Crown Castle Inc.

Welcome to the Crown Castle Q1 2019 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Ben Lowe. Please go ahead, sir.

Thank you, Cody, and good morning, everyone. Thank you for joining us today as we review our first quarter 2019 results. With me on the call this morning are Jay Brown, Crown Castle's Chief Executive Officer, and Dan Schlanger, Crown Castle's Chief Financial Officer. To aid the discussion, we have posted supplemental materials in the investor section of our website at crowncastle.com, which we'll refer to throughout the call this morning. 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. 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. Our statements are made as of today, April 18th, 2019, and we assume no obligations to update any forward-looking statements. In addition, today's call includes discussions of certain non-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 crowncastle.com. So with that, let me turn the call over to Jay.

Thanks, Ben, and good morning, everyone. We delivered another great quarter of financial results, reflecting the significant demand for our shared infrastructure assets and the terrific execution by our team. Given the positive momentum we continue to see in our towers and fiber results, we are investing in our business to generate future growth while delivering dividend per share growth of 7% to 8% per year. With our strategy and unmatched portfolio of more than 40,000 towers and approximately 70,000 route miles of fiber concentrated in the top US markets where we see the greatest potential demand growth, we believe we are uniquely positioned to translate growth and data demand into growth in cash flows and dividends per share. As the volume of data delivered by both wireless and wired networks continues to grow, our customers are increasing the capacity of their networks by leasing additional access to our tower and fiber infrastructure assets, which in turn generates growth in our cash flows. As you can see in our 2019 outlook, this positive backdrop is resulting in higher levels of new leasing activity across all of our assets. On the tower side of the business, our customers are improving and densifying their networks by adding more equipment to existing leases and adding to new leases on our towers. The higher levels of tower leasing we experienced in the back half of 2018 has continued into this year, affirming our expectation for an increase in tower leasing this year as compared to 2018. With regards to fiber and further highlighting the strong demand for our infrastructure, We expect to nearly double the number of small cells we deploy in 2019 after installing a record number of small cells last year. Our strategy has positioned us to take advantage of the increasing activity by our wireless customers as they respond to the continued growth in data. To this end, we are excited about the significant investments we are making to build new fiber assets as we pursue this expanding small cell opportunity. By focusing our investment in high-capacity fiber across the top markets where we see the greatest potential demand for small cells, we believe we are extending the potential long-term growth in cash flows and dividends per share. Our fiber strategy utilizes the same playbook we used with towers by sharing the asset across multiple customers. With our leading capabilities in fiber solutions, we have the ability to increase the yields on our fiber investments by growing cash flows from both small cells and fiber solution customers that require access to the same high-capacity, dense fiber assets in the top markets of the U.S. By sharing a common asset across a larger customer base, we are able to provide each of our customers with cost-effective access to the critical infrastructure they need while generating significant value for our shareholders over time as we lease our assets and generate cash flows. Consistent with our expectations, we continue to see very attractive returns on small cell investments with initial yields of 6% to 7% for the first tenant. And similar to towers, we are seeing demand from multiple tenants on the same asset, in this case fiber, resulting in high incremental margins that increase the returns above our cost of capital on the second tenant with additional upside as we add more tenants over time. To date, we have invested approximately $13 billion of capital to establish fiber footprints in prime locations across the top U.S. markets where we see the greatest long-term demand. These investments are already yielding 8% and have significant available capacity to further increase the return as we add new small cell and fiber solutions customers. While those returns are great and justify the investment, I get even more excited when I consider how early we are in the digital transformation of the U.S. economy and the critical role our infrastructure will play. The current demand environment is largely tied to our customers investing heavily in their 4G networks to keep pace with the 30 to 40 percent annual data demand growth from existing technologies, while the investment in 5G is just getting started. Recent commentary from the White House and FCC that they are committed to ensuring the US wins the race to be the world's leader in providing 5G underscores our belief that the US is the best market in the world for infrastructure ownership. We believe 5G has the potential to significantly increase the demand on communications networks by moving beyond simply connecting millions of people to potentially connecting billions of devices in the future. The size of the opportunity will likely attract significantly more investment in networks over time from both existing operators as well as potential new entrants that will require access to network infrastructure at scale. While we continue to underwrite our investments to generate attractive shareholder returns based on existing applications and technologies, we believe the network infrastructure needed to support 5G will dramatically increase the demand for our tower and fiber assets over time. It is truly an exciting time in our industry. And, in many ways, it reminds me of several other points in time over the past two decades as we are currently benefiting from the significant ongoing investment in today's networks while also looking forward with great anticipation of what lies ahead. How exactly the investment in 5G ultimately transforms the way we live and work is yet to be determined. But if past is prologue, I suspect most are underestimating the magnitude of the change and the corresponding opportunity for us. With our unmatched asset base and expertise, I believe Crown Castle is in a great position to play an important role in the next chapter of this industry. And with that, I'll turn the call over to Dan.