Q4 2024 Crown Castle International Corp Earnings Call
Music
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Good afternoon and welcome to the fourth quarter, 2024 Crown Castle earnings conference call. All participants will be in a listen only mode. Should you need assistance please single a conference specialist by pressing the star below by zero. After today's presentation there will be an opportunity to ask questions.
Speaker Change: to ask questions you might press star and one on your telephone keypad. To withdraw your question, please press star then two.
Speaker Change: Please note this event is being recorded. I would now like to turn the conference over to Chris Hinson, Vice President and of Corporate Finance and Treasurer. Please go ahead.
Thank you, Barcy, and good afternoon, everyone.
Speaker Change: Thank you for joining us today as we discuss our fourth quarter 2024 results. With me on the call this afternoon or Steven Moskowitz, Crown Castle's Chief Executive Officer, and Dan Schlinger, Crown Castle's Chief Financial Officer [inaudible]
Speaker Change: To aid the discussion, we have posted supplemental materials in the investor section of our website at crowncastle.com that will be referenced throughout the call.
Speaker Change: This conference call will contain four looking statements which are subject to certain risks, uncertainties, and assumptions, and actual results may vary materially from those expected.
Speaker Change: Information about potential factors which could affect our results is available in the press release and the risk factor sections of the company's SEC filings.
Speaker Change: Our statements are made as of today, March 13, 2025, and we assume no obligations to update any forward-looking statements [inaudible]
Speaker Change: In addition, today's call includes discussions of certain non-GAAP financial measures.
Speaker Change: Tables reconciling these non-GAAP financial measures are available in the supplemental information package in the investor section of the company's website at crowncastle.com With that, let me turn the call over to Steven
Thank you, Chris and good afternoon everyone. [inaudible]
Steven Moskowitz: that we successfully signed a definitive agreement to sell a fiber segment to a combination of companies.
EQT, Active Core Infrastructure Fund, and Zeo Group Holdings.
Unknown Executive, Kris Hinson, Steven Moskowitz
EQT has agreed to acquire Crown Castle's small-style business.
Steven Moskowitz: and Zeo has agreed to acquire Crown Castle's commercial enterprise fiber business.
Steven Moskowitz: The transaction will be subject to customary regulatory approvals, and we expect the transaction to close sometime in the first half of 2026.
Steven Moskowitz: I'm happy to say that with this announced transaction, we have officially concluded Crown Castle's Fiber Strategic Review. Let me repeat, we have officially concluded Crown Castle's Fiber Strategic Review.
Steven Moskowitz: As we've conveyed in the past, the Board of Directors dedicated a tremendous amount of time to conduct a comprehensive, strategic and operational review of a fiber businesses.
with the end game in mind to maximize shareholder value.
Unknown Executive, Kris Hinson, Steven Moskowitz
Steven Moskowitz: After considering a variety of transaction structures and potential counterparties, we believe the sale of these businesses to EQT and ZEO will maximize the long-term value to crown
Steven Moskowitz: from the combination of the proceeds from this transaction and Crown Castle's ability to enhance the value of our tower business by creating a focused and premium pure play U.S. tower company.
Unknown Executive, Kris Hinson, Steven Moskowitz
Steven Moskowitz: In consultation with financial, legal, and strategic advisors and the executive management team of Crown Castle
Speaker Change: Crown Castle made the decision to sell the businesses at this time for the following reasons.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Although the 90,000 loop miles of high-strand count five are located in the largest markets in the US are great assets
The Fiber Solutions business has a different business model.
and different customer base and towers. [inaudible]
and requires different operational capabilities.
Speaker Change: Because the similarities between towers and fiber solutions are somewhat limited, we determined they should be separated to enhance focus on the systems structure and capabilities needed to maximize the value of towers.
and while towers in small cells share similar market dynamics.
Speaker Change: We ultimately decided that the operating capabilities needed to run a power business and a small shop business.
Speaker Change: We're dissimilar enough that the synergies between the two businesses were more than offset by the enhanced value we believe we will unlock in the tower business by creating a focused and premium pure play US tower company. [inaudible]
Speaker Change: Lastly, we felt that if we were able to secure enough value for the fiber port folio, it would position the tower business well for future growth and maximize shareholder value.
Speaker Change: After the anticipated transaction closes, we will generate substantial cash proceeds from the sale of our fiber segment that we expect to use to transform our tower business.
Speaker Change: by repaying debt, strengthening our balance sheet, and returning capital to shareholders to dividends
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: We believe this greater financial flexibility and optionality will help us to grow into the future as the only pure public U.S. tower company, which I'll comment a little bit later in the discussion.
Speaker Change: Additionally, we believe in the attractive value of our U.S. tower business, and that share we purchases are a compelling opportunity in the current market environment.
Speaker Change: So before I move on, I would like to send a message of thanks and appreciation to the Crown Castle employees, particularly those in the Fiber side, and those who have been providing extensive corporate support to the Fiber businesses.
Speaker Change: Your tireless work has allowed us to continue delivering solid results as we have evaluated
Speaker Change: As part of the Strategic and Operating Review, we announced the realignment of our operational strategy to focus on free cash flow generation as opposed to top line revenue growth.
