Q2 2025 Crown Castle International Corp Earnings Call

Good day and welcome to Crown Castle's. Second quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions to ask a question. You may press star then 1 on your telephone key keypad.

To the draw. Your question, please press star then 2, please note this event is being recorded.

Chris Hinson: I would now like to turn the conference over to Chris Hinson. Vice president of corporate finance and Treasurer. Please go ahead.

Thank you. Ah, and good afternoon everyone.

Chris Hinson: Thank you for joining us today as we discuss our second quarter, 2025 results.

With me on the call this afternoon or Dan schlanger Crown Castle's interim, president and chief executive officer and soon at Patel Crown Castle's Chief Financial Officer.

Chris Hinson: To Aid the discussion. We have posted supplemental materials in the investor section of our website at crown castle.com, that will be referenced throughout the call.

Chris Hinson: 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 Hinson: 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.

Chris Hinson: Our statements are made as of today, July 23rd 2025 and we assume no obligation to update any forward-looking statements.

Chris Hinson: In addition, to today's call includes discussions of certain 9, gaap Financial measures tables, reconciling, these non-gaap Financial measures are available in the supplemental, information package in the investor section of the company's website at crown castle.com.

Chris Hinson: I would like to remind everyone that having an agreement to sell our fiber. Segment means that the fiber segment results are required to be reported, within Crown Castle's financial statements as discontinued operations.

Consistent with our first quarter reporting the company's full year 2025 Outlook and second quarter results. Do not include contributions from what we previously reported under the 5% except as otherwise noted

Chris Hinson: On a comparable basis.

Chris Hinson: As we indicated last quarter, within 2025 Outlook, and in our quarterly results, all financing expenses are included in continuing operations and do not reflect the impact of any expected use of proceeds from the sale of our fiber business.

Chris Hinson: Additionally, sgna has been allocated between continuing and discontinued operations to develop our Outlook.

However, these allocations may not represent the Run rate sgna for Crown castles as Standalone Tower company.

Chris Hinson: As a result adjusted Eva afo and afo per share in our 2025 Outlook and quarterly results may not be representative of the company's anticipated performance, following the close of the sale.

Dan: With that, let me turn the call over to Dan.

Dan: Thanks, Chris and good afternoon, everyone.

Dan: As a result of the great work by everyone at crown castle, we are delivering on the 3 near priorities I shared last quarter.

Dan: First meeting or exceeding, the company's financial and operating objectives for 2025. Second facilitating, the successful close of the sale of our small cells and fiber Solutions businesses and third positioning the tower business to maximize value for shareholders on a standalone basis.

Dan: As evidenced by our solid second quarter results and our increased 2025 guidance. We are delivering on our first priority.

The increase to our full year. 2025 Outlook is underpinned. Both by higher demand for our assets as our wireless. Customers continue to augment capacity in their networks driving, higher, Leasing and services activity,

Dan: And by improved operating efficiency.

Dan: On the second priority.

We believe We are on track to close our sale transaction and the first half of 2026,

Dan: We have already started, receiving state level approvals, and we are actively engaged with the Department of Justice.

Dan: as we process a second request for information that we recently received,

Dan: From an operational standpoint. We have delivered to the buyer's outlines of the processes personnel and support infrastructure required to operate each business.

Dan: Positioning us for a seamless transition at close.

With respect to our third priority, since announcing the agreement to sell our small cell and fiber Solutions businesses, we have focused on operating the tower business more efficiently.

This focus is already beginning to show up in our results as we have driven shorter cycle times that have contributed to our higher leasing expectations for the remainder. Of the year, we have improved the margins in our services business by reducing operating costs and we have reduced expected full year 2025 overhead costs by 10 million.

Dan: We believe our continued focus on operating the tower business more efficiently along with our previously, announced Capital allocation framework.

Dan: We'll position the company to maximize value. As a pure. Play us Tower operator.

Dan: In the second quarter, we made progress implementing implementing our Capital allocation framework. By decreasing. Our dividend per share to 4.25 cents on an annualized basis, which will increase our financial flexibility going forward.

Dan: Following the close of our sale transaction.

Dan: We intend to grow the dividend in line with asfl excluding amortization of prepaid rent by maintaining a payout ratio of 75 to 80%

Dan: Additionally, we expect to spend between 150 and 250 million of annual net, capital expenditures to modify our Towers purchase land, under our towers and invest in technology to enhance and automate our systems and processes.

