Crown Castle International Corp. (REIT)

Q1 2021 Earnings Conference Call


spk_0: the everyone and welcome to the crown castle que one twenty twenty one earnings call today's call is being recorded at the time i'd like to turn the conference over the been well please go ahead
spk_1: right i give a good morning everyone thank you for joining us today as we discuss her first quarter to doesn't only one results with me on the call this morning rj brown crown castles chief executive officer and dance langer comcast was chief financial officer to a the discussion we have posted supplemental materials and investor section of our website a crown cancelled calm that will be reference throughout the call this morning this conference call contain forward looking statements which are subject to certain risks uncertainties and assumptions and the actual results may vary materially from those expected information about potential factors which could affect our result is available in the press release and the risk factors sections of the companies as he see filings our statements are made as of today april twenty second two thousand and twenty one and we assume no obligations update any forward looking statements in addition to they'd call includes discussions of certain non gap financial matters tables reconciling these non gaap financial measures are available in the supplemental information package and the investor section of the company's website a crown castle dot com before i turn the or to i want to mention that we will take as many questions as possible following are prepared remarks the day but we plan to limit the called sixty minutes this morning so that when he turned the call to jay like then and good morning everyone thanks for joining us on the call as he saw from our first quarter results and increased for your outlook are consistent edgy execution is delivering outstanding result of we support our customers growth initiative with their deployment of nationwide five g and the us following a period of building excitement and anticipation we have seen a significant increase in activity as our customers had started to upgrade their networks to five g at scale we expect this elevated level of activity to result in a year of outside growth for crown capital as we now anticipate eleven percent growth in a episode per share for the full year two thousand and twenty one meaningfully above our long term annual target of seventy eight percent
spk_2: the on two thousand and twenty one i believe our strategy and unmatched portfolio of more than forty thousand towers approximately eighty thousand and small felt on air are committed and backlog and eighty thousand route miles of fiber concentrated in the top us markets have physician crown castle to generate growth and cash flows and dividends per share for years to come
spk_1: our strategy is to deliver the highest risk adjusted returns for shareholders by growing our dividend and investing in assets that will drive future growth that focuses led us to invest and towers more self and fiber assets that are all foundational for the development of five g networks and the us
spk_2: we believe the theory that to teach jake agreement that we have announced in recent months further highlights the synergistic value or shared infrastructure provides to our customers
spk_1: building on the momentum from our recent fifteen year agreement with this to support our nation wide five ci build out and our recent long term five g small cell agreement with horizon to support their network deployment we are excited to once again expand our strategic relationship with rising through a recent long term tower leasing agreement we believe this agreement will deliver significant value for both parties as it established as turns releasing additional capacity on existing tower sites with a structure that is intended to make it easier to expedite the deployment of see band equipment over the next several years the agreement also resulted in an increase in the average remaining current contract at least term and arrive arise in spite leases to approximately ten years daniel discuss the expected financial impact a disagreement later in the call turning back to our focus on generating superior long term returns one of our core principles of our strategy is to remain us only because we believe it represents the best market for wireless infrastructure ownership since it has the most attractive growth profile and the lowest risk and we believe this dynamic of higher growth and lower risk will continue into the future which is why we expect our us based strategy to drive significant returns for our shareholders starting with the higher growth we see in the us the demand for our shared infrastructure offering across tower small south and fiber is tied to the robust demand for mobile data in the us which continues to increased by more than thirty percent annually because the outlook is so compelling the us wireless market continues to attract a disproportionate amount of global capital investment
spk_2: this is likely due in part to the fact that the durability and scale of wireless data growth in the us has repeatedly outperformed expectations
spk_1: i remember fielding questions from investors and analysts nearly a decade ago trying to understand why we were not expanding our tower business and a less established international markets that offered the promise of outside growth to compensate for the outside riff the course that of a substance underpinning that line of questioning included a viewed by many that it was inevitable that us growth rates would flow leading to a desire to augment that growth by investing in international wireless market that hopefully would develop the same keith that of a fundamental over time that have made the us market so successful for decades we didn't buy into that argument at the time and sitting here today on the doorstep the five g we reach a similar conclusion that the us the still among the highest growth markets for wireless infrastructure importantly in a shared infrastructure business with long term investment horizon we have benefited from the superior growth rates while