to activity levels in the second I just wanted to do the housekeeping item. So the 11 to 13.
Simon Flannery: They are gaining insight about what their capital budgets that may look like.
Simon Flannery: Which geographies that may be spending more or less on the.
We still believe that 11 to 13000 is an appropriate goal and outlook for 2024.
Simon Flannery: The cadence of their <unk> overlay is so all of that together by the end of January when we provide guidance, we should pretty in relatively good shape.
It really speak to what the what the right run rate will be going into 2025, but we will give guidance in three months.
Clarify that when we do so for 2025, great yes, okay.
Simon Flannery: To provide a range that we have confidence in us as we work through 2025 and again.
Simon so a little bit of color I guess on on demand I mean, this year from our perspective is playing out pretty.
Simon Flannery: We believe that since most of the carriers still have lots of work to do to complete their <unk> overlay cycle with their C band spectrum and as I mentioned in my opening remarks consumers continue to drive significant demand for greater Megabits and gigabit bits for that matter of data faster speeds.
Pretty much as we expected.
With active kind of moderate application in leasing volume.
And it is this type of steady state activity that is more consistent with what we saw second half of last year.
Today, we're in the beginning actually of our stages of budgeting.
For next year. So our commercial teams are out speaking with their counterparts at the carriers.
Simon Flannery: It just it only means more pressure being put on the networks, which gives us continued confidence.
They're gaining insight about what the capital budgets that may look like.
Simon Flannery: The ongoing need for carriers to invest.
Which geographies that may be spending more or less on.
Simon Flannery: Wireless infrastructure.
Simon Flannery: And.
The cadence of their <unk> overlay is so all of that together by the end of January when we provide guidance, we should pray in relatively good shape to.
Simon Flannery: Types of assets that we have to offer.
Speaker Change: And when do you think you can get the benefits from the digitizing the tower portfolio. It sounds like an interesting opportunity, but it is not a <unk>.
Speaker Change: <unk> term or can you see some of that next year.
To provide a range that we have confidence in us as we work through 2025 and again we.
Speaker Change: I mean, I think there's can be some quick hits.
Speaker Change: Leapt out of it but it's more I think what I've tried to convey to folks is it's going to take time.
We believe that since most of the carriers still have lots of work to do to complete the <unk> overlay cycle with the C band spectrum and as I mentioned in my opening remarks consumers continue to drive significant demand for probate.
Speaker Change: The type of business transformation takes a period of <unk>.
Speaker Change: Quarters or even years for that matter I mean, we're hoping that by mid next year, we'll be in a better position to be able to capture the best possible sure that we get in the marketplace.
Beta megabits and gigabyte bits for that matter of data faster speeds.
Speaker Change: Great I appreciate it thank you.
It only means more pressure being put on the networks, which gives us continued confidence.
Speaker Change: And the next question comes from.
About the ongoing need for carriers to invest.
Speaker Change: Michelle Rollins with Citi. Please go ahead.
On wireless infrastructure.
Michelle Rollins: Alright, thanks for taking the question.
And types of asset that we have to offer.
Speaker Change: Okay.
And when do you think you can get the benefits from the digitizing the tower portfolio. It sounds like you're connecting opportunity, but is that a medium term or can you see some of that next year.
Michelle Rollins: First just in terms of small cell.
Michelle Rollins: To review the portfolio in more detail with the customers with the remaining greenfields that are left in that backlog what should be the expected initial return for small cells and can you share a little bit more detail on the margin or returns that you get for.
I think there can be some quick hits developed out of it but it's more I think what I tried to convey to folks is it's going to take time any type of business transformation takes a period of <unk>.
Michelle Rollins: The Colocation nodes and then just.
Quarters or even years for that matter I mean, we're hoping that by mid next year, we'll be in a better position to be able to capture.
Speaker Change: Secondly, as you've had conversations with these carriers and you walked through some of the optimization of this backlog is you get a better sense from the customers of when they may want to look at executing another tranche of small cell nodes.
The best possible sure that we get in the marketplace.
Great I appreciate it thank you.
Yes.
And the next question comes from.
Michelle Rollins with Citi. Please go ahead.
Speaker Change: In terms of their densification needs.
Hi, Thanks for taking my question.
Yes.
Mike Cavanaugh: Yes, Mike.
Okay.
Harsh.
Mike Cavanaugh: On the first point on returns.
Now that you've had a chance to.
To review the portfolio in more detail with the customers.
About the.
Speaker Change: The revision to our return thresholds is that it's higher than it was used to be 67% and is now higher and so we're not going to talk about exactly what that is but you can assume that the greenfield nodes that we have remaining in our backlog meet our new threshold levels of higher than 67% and then on co location returns generally speaking we see.
With the remaining Greenfield that are left in that backlog what should be the expected initial return for small cells and can you share a little bit more detail.
On the marginal returns that you get for.
The colocation.
And then just.
Secondly, as you have conversations with these carriers and.
Speaker Change: On an incremental basis in the neighborhood of 20% incremental returns on those businesses and it can be higher than that.
Can you walk through some of the optimization of this backlog.
Speaker Change: Good way to think about it. So those are the types of returns that we're looking at for our backlog.
Better sense from the customers when they need.
Speaker Change: And the conversations with our customers that we've had over the course of.
They want to look at executing another branch.
Speaker Change: For the last several months.
Small cell nodes in terms of their densification needs.
Speaker Change: We are really focused on trying to get through this process and did not get a lot of.
Yes.
Speaker Change: It didn't give us any more significant insight into the future potential.
Hey, Mike.
On the on the first one on returns.
Speaker Change: Potential for bookings, but as Stephen has been talking about this whole time.
Well, we said about the.
The revision to our return threshold is that it is higher than it was used to be six months to 7% and is now higher and so we're going to talk about exactly what that is but you can assume that the greenfield nodes that we have remaining in our backlog meet our new threshold levels.
Speaker Change: The amount of data demand in the U S is growing so fast that we still believe that the thesis underlying the small cell business makes sense that at some point densification will be required at some point in towers are not sufficient for that dislocation and the next technology that will be utilized as small cells and we believe that over time, those small cells will come to us as a natural provider.
Higher than 67% and <unk>.