Speaker Change: We increased the hurdle rates of our project pipeline, increased the efficiency of our capital spending, and updated our 2024 Forward Forecast, and through all of this.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Our fiber solutions are small cells in our corporate support teams, remain positive, intent on delivering for customers at the same rate as always, and focused on achieving solid financial and operating results. So thank you, thank you to the Crown Castle team members.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: I also want to send a shout out to our lead advisors, Marco and Calvin at Morgan Stanley , Dan and Chris at Bank of America, Andrew, and Scott Paul Weiss, David and Harry at Morgan Lewis, and Sarah at Ernst & Young
Speaker Change: We appreciate you and your team's dedication to helping us complete this transaction.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: I'm pleased to report that our teams delivered solid operating and financial performance for the fourth quarter, in full year 2024 across our towers, fiber solutions, and small cell businesses.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Our results continue to validate our ability to deliver for our customers and shareholders in a year where we implement the significant changes to how we operate and invest in our business.
In fact we drove structural reductions in operating costs.
of a hundred million, [inaudible]
Speaker Change: on an annualized basis and reduced net cat-backs by almost 200 million.
Speaker Change: versus the revised 2024 full year forecast that we announced in June , and 400 million versus the original 2024 guidance we provided in October of 2023.
Speaker Change: We achieve these cost reductions while delivering organic growth net of spring churn of 4.5% in towers, 12% in small cells, and 2% in fiber solutions.
Speaker Change: Elizabeth Point, I want to emphasize, and that is...
Speaker Change: The 12% organic growth in small cells was driven by over…
12,500 revenue generating nodes that we added during 2024.
Speaker Change: and not only is that in line with the updated guidance we had gave in conjunction with our operating plan changes that we announced in June , it happens to be the highest level of incremental annual node production in the company's history.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: There are a couple of additional items we noted in our press release, but I would like to comment on briefly.
Speaker Change: First, with enhanced the way we report our organic growth to provide investors with more specificity around recurring revenue and these changes are reflected in the numbers that I just mentioned 4.5% growth in towers.
Speaker Change: 12% growth in small cells and 2% growth in fiber solutions.
Speaker Change: With this more granular approach to organic growth reporting, which you can find in our earning supplement, we've separated out other buildings and other revenues.
Speaker Change: which capture the impact of items unrelated to recurring leasing activity, including non-recurring revenue items like backbillings.
like passed through taxes and cancellation fees. And can't cancelation fees.
Speaker Change: We believe providing this additional level of transparency is a better indication of recurring growth and will help investors better track our underlying business in progress.
Speaker Change: We will continue to look at ways to improve our disclosures and provide investors with more granularity and transparency, which we hope is helpful to understand the financial and operating performance of the business.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: As is always the case, in the fourth quarter, we performed our annual goodwill impairment test.
Speaker Change: which indicated that the carrying amounts of the fiber reporting unit, which includes both our small cells and fiber solutions businesses, exceeded its estimated fear of value.
Speaker Change: As a result, we've recorded a goodwill impairment charge of about $5 billion.
for full year 2024. [inaudible]
and have no good will remaining for the final report excitement.
Speaker Change: The reduction to fear of value was driven primarily by our decision to reduce and defer our small cell development plans.
Speaker Change: also the work that we did with our customers on their recalibrated network deployment plans in the short and midterm and at the higher cost of capital of experience as interest rates have stayed higher for longer than anticipated.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: So, for the outlook for 2025, I wanted to start with discussion off by mentioning that our 2025 outlook
and that excludes the results of our fiber segment.
Speaker Change: which on a go forward basis for reporting purposes will be accounted for in discontinued operations.
Speaker Change: who will continue to operate the fiber segment as in the ordinary course of business during 2025 and believe it will generate results largely in line with 2024.
Speaker Change: As a result of these changes in reporting, I will only be talking about Tower Outlook for 2025.
Unknown Executive, Kris Hinson, Steven Moskowitz
So, as it relates to towers,
Speaker Change: Underlying our 2025 Outlook, we believe we will deliver organic growth of 4.5% in towers, excluding the impact of sprint consolidation churn. [inaudible]
Speaker Change: As we see our customers activity levels being similar in 2025 to what we experienced in 2024.
The wireless carrier's level of activity continues to be positive.
Speaker Change: As they are busy fortifying their networks with new spectrum and new equipment.
Speaker Change: Most of the work at our sites continues to be 5G overlays.
Speaker Change: As our customers shift toward densification, we believe our towers are well positioned to capture this activity.
Speaker Change: As a result, for 2025, we believe it will be a continuation of solid growth with organic growth with excluding sprint cancellations of 4.5 percent.
Speaker Change: Now our growth in 2025 is offset by the impact of the Sprint Consolidation Charm.
Speaker Change: This churn, which is hit as of January 1st, will be approximately 205 million in towers.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: and looking beyond this year are expected churn range remains one to two percent. Now this includes around 20 million an annual sprint churn that we have from leases that will be coming to their natural final termination date between 2026 and 2034.