Dan: We believe these enhancements which are already underway, are fundamental to our operational objectives of improving, customer service, becoming the best operator of us towers by increasing productivity and efficiency.

Dan: Lastly, after paying our quarterly, div div dividend and pursuing organic investment opportunities. We intend to utilize the free cash flow. We generate to repurchase shares while maintaining our investment grade credit rating, which we believe will drive attractive, shareholder returns.

To wrap up as supported by our updated full year. 2025 Outlook, we are making solid progress across our 3 near priorities.

Dan: We are on track to exceed our financial and operational objectives for 2025.

Dan: We're making both Regulatory and operational progress in the separation of the small cell and fiber Solutions businesses and believe. We are on track to close the transaction. The first half of 2026,

Dan: And we are focusing on driving efficiencies and implementing our Capital allocation framework, which we believe will position the tower business to maximize long-term value creation.

Speaker Change: With that, I'll turn it over to son to walk us through the details of the quarter.

Speaker Change: Thanks Dan and good afternoon everyone.

Speaker Change: Impact of Sprint cancellations.

Speaker Change: A million dollar year increase in Services, activity contribution and a 37 million year-over-year. Decrease in sgna primarily driven by the reduction in Staffing levels and office closures announced in June 2024, and the absence of 20 million of advisory fees incurred in the second quarter of 2024.

Speaker Change: These items however were more than offset at the site. Rental revenues, adjusted ebit da and if, if all lines largely due to an unfavorable 51 million impact from Sprint, cancellations a 34 million dollar reduction in non-cash straight line revenues and 16 million decrease in non-cash amortization or prepaid rent.

Speaker Change: Our updated outlook for full year, 2025 includes increases of 10 million to cite rental revenues, 25 million to adjusted ibida and 35 million to afo.

Speaker Change: Moving to Page 6.

The 10 million increase to growth in sight. Rental revenues is a result of higher organic contribution to cite Rental Billings driven by higher activity levels.

Speaker Change: This increase which brings the full year outlook for organic growth to 4.7% excluding the impact of spring cancellations benefits from a 5 million increase to core living activity, and a 5 million increase to change in other Billings, which primarily consists of back Billings.

Speaker Change: We also expect a 35 million increase at the afo line consisting of first, the 10 million increase to cite rental revenues. Second a 10 million decrease in overhead expenses as we identify opportunities for greater operational efficiency in the tar business.

Speaker Change: Third, a 5 million increase in Services, gross margin driven by the higher activity levels and finally, a 10 million decrease in interest expense. Due, primarily to a push out in the assumed term out of our floating debt.

our outlook for discretionary Capital expenditures which includes modifying, our Towers purchasing land, under our towers and investing in technology and systems, that will enhance profitability remains unchanged at 185 million or 145 million, net of 40 million or prepaid rent received

Speaker Change: In conclusion, we're making solid progress against each of our top near-term. Priorities.

Speaker Change: We believe We remain on track to close the sale of our small cells and fiber Solutions business in the first half of 2026.

Speaker Change: With our increased focus on operating the tar, business as efficiently as possible. We continue to expect to meet our range for estimated annual affo that we reiterated last quarter of 2.265 to 2.415 billion at anticipated, transaction closed. And we believe our focus on operational execution, investment grade, balance sheet and our Capital allocation framework. Will position the top business to maximize long-term shareholder value on a standalone basis,

Speaker Change: With that operator. I'd like to open the line for questions.

Speaker Change: Thank you. We will now begin the question and answer session to ask a question. You may press star then 1 on your telephone keypad. If you're using a speaker-phone, 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 then 2

Speaker Change: The first question comes from Jim Schneider, with Goldman Sachs, please go ahead.

Speaker Change: Hey guys, this is uh Josh and for Jim, thanks for taking the questions. Um, I just, uh, too if I could, um, can you give a bit more information on what's driving the higher leasing activity. And if this is related to rural builds or or some other project that that you're seeing from the carriers and then secondly um each of the carriers has has talking about or spoken about their timeline for um, 5G deployments, but from your standpoint relative to this point in 5G versus 3G and 4G Cycles. Um, how should we think about what's left to deploy and and how do you think about the the tale of 5G um, being longer or shorter than those? Thanks?