Co location returns generally speaking, we see on an incremental basis in the neighborhood of 20% incremental returns on those businesses and it can be higher than that.
Speaker Change: <unk> of a lower cost solution, because we can share those economics among multiple carriers.
Speaker Change: The difficulty has always been for us I'm trying to pinpoint the timing of when things like that happen that's been a difficulty in the tower business.
Good way to think about it. So those are the types of returns that we're looking at for our backlog.
And the conversations with our customers that we've had over the course of the.
Speaker Change: Of pinpointing when changes in activity levels will happen I believe thats going to be a difficulty for us in the small cell business, but at some point, we believe that there'll be significant demand for small cells over time.
The last several months.
We are really focused on trying to get through this process and did not get a lot of.
It didn't give us any more significant insight into the future.
Speaker Change: Yes, Mike I would just add that.
Tension for bookings, but as Stephen has been talking about this whole time.
Speaker Change: The carriers are focused first and foremost on their C band.
The amount of data demand in the U S is growing so fast that we still believe that the thesis underlying the small cell business makes sense that at some point densification will be required at some point in towers are not sufficient for that this litigation and the next technology that will be utilized as small cells and we believe that over time, those small cells will come to us as a natural provider.
Speaker Change: Overlays.
And we're hearing projections that they will be completed with those probably by the end of 2026 beginning in 2027.
Speaker Change: So and we have a very significant backlog of nodes to build so we're very very busy.
Speaker Change: It doesn't mean, we wouldn't look forward to having a nice new contract, but the fact is we want to execute these first and doing flawlessly and continued to build the trust and respect from these customers.
Of a lower cost solution, because we can share those economics among multiple carriers.
The difficulty has always been for us and underpin the timing of when things like that happen that's been a difficulty in the tower business.
Speaker Change: So our feeling is a year or so from now we should be well positioned again to be able to go in and negotiate new agreements that would fill that backlog for us going into 2728 29.
Up 10, pointing when changes in activity levels will happen I believe that's going to be a difficulty for us in the small cell business, but at some point, we believe that there will be significant demand for small cells over time, Yeah, I guess, Mike I would just add that.
Speaker Change: Thanks very much.
The carriers are focused first and foremost on their C band.
Speaker Change: And the next question comes from David Barden with Bank of America. Please go ahead.
<unk> and we're here projections that they will be completed with those probably by the end of 2020 beginning in 2027.
David Barden: Alright, guys. Thank you for taking the questions I apologize telecom guys are always on the one always the ones on mute.
So and we have a very significant backlog of nodes to build so we're very very busy.
Speaker Change: Sure.
And I'm sure you appreciate that.
It doesn't mean, we wouldn't look forward to having a nice new contract, but the fact is we want to execute these first and doing flawlessly and continue to build the trust and respect from these customers.
Speaker Change: No.
David Barden: I guess my first question is.
Speaker Change: Steven.
Speaker Change: You said something at the at the beginning about how.
Speaker Change: <unk>.
And so our feeling is a year or so from now we should be well positioned again to be able to go in and negotiate new agreements that would.
Speaker Change: We're going to be competitive differentiator for what you are prepared.
Speaker Change: To do and I think you said it was going to be.
Speaker Change: A share taking or a wind share event.
Until that backlog for us going into 2728 29.
Speaker Change: I was wondering if you could elaborate a little bit on your perspective, because you know this has been a philosophical question for the industry for a long time ever since back in the day when AT&T did their holistic with AT&T.
Thanks very much.
And our next question comes from David Barden with Bank of America. Please go ahead.
Speaker Change: This is a good thing because it stabilizes the outlook or is that a bad thing because it limits your upside opportunities.
Speaker Change: I'm wondering if you could elaborate a little bit on maybe what you are bringing to the table in this thought process I think there'll be super helpful.
Alright, guys. Thank you for taking the questions I apologize telecom guys are always on the one.
One is on mute.
And then.
I'm sure you appreciate that so.
I guess, just and I'm, sorry to have to hammer on it but.
I guess my first question is Steven.
Speaker Change: It seems strange that a year.
You said something at the beginning.
After you have been into the strategic review and months. After you finished your operating review that you weren't proactively to carrier counterparts and eliminated a meaningful part of your backlog that presumably any counterparty who is engaged in this conversation could have gone ahead and done on their own.
How.
Mla's.
Going to be competitive.
Competitive differentiator for what you are prepared.
To do and I think you said it was going to be.
Sure taking our win share event.
Speaker Change: I was wondering if you could elaborate a little bit on your perspective, because you know that there's been a philosophical question for the industry for a long time ever since.
Speaker Change: And.
Speaker Change: Yes.
Speaker Change: I'm wondering like.
Speaker Change: During the day, when when AT&T did a holistic with AT&T.
Speaker Change: How you guys came to the determination that.
This is a good thing because it stabilizes the outlook or is that a bad thing because it limits your upside opportunities.
Speaker Change: This was a thing that the crown should undertake.
Speaker Change: At this juncture.
Does it tell us about where we are in the process. Thank you.
Speaker Change: I was wondering if you could elaborate a little bit on maybe what you are bringing to the table in this thought process I think that'd be super helpful.
Speaker Change: Well I mean, let me start with the question regarding small cells.
Speaker Change: And then.
Speaker Change: I guess, just and I'm, sorry to have to hammer on it.
Speaker Change: Coming in here.
Speaker Change: I had a number of key priorities and one was a strategic review.
Speaker Change: It seems strange that a year after you've been into the strategic review and months. After you finished your operating review that you weren't proactively to carrier counterparts.
Speaker Change: One was looking at our capital allocation strategy, while it was revenue growth and one was business transformation so to speak so.
Speaker Change: Eliminated a meaningful part of your backlog that presumably.
Speaker Change: The combination of strategic review.
Speaker Change: Inter party, who was engaged in this conversation could have gone ahead and done.
Speaker Change: That's.
Speaker Change: <unk>.
Speaker Change: And determining how we want to spend our capital to my from my perspective was pretty important to that kind of fit together.
Speaker Change: Got it on their own.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: I'm wondering how you guys came to the determination that.
Speaker Change: And as we evaluated the opportunities with these carrier customers.
Speaker Change: This one thing that the crown should undertake.
