Crown Castle Inc.

Good day and welcome to the Crown Castle Q3 2019 Earnings Goal. Today's conference is being recorded. At this time, I would like to turn the conference over to Ben Lowe. Please go ahead, sir.

Great. Thank you, Samantha, and good morning, everyone. Thank you for joining us today as we review our third 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. Dade the discussion, we have posted supplemental materials in the investor section of our website at crowncastle.com that 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, October 17th, 2019, and we assume no obligation 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 quarter of strong financial results that reflect the significant demand we are seeing for our shared infrastructure assets. I believe our strategy and unmatched portfolio of 40,000 towers and 75,000 route miles of fiber concentrated in the top U.S. markets has positioned Crown Castle to generate growth in cash flows and dividends both in the near term and for years to come. Steady execution against this strategy is resulting in consistent dividend growth. As we increased our annualized common stock dividend by 7% to $4.80 per share, in line with what we believe our ASFO per share growth will be in 2020. Over the last five years, and inclusive of the increase we announced yesterday, we have grown the dividend at a compounded annual growth rate of approximately 8%, while investing heavily in assets that we believe will generate significant growth over the long term. Dan will discuss the results for the quarter in the full year 2020 outlook, in a bit more detail, so I want to focus my comments this morning on two key points. First, new leasing activity across our business is expected to be higher in 2020 than in 2019, including activity in our tower business remaining at the highest level in more than a decade. And second, I'm excited about the long runway of growth for Crown Castle as 4G investment remains robust and the deployment of 5G is just getting started. On the first point in 2019, we are seeing a significant acceleration in tower leasing as our customers add capacity to their wireless networks in response to the rapid growth in mobile data traffic. The current demand environment is largely tied to our customers investing heavily in their 4G networks to keep pace with 30 to 40% annual data demand growth. As you can see in our outlook for 2020, we expect the elevated level of tower leasing to continue into next year. As 5G becomes a reality and wireless networks expand from connecting everyone to connecting everything, we believe new use cases will develop that will generate significant long-term demand for our infrastructure, with towers remaining at the core of the wireless networks. As I think back on my time at Crown Castle over the last 20-plus years, there have been significant advances in the broader wireless industry. like the rapid deployment of technology that has taken us from tracking mobile penetration rates and voice minutes with 1G to the current 4G unlimited data plans that feed a seemingly insatiable demand for data from consumers. And now the industry is in the beginning stages of what is likely to be the next decade-long investment cycle with the deployment of 5G, which brings with it the promise of a step function change in the role that wireless networks will play in supporting the digital economy going forward. While technologies have changed, there has been one constant, the significant and sustained demand for tower assets in the U.S. This steady growth has been driven by increased data traffic and investment to maintain and improve the wireless user experience. With continued strong data growth, we believe the carriers will respond to pressure on their networks as they have over the last couple of decades, by leasing access to our infrastructure. In addition, future networks will need to be significantly more dense than current infrastructure can handle, which brings me to my second point. I see a long runway of growth in front of Crown Castle as our customers continue to invest heavily in their 4G networks to keep pace with data demand growth from existing technologies, while the deployment of 5G is just getting started. We are at the very beginning of what the World Economic Forum has deemed the fourth industrial revolution. The first used water and steam power to mechanize production. The second used electric power to create mass production. The third used electronics and information technology to automate production. And the fourth will be the digital revolution that leads to long-term gains in efficiencies and productivity and impacts almost every person and every industry. The fourth industrial revolution is closely tied to the deployment of 5G, which will allow for billions of devices to be connected and communicating in real time. This level of connectivity is unprecedented and will require a network that is denser and closer to end users than has ever been the case. We saw this change in network architecture begin with 4G, driving us to expand our shared infrastructure beyond towers and build the leading industry small cell business in the US. We believe creating this unique portfolio has increased our opportunity to deliver long-term growth and dividends per share by tapping into the same underlying demand trends that make US towers so valuable. The extension of our strategy utilizes the same playbook we used with towers by sharing the asset across multiple customers. In the case of small cells, Fiber is the critical shared asset. We have rapidly scaled our small cell business to where we are today with 70,000 small cells on air or under construction, and we believe we are still in the very early innings. According to CTIA, the number of small cells deployed in the U.S. is expected to increase nearly tenfold from 85,000 at the end of last year to 800,000 by 2026. Against that backdrop, we see tremendous opportunity to increase the returns on our fiber investments over time by adding new small cell tenants to existing fiber networks, as we're doing today. We also see a path to further improve our small cell returns by sharing the fiber assets across a larger addressable market of customers that require high bandwidth connectivity, including large enterprises, healthcare institutions, and government agencies. When I look at the entire opportunity in front of us, I see we are generating a 9% recurring yield on the $37 billion of capital that is invested across our 40,000 towers and 75,000 route miles of fiber. With the lease-up we have driven over the past two decades, we are now just over two tenants on average per tower. In a similar vein, with an average investment age of just three years, we have less than one small cell equivalent across our fiber networks, giving us a long runway of growth as we have significant capacity to add more tenants to our assets over time. So to wrap up, the growth we are seeing in our business reflects the positive underlying fundamentals driving demand for our infrastructure, including the continued growth in mobile data on existing 4G networks and the early stages of our customers developing 5G networks. With our unmatched asset base, and expertise, operating in the best market in the world for communications infrastructure ownership, I believe Crown Castle is in a great position to capture these substantial long-term opportunities and consistently return capital to shareholders through a high-quality dividend that we expect to grow 7% to 8% annually. And with that, I'll turn the call over to Dan. Thanks, Jay.