avoiding the risks associated with investment opportunities and less established international wireless market these risk and have a meaningful impact on long term returns and many have materialized in recent years including the outsize turn do the less favorable industry dynamics relative to the u s sustained foreign currency devaluation that results in revenue churn and disrupted social or governmental environments and less developed countries because we believe the us has both greater potential for growth and lower risk we are focused on growing cashflows on our forty thousand and towers by providing access to existing and new customers that are building by the wireless network we are investing in new small cell and fiber assets that our customers need for their wireless networks which we believe increases our ability to capitalize on the five g growth trends in the us and we are developing new capabilities and offerings that will leverage our existing assets to drive innovation and we believe will further extend our growth opportunity such as cbs and as computing i believe that crown castle offer shareholders and unmatched opportunity to benefit from the launch of five g wireless network than the us in the near to medium term we expect to deliver outsized ethel per share growth of eleven percent this year
spk_2: as we translate this increasing five ci activity and a very attractive bottom line growth
spk_1: we expect the once again deliver the highest tower revenue growth rate in the us among our public tower peers in two thousand and twenty one and our customers are affirming the value we bring with our comprehensive portfolio of shared while with them for structure assets by entering into long term agreement to act as though that's it longer term we believe crown castle provides an exciting opportunity for shareholders to potentially compound double digit total returns over a long period of time with a high quality dividend that currently yield three percent and that we expect to be able to grow seventy eight percent annually when i consider the durability of the underlying the man trends we see in the us
spk_2: that provide significant visibility into the future growth for our business the deliberate decisions we have made to reduce the risks associated with our strategy
spk_1: and our history of steady execution i believe that crown castle stand out as a unique investment that will generate compelling returns over time and with that alternate call over to damn
spk_3: thanks yes the morning everyone
spk_1: sj mentioned we're excited to see our customers beginning to deploy five he had scale we have seen a significant increase in activity levels leading the salad first quarter results that exceeded our expectations and support our interests for your guide turning to slide for the earnings presentation you can see our strong topline results were driven by more than six percent growth and organic contributions to site when revenue
spk_3: this growth included more than nine percent growth from new leasing activity and contract at escalators net of approximately three percent from not in north
spk_1: we also generated a twenty three million dollar increase in contribution from services when compared to the first quarter twenty twenty culminating in ten percent growth and adjusted ebitda and twenty percent growth and episode per share on a year over year basis turning to slide five we increased our full year ethel guided by forty million dollars reflecting a twenty five million dollar increase unexpected services contribution as a result of higher than expected tower activity levels and a thirty million all reduction the interest expense following are successful recent refinancing activity
spk_4: partially offset by fifteen million dollars of additional labor related costs associated with the higher activity
spk_1: additionally as j disgust we entered into a long term tower leasing agreement with for us and that resulted in increasing the average currently term of other right and our site leads us to approximately ten years and adding straight line revenue of approximately one hundred and forty million dollars and twenty twenty one
spk_3: taking the changes into account we now expect are adjusted even dodd to be one hundred and fifty million dollars higher than our previously provided twenty twenty one outlook our expectation for site rental revenue growth has increased to approximately seven percent inclusive of the expected organic contribution to site will revenues of six percent which remains unchanged
spk_2: our expectation for growth organic growth across towers small felt and fiber solutions also remain consistent with approximately six percent growth for for took from towers approximately fifteen percent growth from small cells and approximately three percent growth from fibers list
spk_4: focusing on investment activities
spk_1: during the first quarter capital expenditures totaled three hundred two million dollars including seventeen million dollars of sustaining capital expenditures forty nine million dollars a discretionary capital expenditures for our tower segment and two hundred twenty five million dollars of discretionary capital expenditures for a fiber said our full your expectation for catholics senators remains unchanged at approximately one point five billion dollars or less than one billion dollars after customer capital contribution and we continued to expect the thunder discretionary investments this year with free cash flow and incremental borrowings turning to the balance sheet we finished the first quarter at approximately five point five time net debt the even done and expect to exit twenty twenty one at our target leverage for patently five times based on the anticipated growth and cash flows to the balance of the year
spk_4: as gay discussed in addition the driving significant dividend growth a key part of our strategy is to reduce the overall risk profile the business to further enhance the by created for shareholders over time
spk_3: along with focusing on what we believe at the highest growth and lowest risk market in the world for wireless infrastructure ownership