Speaker Change: The discussions that were that came together as Dan alluded to.
Speaker Change: At this juncture.
Speaker Change: And what does it tell us about where we are in the process. Thank you.
Speaker Change: It became kind of best outcomes for both parties. So could we have shifted that responsibility to a potential suitor.
Speaker Change: Well, let me start with a question regarding the small cells.
Speaker Change: Coming in here.
Speaker Change: Possibly but we didn't know what the timing was going to be we didn't know what the outcome was going to be and we felt that we needed to be the fiduciary here, we need to make sure that we were making.
Speaker Change: I had a number of key priorities and one was a strategic review.
Speaker Change: One was looking at our capital allocation strategy, one was revenue growth and one was business transformation so to speak.
Disciplined decisions on how we spend capital.
Speaker Change: And a lot of these nodes as Dan spoke to.
So.
Speaker Change: The combination of strategic review.
Speaker Change: We're going to be exceptionally expensive propositions in some of these nodes. We are in process for the last two or three years.
And.
Speaker Change: And determining how we want to spend our capital to my from my perspective was pretty important they kind of fit together.
Speaker Change: So if we could come to a conclusion with our customers in any situation that creates best outcomes for both parties, then we're going to seize that opportunity and that's what we felt was most important was to seize that opportunity.
Speaker Change: And as we evaluated the opportunities with these carrier customers.
Speaker Change: The discussions that were that came together as Dan alluded to.
Speaker Change: And again realizing that many of these sites were in development for years, they were going to take a matter of time to complete in the future and they are going to be very expensive.
Speaker Change: Really became kind of best outcomes for both parties. So could we have shifted that responsibility to a potential suitor.
Speaker Change: We felt the right thing to do was to negotiate something which we were able to accomplish and we're pretty satisfied by it.
Speaker Change: Possibly but we didn't know what the timing was going to be we didn't know what the outcome was going to be and so we felt that we needed to be the fiduciary here, we need to make sure that we were making disciplined.
Speaker Change: As it relates to MLR.
Speaker Change: Decisions on how we spend capital.
Speaker Change: I mean it.
Speaker Change: And.
Speaker Change: We've been able to achieve.
Speaker Change: A lot of these nodes as Dan spoke to.
Speaker Change: Good growth.
Speaker Change: And create significant shareholder value by negotiating these comprehensive agreements.
Speaker Change: We're going to be exceptionally expensive propositions in some of these nodes were in process for the last two or three years.
Speaker Change: And we have already articulated that we believe that we are able to realize more guarantee growth over a multiyear period of time in a way that we think maximizes the value of our assets.
So if we could come to a conclusion with our customers in any situation that creates best outcomes for both parties, then we're going to seize that opportunity and that's what we felt was most important was to seize that opportunity and again realizing that many of these sites were in development for years, they were going to take.
Speaker Change: While providing a pretty good degree of certainty.
Speaker Change: As carriers stop and start their wireless network spending.
Speaker Change: What typically happens right and we've talked about that with the <unk> experience.
Speaker Change: A matter of time to complete in the future and they are going to be very expensive.
Speaker Change: So and from there and from a customer's perspective to try to continue to Ingram.
Speaker Change: We felt the right thing to do was to negotiate something which we were able to accomplish and we're pretty satisfied by us.
Speaker Change: Ingratiate yourself with these with these customers.
Speaker Change: These agreements take a lot of haggling out of the equation for individual lease type of negotiations and it makes it easier for them to conclude the transaction it saves them processing time and money and it gets them on year faster.
As it relates to MLA is.
Speaker Change: I mean.
Speaker Change: We've been able to achieve good growth.
Speaker Change: And create significant shareholder value by negotiating these comprehensive agreements.
So.
We've looked at it as being.
Speaker Change: And we have already articulated that we believe that we are able to realize more guaranteed growth over a multiyear period of time in a way that we think maximizes the value of our assets.
Speaker Change: In many respects a win win situation and just realize it doesn't mean that negotiations stops when you have a holistic agreement signed because the holistic agreement usually has a certain amount of terms conditions within that agreement and it's for a period of time.
Speaker Change: While providing a pretty good degree of certainty as carriers stop and start their wireless network spending and that's what that's what typically happens right and we've talked about that with the <unk> experience.
Speaker Change: So as the carrier's demands keep changing whether it's technology, whether it's adding.
Speaker Change: So and from there and from a customer's perspective to try to continue to.
Speaker Change: Shipments in towers are in compounds are hardening sites. There are certain things that are included in those agreements and there are certain things that aren't included in those agreements. So we have a stable contracted revenue and we have also on contracted opportunities in the future.
Speaker Change: Ingratiate yourself with these with these customers.
Speaker Change: These agreements take a lot of the haggling out of the equation for individual lease type of negotiations and it makes it easier for them to conclude the transaction it saves them processing time and money and it gets them on year faster.
Speaker Change: That we that we work hard to try to.
Speaker Change: To try to seize.
Speaker Change: So.
Speaker Change: Thank you Steve for that I appreciate those comments if I could ask one quick follow up which would be you guys have been very careful to kind of.
We've looked at it as being.
Speaker Change: In many respects a win win situation and just realize it doesn't mean that negotiations stops when you have a holistic agreement signed because the holistic agreement usually has a certain amount of terms conditions within that agreement and it's for a period of time.
Speaker Change: Couch the strategic review in terms of the strategic review of the fiber business.
Speaker Change: Just want to make sure that I'm not being too myopic.
Speaker Change: And and if we zoom out and say, it's been an awful long time.
Speaker Change: So as the carrier's demands keep changing whether it's technology, whether it's adding.
Speaker Change: Is there.
Speaker Change: Is the strategic review.
Speaker Change: About the fiber business or is there some maybe even larger strategic.
Speaker Change: Shipments in towers are in compounds are hardening sites. There are certain things that are included in those agreements and there are certain things that are included in those agreements. So we have a stable contracted revenue and we have also on contracted opportunities in the future.
Speaker Change: Considerations going on.
Speaker Change: We've been very clear about our intentions as it relates to this.
Speaker Change: Before I got here after I got here I mean, we own some of the best in class fiber networks in the U S and.
Speaker Change: That we that we work hard to try to to <unk>.
