Crown Castle Inc at Goldman Sachs Communications & Technology Conference Transcript

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

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : So the question against that at facts -- a set of facts is, what is Crown Castle's vision for the future wireless networks? And how does that align with your decision to own assets across so many parts of the infrastructure stack?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : But not data centers. Some of your peers have made bigger investments in data centers. Why do you approach that differently?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : Right. Let's talk about your tower leasing business. You expect organic growth in your tower business of about 5% this year, although with your second quarter results, you did actually trim your outlook for leasing activity in 2023. And you attribute this to a slowdown that you were starting to see emerge in the second quarter. I think a lot of investors had expected that inevitably, we would see some deceleration as we sort of came out of the tail end of the front end of the 5G cycle. How would you characterize what the domestic leasing environment is right now? What's driving it if we're sort of through that front end?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : You've noted that you do anticipate that the business can grow organically at a 5% CAGR. That's obviously an average rate, not at the exact rate you would expect in any given year. How do you think about the things that matter in terms of what are the conditions that might push you above the 5% at any point in time? What are the conditions that might have you run rating below the 5% at any point in time?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : And who do you see as the tenants in that scenario? Is it just the major carriers building out those 5G networks for large industrial customers? Or do you think there's an opportunity to maybe contract directly with enterprises who may be accessing spectrum through a partnership with someone else?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : Last question here about sort of the swing factors on the long-term outlook for U.S. tower leasing. How important is it to your long-term business plan that there be a strong, viable fourth facilities-based operator? Obviously, DISH has been trying to position itself as that type of operator, but investors debate that. How important is this to you?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : Well, let's spend a little bit of time talking about your small cells business. You expect to deploy 10,000 small cell nodes this year, although you've noticed that -- you've noted that you expect acceleration in that as we go into '24 and '25 just based on what's in your backlog. One of the questions we get about this is investors will say, "Well, if I listen to some of the big tower companies, it sounds like the carriers have only touched about 1/2 of their existing cell sites with 5G sites and spectrum." So wouldn't the incremental densification happen on the macro sites for a while, meaning wouldn't it be a while before we saw a real need to densify through small cells? So I guess the first part of the question is what's actually driving the backlog because you have real demand? And then how do you think about getting to a point where there may be a greater allocation of carrier CapEx budgets towards small cells relative to macros?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : I think in the past, you've noted that Crown Castle wins about 1/2 of the small cell RFPs that are out there. There's really very few scaled operators in this space. So it's essentially carriers ultimately deciding to do things themselves when they're not working with you in places where you can provide that service. Any update on what that win rate looks like? One of the questions we've been getting is whether some of the wireless carriers who have big fiber initiatives, such as AT&T, are increasingly self-performing on the small cell side.

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : What do you look for to get comfortable with the probability that there will be a need for co-locations? 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 06, 2023 / 6:30PM, CCI.N - Crown Castle Inc at Goldman Sachs Communications & Technology Conference

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : Why do you think you haven't seen another large-scale competitor emerge? It's not that there are literally none, but there is no one else at your scale in the U.S. looking to do this.

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : So that's why other operators that may happen to have a lot of fiber, whether it's a Lumen or a Zayo or so forth, don't necessarily have a presence in the small cell market because it would be another tier of investment? 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 06, 2023 / 6:30PM, CCI.N - Crown Castle Inc at Goldman Sachs Communications & Technology Conference

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : I think historically, about 70% of the small cells that you had constructed have represented anchor builds, about 30%, I think have been co-locations. Just based on what's in the funnel right now, where is that ratio trending? And how do you think about getting to a point where you increasingly are co-locating and therefore, driving higher yields?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : You've given a lot of examples in your earnings materials of illustrative markets where you've been able to drive yield. And in some markets, it's still considerably higher than others. What are you finding are the factors that are allowing you to get to those very high yields? How much of it is execution versus just picking the right market to begin with?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : Your fiber solutions business still generates the majority of the revenue off of your fiber assets. It's going to be pretty flat this year and the Sprint consolidation is factoring into that, but you are expecting that you'll see growth return to that 3% growth rate you've historically seen over time. What's your outlook for this business? And how macro sensitive is it?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : In July, shortly after your second quarter report, you initiated a restructuring plan around your services business. Where are you in terms of implementing that? How do we think about the cost savings? And are there any other meaningful cost-saving steps you think you could take or need to take going forward?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : Okay. Your outlook for this year anticipates discretionary CapEx of about $1 billion, a little bit more than you spent last year. How should we think about the capital intensity of the business going forward? And how sensitive is that going to be to what happens with your small cell business?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : In the near to medium term, there will be a little bit of a headwind you have to work through at a consolidated level because of some of the remaining churn that you're going to experience out of T-Mobile. And so you're not going to have a significant amount of AFFO per share growth over that period of time. Your dividend growth will be lower. You've said all of this. If the small cell demand were to start to ramp within that period of time, how would you think about funding that? How would you think about where your balance sheet needs to be in that cycle?

Question: Joseph Ezra Griff Gaebler - Goldman Sachs Group, Inc., Research Division - Analyst : Jay, this has been really great. Thanks so much for being here with us.