spk_1: weird methodically reduce the risk profile of our balance sheet with the same goal of maximizing long term shareholder by
spk_4: with that in mind we were able to opportunistically access the bond market during the first quarter to refinance upcoming the charity's reduce our dead costs and extend our maturity brother
spk_3: looking back five years to when we achieved our initial investment grade credit rating and inclusive of our recent refinancing transaction
spk_4: we have increased our debt mature average debt maturities and to nearly ten years from just over five years reduced our average borrowing costs that three point one percent from three point eight percent increased increased our mix a fixed rate debt to more than ninety percent from just under seventy percent and reduce reliance on secured the that to just fifteen percent from nearly fifty percent
spk_3: with limited upcoming debt maturities in the near term and more than four billion dollars of unranked past the on revolving credit facility
spk_2: we believe the balance sheet that positioned well to support our greatness
spk_4: turning back to the growth that of that i you equation and wrap things up
spk_1: we're excited about the increasing level of activity we're seeing as our customers began to deploy five he had scale
spk_4: our customers continue to recognize the differentiated value our comprehensive shared infrastructure offerings offering bring leading the side significant long term agreements with that we expect a once again generate industry leading us tower revenue growth this year and we expect to generate eleven percent growth and a half of or share and twenty twenty one which provide a very attractive total return opportunity when combined with the current three percent dividend yield
spk_1: importantly we are generating these returns while making strategic investments in new small stone fiber asset that we believe will add to our long term growth opportunity and with that vicky i'd like to open a called a question
spk_0: thank you to ask a question please press the star keep our by the digit one on your test hometown of to make sure your mute button is turned off till i a signatory car club met again at a star one to ask a question and we will take our first question they from time and flannery with morgan stanley please go ahead
spk_5: bright thank you very much sham thanks for all the color j f at the top secret to dive into the services as as what what are you seen going on there that led you to write to increase the guidance and and have agassi that translating time wise and to hire leasing trans and any comments on the u s i'm in a environment thanks
spk_1: the morning simon i'm and you know we're obviously very very encouraged by the activity that we're seeing among the carriers were not surprised by the urgency that our customers are showing ah in deploying five g and the level of commitment that they showed during the see band auction was really a clear sign that there are going to invest heavily and five g and for the activity we're we're seeing i think just blows from that we're we're seeing that turn into action as they're deploying significant amount of five g networks and and were really encouraged by the activity that we're seeing out when we think about that that activity translating towards revenue growth it it we we obviously thought big step up towards the end of last year and that's continued into this first quarter and as we as it relates to the services activity of between most of that activity as either in the nature of preconstruction work that we're doing for carriers and then some portion of that carries over to work that we're doing as we actually than stall them on the site
spk_2: so the elevated activity that we saw the step up we think so to continue to the balance of the this year and and as a direct result of the overall are encouraging level of activity that were seen from the carriers
spk_3: yeah and the second part was just on a him in a environment the us
spk_4: the i think what we're seeing across the board simon i think i think you understand is that there's a lot of it of of money that interested in infrastructure right now and that reflecting itself in the the him in a environment but for towers and from fiber asset well we've been focused on him been clear about it that we think that there's not a lot of the
spk_6: the of additional him in a were going to pursue any us for fiber we think most of those assets that we wanted we have purchased there may be some other it out though that that meet the criteria we've looked at being a high capacity dense metro fiber but but not a lot so we anticipate most of our our capital go to organic growth and our business buddhists
spk_0: also in five of us
spk_7: thank you one that that i'm michael rollins which city
spk_1: thanks good morning i'm sure it's first just start with the variety in agreement and extension can you frame that types of activities
spk_7: and upgrades that ah varieties and to within this agreement and extension and what might be opportunity that fall outside the scope a disagreement just the think about you know what kind of predetermine versus what other activities you could press
spk_1: she would right into further grow your revenue over time and then shutter a quick follow up on on the net debt leverage to use give us an update or what the target of range is and yeah to the extent that leverage i think in the gap and ended at five and a half times in the first quarter to haiti that progressing a over the next couple of years thanks sir mike the morning and obviously really excited about the bride's in agreement that we announced on a tire tower side i think it provides significant value and certainty to rise and as well as to ourselves and i think the significance of that agreement is obviously evidence by the impact that it has on our two thousand and twenty one
spk_2: one outlook and step up that we we put into that outlook last night in the press release you know that's really went to the same thought process that we've gone through over the last several years the as we've done large large transactions with the with the carriers on the in the lakeside ah and and had similar component to it we're trying to meet the customers' needs