It's key for US is determined whether crown strategy is aligned with those opportunities.
Speaker Change: <unk>.
Speaker Change: Thank you Steven for that I appreciate those comments, if I could ask one.
Speaker Change: And we're just we have been taking the time within obviously engaged with different parties, who are interested in these assets and it all comes down from our perspective to generating the most value for the shareholders, whether it's receiving some cash proceeds and redeploying capital moving to moving towards the tower only company keeping the businesses. If we feel they can create.
Speaker Change: Quick follow up which would be.
Speaker Change: You guys have been very careful to kind of.
Speaker Change: The strategic review in terms of the strategic review of the fiber business.
Speaker Change: Want to make sure that I'm not being too myopic.
Speaker Change: And if we zoom out and say, it's been an awful long time.
Speaker Change: The most value that way so it takes time, maybe it's taken.
Speaker Change: Is there.
Speaker Change: Is the strategic review just about the fiber business or is there some maybe even larger strategic.
Speaker Change: More time than you guys have patients for <unk>.
Speaker Change: Considerations going on.
Speaker Change: But obviously, we'd like to wrap this up also and hopefully this will.
Speaker Change: We've been very clear about our intentions as it relates to this whether it's before I got here or after I got here.
Speaker Change: It will be able to make a decision.
Speaker Change: In the in time in Thailand.
Speaker Change: We own some of the best in class fiber networks in the U S.
Speaker Change: I appreciate the comments good luck with all of it. Thank you okay. Thank you very much.
Speaker Change: And.
Speaker Change: It's key for US is determined by the Crown strategy is aligned with those opportunities.
Speaker Change: And the next question comes from Nick del Deo with.
Speaker Change: Moffett Nathanson. Please go ahead.
Speaker Change: And we're just we have been taking the time within obviously engaged with different parties, who are interested in these assets and it all comes down from our perspective to generating the most value for the shareholders, whether it's receiving some cash proceeds and redeploying capital moving to moving towards the tower only company keeping the businesses. If we feel they can create.
Speaker Change: Hey, good afternoon, guys. Thanks for taking my questions.
Speaker Change: Stephen you described the number of efforts to digitize, our streamline your operations to save money and improve the customer experience.
Speaker Change: Is it your sense that Crown Castle was was behind your peers in these areas and this is kind of that kind of allow you to catch up or do you think this is more about being better than the peer group.
Speaker Change: The most value that way.
Speaker Change: So it takes time, maybe it's taken.
Speaker Change: On these fronts after you've wrapped up the initiatives.
Speaker Change: More time than you guys have patients for <unk>.
Speaker Change: So listen the goal of the company is to be best in class.
But obviously, we'd like to wrap this up also and hopefully this will.
Speaker Change: And what we do.
Speaker Change: And this company went through significant.
Speaker Change: It will be able to make a decision.
Speaker Change: In the in time in Thailand.
Speaker Change: Growth.
Speaker Change: Through.
Speaker Change: Through 2000 to 2010 up to 2020.
Speaker Change: I appreciate the comments good luck with all of it. Thank you okay. Thank you very much.
Speaker Change: And the next question comes from Nick del Deo with.
Speaker Change: Buying significant numbers of assets and building significant number of assets in that growth mode as I talked about before that whenever you're growing to that level.
Speaker Change: Moffett Nathanson. Please go ahead.
Speaker Change: Hey, good afternoon, guys. Thanks for taking my questions.
Speaker Change: It's difficult to focus not only in growth initiatives, but also on kind of the internal infrastructure initiatives of the company. So there has been work done.
Stephen you described a number of efforts to digitize, our streamline your operations to save money and improve customer experience.
Speaker Change: Is it your sense that Crown Castle was was behind your peers in these areas and this is kind of kind of allow you to catch up or do you think this is more about being better than the peer group.
Speaker Change: And the company is operating well, but there is opportunities to improve and enhance and so that's what I'm talking about is transforming what we have.
Speaker Change: On these fronts after you've wrapped up the initiatives.
Speaker Change: There has been some element of digitizing the assets, but the drone program that I mentioned started last year I mean it.
Speaker Change: So listen the goal of the company as being best in class.
Speaker Change: And what we do.
And this company went through significant grew.
Speaker Change: It Didnt start last month.
Speaker Change: It's been a work in progress and I think too one of the earlier questions. When are we going to see the fruits of the labor and as I said, there's going to be some opportunities for us to use that data and we're using it already.
Speaker Change: Growth.
Speaker Change: Through.
Through 2000 to 2010 up to 2020.
Speaker Change: Buying significant numbers of assets and building significant number of assets in that growth mode as I talked about before and whenever you're growing to that level.
Speaker Change: Two to help.
Speaker Change: Generate more activity and more knowledge within our organization, which helps as we communicate with customers.
Speaker Change: It's difficult to focus not only in growth initiatives, but also on kind of the internal infrastructure initiatives of the company.
Speaker Change: So it's an evolution and obviously I was brought in for a reason and part of the reason is to make modifications and changes that I think will be healthy and good for this company moving forward that said.
Speaker Change: So there has been work done.
And the company is operating well, but there is opportunities to improve and enhance and so that's what I'm talking about is transforming what we have.
Speaker Change: The company has always had and continues to have a very strong reputation as being very customer oriented and very service oriented. So to your question about kind of catch up or get ahead. I think we are doing a little bit of catch up in certain areas, but we have every opportunity.
Speaker Change: There has been some element of digitizing the assets, but.
Speaker Change: The drone program that I mentioned started last year.
Speaker Change: It Didnt start last month.
Speaker Change: It's been a work in progress and I think too one of the earlier questions. When are we going to see the fruits of the labor.
Speaker Change: It really become best in class in the U S and that's the goal.
Speaker Change: And as I said, there's going to be some opportunities for us to use that data and we're using it already.
Speaker Change: Okay Thats great context, thank you.
Speaker Change: Yes, I guess the other thing I want to ask about were where the no cancellations.
Speaker Change: Two to help.
Speaker Change: <unk> generated more activity and more knowledge within our organization, which helps as we communicate with customers.
Speaker Change: I guess during the discussions where you're able to surmise it all what customers might be planning to do as an alternative.
