Crown Castle Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Rollins - Citi - Analyst : So with that, Dan, it's been a busy year, and curious as we're sitting here today for an update on the go-forward strategy evolving for Crown Castle, especially after some of the changes this year.

Question: Mike Rollins - Citi - Analyst : Great. This is a great time to introduce one of our survey questions for our audience here to get them involved. So we are going to ask them what is the most likely outcome from the fiber strategic review. No change, retain ownership of the fiber segment, sell the entire fiber segment, partial equity sale of the entire fiber segment, which is different than the last option, which is to sell part of the assets within it, whether it's regions or products. There's always been questions about whether fiber solutions and small cells belong together. So we'll see what our audience thinks as we continue the conversation in a few moments. But I want to drill down a bit more on what you were describing in terms of the shift in operations. So as you've begun to execute this new strategy of focusing more on the existing assets versus the new builds, what's been the customer reaction and are you seeing the pipeline that you want to see to support the growth aspirations for the business?

Question: Mike Rollins - Citi - Analyst : One of the features -- I think I'm remembering correctly about your fiber assets, you have a lot of strands.

Question: Mike Rollins - Citi - Analyst : So with all the strands of fiber that you have across the fiber network, are you seeing a pickup of interest or demand from the hyperscalers where we're starting to see for other companies in the category, there's been a greater interest in IRU purchases and data center connectivity. Are you seeing that? And is that an opportunity for Crown? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:00PM, CCI.N - Crown Castle Inc at Citi Global TMT Conference

Question: Mike Rollins - Citi - Analyst : Let's see what our audience is thinking of the strategic view.

Question: Mike Rollins - Citi - Analyst : So, there's a mix here. So 29%, no change, retain the ownership; another 29%, just sell the entire fiber segment, 14% partial equity sale of the entire fiber segment, and 29% just sell part of the assets within the fiber segment. Any reaction?

Question: Mike Rollins - Citi - Analyst : You mentioned value and the importance of value. And so, we get questions on this all the time. So I figured let's ask our audience this question as well. So if Crown monetizes part or all of the fiber segment, what value will be placed on the transaction? And I'm describing this because there's so many questions about what to put the multiple on. We're going to put the multiple on disclosed 2024 fiber segment operating profit, which is basically the EBITDA contribution on a GAAP basis. So the choices that we're giving our audience for our streamers is 8 times or less, over 8 to 10, over 10 to 12, over 12 to 14, and over 14. So we'll what -- encourage everyone to contribute their view and we'll see what we get from this in a few minutes.

Question: Mike Rollins - Citi - Analyst : We do have a view, but I want to see what our audience thinks. And before we talk about value maybe a little bit more specifically, as you've gone through this review and you see all the different feedback you're getting, have you had a chance to learn anything unique or narrow the set of menu options that Crown is considering for this?

Question: Mike Rollins - Citi - Analyst : Let's see what our group here thinks of value. So 20% at or below 8 times, 60% at over 8 to 10, 20% over 10 to 12. Curious for your reaction?

Question: Mike Rollins - Citi - Analyst : We have in our published research, but before we get there, is there a line in this virtual sand that you would draw area like it would not make sense, it would be a disservice to shareholders if we went below a certain number.

Question: Mike Rollins - Citi - Analyst : When I think back to the conversations that we've had, I've listened into the conversations, some of them that you've had with investors, I think there is a question that came up about -- a question of capital allocation into fiber which is viewed maybe as a longer duration investment cycle. And so, is there an overarching goal or possibility as part of this strategic review for Crown to take the fiber business and whatever is chosen, just to put it in a self-funding position where it doesn't infringe on the capital allocation from the tower business?

Question: Mike Rollins - Citi - Analyst : Couple of more questions on this. So in terms of structure, in your discussions with the rating agencies and with creditors, do you feel that the combined leverage ratio to stay investment-grade is lower than what the tower business would be on a standalone basis?

Question: Mike Rollins - Citi - Analyst : We'll pivot to the tower discussion in a moment, and we'll throw up another survey question on our screen here. So we're going to ask our group here what -- should be up there. What is your expectation for Crown Castle's tower organic revenue growth, excluding Sprint related churn, which is a factor for next year into 2025? So this year, I believe the midpoint of guidance is 4.5%.

Question: Mike Rollins - Citi - Analyst : And so, be in comparison to that, so 3% or less, over 3% to 4%, over 4% to 5%, over 5% to 6% or over 6%. We'll see what our group thinks. So one other thing -- I want to go back to one of the things you mentioned about some of the changes that you made to the way you're operating the

Question: Mike Rollins - Citi - Analyst : Well maybe pivoting over to tower business before we get to our survey. Just curious if you can give us an update on the leasing environment, what you're seeing in terms of activity levels from your carrier customers?

Question: Mike Rollins - Citi - Analyst : When I come back to stability in a moment, let's just see the results. So it's pretty split. Half at over 3% to 4% and half at over 4% to 5%? Anything surprising about this mix for you?

Question: Mike Rollins - Citi - Analyst : Maybe talking about stability. Often when we talk about growth, we talk about leasing activity, but there's another important component of it, which is the churn side of the equation. And ex-merger related activity, which I realize for you is very concentrated in '25, but the churn has been coming down. So can you talk about what's happening on the churn side and is the stability and maturity of the carriers just playing out to the point where there could be a better outcome for churn that helps growth even if the activity is a little harder to predict year to year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:00PM, CCI.N - Crown Castle Inc at Citi Global TMT Conference

Question: Mike Rollins - Citi - Analyst : Switching gears a little bit to Gen-AI. And with these capabilities, curious if you look at that as more of a revenue opportunity for Crown, more of a cost opportunity, could be both, but which is the and create the most value for shareholders?

Question: Mike Rollins - Citi - Analyst : In terms of driving efficiency in the organization, a lot of the changes announced back in June, where specifically fiber segment related. Are there incremental opportunities on the tower side?

Question: Mike Rollins - Citi - Analyst : As you move into '25 and you have the Sprint churn event, sometimes the carriers will choose to leave the equipment on the sites and paying for that. And that gives you some compensation that helps offset, at least in the moment, maybe some of that churn. Is there such an opportunity as we look out into next year? Or is that de minimus or just not an option here?

Question: Mike Rollins - Citi - Analyst : Are there any other items as you're thinking about just the flow. So over time, you talked about got the churn event and then the opportunities to get back to that mid-single digit growth that you were describing earlier. Is there anything else just from a high-level, long-term perspective that you want to highlight for us today?

Question: Mike Rollins - Citi - Analyst : Dan, thanks for joining us today.