spk_1: particularly with regard to certainty of price and and then lowering or of reducing the amount of time that it takes to go through the paper portion of of getting them onto our side so it's designed to facilitate their ability to go back to site that they're already on and speed up that process of them being able to do upgrades and hobbies lee they've been specific about the desire to be that with regards to see ben june and and then on our side of it were trying to make sure that we priced the economic the that transaction appropriately and i think we've been over multiple of those kinds of transactions with customers multiple customers multiple transactions over time in ability to do that well to both get the right economics on the site and then provide our customers with the right access and speed to get there so we did something similar have a lot of components to think that we've done in the past ah and thought about it in a similar way or we get the ten year extension on the leaf is that they're already on which done this the mature eddie out from about four years to about ten years on those on those sites and then over the next several years give them an opportunity on the site that they're already on our to upgrade to to upgrade their equipment to to handle new new new spectrum bands and and to get that where they wanted to be from a five ci standpoint are we feel
spk_3: maintain the upside on newly thing and other activities associated with that and then once we get passed through this initial push into five g than obviously the opportunity of there for us to to see to see greater growth over time so excited about the agreement they're excited about what it means in terms of total activity and and as i said before
spk_4: for in that prepared remarks like right on the doorstep the thing or five ci deployment at scale and enables us to be able to the response to brightens desires to get there
spk_8: yeah in my of then i'll take the second question on leverage our target still remains four to five times we believe will stay in at five time that we continue to invest in our small stone biber business which would be for several years i worked it as you pointed out at five point five times at the at the end of two one we believe that with the
spk_3: growth and even da that wifi coming for the through the rest of the year that we will end the year close to that five times maybe slightly above it but pretty close to that five time that part that leverage target i and feel really good about that position where and with as were able to invest in in the growth of our business
spk_0: oh wow
spk_7: relying on cash flows and incremental barring capacity and not not equity to fun that growth
spk_9: thanks
spk_10: my take the next question from matt and with toys your bank
spk_1: agatha agatha i think and questions on one of small thousand and one armed services are on the small sulfide our revenues were flat sequentially at a year on year growth slowed into the high single digit so can you give any color in terms of the drivers their one how we should think about ah the outlook for the roster the or if you're reiterating the yeah fifteen percent growth guide our and then on services that didn't give any were color in terms of what drove the strength strengthen margin that score go on and i'm just trying to get a sense of what the cadence ah for all services contribution will look like are in in the next couple of quarters of course to the air eggs target morning the on small cells in i would point to as we've as we've tried to do and in our outlook look at the full year or so little bit of timing changes kind of which is naturally going to happen as we got to the construction phase a small cells can have some some quarter to quarter movement that may not admit may not tired exactly to the for your outlook but as we look at the for your outlook still think small cell growth year over year than a fifteen percent range that mid teens that we've talked about for a long time i we think on the fibers bullish inside will be around three percent for the full year and then towers are right there around six percent as we as we previously expected so i don't see anything that in terms of those
spk_3: numbers in the quarter that earth indicative of anything happening in the underlying business that i would i would point to i think it's just as just the timing differences quarter to quarter and as we look at before your i think that more indicative of the actual activity what we're seeing from the carriers and how eating at the that those businesses to perform an on the on the services side and and the cadence their a grad a level of the elevated activity so we we probably had a better first quarter in terms of services than we would and and and many years where we we often talk about your being back in heavily back and loaded onto the second half or two even towards the fourth quarter and we thought step up an activity going into the end of life
spk_11: last year and that level of elevated activities carried right into the first quarter so are we saw real nice contribution from services in the in the first quarter and and and and expect basically or for your assumption that be pretty similar to where we were previously with that with that adjustment for the first quarter
spk_0: and mad at stand on the on a question on margin specifically
spk_12: it's the mix of of business day talked about earlier having a mix between preconstruction and construction as part of our services business the preconstruction is done a little bit higher margin and that's what we had a little bit higher mix of with in the quarter and that road the higher overall march
spk_7: great that's that
spk_13: and we'll got a copy sense hell with cowan i great thank you on
spk_12: you know east it's still pretty bullishly about what you're saying from an activity perspective on let's get a little surprising then that you didn't raise your organic power growth and you're given that you gave your guide i'll wait back in october twenty twenty on where you are you seeing i had the conviction that you see that acceleration in demand and the airports already built into the guidance it just seems like given how early you gave you guys and how quickly the demand is kind of ramp that he wouldn't necessarily included that and and then secondly