Speaker Change: So it's an evolution and obviously I was brought in for a reason and part of reason is to make modifications and changes that I think will be healthy and good for this company moving forward that said.
Speaker Change: Whether it's got other vendors are trying to get a macro sites or maybe not do anything at all.
It just seems like an interesting situation, where the customers seem to have kind of throwing up their hands.
Speaker Change: The company has always had and continues to have a very strong reputation as being very customer oriented and very service oriented so.
Speaker Change: Tough tough area in which to work.
Speaker Change: So I'm curious if you have any clues as to how they how do you plan to address it.
Yes.
Speaker Change: Again, it's hard for us.
Speaker Change: Opine on what our customers are doing at that level of detail, but what I would say is generally speaking.
Speaker Change: To your question about kind of catch up or get ahead. I think we are doing a little bit of catchup in certain areas, but we have every opportunity to really become best in class in the U S and that's the goal.
Speaker Change: The first thing our customers want to look at as you know Nick is to try to maximize that tower availability in any given area because.
Speaker Change: Okay Thats great context, thank you.
Speaker Change: It is the cheapest way to deploy spectrum over large geographies population areas.
Speaker Change: Yes, I guess the other thing I want to ask about were where the no cancellations.
Speaker Change: And I think if I were to make a guess on your question is that.
Speaker Change: I guess during the discussions.
Speaker Change: They believe that with the.
Speaker Change: To surmise at all what the customers might be planning to do as an alternative.
Speaker Change: Amount of C band and mid band spectrum. They have they can make they can they can cover these areas with ours in the short term.
Speaker Change: Whether it's got other vendors are trying to get on macro sites or maybe not do anything at all.
Speaker Change: But as we've talked about at some point that that is no longer an available option.
Speaker Change: Just seems like an interesting situation, where the customers seem to have kind of thrown up their hands.
Speaker Change: But at this point.
Speaker Change: All of these markets, we're talking about which were very high costs are very long term.
Speaker Change: Tough tough area in which to work.
Speaker Change: I guess I'm curious if you have any clues as to how they how they plan to address it.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: Projects that just weren't coming to fruition I think that it determined that they could add more to the overall macro network to take advantage to take care of the demand in these areas.
Speaker Change: Yeah.
Speaker Change: Again, it's hard for us.
Opine on what our customers are doing at that level of detail, but what I would say just generally speaking.
Speaker Change: Yes, I would just also add.
Speaker Change: The first thing our customers want to look at as you know Nick is to try to maximize that tower availability in any given area because.
Speaker Change: These agreements were signed with these customers.
Speaker Change: Before C. The C band spectrum auction.
Speaker Change: It is the cheapest way to deploy spectrum over large geographies population areas.
Speaker Change: So.
Speaker Change: The fact of the matter is these cancellations.
Speaker Change: And I think if I were to make a guess on your question is that.
Speaker Change: In totality of our contract.
Speaker Change: They believe that with the.
Speaker Change: These cancellations represent just 6%.
Speaker Change: Amount of C band and mid band spectrum. They have they can make they can they can cover these areas with ours in the short term.
Speaker Change: Of our total small cell build program.
And.
Speaker Change: Many of US have been in this industry for a long long time and have done lots of built to suit agreements over the years.
Speaker Change: But as we've talked about at some point that that is no longer an available option.
Speaker Change: But at this point.
Speaker Change: All of these markets, we're talking about which were very high costs are very long term.
Speaker Change: Typically for every 100.
Speaker Change: Search rings, you get <unk>.
Speaker Change: <unk>.
Speaker Change: 20% to 25, yet canceled.
Speaker Change: Yes.
Speaker Change: Projects that just weren't coming to fruition I think that it determined that take you to add more to the overall macro network to take advantage to take care of the demand in these areas.
Speaker Change: And Youre left building 60 or 70, so the fact that there hasnt been.
Speaker Change: Any type of large cancellation of groups of projects or nodes.
Speaker Change: Yes, I would just also add.
These agreements were signed with these customers.
Speaker Change: Since these contracts were signed is actually amazing Tonight.
Speaker Change: Before ceased the C band spectrum auction.
Speaker Change: So I look at it as a small portion of what the carriers are doing overall and to Dan's point.
Speaker Change: So.
Speaker Change: The fact of the matter is these cancellations.
Speaker Change: They are actively trying to find other ways to solve their network densification where coverage issues.
Speaker Change: Totality of our contract.
Speaker Change: These cancellations represent just 6%.
Speaker Change: Of our total small cell build program.
Speaker Change: Okay. That's great color. Thank you guys yeah. Thanks for the question.
Speaker Change: And many of US have been in this industry for a long long time and have done lots of built to suit agreements over the years.
Speaker Change: And the next question comes from Jim Schneider with Goldman Sachs.
Speaker Change: Typically for every 100.
Jim Schneider: Good afternoon. Thanks for taking my question I guess, if you set aside the 7000, no cancellations and look forward to what your carriers customers are telling you about their demand for small cells over the next several years.
Speaker Change: Search rings, you get <unk>.
Speaker Change: 20% to 25, yet cancel.
Speaker Change: And Youre left building 60 or 70, so the fact that there hasnt been.
Speaker Change: Any type of large cancellation of groups of projects or nodes.
Jim Schneider: Is there anything that you.
Jim Schneider: It makes you think that the structural case for small cells is in any way unchanged.
Speaker Change: Since these contracts were signed is actually amazing Tonight.
Jim Schneider: Specifically with respect to the increased returns profile you sort of put them on the business now anything that makes you believe you can achieve your sort of longer term.
Speaker Change: So I look at it as a small portion of what the carriers are doing overall and to Dan's point.
Speaker Change: They are actively trying to find other ways to solve their network densification where coverage issues.
Jim Schneider: Yes.
Jim Schneider: Small cell growth targets at that higher investment.
Jim Schneider: Right.
Yes.
Speaker Change: Okay. That's great color. Thank you guys. Yes. Thanks, thanks for the question.
Speaker Change: I'll start here Dan.
Speaker Change: In terms of future growth.
Speaker Change: Yeah.
Again, we believe this technology has good upside.
And the next question comes from Jim Schneider with Goldman Sachs.