Speaker Change: So our longer-term churn expectations excluding the trailing sprint churn is between 0.5 to 1.5 percent.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: In towers for 2025, you can expect to see an increase in capital spending and a majority of that anticipated increase is going toward investing and controlling the parcels of land under our towers.
Speaker Change: This higher expected level investment will be focused on select site locations that we deem as both strategic. They may generate significant revenue or be prime sites for future co-location activity and also provide us positive returns.
Speaker Change: By their extending leases to perpetual easements or acquiring the deed, we'll use our capital wisely to secure future cash flows and improve operating margins.
Speaker Change: We also expect to spend more to improve our project management capabilities and to enable us to work more closely with our customers to make faster and more informed commercial and operating decisions.
Speaker Change: We believe these initiatives will make it more efficient for our customers to add equipment or co-locate on our sites.
Speaker Change: Accelerate the customer application cycle time and increase the rate by which customers can complete their installations.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: So, as we move to our priorities in towers for 2025, I'll refer to slide five in the earnings presentation.
Basically, here's what you can expect from us.
Speaker Change: Customer Service. We're going to be absolutely laser focused on delivering great customer service for the wireless carriers.
as we drive operational excellence into the business. [inaudible]
Speaker Change: Refining processes, leveraging technology better in enhancing automation, all in the effort to improve speed and ease of service.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: I mention operational excellence, operational excellence is critical for us. Again, we're going to look to leverage technology and make sure that we have what we need to be able to make very well informed commercial and operating decisions with our customers.
Jennifer and both of us.
Speaker Change: Improve profitability is also critical, and we will leverage our scale and operational efficiency as we look to secure and optimize our long-term revenue and drive operating margins higher.
Speaker Change: Through efforts like those to economically secure the land under a cowers which I just mentioned before.
Speaker Change: and Strong Balance Sheet. He will target investment-grade credit rating and practice strong financial discipline while allocating capital to maximize shareholder returns.
and while we will focus on these four strategic priorities.
Speaker Change: will be working very hard to deliver for the buyers of our fiber businesses.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: We know the next goal for our companies to maximize shareholder value as a focused, pure play US
Speaker Change: and with the sale of the fiber segment, we're updating our capital allocation framework to focus more on free cash flow generation and financial flexibility as you can see on slide 6.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: It starts first and foremost with returning capital to our shareholders via quarterly dividend.
Speaker Change: Going forward, Crown Castle intends to set its dividend at a rate of about 75-80% of AFFO excluding
Speaker Change: We anticipate reducing our annual dividend to approximately 4.25 per share.
Speaker Change: Starting in the 2nd quarter of 2025, based on our expected annual FFO, excluding the memorization of prepaid rent, following the close.
Speaker Change: Second after the close, we will target about 150 to 250 million of annual organic capital expenditures.
Speaker Change: Opportunistically pursuing value enhancing growth, and this includes purchasing land under our towers, which is a key priority for us this year and in the future.
Selective new builds as we have opportunities.
Speaker Change: and investing more in technology to enhance our margins for our revenue growth.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: The third thing we're going to do post-closing is we plan to manage our debt balance to maintain investment grade credit rating.
Speaker Change: After closing the fiber transaction, we expect to use substantial cash proceeds to repaid debt.
Speaker Change: and based on preliminary analysis, we believe the enhanced ability of our free cash flow profile as a pure play US tower business will allow us to maintain investment-grade credit rating with the target leverage between 6 and 6.5 times.
https://www.kenhub.com
Finally, we expect to repurchase shares.
Speaker Change: Currently, Crown Castle intends to implement the sheer repurchase program of approximately $3 billion in conjunction with the close of the transaction.
Speaker Change: which we expect to happen again in the first half of 2026.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: We believe this capital allocation framework provides an attractive near-term capital return while allowing financial flexibility to pursue opportunistic, sharing purchases, as well as organic growth and inorganic growth opportunities in the future.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: I'd like to conclude by saying there's a pure play US tower company with clear focus and riding best-in-class customer service.
and more efficient operations. [inaudible]
Speaker Change: We believe we will have a unique opportunity to enhance shareholder value by providing focused exposure to the best market for wireless infrastructure in the world with positive secular trends bolstered by 15% plus annualized growth and mobile data consumption.
Speaker Change: Financial sound counter parties who are spending at a rate of 30 billion or more annually on network deployment and optimization.
http://TheBusinessProfessor.com
Speaker Change: All leading to an environment that you drive tower growth for years to come.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
I also want to thank our employees [inaudible]
Speaker Change: who helped us achieve our fourth quarter and full year 2024 results.
Speaker Change: Your effort and focus enabled us to deliver solid revenue growth while significantly lowering operating costs
Speaker Change: and Capitol expenditures as we implemented revised operating plans and concluded...
The Fibre Strategic Review
Finally,
Speaker Change: As you know, then Schlanger will be leaving Crown Castle at the end of this month
Amazing that this will be his last earnings call.
Speaker Change: and I'd like to take the opportunity to thank Dan for the many contributions that he has made.
particularly in the past year supporting me.
as I join this company.
and for his work on the Strategic Review and Transaction.