spk_1: ah as it relates to the bride then and away he talked about i'm make it easier to deploy and i get why the bigger question people trying to get a sense at industries are kind of get a hand side is whether or not the agreement includes just some standardized pricing to make it easier for them in the clicker or whether or not there's actually some type of financial benefit where i you allow them to go to x amount of sites overs x and not appear that young shorter than that ten year period the to kind of move quickly in in that that the gate that would assume that there's some type of cash benefit yet we didn't really hear the at the fao change up for that in particular show get any titan given that would be helpful thank you america morning colby thanks for the questions are on the first question around organic organic tower growth
spk_2: you know cut the couple of things i would i would i would put in front of you on on that one is there's a there's a pretty good weed time or lag time and the time that wifi revenue start to turn on ah for to get the applications from the customers to when we actually see the revenue start turn on that that about sixty nine months so the increased level of back tv that we've been talking about four two thousand and and twenty one ah is something we did see all the way back into the fourth quarter of two thousand and twenty we started started to see the application step up then and and that in informed are increase the me in the overall activity i was i would sort of curious to this point the other day and
spk_1: as looked back at kind of organic revenue growth over the last two thousand and seventeen three two thousand and twenty and the organic revenue growth and twenty one than our outlook is a step up of a little over twenty five percent of that average over those of those previous or yourself it's a meaningful increase in the activity and we bake that into our our outlook on love it when we gave two thousand and twenty one so what we're seeing now in terms of that activity is pretty consistent with what we had expected and but it's always good to see it materialize and it in and not just the our expectations as where we were back in the act october october timeframe the other thing that i would i would mention about this is as we as we look at this activity were encouraged and and think that there's the opportunity for it to stay a be the level of elevated activity for a for a period of time though at begin the business oftentimes people start to look for inflection points or point where it's going to be the highest them and expected kind of fall off an aura or r prior experience would tell us that those inflection points are relatively rare or that you see the carrier step up level of activity them and whole that of plus or minus
spk_2: a certain amount for a long period of time though we look at that activity really encouraged by what we're seeing and not and and frankly not surprised
spk_1: i'm to the broader point on as we look at revenue growth and activity you know the way with it we create value for shareholders is by stacking years of good growth one on top of another and
spk_2: what is happening in the business right now is a tremendous tremendous your of growth of grow that a episode eleven percent a year over year on a personal basis and just stalking another year a great growth on top of what was a good base and and our goal is to consistently deliver that growth of like we talked about of in alone term seventy eight percent and what was the end of the top line certainly indicates our ability to to achieve that longer term that longer term that longer term goal
spk_1: on your second question around the arise and emma lame you know we we try to stay away from getting too specific about the terms of the agreement that we we do with our customers i will let them speak the you know how they pick another deployment plans and and why they structured certain agreements with us and but i would i would tell you that there are components of both parts of your question in the in the agreement it certainly doesn't include some certainty of pricing for them
spk_12: and if if depending on levels of activity then it will driver and answer for us in terms of topline growth of a long period of time though it does provide pricing with them and then there's also a component of have committed activity or that that than at where are we have certainty of the revenues associated with activity as they deploy
spk_1: as they deploy see band over the over the next several years so there's component of both of those in in the agreement and ah as as we go forward
spk_4: we'll see more can consolidated rather than specific to to a customer relationship and the contribution of of cash revenues beyond what dance spoke to in terms of the impact of the the gap financial statements this year and and years to come
spk_3: get presumably they're even then that the eighth though is not benefiting from that committed activity that is that it's not actually starting necessarily in two thousand twenty one but some kick your point that there
spk_1: no i don't think that's fair i think i would look at some of the activity that we would have assumed would occur in two thousand and twenty one when we gave the outlook would be associated with all of our customers to some component of that activity was already embedded in our guidance and maybe it's under a different construct now as a result of this agreement but i wouldn't necessarily
spk_14: change our view of activity for the year and therefore i get the cash flow yeah the only thing called the and only thing i would add to that is i just to put a little bit of context the around it that our growth in the tower business of around six percent is double that what are were a closet peers and have guided to for twenty twenty one so