Thanks Josh. Um,

The higher leasing activity really is across the board from all of our customers and across, uh, across our footprint. I think what we're seeing is a continuation of our customers seeing, um, a, a need to augment their network capacity because they're seeing subscriber growth as they each, um,

And I think when, when you see those types of things from our perspective, uh, subscriber growth and increased turn, usually leads to an increase in in activity because, uh, uh, the network needs to be augmented to keep up with, um, the incremental demand that's being placed on it. So, there's nothing I would point to specifically other than it's just activity levels are higher than what we expected. When we gave guidance at the beginning of the year,

Speaker Change: On the, on the timeline of 5G, this deployment cycle versus others. Uh, you know, the 4G cycle was 10 to 12 years, that took to go from the beginning of the 4G cycle, until we really started 5G in earnest.

Speaker Change: I don't think there's anything that would lead us to believe that the 5G cycle would be any shorter. I think there is something that would say that the the 5G cycle might be longer just because um the Quantum of incremental data continues to grow. So even though that the percentage of data growth in the US is relatively consistent because the basis is growing, you're getting an increase in the n and just the amount of of data that that needs to be tracked over the networks. Which think we think is going to take a long time for our customers, to continue to build out their networks to withstand all that incremental, demand

Speaker Change: Got it. Thank you.

Speaker Change: The next question comes from Michael Rollins with City. Please go ahead.

Michael Rollins: Thanks and good afternoon. Um, curious. Um,

Michael Rollins: To ask about the pro-forma, uh, post. Uh, the vesture crown castle. So, um, in the past I think you talked about generating, uh, in reference to I think earlier enough afso per share. So the dividend payout at, uh, 4 and a quarter would be 75 to 80% and then there could be a second leg after that, in terms of efficiencies Beyond just the general organic growth of business. So, curious as you've been focusing more on the go forward, Crown strategy, and efficiencies what you're learning about the size of opportunity in that second leg of maybe. How much more incremental efficiency. You know you can generate and the speed at which you can get to the first leg and the second leg once the deal closes. Thanks.

Mike: Thanks for the question. Uh Mike.

Michael Rollins: I'm going to try to use the language you use and use a first leg second leg even though that's not exactly how we've said it. But I'll use that language to be consistent with how you ask the question.

Mike: Um, we have and we've given in the first quarter and soon, it said, in the prepared remarks that we still believe we will, we will be able to reach the range of outcomes for the, uh, annualized period after close that we had in in our presentation, last quarter of, of around 2.3, to 2.4 billion dollars of afo.

Obviously we expect to get there by the time, we close the transaction or we wouldn't put that out as our expectation. So we believe we will be able to get to that level of savings that would allow us to to reach and generate that level of afo. By the time we close the transaction.

Mike: So that I think covers your first leg question. Your second leg, question is beyond just being a simpler business that allows you to to operate more efficiently and drive costs out. What can you do going forward? That would be even more. Um, we don't really have a time frame on that nor do we have a way to to quantify it at this point because we are working on that currently. We are, we are updating our systems. We are updating our processes currently. And as we go through that process, we will identify places where we believe we can get more efficient that will drive higher afo growth over time, but we're not in a position. Now that we would be able to quantify when or how much

Mike: Thanks.

Mike: Thank you.

Michael Frank: The next question comes from Michael Frank, with Bank of America, please go ahead.

Yeah, thank you for the question and good evening everyone. Um, so soon, maybe a question for for you, if I, if I could. Um, you know, going back to the post close structure and you've talked a lot about the allocation of expense between, um, you know, the the Standalone business versus the devastated business, where are the most questions on overlapping cost left to evaluate and deciding the final breakdown of expense between the uh, devest and then the core Tower business,

Michael Frank: Yeah, I think if, uh, if I understand your question, right? Michael. I think um, you know, look it's uh, they are the synergies in running 3 disadvantages. We got the fiber business, the small cell business, and the tower business. And I think just with the

Michael Frank: The course of this year, through some of our separation activity. Uh, you know, it's beginning to highlight, uh, areas that we'd have to take a look at post post-closing. So, but, but the main, the main point I would make is, you know, running 3 businesses versus 1 is a big big difference in simplification, which is why we think we should be able to drive efficiencies over time Danny.