I know I can speak for everyone at Crown Castle.
Speaker Change: Dan, we wish you all the best in your next and others.
Steven Moskowitz: Now I'll turn it over to Dan to walk us through the details of the court.
Thanks, Steven. I appreciate the kind words.
Good afternoon, everyone.
Steven Moskowitz: As Steven mentioned, we delivered fourth quarter and full year 2024 results in line with expectations
Steven Moskowitz: and we continue to perform well after implementing the meaningful changes in our operating plan announced in June .
Steven Moskowitz: Our solid fourth quarter results included 4.5% consolidated organic growth, which was driven by an increase in demand across our portfolio of tower small cells in fiber solutions. [inaudible]
Horsely offsetting our strong organic growth during 2024 [inaudible]
Steven Moskowitz: We incurred $10 million of higher than expected advisory fees in the fourth quarter that impacted both adjusted EBITDA and the FFO.
Steven Moskowitz: These fees related to our ongoing strategic review and resulted in full year 2024 total advisory fees of $40 million related to both our strategic review and the proxy fight earlier in the year.
Turning to our 2025 Outlook
Steven Moskowitz: As Steven mentioned, having an agreement to sell our fiber segment means that beginning in the first quarter of 2025, fiber segment, historical results are required to be reported within Crown Castle's financial statements as discontinued operations.
Steven Moskowitz: As a result, the company's full year 2025 outlook does not include contributions from its fiber segment, other than a net income and net income for share.
Steven Moskowitz: There are a couple items I want to point out about our 2025 outlook.
Steven Moskowitz: First, all financing expenses remain with towers and our outlook and do not reflect the impact of any use of the proceeds from the sale of our fiber business.
Steven Moskowitz: And second, SGNA has been allocated between towers and discontinued operations to develop our outlook. However, these allocations may not represent the run rate SGNA for Crown Castle as a standalone tower company.
Steven Moskowitz: As a result of these items, adjusted EBITDA, AFFO, and AFFO per share in our 2025 outlook may not be representative of the company's anticipated performance following the close of the sale.
on page seven of our earnings materials. [inaudible]
Steven Moskowitz: You can see a bridge from the AFFO provided in our 2025 outlook to a range of expected annual AFFO following the anticipated close of the transaction.
Steven Moskowitz: Starting with our 2025 Outlook for AFFO of approximately $1.8 billion $1.2 billion.
Steven Moskowitz: We add back around $235 million for the reduction of interest expense [inaudible]
Steven Moskowitz: Based on using anticipated proceeds from the transaction to repay around $6 billion of debt at our current weighted average debt rate of 3.9% [inaudible]
Steven Moskowitz: Next, we see further improvements of about 310 million dollars due to anticipated revenue growth and an adjustment to the SGNA to more accurately reflect the anticipated cost-tructure of a standalone tower company.
Partially offset by incremental borrowing costs through transaction clothes
Steven Moskowitz: putting all this together results in an estimated annual AFFO at the anticipated close of the sale transaction of around $2.3 billion.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Moving to our full year 2025 outlook, we expect a solid, stable, level of demand for our tower assets we experienced in 2024 to persist into 2025, resulting in a second consecutive year of 4.5% tower organic growth, excluding the impact of sprint cancellations. [inaudible]
consisting of...
Speaker Change: 2.8% from Core Leasing, 2.5% from Escalators, and negative 0.8% from Charn. [inaudible]
Steven Moskowitz: As Steven mentioned, our definition of core leasing activity has historically included the impact of items unrelated to recurring leasing, such as tenet cancellation fees and backbillings.
Steven Moskowitz: To more accurately reflect, changes to our recurring revenues, the impact from back buildings will now be captured in other buildings, and the impact from revenues unrelated to recurring leasing will be captured in other revenues, which will also include the impact from sprint cancellation and other early termination payments.
Steven Moskowitz: Under our revised definition, we expect tower core leasing activity of $110 million at the midpoint.
Steven Moskowitz: which compares to $110 million in 2024, and results in $175 million of organic contributions to site rental buildings excluding the impact of sprint cancellations.
Speaker Change: This growth is more than offset at site rental revenues due to the $205 million of Sprint cancellation Stevenson mentioned and a decrease in non-cash straight line revenues and amortization
We believe the underlying growth of the tower business...
Speaker Change: Combined with his efficient cost structure, will generate sufficient assafel excluding amortization of prepaid rent upon close at the transaction to fund our dividend per share target of approximately $4.25 per share.
Speaker Change: We believe the target annualized dividend per share of approximately $4.25 is consistent with the dividend policy Steven discussed earlier of setting our dividend approximately 75% to 80% of the annual AFFO, excluding amortization of prepaid rent following the close of the transaction.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Turning to the balance sheet, we ended the quarter with significant liquidity and flexibility, positioning us to efficiently maintain our investment grade rating after the sale of the Fiverr business based on the Tariq capital structure and capital allocation framework that Steven mentioned
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: In conclusion, we delivered solid results in full year 2024, and we expected to deliver similar tower organic and full year 2025, as we continue to benefit from the persistent increase in mobile data demand.