spk_0: we feel really good about that and that this deal that we find with rise and along with i would this all when end of to our understanding what was going to drive that six percent growth that if you're almost double what our peers are saying so am i think looking for us to increase above what is already a really good number poly it
spk_15: is is am too much than can happen as jay pointed in any one year for the tower business and we're just excited that that were able to provide as much growth as we are right now i'm driving the type of of returns that we offer cheryl
spk_7: that thank you next as helpless ethnic jp morgan
spk_1: i guess thanks am first jay to your in on leverage remaining if times should we expect accelerating cap topics next year to keep that leverage or five times on the these seems otherwise it would be falling below that pretty quickly and then second edition out yesterday it'll be using the eight of us cloud not a surprise but can you get this thoughts on how that may impact crown of time on site leasing revenue as well and is pay impact on the opportunity and in as computing next yeah no thanks for the questions on on around cap bags out with spent some time i think of the last couple of quarters talking about our expectation for this year's cap backs are which on a net basis as down about four hundred million dollars from the level that we saw in two thousand and nineteen and that was largely related
spk_2: two of the fiber acquisitions that we made those companies had committed to a number of large enterprise and government build out that were built specifically for kind of those kind of activities enterprise and government broadband services and post those acquisitions we we just haven't signed up those kind of agreement that at any kind of scale like those those those prior companies and done and and as a result the that and our strategic focused around small cells or the cap act as has come down as we built out both really long lead time contract me time there were three to five years of of of build out and and commitment so though the
spk_1: basically rolled off and and and and now as we think about capital spending it's strategically focused on what we believe that the long term value driver of the business around small cells and the opportunity to can build these networks for fruit for carriers as they have they built five g networks i don't want to get too much into what we think and twenty two and beyond our given guidance this year that are net cap back to the a little less than a billion dollars for the longer term odd the driver of cap backs will be what are the opportunities mostly around small cells and and those will go through the same rigorous process that we put all of our cat that processes through of understanding what the return is how we look to see a six the seven percent initial yield on invested capital and then we want to make sure that we believe there's a good opportunity for additional lisa beyond that are that can drive that yield into the double digits and and and higher return on capital overtime as we see more lisa so in future we'll we'll just have to evaluate what the opportunities are in and will give you an update on on on capek as we get later in the year ah of in october we would plan to give our two thousand and twenty two outlook as weak as we typically do
spk_2: ah with regard to dish it up a probably beg off most of that and let this and amazon speak to to the to the to how their agreements between the two of them are going to drive activity but obviously this made a significant commitment to us recently and terms with the deployment of their network and that are operating team is and credit
spk_1: lee busy and focused on delivering for them are based on their expectations for team has done a great job out of the gate ah and dull and and i believe delivering for them what they what they had hoped and we're we're ready to support dish in any way possible as they as they work on building out there their five g network your your last question around as computing you know we we think at today a lot of this a lot of the edge computing activity is around traffic management and and potentially reducing costs but as and the wireless networks move into via gee i think the opportunity is going to expand well beyond our well beyond that to really delivering solutions to customers and increasing the applications as innovation a curse and we think power sides are uniquely positioned to be able to provide the real estate the connectivity ah as well as power that enabled edge computing so it's a foundation of of long term innovation and are combination
spk_0: fiber and really uniquely positioned us to be able to capture that am i know we highlighted or that component of both fiber and hours and the disagreement or it was something that was really important them as they designed and decided to anchor their network around are around our site and i think i think it
spk_7: another example of kind of the combination of our assets sets us up for opportunities for growth that are frankly beyond our what we put into our forecasts and we talk about being able to grow the dividends seventy eight percent of our a long period of time things like as computing and cbr us are really not in our forecast so we with you that it's as and modeled upside and opportunity and bleed the the type of after we've acquired and and were those assets are located really gives us the optionality to to benefit from that over the long term thanks you
spk_9: when a john at can with rbc
spk_3: ah thanks very much question just on balance sheet any kind of have thoughts on additional test we are activities that you would get contemplate and then
spk_1: on the small cells and he would a does seem as if you're were to in the script and elsewhere that you have some structural advantages as we get to the infill and densification part of cheating and and or the and frequency that is wondered if you're starting to see that in the pipeline yes