Speaker Change: What are other areas like maintenance for? For example, there's still some questions and I allocate that cost between the 2 businesses or more. The overlapping costs, um, you know, business support, um, you know, it accounting, things of that nature that you're still questioning.

Yeah, it's more on the corporate side uh, not as much because the businesses are unfairly separately. Otherwise meaning the fiber and small cell and the tower business. So so not much overlap uh on things like maintenance that you mentioned. It's more on the corporate side. Okay. 1 more quick 1. If I could please, um, I'm thinking about Capital allocation priorities. Um, how should we think about programmatic versus opportunistic BuyBacks?

Speaker Change: Yeah, I mean I think we we mentioned this uh, at the announcement of the transaction, but clearly uh, with the proceeds debt reduction is key. If you want to keep, uh, make sure we have a investment grade. Uh, rating balance sheet. If you like, uh, we talked about our D dividend policy is Dan mentioned, uh,

We have set the dividend at a new level. And then going forward, post the close of the transaction, uh, you know, the dividend will grow and will be in that range of 75 to 80% of ffo. And then, uh, thirdly we also talked about buying shares back. Uh, so that says you point out more more discretionary. But we also talked about, uh, what we're going to do there. So so the idea is to do all 3, which we think really, uh, maximizes shareholder value over time. And then let Dan add any thoughts? He is.

Dan: the only thing I would add to that, Michael is

We're going to have again. I think kind of 2 stages of what you would call a share reverse. The first is, what do we do with the proceeds that we get from the transaction? And how are we going to allocate? Those proceeds, as we've talked about, we're going to use the vast majority to pay down debt and then we're going to use some to buy back stock uh, to maintain an investment grade rating.

How we ultimately execute on that stock repurchase program is going to be a function of the timing, the market, and what we think, will deliver the best results for our shareholders. And and I and so we don't we don't have a view yet on how we will ultimately execute. And then ongoing, We believe We Will generate uh additional free cash flow and leverage capacity that we can utilize to invest in our business, pay our dividend and uh, and buy back stock as soon as it pointed out. And again, how we ultimately, uh, structure all of that. Um,

Dan: Stock repurchase will will be predicated on what the market looks like. And how we think we'll be able to generate the best value for our shareholders. So it I don't think at this point, we can we can give a really good sense for for what that execution is going to look like. But I think what we can say is, um, we understand their pros and cons to to having a programmatic share. We purchase and we're having a an opportunistic, share purchase, we will weigh all of that. And come up with what we think is the best case scenario.

Speaker Change: Great. Thank you both the time.

Dan: Thank you.

Speaker Change: The next question comes from, Rick Francis with Raymond James, please go ahead.

Speaker Change: Thanks, good afternoon. Everybody on a busy day. Um, first, our thoughts are with everybody in Texas. That was a very difficult time over the 4th of July. So hope everybody on the team and families made it. Okay.

Speaker Change: Thanks Rick.

Speaker Change: Um, first question, I've got um, Dan you mentioned that something you've already been achieving has been shorter cycle times where are we at right now? What are you guys heading and what what kind of uh cycle times? Are you achieving? That's, that's helping results.

Speaker Change: Yeah. Overall.

Speaker Change: 1 thing, that would be a

Dramatic change from when we get an application that when we put something on air and generate Revenue, those are still for most of the applications. We're talking about now in the 6 to 12 month range, what we're talking about is the average cycle time, we've been able to uh, reduce the amount of process that we put in and, and streamline what we do in order to drive incremental and and relatively marginal changes to our cycle times. But when you're talking about a book of business, the size of ours, and the number of applications that we process on a yearly basis, those incremental and marginal improvements add up to uh enough to enough outcome to uh, impact the the

Speaker Change: But we increased the core leasing activity by million dollars. So it's not a tremendous impact but it's a proof point that what we're doing is working. We're putting in place uh, incentives and and getting people to work really hard to try to figure out what can we do to make our business better. And we're seeing the very early stages of all those things coming true both in those cycle times that we're talking about um but also in the Improvement to our services margin um and the improvements to our cost structure. So it's just little things over and over again we think will notice to be the Best in Class operator of towers and it won't be 1 dramatic event that we can point to and say our cycle times move by 180 days. They're going to be little things here and there, uh, like cycle times, like, like cost improvements that over time, we think are going to add a tremendous amount of value through the ability to grow our cash flows, more than we, otherwise would have

Speaker Change: Um, I think you also mentioned on the deal closing.