Speaker Change: I believe in the long-term strength of the Tower business model, and I also believe the US continues to be the best market in the world for wireless infrastructure ownership. [inaudible]
Speaker Change: The sale of our fiber segment, Positions Crown Castle is the only public sure play US tower company, and I believe this is the best outcome for driving shareholder value [inaudible]
Speaker Change: Thank you to all the town Crown Castle team who worked diligently to conclude the strategic review and for all the team members who helped the company deliver our solid fourth quarter in full year 2024 results.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: You've made the last nine years, the best years of my professional life. You're a dedicated and talented team and a wonderful group of people. I'm going to miss working with you and wish you all nothing but the very best.
Speaker Change: With that, Borsi, I'd like to open the line for questions [inaudible]
Thank you. Thank you. Thank you.
Speaker Change: Thank you. We will now begin the question and answer session.
Speaker Change: To ask a question, you may pass star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question today, please press star then two. At this time, we will pause momentarily to assemble our roster.
Speaker Change: Your first question today comes from Simon Flannery from Morgan Stanley .
Please go away, right?
Simon Flannery: Thank you so much. Let me add my best wishes down to your future endeavors, great working with you. Steven, do something.
Speaker Change: Thank you. Thank you. Thanks for all the color. Very helpful. In the past, the company has expressed interest in developed market opportunities for macro towers.
Speaker Change: I guess years ago you had an investment in Australia, but is that off the table now? Are you pretty much locked into the US or might you be interested in something in Europe if the right opportunity arose?
Speaker Change: and then down back to the organic growth. As we go forward here and get past a lot of these one-time items like Sprint Churn,
Speaker Change: If we take a mid-single digital organic growth number, is it fair to say that the AFFO per share growth should be in that mid to high single digits and that the dividend per share's foot also be in that sort of trajectory on a kind of medium term basis?
https://www.kenhub.com
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Simon, let me take the first question, which I appreciate about the potential of inorganic growth opportunities.
Speaker Change: We're focused in the US, and we have a lot of work to do over the next 12 to 15 months.
to make sure we deliver a great product. [inaudible]
Speaker Change: The two buyers that we're selling to on the fiber side and also deliver results for the tower business and continue to set ourselves up for even greater success as we go into 2026.
Speaker Change: So, right now, that's really the focus. It doesn't mean that we wouldn't be looking at inbound opportunities.
Speaker Change: I'm not sure if I'd be spending a lot of time in a plane going over and trying to uncover things in Europe or develop markets but if there's things that come to us we would look at it, we'd evaluate it
Speaker Change: We see what type of opportunity it presents to create shareholder value, we discuss it with the board of directors and we come to some type of conclusion. So, we'd like to be opportunistic, it's just part of it's about timing and price.
Makes sense.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Simon, on the second question, we just went out with our 25 guidance. We're going to keep it at that for now, which is we think we're going to get 4.5% growth in power business. As you pointed out, there is operating leverage in this business.
Speaker Change: and it is the intention to have dividend for share growth that mirrors AFFO for share growth over time. As Steven mentioned earlier at about 75 to 80% of AFFO excluding prepaid rent.
Speaker Change: Emeritization. So the dividend growth will be in line with that AFFL growth as we move forward.
Great. Thank you so much.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Thank you. Your next question comes from Michael Rollins from City. Please go ahead.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Thanks in the day afternoon. I also want to express my thanks and best wishes to Dan.
Speaker Change: Thanks, Mike. I appreciate it. It's been great work and we'll do it.
Speaker Change: And just a few questions. So first, it seems appropriate as you're focusing now on domestic powers to ask a bit about the leasing activity that you're seeing.
Speaker Change: We did that $110 million for 2025 and if you could share if there's any differences whether it's in the shaping of that over the course of the year in terms of where it may be coming from. I think you mentioned densification earlier and just curious.
Speaker Change: The types of activity that you're seeing this year that may differ from last year and then
Speaker Change: Secondly, on capital allocation. As you look at managing the fiber business as a discontinued operation.
Speaker Change: Through Close. Can you give us a sense of what the base case assumption is for how much free cash flow that business could contribute or consume for Crown Castle? Thanks.
Unknown Executive, Kris Hinson, Steven Moskowitz
Sure, Michael. Thanks for the questions.
Speaker Change: You know, I guess I'd start off by saying that from an application perspective, we don't give out specific numbers, but we have seen a sequential increase
Speaker Change: in applications, kind of through our pipeline, I'd say from Q4, you know, to today.
Speaker Change: But it's not enough for us to necessarily forecast any significant change for this year versus the 4.5% growth that we've mentioned.
Speaker Change: and the largest contributors to the applications that we're seeing are continuing deployments by carriers.
Speaker Change: of their mid-band spectrum. They're primarily using the rest of their C-band spectrum to add and swap out equipment that supports their 5G initiatives.
Speaker Change: So most of what we're seeing still is overlays. [inaudible]
Speaker Change: There is some activity that's brewing, but I'll use brewing lightly.
Speaker Change: of co-locations or first-time installs. You know we'll see how that develops over time, and maybe toward the back half of the year, but just also appreciate from an activity perspective with us.