As the carriers again as I said complete their mid band deployment and consumers and businesses continue to be very data hungry.
Jim Schneider: Good afternoon. Thanks for taking my question I guess, if you set aside the 7000, no cancellations and look forward to what your carriers.
Speaker Change: So we just we see.
Jim Schneider: We're telling you about their demand for small cells over the next several years.
Speaker Change: The overall network structure as getting more densify more distributed with.
Jim Schneider: Is there anything that.
Jim Schneider: It makes you think that the structural case for small cells is in any way unchanged.
Speaker Change: The lowest latency networks, you can find and so to fill those types of hotspots in locations, where macros are not suitable.
Jim Schneider: Specifically with respect to the increased return profile you sort of put them on the business now anything that makes you believe you can achieve your sort of longer term.
Speaker Change: We see this technology as being a a perfect opportunity for the carriers and so there arent that many companies that play in this arena on an independent basis.
Speaker Change: Small cell growth targets at that higher investment return rate.
Speaker Change: The carriers play in this arena themselves at times and as we look into the future we feel that if we.
Speaker Change: Okay.
Speaker Change: Yes, I'll start here, Dan I mean in terms of future growth.
Speaker Change: Again, we believe this technology has good upside.
Speaker Change: Set forth reasonable expectations in terms of how we underwrite this type of business, we will be able to achieve that.
Speaker Change: As the carriers again as I said complete their mid band deployment and consumers and businesses continue to be very data hungry.
Speaker Change: Particularly if its a combination of co locations and anchor tenants.
Speaker Change: So we just we see the overall network structure as getting more densify more distributed with.
Speaker Change: And that's obviously as you guys know what it's all about for US its colocation right. We're building in order to get co locations in the future.
Speaker Change: The lowest latency networks, you can find and so to fill those types of hotspots in locations, where macros are not suitable.
Speaker Change: And if you think about this portfolio there has been $65 70000.
Speaker Change: Nodes.
Speaker Change: Put on air and the backlog of 40000. The preponderance is co location. So it's actually playing out is playing out a little longer than everybody thought it was actually playing out to the point, where the overall ROIC.
Speaker Change: We see this technology as being a a perfect opportunity for the carriers and so there arent that many companies that play in this arena on an independent basis.
Speaker Change: The carriers play in this arena themselves at times and as we look into the future we feel that if we.
Speaker Change: On this set of assets down the road is going to be admirable into some of the expectations that were talking about.
Speaker Change: Set forth reasonable expectations in terms of how we underwrite this type of business, we will be able to achieve that.
Speaker Change: That's helpful. Thank you.
And then maybe just as a follow up on different topic.
Speaker Change: Some of your peers in the enterprise fiber space have announced some deals tied to interconnection of data centers. So I am wondering is that any kind of opportunity you feel you would want to address or could participate in and does that kind of change your view on the expectations for the future growth in your fiber business in.
Speaker Change: Particularly if its a combination of co locations and anchor tenants.
And that's obviously as you guys know what it's all about for US its colocation right. We're building in order to get co locations in the future.
Speaker Change: And if you think about this portfolio theres been $65 70000.
Speaker Change: And maybe your expectations around.
Speaker Change: <unk> put on air and the backlog of 40000, the preponderance is colocation. So it's actually playing out is playing out.
Speaker Change: Our price in terms of potential asset sale.
Speaker Change: I think generally the.
Speaker Change: A little longer than everybody thought it was actually playing out to the point, where the overall ROIC on.
Speaker Change: As Stephen was talking about in some of the prepared remarks, the increase in demand over network is positive for our business because we have assets in very good. We believe we'll have good demand.
Speaker Change: This set of assets down the road is going to be admirable into.
Speaker Change: Some of the specifics about what you are talking about I do not believe fit our footprint or strategy. So the idea of connecting.
Speaker Change: The expectations that we're talking about.
Speaker Change: That's helpful. Thank you.
Speaker Change: And then maybe just as a follow up on different topic.
Speaker Change: Large AI focused data centers that are being built.
Speaker Change: Some of your peers in the enterprise fiber space have announced some deals tied to interconnection of data centers. So I am wondering is that any kind of opportunity you feel you would want to address or could participate in and does that kind of change your view on the expectations for the future growth in your fiber business in.
Speaker Change: And more.
Speaker Change: Rural locations because land costs are cheap and then connected into the market into.
Speaker Change: The big markets, where people are via via fiber.
Speaker Change: Interested in building that type of fiber because we don't see that as supporting our overall strategy of having fiber solutions and small cell together, where we think the densest network demand will come and we don't see it as much as a shared infrastructure model as a build to suit infrastructure model and Thats just not what we do so part of your question.
Speaker Change: And maybe your expectations around.
Speaker Change: Our price in terms of a potential asset sale.
Speaker Change: I think generally the.
Speaker Change: As Stephen was talking about in some of the prepared remarks, the increase in demand over network is positive for our business because we have assets in very good markets. We believe we will have good demand.
Speaker Change: To answer your question is no we don't see the same.
Speaker Change: Type of outcome for us as we've seen in other companies the other company's announcements recently.
Speaker Change: Some of the specifics about what you are talking about I do not believe that our footprint or strategy. So the idea of connecting.
Speaker Change: Not to say those are bad deals to do all of our businesses, it's just not for us.
Speaker Change: But we do see a tremendous opportunity ahead of us to connect data centers and metro markets that already exist that we think are going to be extremely valuable because we have a footprint that is very difficult to replicate and dense metro market.
Speaker Change: Large AI focused data centers that are being built.
Speaker Change: And more.
Speaker Change: World locations, because land costs are cheap and then connected into the market into.
Speaker Change: We have lots of fiber under lots of streets already and so connecting into where we can connect each data center to another data center and making a ring.
Speaker Change: Into the big markets, where people are via fiber.
Speaker Change: Interested in building that type of fiber because we don't see that as supporting our overall strategy of having fiber solutions and small cell together, where we think the densest network demand will come and we don't see it as much as a shared infrastructure model as a bold pursuit infrastructure model and Thats just not what we do so part of your question.
We think we are well positioned for that type of demand and we think that type of demand will be necessary to or will be part of the growth in traffic going forward because.