Speaker Change: Is still looking at first half, we got some State levels that are making good progress or approved doj. Is there anything with the FCC and of course we've been watching T-Mobile Uso or Paramount. Sky dance. A lot of this Dei discussions or need for a letter, sometimes comes out there. But is there any FCC? Requirement and where are you guys at? As far as any kind of De Dei issues?

Speaker Change: Yeah. There's nothing that we can speak to 1 way or the other at this point because we're just not far enough along the process. Uh, what we can say is that we have, um, tried to manage our business for the interests of our shareholders, uh, because we believe that that's the most important thing to do. And we continue to manage our business at the interest, in our shareholders, uh, some of those things when we are trying to drive the best outcomes for shareholders. Also means we try to buy Drive the best outcomes for our customers and our communities and our employees. Uh but the the driving factor and how we make decisions is, what do we think? Is going to make the best sense for our business overall?

Right. And last 1 for me, is you laid out your 3?

Speaker Change: Objectives and what you're working on. It's good progress on all of them. Um, maybe an update on is the board actively searching for a new CEO. Are they waiting for the deal to close because it means sort of seems like the process is going well. But what is the update? Kind of on a CEO search and could there be any changes in capital allocation, or stock buyback plans? If there was a change at the, at the sea level,

Speaker Change: the board is actively searching for a CEO. I don't think that they are waiting for the deal to close. I think that they they are trying to find the right person to lead this company going forward. Uh, they have not put a time frame on it as we discussed last quarter because they don't the the as you said things are going well enough at this point where we don't need to make a change. But I think that they want to find the the the

Uh, CEO who is no longer interim, um, as quickly as they can, because it would be something that would would clear up, uh, another level of of uncertainty on our company. We've had plenty of uncertainty. So it would be very good. I think to, to have an announcement and I think the board understands that so they're working towards it. Um,

Speaker Change: and uh,

Speaker Change: and,

Speaker Change: I forget the second part of what you have. Yeah, could they change the Catholic?

I think what you can take away is that the board has made some some decisions on the strategy and the future of this business that any person who would step into the role, would have to agree with or they wouldn't take the role

Speaker Change: Because I think that the board will be very clear that we are going to be a tower, only business that is focused on the US. And that they're going to want somebody who's going to come in and be able to make that uh that Tower only business. The best operator of towers in the US that we possibly can be and I think that that will make that clear to any person who's going to come in to be the CEO.

Speaker Change: Great, thanks guys. And again, our thoughts are with everybody in Texas.

Speaker Change: The next question comes from Ben Simmons, with Morgan Stanley, please go ahead.

Ben Simmons: Thanks, good afternoon. Uh, I guess 2 questions, 1 1, kind of bigger picture. I know it's early Dan, but I was wondering if you had any updated thoughts on how

Ben Simmons: gen AI or AI could drive incremental traffic by your customers and therefore, incremental, Tower Revenue, um, particularly as we see inferencing as a bigger and bigger part of the AI use cases. Um, and then second, you know, I know it's a smaller part of the business but service gross. Margins are coming in better. You guys that's part of the guide raise. What can you talk a little bit about what's happening there? How much of that might be, you know, kind of structural or what changes you've made to help drive that and how we should think about the service margin opportunity. Uh going forward. Thank you.

Ben Simmons: That technology will ultimately follow us where we are, which is mobile. We don't sit in our desks and only do work at our desks anymore. So anything you can think of that drives AI traffic that people currently are using, when they are at the office will likely make it into a world where we're going to want to use that technology as we move around the world. And I think that that is going to be a potential significant increase in data demand.

But the exact use case is really hard to pinpoint right now of what it would be. It could be Healthcare or autonomous driving or any of the ones we've talked about. It could be, um, how do we Implement better manufacturing techniques and how do you use mobile networks to be able to make that happen? But those types of things are are, are hard for us to see? All we know is that as technology increases and, uh, in technology moves that we as consumers wanted to move with us, and that's what crown castle provides. The world its connectivity for whatever data you want to utilize Wherever You Are.