Speaker Change: So again, we, you know, the good news is we provide, you know, relative stability and visibility in terms of our outlook.
Speaker Change: So we don't anticipate any type of significant going outside that range in any significant way.
So, I hope that answers your question.
It does, thanks.
Speaker Change: Okay, I'll take the second one on free cash flow from the fiber segment.
Speaker Change: We intend to operate this business in the ordinary course that Stephen mentioned during the prepared remarks.
Speaker Change: As part of that discontinued operations, we've given net income as well as the CAPAX associated with the business And we think that the free cash flow generation under that treatment is going to be very similar in 25 as it was in 24 and that's going to be in the neighborhood of $250 million positive for the year.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Thanks.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Thank you. The next question comes from Rick Prentiss from Raymond James.
You and me both, Rick, it's been a pleasure [inaudible]
Speaker Change: Yeah, and obviously the finish line looks really similar to what we were thinking.
One aspect, Eric,
Speaker Change: What were you thinking at all of keeping small cells or even a stake of small cells because there is some excitement about densification or was it just going to be too complicated to try and keep a stake in the small cell?
Speaker Change: Yeah, I mean, Rick, it's a great question. I mean, again, we assessed different offers, different structures.
Speaker Change: from financial buyers, from strategic buyers. You know how I feel about the small self-business from the past.
Speaker Change: and it is a great business and has lots of opportunity into the future.
Speaker Change: But from our perspective, the board had to make the evaluation and felt that if they can get a fair value.
Speaker Change: for that business. Then it made sense to sell it, monetize it, and then use those proofs proceeds to help grow and maximize shareholder value for the US tower
Speaker Change: Okay. And then it talks about the deal. We did see from Zeo that they're saying the
Speaker Change: Fiverricide is 4.25 billion, implying that the small cell is 4.25 billion. Is it one transaction with two parties? Is it separate transactions? And how should we think about kind of the long poles and the tests of getting the approval process? [inaudible]
So it's one transaction, one purchase price.
two parties involved.
Speaker Change: and we'll have to go through the typical regulatory processes, which is you know, Hart Scott, Rodino, and also working with the states.
Speaker Change: on the agreements that we have to get those agreements to be transferred over to the new businesses on both sides.
Speaker Change: Yeah, I'm sorry, now just saying that the process takes a little bit longer, particularly when you're dealing with certain states out there, as we know, and that's why we're projecting, you know, this to be probably 12 to 15 month close.
Speaker Change: Well, a lot of them for me is the leverage you talk about targeting 6.0, 6.5. Have you got any confirmation from the ray agencies that they do view that as an estimate-grade zone, particularly as they also might consider the final purchase options?
https://www.youtube.com or www.facebook.com or www.instagram.com
Speaker Change: I mean there has been some discussions with the rating agencies and again the preliminary analysis has us at least believing as a pure play US tower business with our type of superior free cash flow who should be able to maintain investment grade credit with target leverage between six and a half times.
Speaker Change: Okay, thanks guys, and again, I'm glad to reach the finish line and dang, glad you were there to get it done and best wishes [inaudible]
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Thank you. Your next question comes from Brendan Lynch from Bachwey's
Please go ahead.
Speaker Change: Great, thank you for taking my questions. Maybe you could talk a little bit about the time frame for the $3 billion of repurchases and your thought process around repurchases versus other options such as a special dividend. Thank you very much.
Unknown Executive, Kris Hinson, Steven Moskowitz
in terms of cap allocation is CapEx, is CapEx spending that we believe is going to maximize investment return for us.
then debt reductions.
Speaker Change: David End, Payments, and Buybacks. I mean, that's kind of the order. So, you know, and...
Speaker Change: So we're going to have kind of an accordally basis post-closing lots of discussions about how we spend our capital and be very disciplined in our approach.
Speaker Change: I would follow up a bit on the time frame. Obviously, what Steven mentioned is, or one of us mentioned, is a $3 billion, approximately $3 billion, Sherry Purchase Intention.
Speaker Change: for when the transaction closes. We're far away from that. So it's hard to say what we're going to do when that comes. It's going to be what we think is the best in the best interest of the shareholders.
Speaker Change: and something that the board wants to do at the time. [inaudible]
Speaker Change: and thinking about repurchases for special dividends, I think it did. [inaudible]
We think of it kind of as...
Speaker Change: The best way to maximize values to provide a regular dividend and provide opportunistic or opportunistic flexibility to pursue all the things that Steven mentioned in terms of allocation of capital . . . . . . . . . . . .
Speaker Change: and that includes CapEx or some sort of sharey purchase and will be the dividend most likely in the regular dividend. But I think looking at a special dividend over time won't be off the table. It just, we believe that at this point a sharey person seems like a better way to return the capital share.
Unknown Executive, Kris Hinson, Steven Moskowitz
Simon Flannery: Great. Thank you. That's helpful. And maybe just a clarification question on this sprint churn beyond 2025. Steve, you mentioned that there was some lingering components beyond the 205 million this year. You just clarify how we should think about that.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Sure, yes, we've mentioned in the past that our term rate into the future was to be expected in the 1-2% range.
