Crown Castle Inc.

Good day and welcome to the Crown Castle Q4 2020 earnings call. Today's conference is being recorded. At this time, I turn the conference over to Vice President of Corporate Finance, Ben Lowe. Please go ahead, sir.

Great. Thank you, David, and good morning, everyone. Thank you for joining us today as we review our fourth quarter 2020 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 will 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, January 28th, 2021, 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 thank you, everyone, for joining us on the call this morning. As you saw from our announcements last night, we delivered another year of solid growth in 2020. We expect to generate double-digit ASFO growth per share in 2021, and we secured our largest-ever small-cell commitment with the 15,000 Note Award from Verizon to support their 5G build-out. Dan will discuss the results in our full year of 2021 outlook in a bit more detail in a minute, So I want to focus my comments on two areas, our strategy to maximize long-term shareholder value while also delivering attractive near-term return, and the recent positive developments that increase my confidence on our strategy and growth opportunity. I believe our strategy and unmatched portfolio of more than 40,000 towers and approximately 80,000 route miles of fiber concentrated in the top U.S. markets have positioned Crown Castle to generate growth in cash flows and dividends per share, both in the near term and for years to come. Despite the challenges presented last year, we continue to build on our long history of consistently delivering compelling growth through various market cycles, highlighting both the strength of our business model and the significant value creation opportunity our strategy provides to shareholders. One of the core principles of our long-term strategy is to focus on the U.S. market, Because we believe it represents the fastest-growing market for wireless network investment with the least amount of risk, leading to superior long-term returns. The demand for our shared infrastructure is fundamentally tied to the insatiable demand for mobile data in the U.S., which increased by 30% again last year. Because the growth outlook and market fundamentals are so compelling, The U.S. wireless market continues to attract a disproportionate amount of capital investment. This dynamic is again apparent with the C-band spectrum auction with gross proceeds of more than $80 billion. During my more than 20 years at Crown Castle, large-scale wireless spectrum auctions in the U.S., like this one, have followed a consistent pattern. First, industry observers question whether the capital required to secure the valuable spectrum will crowd out investment in wireless networks? And second, these questions are answered with long periods of sustained significant investment. Similar to the past, the seemingly insatiable demand for data drives the need for additional spectrum. Further, the only way the spectrum can meet the demand is for our customers to deploy it on towers and small cells. I am confident that we will look back in the years to come and recognize how important this auction was for the development of nationwide 5G in the U.S. In addition to deploying more spectrum, cell site densification has always been a key tool that carriers have used to add network capacity, enabling our customers to get the most out of their spectrum assets by reusing the spectrum over shorter and shorter distances. The nature of wireless networks requires that cell site densification will continue as the density of data demand grows, particularly given the higher spectrum bands that have been auctioned in recent years and that have shorter propagation characteristics. Slide three illustrates this point. The higher frequency spectrum bands are valuable because they provide our customers with the ability to significantly increase network capacity, given how much more spectrum is available in those higher frequencies. However, as you can also see on the slide, the signal travels over shorter distances, requiring more cell sites. As a result, we expect both the deployment of additional spectrum and this densification trend to drive significant demand for our tower and small cell assets for years to come. To address this sizable and growing opportunity, We have invested nearly $40 billion of capital over the last couple of decades in shared infrastructure assets that we believe are mission critical for wireless networks. Our tower investments began more than 20 years ago when we built and acquired assets that we could share across multiple customers, providing a lower cost to each customer while generating attractive returns for our shareholders over time as we leased up those assets. More recently, As wireless network architecture evolved to require a network of cell sites that is much denser and closer to the end users, we established the leading small cell business in the U.S. with the same thought process in mind. Provide a shared infrastructure solution that lowers the cost to each customer while generating compelling returns for our shareholders over time as we lease up those assets. We believe the addition of small cells and fiber to our strategy both complements our tower business and provides substantial potential upside to our 5G growth strategy. To that point, we recently signed two strategic agreements. In November, we announced a 15-year agreement to lease DISH space on up to 20,000 of our tower sites. This strategic agreement established Crown Castle as DISH's anchor tower provider and includes certain fiber transport services to further support their nationwide 5G build-out. This agreement will contribute to our financial results over time as DISH deploys on our tower sites, and we expect to start in the back half of this year. We're excited to partner with DISH to support their long-term infrastructure needs and look forward to working with them as they deploy nationwide 5G networks. As we announced yesterday, we are also excited that we have expanded our strategic relationship with Verizon by signing a long-term small cell agreement to support Verizon's 5G ultra-wideband and 5G nationwide deployment. Under this agreement, Verizon has committed to lease 15,000 new small cells, representing the largest small cell award in our history and demonstrating the value of sharing small cell and fiber infrastructure assets with multiple customers. While we believe it is our ability to provide the full breadth of wireless infrastructure assets that allowed us to secure the agreements with DISH and Verizon, highlighting the benefits of the unique portfolio we have built over the last 20 years. With our 40,000 towers and 80,000 route miles of high-capacity fiber concentrated in the top U.S. markets, we believe we will continue to reap the rewards of our investments as our customers continue to roll out their nationwide 5G network. As we noted in our press release, late last year T-Mobile notified us that they were canceling approximately 5,700 small cells that we initially contracted with Sprint. The majority of the small cells were yet to be constructed and would have been located at the same locations as other T-Mobile small cells once completed. The sprint cancellation resulted in T-Mobile accelerating the payment of all contractual rent obligations for those small cells, as well as the payment of capital costs we had already incurred. In addition to receiving the future rent associated with the canceled nodes, the small cell locations are now again available for future customers, and this development does not impact the long-term growth opportunity for our small cell business. As a result, We finished 2020 with approximately 50,000 small cells on air, and we have meaningfully increased our backlog of small cells committed or under construction to approximately 30,000. As I reflect on 2020, I'm proud of how well our team delivered for our customers and our shareholders during a difficult operating environment. Looking forward, I'm excited about the growth opportunity as our customers embark on what is likely to be a decade-long investment cycle to develop 5G in what remains the best wireless market in the world. Our strategy remains unchanged as we focus on delivering the highest risk-adjusted returns for our shareholders by growing our dividend and investing in assets we believe will drive future growth. And I believe Crown Castle offers shareholders an unmatched opportunity to benefit from the launch of 5G wireless networks. We provide a compelling total return opportunity with a high-quality dividend yielding more than 3%. We are delivering the highest tower revenue growth rate in the US among our peers. We expect to generate double-digit ASFO per share growth this year, even before 5G spending occurs in earnest. Our customers are affirming the value we bring with our comprehensive portfolio of shared infrastructure assets by entering into long-term agreements to access those assets. We are investing in new infrastructure assets that we expect will extend the opportunity to grow dividends per share 7% to 8% per year. I believe this combination is as compelling for future value creation as we've ever seen at Crown Castle. And with that, I'll turn the call over to Dan. Thanks, Jay.