Speaker Change: On the second question, with the service growth margin coming in better. I would say that the recent improvements have been structural as we talked about. We've been looking at our processes looking at costs our cost structure and trying to save money. And uh the tower team has done a fantastic job. Identifying what they can do to try to increase uh revenues while increasing the percentage of that Revenue that falls to the bottom line. And what you've seen is an increase in service growth margin

Speaker Change: Consistently over the course of the last, you know, 6 12 months. And we believe that there is uh, those are sustainable increases in service grows more

Speaker Change: Thank you so much.

The next question comes from Jonathan. Atkin with RBC Capital markets, please go ahead.

Speaker Change: Thanks. So just a couple from my side wondered. Um, if you're noticing anything different, um, around carrier activity with respect to doing their own, uh, Greenfield bills, I think 1 of them kind of referenced an elevated pace of doing their own bills, rather than perhaps, uh, commissioning build the suits from third parties, any observations on that. And then with regard to just, uh, private Market m&a activity, um, in the US, um, anything that you're seeing in terms of, uh, multiple multiple

Speaker Change: Thanks John, you may have cut out a bit so if I don't get to the second question fully just just please ask again. Uh

We have not really been in the build the suit Market very much over the course of the recent past because we have not seen an opportunity to generate returns over and above our cost of capital. Given the terms that we've seen coming from carriers, so we haven't been involved all that much and build the suit and therefore, we we haven't seen much of a change because we just haven't been all that involved.

Speaker Change: I I would find it. Um, I find it hard that that our customers are able to drive a lower all-in cost of operation over the life of an asset, uh, for the tower business, that wouldn't be third-party given the ability to share that asset is so much easier as a third party than it is as a carrier. And that has been proven over and over again of the history of the of the tower business. So, even though that might happen, even though it might happen that our customers want to build their own towers for a period of time, it is generally been that they ultimately sell those Towers to a third party operator because that's where the lowest total cost of operation can occur because of the sharing of the of the capital among all customers.

Speaker Change: On private Market multiples, sorry, go ahead. Yeah, no, go ahead. I, I have a quick third 1, go ahead and, uh, address the m&a. Okay. Thanks John. Uh, on private Market multiples.

Speaker Change: You know, we said this before, I've said this before, it has always been an interesting to me in my experience, with this industry that private Market multiples have been higher than public market multiples. And, uh, we've never really figured out exactly why I think that there's, there's some theories, but it's hard to pinpoint. Um, and we have not seen a significant change in the market dynamics, for private Tower, uh, uh, assets, uh, in the US.

Speaker Change: Again, that really has an impact on us all that much. We haven't been in the market to do so, and we're not in the market now to try to go expand our footprint in the us because we have enough to do right now to get the deal closed that we're already working on. So I don't think the, the private Market multiples where they are, where they sit today have much of an impact on Crown Castle's Outlook over over the course of 2025 and even into 2026. As we get the uh the sale of our fiber Solutions and small cell businesses completed.

To Rick's question, um, on ground lease, uh purchases, uh, the pace of its any anything around um, uh, whether that could increase, in terms of outright, um, purchases of land or, or, or or lease, extensions, any, anything different going forward than what we've seen over the last, uh, couple quarters?

Speaker Change: We have not increased over. You can see, we haven't increased over the the course of this year, thus far our purchases of land under the towers. However, we are putting a focus on trying to identify the places where we think that we can generate a good return by buying that land and reducing our cost structure. We think that drives value as long as it's a good return for us, uh, and it reduced our operating costs. Those things are things that we think are are really valuable and can, and can generate incremental shareholder value. So, we are looking to increase the amount of land that we purchase over time and you should see in the back half of the year, a little increase in the amount of capital that we are allocating to that land purchase program.

Speaker Change: Thank you.

Speaker Change: The next question comes from Eric Klein with BMO, please. Go ahead.

Thanks uh Dan you mentioned capacity additions. Uh curious if that suggests you're seeing an uptick in uh collo activity and maybe you can talk to the cola versus Amendment mix and and how that might be changing.

Speaker Change: And there may be separately on Ibiza, you've had 2 quarters of that performance to start in the year that amount to more than the the amount that God was raised. And if we simply annualize the first half of the year, it would get to above the high end of the range. So, just curious. We can provide some color on the moving parts and maybe what's been sustainable, cost savings for seasonality or timing. Thanks.