Speaker Change: and I thought it'd be best at this time to just be more granular and just call out the Sprinchern in particular, which is about 20 million. Again, starting in 2026, just to clarify what was included in that range.
Speaker Change: So, I guess, again, think of our long-term range as I mentioned, as being, you know, around 1% and the in the sprint churn, being, you know, 40 to 50 basis points.
starting in 2026.
Speaker Change: Great, that's helpful. Thank you very much and Dan, it's been a pleasure working with you all the best going forward with whatever comes next.
Thank you very much. Appreciate it.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Thank you. Your next question comes from Nick Del Deo from Mossett, Nathanson.
Please go ahead
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Hey guys, and first off Dan, again, thank you for all the time and insights you shared with us over the years and best of luck and whatever you choose to do next.
Thank you very much.
Steven Moskowitz: Steven, you talked about the opportunity to improve market shares, one of your strategic priorities going forward.
Speaker Change: I think a lot of folks think of this business on a tower by tower basis. You're kind of either there or you're not.
Simon Flannery: and there tend not to be a lot of competing towers within a relevant radii. So through that lens, how are you thinking about the opportunity to boost the share of cell sites you host?
Simon Flannery: We're trying to maximize the sheer revenue that's out there.
Simon Flannery: There are some sites that are competing out there as you know and so ideally based on the way in which we perform and the confidence level that we have with our customers and the MLA's that we have structured with our customers.
Simon Flannery: in the speed and the quality that we deliver to our customers on a day-to-day basis, that they would want to have their RF engineers RF with our sites in mind first.
Simon Flannery: and so again some of the things I just mentioned are really critical for us to continue to enhance in order for the customers to look at us as being the most essential player in this business in the US.
Simon Flannery: and kind of always target a Crown Castle site first in terms of a co-location. Obviously with the overlays, you know, there's not much of a choice because they're doing upgrades. It's when they densify or it's when they add coverage.
Simon Flannery: We haven't played in the new tower bill game in a long time.
Simon Flannery: We haven't played in the inorganic tower M&A game in a long time.
Simon Flannery: So we're going to be putting more effort, more thought around that. There are some customers of ours who would like us to do building for them as they're trying to expand in certain markets.
Simon Flannery: where we have economies of scale also. So, you know, we're going to be looking at that. And thinking about how we could put together some agreements and some opportunities that leverage our abilities and relationships. We're going to be looking at how we could put together some opportunities that leverage our abilities and relationships.
and also provide good returns, long-term for shareholders.
Unknown Executive, Kris Hinson, Steven Moskowitz
Simon Flannery: Okay, that's helpful. Thank you, Steven. Can I ask one about unallocated GNA as well? In the slide where you kind of bridge to the estimated AFFO at Transaction Close, you seem to assume that a lot of the unallocated GNA eventually goes away. I guess, can you help to mention how much of that you think you can eventually get rid of in over what sort of time frame?
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Yeah, I'm not exactly sure how you got to that conclusion, Nick, but I can tell you that there's a bar you're talking about, which is kind of the third bar from the left on that page seven is a is a. [inaudible]
Speaker Change: appropriately sized towards a tower only business, and you maybe get a range of that from the bar, but we're not going to get right now into specifics of how that's going to go until we get further along in the process.
Speaker Change: Yeah, I mean, we have there's a lot of opportunity for the employee base of this company.
Speaker Change: and there's also a lot of opportunity for folks at Tower as we want to continue to enhance our business and grow our business and expand our business.
Speaker Change: So I agree with Dan, we're always going to be looking at opportunities to focus on cost management.
Speaker Change: with that means from an SNA or a corporate perspective on a post-closing basis, time will tell, and we'll obviously update you as we make decisions.
Okay, great. Thank you both.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive: Thank you. Your next question comes from Jim Schneider from Goldman Sachs. Please go ahead.
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Thanks for taking my question, and thanks to you, Dan, and best wishes on your piece of endeavors.
maybe this maybe will not do [inaudible]
Speaker Change: I think you could talk a little bit about your four-danked growth strategy for towers in the US business.
Speaker Change: from that interview. Let me talk about your intention to serve.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Yeah, I didn't get the first. Can you repeat the first part of the question? I've got about the rural and about the built-to-suit and about the cat-backs.
Speaker Change: First was about just how your demand was the rural opportunity? Okay, but the rule, you know, we're starting to evaluate that Jim, you know, on the, on the rural side, you know, most of our footprint, as you know, is urban and suburban and quarter driven.
Speaker Change: We don't have a lot of steel and pulses of land in rural America, other companies that we compete with do.
Speaker Change: So, you know, the question for us is, you know, what, you know, which carriers are going into that mark, into those markets? Is there opportunity for co-location versus just having a single stick with a single carrier on it? And where the economics involved?
Speaker Change: You know, we feel very comfortable in our ability to be able to...
Speaker Change: You know, do the site acquisition zoning and permitting and the construction of building sites?
Speaker Change: and doing it with speed and quality. The real opportunity, the real question comes down to what type of economics we would be able to work out where we feel it's a good investment for the business both in the short run and also over the long term horizon. [inaudible]
in terms of the capital.