spk_4: i will revenues might be a little ways off that damn are there are active discussions at this point or is that on more on the calm and had finally i'm one of the see their licensees self taught earlier this morning about supply chain constraints a that they're same on on the other hand under another one put out a press release talking about our second quarter they're already kind of that starting to deploy see the and and as you kind of consider all those data points are now with carriers are a wondered how that affects your expectation on around second half in whatever way if might see thank you georgina i'll take the first one on the on a balance sheet on that refinancing activities were always looking at our balance sheet to identify opportunities for us to
spk_1: as we mentioned the script route reduce art art borrowing costs extend our charities we won't get specifically into a what we're going to do right now but the integrate environment as remain attractive and will will continue to look at that vs whatever the economic and trade is and entered the early premium we would have to pay to take out any that future debt or that's just part of our normal ongoing every day operations within our our finance department and are will find out what we're going to do or will figure out what will do overtime and and letter of i know and habits on your second question around small cells you know we believe that we do have a structural advantage around the assets that we've acquired as the and mentioned in his earlier comment we were intentional about of acquiring high capacity dense urban fiber ah and as we've been kind of in the later stages of gorgie g r and now as we enter into five g there's a disproportionate amount of traffic in dense urban and suburban areas in the united states and in order to solve that increased traffic and small small cells are absolutely necessary there a critical component of their network and i think the the locations that we've acquired fiber and and where we've built fiber ah and then where we started to build myself sets us up really nicely as we get into five g and we start to feed networks interpretation and that fiber that we have existing i think we'll see additional co location on are driving up the the yields returns of of of those assets and
spk_2: as as had happened in prior psychosis gone from two to two and a half t and than to three g and into for g and now under five g
spk_1: we would expect there will be innovation that will further drive demand a wireless traffic demand and that increase traffic again and ears kind of the benefit of those those assets so we think we got great assets in the right location and and think that we're going to see a really strong tailwind in the business of for a long period of time and you're right to point out you know the the impact directly to fight real revenues is not going to happen overnight or it'll happen over time but the conversations in the discussions that we're having with carriers ah and the activity and i would point to the bride and commitment of fifteen thousand small cells that that we talked about on the last quarter those are all
spk_7: the early indications that these assets or of credit of the critical nature necessary to deploy wireless carrier network them and we're really excited about where we're where where position on your last question around see bands that room and constraints and supply chain cetera you know we haven't seen anything at this point that with the just the us that the numbers that we have out there are and are not going to be achievable ah if we if we start to see something obviously won't we'll update you on on our expectations but
spk_2: normally and and the business units are the quarter to quarter changes than and timing or are not that impactful to our overall result as i spoke to earlier in terms of the lead time and a commitment of revenues we have a pretty long lead time so we have a lot of visibility enter into the what will do in two thousand and twenty one and for
spk_1: oh good about where the where the forecast is and if that changes will will will update you but i think i think the supply chains will will resolve themselves over time and and don't expect that have an impact and in terms of our and and then just get thank you for that i just have a quick follow up so to last september we we had american tower announced their their and away the team mobile and he cook philosophically of community this reminds us how you might want to ah am your think about that and structure evergreen or any kind of in l a that would address the at sprint into mobile chart i appreciate you put up yet in the expiration schedule on supplement i was quite helpful that and any any other thoughts philosophically on honor at willingness to enter into at some sort of and emulated captures all that sure and so we did thanks for mentioning the disclosure we did add some additional disclosure to the to the supplement we had gotten questions without a be helpful to give you a little more granularity or if not intended to be a forecast though that within the supplement his is not our forecast of of actual charm but just the actual numbers the you can separate locations where the legacy sprint and t mobile were on the same sites and and sites where legacy sprint was the with stand alone on a fight and and not cool okay to with the mobile and we're always open to learn to considering a a new structure or an agreement with a customer but there's there's not any need for say to do that and we were intentional a number of years ago about extending the term so if you
spk_16: look back and that disclosure we've got a lot of term remaining on those on those leases and and it's provided a lot of which with the goal when we did it of extending as brantley says we're trying to make sure that we had a lot of flexibility through that if there was consolidation so pleased about where we are there