Speaker Change: On your first question. Ari, the capacity additions we have not seen a significant change in the mix of collocation and Amendment activity. So what we're talking about when we say adding capacity that addition can be

Speaker Change: Based on adding capacity at a tower that our customers are already on, or adding capacity on towers that they are not yet on, which would be the collocations. Uh, so we're seeing both augmentation and and, um, uh, some densification but not at a, at a pace. That's any different than what we've seen historically.

Yeah, on on your second question. I mean, as we mentioned in the last call, you know, we do have some seasonality in the business. So some of the expenses uh, you know were running lower. But, you know, uh some of them will be back-ended for the rest of the year. So I think the uh, the range uh, we provided captures that for for, for the dollar level.

Speaker Change: Thank you.

Batya Levi: The next question comes from Batya. Levi with UBS. Please. Go ahead. Great, thank you. Um, can you remind us your exposure to Sam and maybe the remaining of terms with the company and to the do, do you have a sense of the overlap with T-Mobile? I think they just suggested that they will take on more Towers from uh USM and how that could potentially impact you. Thank you.

I'm really sorry but you broke up when you asked that question, do you mind asking again? I apologize. Sure. Um, the exposure to USM and maybe the remaining deal terms with the company and um, I believe T-Mobile is looking to acquire more Towers from USM. And how, how could that impact you

Batya Levi: Thanks for repeating it. Sorry about that. Uh, we have minimal exposure to US cellular towers US Cellular on our Towers. It it is a negligible amount that would not have an impact on our overall Financial results.

Batya Levi: Thank you.

Brandon Lynch: The next question comes from Brandon Lynch with Barkley. Please go ahead.

Brandon Lynch: Great. Thanks for taking my questions. Um, wanted to follow up about allocating costs between continuing and discontinuing Ops. It sounds like the default is to keep expenses in continuing options, so it's clear that it can be moved over. So should we expect that more costs are going to be moved over each quarter until the deal closes? Looks like you did this with 15 million of stock comp this quarter.

Brandon Lynch: Yeah.

Brandon.

Brandon Lynch: being is, is kind of the

Brandon Lynch: Ensuring that we've made those allocations as well as we possibly can. We think we've done a very good job and we might have some minor changes over time, but nothing that would be significant, would be the way.

Speaker Change: Out. Okay thanks, that's helpful and then it looks like you only incurred about 14 million of Maintenance capex year to date. But guidance implies 31 million in the second half at the midpoint can you, can you provide any details on what might be planned to get you to the 45 million midpoint or even into the range that you're suggesting?

Speaker Change: Yeah, some of that is just timing and seasonality. I think we'll see a heavier. Uh,

Speaker Change: Expense in the second half of the year, uh, consistent with our guide.

Speaker Change: Okay, there's nothing planned. That's specific. It's just the way that that we spend money sometimes is not routable and we're going to make sure that our our towers are maintained in a way that keeps them safe and upright and appropriate for the weight and distribution that we have on them. And the way, the capital ultimately plays out over the course of the Year, sometimes has lumpiness to it like this year.

Speaker Change: Okay, thanks for your call.

Speaker Change: The next question comes from Richard, Cho with JP Morgan, please go ahead.

Richard Cho: Hi, I wanted to ask about, um, as 2 of your, I guess. Biggest customers in National Carriers. Get to 80 90% 5G coverage. Um, do you expect any sort of I guess, fall-off next year as um, you know, second carrier reaches that level and maybe along with that. What are you seeing in your pipeline of business for next year?

Speaker Change: We're not at a point right now that we think we can give or should give 2026 guidance. So we're not going to talk through what leasing activities is going to be going into 2026.

Speaker Change: Having said that clearly by our increase in guidance for 2025, we're seeing a higher level of activity through this year, than what we expected at the beginning of the year, when we gave guidance and if you look at the, the first half of the year in core leasing activity, uh, and then what we expect in the second half of the year, we expect more quarter leasing activity in the second half than we have experienced in the first half of the year. Uh, so we're we're pleased with that result. It's good to see more Revenue growth than we expect moving our. Our midpoint of our guidance from 4 and a half percent growth, excluding Sprint turn to 4.7% growth including Sprint. Turn is it is a meaningful move for us. And we think that that positions us well for the future as, as we continue to focus on growing, the revenues of the company.