Speaker Change: You know, a chunk of that capital is going to be going to land, which we're trying to, you know, really gear up on.
Speaker Change: because we think there's some good opportunity there and again it helps secure the asset for us, it helps drive co-location more quickly.
Speaker Change: and it helps improve our margins. The balance of it is corporate capital that would be invested again, both to help improve our systems.
Speaker Change: and other kind of smaller areas of the focus for the company.
Unknown Executive, Kris Hinson, Steven Moskowitz
Thank you.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Kris Hinson, Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Thank you. Your next question comes from Brandon Nispel from Keybunk Capital Markets. Please go ahead.
Speaker Change: Great. Thanks for taking the question. Steven, I hope you could talk about some of the operational initiatives that you might do. And from a financial standpoint, where do you think some of them like EBITDA margins can go over the long term?
Speaker Change: and I asked because one of your peers is also sort of doing an exercise to try to drive all costs in the business but try, you know, and we can see where your EBITDA margin is this year on the tower business. So where do you think it goes longer term? Thanks.
Speaker Change: Yeah, I'll start with the second one. I mean, it's tough for me to see here and try to quantify.
Speaker Change: where the EBITDA margins are going to go, I'd like to see that they're going to go up. But, you know, I'm not going to give any type of number of basis points to whatever.
Speaker Change: I'm just going to say that we're going to be working very hard to drive margin. I think, again, one of the initiatives that I've mentioned a number of times here in the Kathy Pichet who's the leader of our tower business is very focused on with her team is the real estate and in trying to do what we want.
Speaker Change: You know, remove the issues that we find impact our margins, which is, you know, dealing with landlords toward end of terms where they want much higher rents.
Speaker Change: So the more that we can do with our operations leadership team and our supply chain team to help drive more economies of scale as we're doing work out in the field I think would be a way for us to improve margin.
and that's again on the operating side. [inaudible]
Speaker Change: In terms of some things that we're working on, I've talked about this before. We're renovating our processes to some degree.
and we have certain projects.
that we're working on to enhance the application.
Speaker Change: Process Flow, really kind of from application to installation, to make that quicker and easier, to make sure the data is correct.
Speaker Change: We're doing a lot of drone work which I've mentioned in the past to help digitize our assets. I think we're about halfway through at this point.
Us be able to very quickly in the future identify what's on the tower, obviously, and what the win-loads are and how those match against our holistic agreements.
Speaker Change: So carriers can deploy more quickly and the quicker the more quickly they can deploy, that helps accelerate revenue for us.
Speaker Change: and we're also trying to toy around a little bit with some AI tools.
Speaker Change: One of our, one of the companies that we work with on that supplies.
Speaker Change: Systems for workflows has some pretty neat predictive analyses tools and so we're trying to incorporate that in again back into kind of the property and asset management part of the business so we can get kind of quicker turnaround times and have less error rates.
So those are just like, I guess a few examples. [inaudible]
Thank you for taking the question.
http://TheBusinessProfessor.com
Unknown Executive, Kris Hinson, Steven Moskowitz
Thank you.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Speaker Change: Thank you. Your next question comes from Batya Levi from UBS.
Please go ahead.
and...
Maybe just going back to the air for a full bridge.
Speaker Change: Looking at that slide 7 again, the 250 to 370 million away effort for growth is a bit of a wide range, what's that dependent on? And if you could provide a rough split of revenue growth versus GNI's, just most will be great. Thank you.
Speaker Change: Yeah, we don't believe they're going to be any significant tax consequences to the deal, so I can confirm that. As you mentioned, Batya, in 2024, we had $40 million of costs associated with our art.
Speaker Change: Advisory Costs that we do not believe will recur. We were also able, as we talked about, to take out about a hundred million dollars of annualized costs from our moves in June about 35 million of which will be incremental in 2025. And those cost savings are offset somewhat by our art.
is regular to cost structure.
on page 7.
Speaker Change: Those are pretty wide ranges on purpose because we don't want to pin down what's happening in 2026. We want to do just try to give the bridge.
Speaker Change: so that you have a sense for what the company looks like. [inaudible]
Speaker Change: Post This Transaction, and so we're not going to give a lot more detail including the breakdown of costs versus revenue versus interest expense. It was all put in there to try to give you a sense for where we're headed not try to get into a specific prediction of what's going on over the next 18 months. And so we're going to give you a little bit more detail about what's going on over the next 18 months.
Okay. Thank you.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive: Thank you. That concludes that question in the next session. And with that, the conference is now concluded. Thank you for attending today's presentation. You might now disconnect. Thank you very much.
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Unknown Executive, Kris Hinson, Steven Moskowitz
Thank you. Thank you. Thank you.
David Barden, James Schneider, David Barden [inaudible]
Born in 1475 Animal Teaching Murder Solitude Murder Death
Unknown Executive: Ben Fried, President and Founder of the Fourth Economic Starship Group Peter Churchill SR You in the Internet Presented in connection with the World Economic Forum The World Economic Forum Created by Charles Seismis
Pleasure to meet you.
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