Speaker Change: Part of the way that we think the networks will expand.
Speaker Change: Each individual user not to go to one data center, but to try to be on ramp into all sorts of different.
Speaker Change: To answer your question is no we don't see the same.
Speaker Change: Type of outcome for us as we've seen in other companies the other company's announcements recently.
Speaker Change: Data centers and on ramps into the network and into different AI locations whatever is the most efficient way to move the data is.
Speaker Change: Not to say those are bad deals to do all of our businesses, it's just not for us.
Speaker Change: But we do see a tremendous opportunity ahead of us to connect data centers and metro markets that already exist that we think are going to be extremely valuable because we have a footprint that is very difficult to replicate and dense metro market.
Speaker Change: Most efficient way to continue the data is where the people are going to try to find and we're going to be we will allow for that.
Speaker Change: Optimization to happen more rapidly because of where our assets are but we think there's tremendous opportunity for us from the AI workloads that are coming just very different than building into data centers built directly for AI in very low cost area.
Speaker Change: Lots of fiber under lots of streets already and so connecting into where we can connect each data center to another data center and making a rig.
Speaker Change: We think we are well positioned for that type of demand and we think that type of demand will be necessary to or will be part of the growth in traffic going forward because.
Speaker Change: And what.
Speaker Change: What we see that meeting is whether whether we believe we are the right owners of this business or whether we think we come to the conclusion that we are moving on and somebody else has a better owner that demand increases the value of our assets and we're excited about that.
Part of the way that we think the networks will expand.
Speaker Change: For each individual user not to go to one data center, but to try to be on ramped into all sorts of different.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Data centers and on ramps into the network and into different AI locations. Whatever is the most efficient way to move the data is going to most efficient way to complete the data is where the people are going to drive to try to find and we're going to be a little will allow for that.
Speaker Change: And the next question comes from Richard Choe with Jpmorgan. Please go ahead.
Richard Choe: Hi, I had a follow up on the tower business in terms of gaining more share do you expect that to come from national players or more regional players.
Speaker Change: Optimization to happen more readily because of where our assets but.
And then regarding the small cell cancellation of that $800 million would have hit in 2025 and 26.
So we think there's tremendous opportunity for us from the AI workloads that are coming just very different than building into data centers built directly for AI in.
Richard Choe: How should we look at that small cell capex was that capex going to be added on to the existing run rate or is that.
Speaker Change: In very low cost area.
Speaker Change: And what we see that meeting is whether whether we believe we are the right owners this business or whether we think we come to the conclusion that we are moving on and somebody else has a better owner that demand increases the value of our assets and we're excited about.
Richard Choe: Potentially.
Speaker Change: Some of it was already in the run rate and can be brought down.
Richard Choe: Yeah.
Speaker Change: Let's start with that and I will go ahead, yeah I'll.
I'll start with the Capex question on the small cells.
Yes, Richard.
Speaker Change: It's hard for me to say what would be in or out of run rate because we haven't given long term guidance of what we think that the capital would be so all I can say is that whatever capital. We thought we were going to spend in 2025 and 2020 is lower now than it would have been otherwise.
Thank you.
Speaker Change: Yes.
Speaker Change: And the next question comes from Richard Choe with Jpmorgan. Please go ahead.
Richard Choe: Hi, I had a follow up on the tower business in terms of gaining more share do you expect that to come from national players or more regional players.
Speaker Change: And in trying to related to what we've done historically, it's just it's hard to do because.
And then regarding the small cell cancellations of that $800 million would have hit in 2025 and 26.
Speaker Change: The magnitude the overall number of nodes that we're constructing in co location and anchor build mix has been different over time, but you can assume that in our past Bill we have built a lot of anchor builds we've talked about that and therefore, the capital intensity of the business was higher historically than we believe it will be going forward both because.
Richard Choe: How should we look at that small cell capex was that capex going to be added on to the existing run rate or is that.
Richard Choe: Potentially.
Speaker Change: So it was already in the run rate could be brought down.
Speaker Change: We've cut off this $800 million and because the majority of our backlog now over 70% as co location as opposed to anchor builds so.
I'll start with that and I'll go back.
Speaker Change: I'll start with the Capex question on the small cells.
Yes, Richard.
Richard Choe: It's hard for me to say.
Speaker Change: Like I said, it's hard to relate to what the run rate would be but compared to what we've spent to date it will be more capital efficient going forward.
Richard Choe: What would be in or out of run rate because we haven't given long term guidance of what we think that the capital would be so all I can say is that whatever capital. We thought we were going to spend in 2025, and 2026 is lower now than it would've been otherwise.
Speaker Change: Hey, Richard in terms of market share I would say two things one.
Speaker Change: We're trying to get to the position where we.
Richard Choe: And in trying to relate it to what we've done historically, it's just it's hard to do because.
Speaker Change: <unk> improve.
Speaker Change: Continually up the ante on customer service.
Richard Choe: Both the magnitude the overall number of nodes that we're constructing and co location and anchor build mix has been different over time, but you can assume that in our past Bill we have built a lot of anchor builds we've talked about that and therefore, the capital intensity of the business was higher historically than we believe it will be going forward both.
Speaker Change: And have the large nationwide carriers.
Speaker Change: Look to us as being a preferred supplier.
Speaker Change: And so.
Speaker Change: That's pretty critical to us and we think again part of these comprehensive agreements and part of what we're doing operationally with improvement will probably enable us to get there at some point in the near future.
Because we've cut off this $800 million and because the majority of our backlog now over 70% as co location as opposed to anchor build so.
Speaker Change: The other area that we need to focus on more.
Richard Choe: Like I said, it's hard to relate to what the run rate would be but compared to what we've spent to date it will be more capital efficient going forward.
Speaker Change: As in the vertical area, which which is those regional and smaller customers, whether it's government entities, whether it's west.
Speaker Change: Hey, Richard in terms of market share I would say two things one.
Speaker Change: Different types of broadcasters.
Speaker Change: We're trying to get to the position where we continually improve.
Speaker Change: So we've had an effort there we have to do a better job. So I think between a combination of those two things.
Speaker Change: Continually up the ante on customer service.
Speaker Change: And have the large nationwide carriers.
Speaker Change: Should help us be able to maximize share and a little bit better way than we've been doing now.