Speaker Change: And some of the um, increase, not all of Italy, but some of it was from the back billing. It seems like that's and also an improvement benefit from operations. Um, should we see more of this going forward? As you continue to improve operations or will it be a little bit more? Episodic

Speaker Change: I think it will be episodic when we were able to raise our guidance. But as we put into the guidance that we we updated today, there's there's a 5 million dollar increase in other Billings, which is mostly in back billing. Uh,

Speaker Change: Some of that already occurred in the year and some of it is, uh, yet to occur for based on the, the work we're doing to identify where we need, where we have equipment on towers that we need to get paid for. So we are improving all of the process around how we operate as a tower company. And that's just yet another proof point that we're making some progress. But like we said, these are these are pretty small moves and but small moves over a long period of time will generate a whole bunch of value. So uh, I I I can't say that we're always going to have, you know, consistent improvements based on the activities that we are undertaking now. But I can say, is that over time, we believe those improvements will come and and whether they're epic that which I think definitionally means their episodic.

Speaker Change: Thank you.

Matt Nicknam: The next question comes from, Matt nicknam with Deutsche Bank, please go ahead.

Matt Nicknam: Hey guys, thanks for taking the question. Uh, just 1 from me. Um, any implications on the pacing of carrier investment, uh, post recent tax reform that you've picked up in conversations with customers. Thanks.

Yeah. The the the carriers have all released their earnings and guidance uh at this point the 3 large carriers have

I think each of them said that they were going to use those tax savings to invest in their network, but I think that the majority of that increase was being directed towards fiber and not towards Wireless. So we have not seen thus far any significant impact from the tax reform. Um

Matt Nicknam: Uh, Capital allocation priorities in in fiber. Uh, we're also seeing an environment in the wireless Market. That is uh, a good environment, saying traffic is increasing subscribers are increasing, turn is increasing. And like I said before, when you have that type of environment, It generally leads to investment in the wireless network. So I think we will see. Uh, continued investment. I think we need it as a as a country. We need to see continued investment in the wireless infrastructure to withstand the demand that we're all placing on that infrastructure. But I don't they the carriers have not said, publicly that they are utilizing the tax savings to invest to make those investments in the, in the wireless technology, in the wireless infrastructure.

Speaker Change: Appreciate it. Thanks then.

Speaker Change: Our last question comes from Nick Deleo with Market, Nathan Chen? Please go ahead.

Nick Deleo: Hey, thanks for your questions. Um, just 2 relatively quick ones so you're projecting 185 million in discretionary capex for the year. I think in the first half, it was 66 million, which you know, applies, a pretty sharp increase in the second half.

Nick Deleo: Is, is that from planned investments in systems, or seasonality? Or are you budgeting for something else in there?

And then on the uh the 10 million reduction in GNA that you're expecting. Did that primarily relate to um, Power GNA or shared GNA?

Nick Deleo: Yeah, so on the capital. Yeah, I mean uh we'll have a whole bunch of things as I mentioned but 1 of them will be land purchases. Uh, so you'll see capital for that. Some will be in, uh,

Systems. Uh, some will be in sustaining capex that we talked about to kind of maintain our our infrastructures. So uh happens to be a little more back-end loaded this year as Dan pointed out but uh uh but but we also say we are stepping up our uh, land Investments. Uh so that's that's what's uh

Nick Deleo: Driving. Driving that.

On the 10 million. Uh, yeah. I mean most of that is at the is GNA. Uh but GNA generally yeah. Some some corporate levels some uh

Nick Deleo: Within the bar business.

Speaker Change: Okay. Thanks part of the result, Nick of of some of the actions we took last year. As you remember, we, we reduced our costs last year in the middle of the year. And we continue to see benefits from having taken both people and, and non-labor costs out of GNA. And some of it is just a continuation of all of that work. We did at a real strong focus on ensuring that. That every incremental dollar that we're spending is doing something very positive for the business and I I'll give a lot of a lot of credit to the

Speaker Change: Managers in our company who are really focused on insurance. That our cost structure stays as as tight as it can, while still providing the service. We need to to our customers.

Speaker Change: Great. Thanks guys.

Speaker Change: This concludes the question and answer session, and today's conference call, thank you for attending today's presentation. You may now disconnect