Crown Castle Inc Q3 2024 Earnings Call Transcript

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

Question: Ric Prentiss - Raymond James & Associates, Inc. - Analyst : Glad to hear your team made it through Helene and Milton okay. Obviously tough storms, Florida-based firm Raymond James, we did, too so we always are thankful for those of us in the Gulf Coast that we made it okay. So glad to hear your team is good. Questions. Thanks for all the detail on the small cell, 7,000 cut for the mostly greenfield stuff. So it sounds like there's no early termination fee for you guys to cancel it, like there would be if a carrier canceled it because the carriers are going to get some savings, too, where it's like they don't have to pay as much upfront capital reimbursement for building the nodes. Is that kind of the right way to think about why the carriers agreed to this reduction?

Question: Ric Prentiss - Raymond James & Associates, Inc. - Analyst : Makes sense. And it looks like combined, between the $800 million of avoided CapEx, and I guess that $125 million to $150 million is a lot of probably CapEx that went to work in progress, these nodes might have looked like they were costing like over $130,000 per node. Is that a way of thinking about it if they have been built? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 9:00PM, CCI.N - Q3 2024 Crown Castle Inc Earnings Call

Question: Ric Prentiss - Raymond James & Associates, Inc. - Analyst : Makes sense. Second question for me is on the strategic review. I know there's not a lot you can talk to there yet, but can you help us understand? Steven, you've been on board, gosh, six months. Seems like forever, I guess, but just 6 months. What are the long poles in the process to getting the strategic review over the finish line? And also, have there been any like major or any conditions that have changed as you guys have looked at the process as it's been almost a year probably in that?

Question: Ric Prentiss - Raymond James & Associates, Inc. - Analyst : Okay. Any other long poles to the town as far as thinking when the review would be something we on the outside we'll get to hear about?

Question: Ric Prentiss - Raymond James & Associates, Inc. - Analyst : Makes sense. I'm glad, again, the team is all well through these natural disasters and appreciate everything they do to keep our networks working.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : I was interested in the carrier activity levels. It looked like the services business had picked up some from the first half of the year, and obviously, DISH had got their extension from the FCC. We saw Ericsson calling out some increased spend by AT&T. So how are you thinking about the level of activity this year and then just conversations about continuing to densify and do more on that side? And then, just a housekeeping item. I think, Dan, you said 11,000 to 13,000 new nodes this year. Is that a good run rate from here with that 40,000 backlog or is that impacted by the 7,000 cancellations?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And when do you think you can get the benefits from the digitizing the tower portfolio? It sounds like an interesting opportunity, but is that a medium term or can you see some of that next year?

Question: Michael Rollins - Citigroup Global Markets Inc. - Analyst : Just a couple. First, just in terms of small cells. Now, you've had a chance to review the portfolio in more detail with the customers. With the remaining greenfields that are left in that backlog, what should be the expected initial return for those small cells? And can you share a little bit more detail on the marginal returns that you get for the colocation nodes? And then just secondly, as you had conversations with these carriers and you walked through some of the optimization of this backlog, as you get a better sense from these customers of when they may want to look at executing another tranche of small cell nodes in terms of their densification needs?

Question: David Barden - BofA Global Research - Analyst : I apologize. Telecom guys are always the ones on mute, and I'm sure you appreciate that. I guess my first question is, Steven, you said something at the beginning about how MLAs are going to be a competitive differentiator for what you're prepared to do. And I think you said it was going to be a share-taking or a win share event. I was wondering if you could elaborate a little bit on your perspective. Because this has been a philosophical question for the industry for a long time ever since back in the day when AT&T did their holistic with AT&T. And is it a good thing because it stabilizes the outlook or is it a bad thing because it limits your upside opportunities? I was wondering if you could elaborate a little bit on maybe what you are bringing to the table in this thought process. I think that would be super helpful. And I'm sorry to have to hammer on it, but it seems strange that a year after you've been into the strategic review and months after you finished your operating review, that you went proactively to carry your counterparts and eliminated a meaningful part of your backlog that presumably any counterparty who was engaged in this conversation could have gone ahead and done on their own. And I'm wondering like how you guys came to the determination that this was a thing that Crown should undertake at this juncture. And what does it tell us about where we are in the process?

Question: David Barden - BofA Global Research - Analyst : I appreciate those comments. If I could ask one quick follow-up, which would be you guys have been very careful to kind of couch the strategic review in terms of the strategic review of the fiber business. I just want to make sure that I'm not being too myopic and if we zoom out and say it's been an awful long time. Is the strategic review just about the fiber business or is there some maybe even larger strategic considerations going on?

Question: David Barden - BofA Global Research - Analyst : Good luck with all of it.

Question: Nick Del Deo - MoffettNathanson LLC - Analyst : Steven, you described a number of efforts to digitize or streamline your operations, to save money and improve the customer experience. Is it your sense that Crown Castle was behind your peers in these areas, and this is going to kind of allow you to catch up? Or do you think this is more about being better than the peer group on these fronts after you've wrapped up the initiatives?

Question: Jim Schneider - Goldman Sachs & Company, Inc. - Analyst : I guess if you set aside the 7,000 node cancellations and look forward to what your carriers or customers are telling you about their demand for small cells over the next several years, is there anything that makes you think that the structural case for small cells is in any way unchanged? And REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 9:00PM, CCI.N - Q3 2024 Crown Castle Inc Earnings Call specifically with respect to the increased return profile you sort of put on this business now, anything that makes you believe you can achieve your sort of longer-term small cell growth targets at that higher investment return rate?

Question: Richard Choe - J.P. Morgan Securities LLC - Analyst : I had a follow-up on the tower business. In terms of gaining more share, do you expect that to come from national players or more regional players? And then regarding the small cell cancellations, of that $800 million that would have hit in 2025 and '26, how should we look at that small cell CapEx? Was that CapEx going to be added on to the existing run rate? Or is potentially some of it was already in the run rate and could be brought down?

Question: Batya Levi - UBS Securities LLC - Analyst : A couple of follow-ups. First, on the 7,000 small cell cancellation. Can you talk about if that's more concentrated in one region? And does that leave you with some maybe fiber assets that will not be utilized now if they could be monetized? And the second question on tower business, how should we think about churn excluding announced churn? I think you have some higher renewals coming up in the next two years beyond the top three. Are you seeing any change in the competitive environment maybe from private tower companies and kind of like any change in the renewal pricing?