Speaker Change: Look to us as being a preferred supplier.
Speaker Change: Thank you for the color.
Speaker Change: So.
Speaker Change: That's pretty critical to us and we think again part of these comprehensive agreements and part of what we're doing operationally with improvement will probably enable us to get there at some point in the near future.
Speaker Change: And Dave I think we have time for one more question.
Speaker Change: The next question comes from <unk> Levi with UBS. Please go ahead.
Speaker Change: Great. Thank you a couple of follow ups first on the 7000 small town calculation.
Speaker Change: The other area that we need to focus on more.
Speaker Change: Talk about this more concentrated in one region and does that leave you with some maybe fiber assets that will not be utilized now that could be monetized and.
Speaker Change: <unk>.
Speaker Change: As in the vertical area, which which is those regional and smaller customers, whether it's government entities, whether it's west.
Speaker Change: Second question.
Speaker Change: Power business, how should we think about churn excluding announced sprint churn I think you have some higher renewals coming up in the next two years beyond the top three are you seeing any change in there.
Speaker Change:
Speaker Change: No.
Speaker Change: Different types of broadcasters.
Speaker Change: So we've had an effort there we have to do a better job. So I think between a combination of those two things.
Speaker Change: Competitive environment, maybe from private tower companies and kind of like any any change in their renewal pricing. Thank you.
Speaker Change: It should help us be able to maximize share and a little bit better way than we've been doing now.
Speaker Change: Thank you for the color.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: 7000 nodes there was no there's no one region I would point to those concentrated and it was it was a lot.
Speaker Change: And Dave I think we have time for one more question.
Speaker Change: The next question comes from <unk> Levi with UBS. Please go ahead.
Speaker Change: There are specific markets, but there was more than one region.
Speaker Change: So I would not say that we had one place that is now no longer building small cells.
Speaker Change: Great. Thank you a couple of follow ups first on the 7000 small calculation can you talk about that more concentrated in one region and does that leave you with some maybe fibrotic that will not be realized now that could be monetized.
Speaker Change: It's more it's more many places but concentrated in those places.
And while we have some assets that we built.
The reason that we had to take a write off as part of this process was a lot of the Capex that had been spent was not on hard assets, but on the preparation of a lot of these like we've said we had a hard time getting to actually building stuff.
The second question on powered business, how should we think about churn.
Speaker Change: Quoting announced sprint Arne I think you have some higher renewals coming up in the next two years beyond the top three are you seeing any change in that.
Speaker Change: And it was costing way too much. So we hadn't made it very far into a lot of the actual build for these things. So there is not a tremendous amount of fiber that is leftover that we had built and to the extent that we did build fiber in these markets. There are generally good market that we see demand both from fiber solutions and small cells going forward, So I would not call them.
Speaker Change: Competitive environment, maybe from private tower companies and kind of like any any change in renewal pricing. Thank you.
Speaker Change: Yes.
Speaker Change: On the 7000 nodes there was no there's no one region I would point to those concentrated and it was it was a lot.
Speaker Change: There are specific markets, but their words visited more than one region.
Speaker Change: Stranded or underutilized or unutilized.
Speaker Change: So I would not say that we had one place that is now no longer building small cells.
Speaker Change: Assets going forward, we believe we can use some of those assets to deliver services to our customers going forward.
Speaker Change: It's more it's more many places but.
Speaker Change: On a small.
Speaker Change: And trade it in those places.
Speaker Change: Tower churn.
Speaker Change: And while we have some assets that we built.
What we said for a long time, as we see 1% to 2% churn in the tower business. We've been on the very low end of that when you haven't had much lower churn from sprint to date, but when you exclude the $200 million in 2025, we still believe we'll be on the low end of that range and we have not seen a significant difference in the competitive profile of our business.
Speaker Change: The reason that we had to take a write off as part of this process was a lot of the Capex that had been spent was not on hard assets, but on the preparation of a lot of these like we've said we had a hard time get into actually building stuff.
Speaker Change: And it was costing way too much. So we hadn't made it very far into a lot of the actual build for these things. So there is not a tremendous amount of fiber that is left over that we have built and to the extent that we did build fiber in these markets. They are generally good market that we see demand both from fiber solutions and small cells going forward, So I would not call them stand.
Speaker Change: And.
Speaker Change: It's because of how good the businesses, it's very difficult to make a change and a tower company. When you already have that thing up on it out.
Speaker Change: It costs money to bring it down and cost money to build a new one.
Speaker Change: What we've found is very limited amounts of churn because of the underlying business model has been very positive for us and for our peers as well and I think I think it specifically calls out our asset base, which is urban and suburban so it's very difficult to try to replicate any type of site.
Speaker Change: It are underutilized or unutilized.
Speaker Change: Assets going forward, we believe we can use some of those assets.
Speaker Change: To deliver services to our customers going forward.
Speaker Change: But on a smaller on the on the tower churn.
Speaker Change: <unk>.
Speaker Change: In the suburbs of Greenwich, Connecticut.
Speaker Change: What we've said for a long time as we see 1% to 2% churn in the tower business. We've been on a very low end of that when we haven't had much tower churn from spreads to date, but when you exclude the $200 million in 2025, we still believe we will be on the low end of that range and we have not seen a significant difference in the competitive profile of our business.
Speaker Change: Or the outskirts of Washington, D C, where Raleigh, North Carolina So.
Speaker Change: And these major cities, where we have most of our footprint, we feel like we have a real good moat and are well protected against churn.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: And it's because of how good the businesses, it's very difficult to make a change and a tower company. When you already have that thing up on it out at.
Speaker Change: This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
It costs money to bring it down and cost money to build a new one.
Speaker Change: So what we've found is very limited amounts of churn because of the underlying business model has been very positive for us and for our peers as well and I think it specifically calls out our.
Speaker Change: Our asset base, which is urban and suburban so it's very difficult to try to replicate any type of site.
Speaker Change: And.
Speaker Change: In the suburbs of Greenwich, Connecticut.
Speaker Change: Or the outskirts of Washington, D C, where Raleigh, North Carolina So.
Speaker Change: These major cities, where we have most of our footprint, we feel like we have a real good moat and are well protected against churn.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.