spk_1: in i would look at my what we've done historically our we're always open to her as i mentioned earlier of working with the carriers to help them facilitate what they need ah and or whether that's achieving synergies are increasing speed of deployment of network and we're happy to work with carriers on that basis and at the same time making sure we maintain and protect the economics about the agreements that we have in place as well as the economics of the site and and and driving the right return on a on the asset so will hold that imbalances as we usually do and up and and make sure we we we do the right thing for both shareholders and for our and for our customers are i would just point out that the which i think it is helpful as we think about you know entering and two thousand and twenty three and beyond and next next big data two thousand and twenty eight where we we have some exposure to two liters potentially being terminated from from the t mobile acquisition you know to an impasse carrier can tell the nation
spk_17: we've been able to grow up with though and dividend right through those those period of time and the other reality is that consolidation to the actually lead to increased spending so we've had this view for a long period of time that that ultimately the the combination of t mobile and sprint will be a good thing for the tower industry and net net will end up with more
spk_18: or more activity and more thing ah
spk_19: then then we would have otherwise and and so i certainly expect that at some point in time we'll feed them the benefit to t mobile of them synergies of taking down from site but i think the overall investment an activity that they will do in with regards to five g will far exceed the the deduct that we may see from from from synergy
spk_18: she's that they try to achieve and taking down from site so that not man back to the earlier comment the really good about the activity urgency and five g and and will work for the consolidation when the time comes in several years from now xj
spk_1: what take our next question from read protests but raymond james oh someone you guys and kick ass the it's a double a total more enrique to and out with a lot of fun
spk_4: that was great on a taster the on this principles of was while i will follow up on something like as you about the pacing
spk_3: are we looking started about fifty thousand small saw loads on at one you and you stop taking telecom thousand a year is is a good pacing them of wrestle accountable next couple years
spk_4: we do we think that the activity we think will end in this year with about sixty thousand give or take note on air and i think that's pretty good forecast for the time going forward and you know if we look out over a longer period of time
spk_18: think that the demand for small cells is going to be well in excess of what we've seen thus far and so i think our our our view would be over a longer period of time that that activity will increase beyond those levels but in the near term think that that's a pretty good pretty good gauge the the carriers and the activity in the discussion
spk_19: it's ah
spk_9: and their public comments around the necessity of mortals and it really that the environment for the opportunity for us to capture a larger portion of it but as you know there's a long lead time for that though we get lots of his ability as we go from a commitment to the carriers did on certain sites to when we're actually turning them on so as we gets to the price
spk_1: it's certainly update you on on our view and records their limited add one thing to that we we we get a lot of questions around why ten thousand is there some sort of structural cap the how many we can put on air and i'll just like did did be clear that the ten thousand it as a result of the bookings we have and the time it takes to get those bookings on air
spk_18: which is typically between eighteen and thirty six month we don't feel the eighteen to thirty six months changing all that much but if we got a lot more bookings we could put a lot more on air than just ten thousand in a year for ten thousand a good a good pointed to look out for the next few years has because or next couple years because of where we're where we are with
spk_2: the bookings that we've had recently and but as a pointed out there's nothing that would stop us with greater bookings to speed up that employment and we would anticipate that to be the case as the necessity of small cells continues to to get clear for the deployment of five g and networks overall
spk_1: the excesses or lessons are visible business that anything he kept from the horizon contract and azores play that onto a time on on a had the fifteen thousand i was too uncertain to a level no and that and nothing more specific than what we if we previously mentioned okay and then on fiber three percent on net growth can you help us understand how is that this is doing gross internalize is itself on a double digit close double to determine better than double digit growth yes we're we're still turn it around nine percent ah and and then the top growth to be in the and the twelve percent plus range ah netting to that that three percent that we expect for four years twenty one a lawsuit from ha talked about a couple times about cbs what do you think the opportunities and cbs will be that you're not in guy doesn't sound like is it increased power to go on towers is it in building systems that you'd like a get involved with opposite arsenal the about lacey opportunity might be coming cbr us
spk_18: yeah think it's all of the above i think there is opportunity and building that that would we have seen and we'll see with with done a number of trials on that front end up with some success
spk_20: but if there's an opportunity to expand our the density of the network for the wireless carriers into buildings to reach places that are very difficult to do from from the outside so i think there's opportunities there i think get off the gonna be some opportunities and a macro environment and certain settings where cbs may be used by a contests
spk_21: provider or or others who who want access to spectrum so being able to get some of the unlicensed spectrum components of cbr as ah isn't up to you do that in nam in in in more macro environment i think they're probably off some opportunities around campus specific activities whether that universities are other locations where
spk_0: as someone controls on a large portion of land and has a discrete user use for cbs that that that could be interesting of the shared provider so i think there are a number of opportunities and it nine did not and guidance yet because the it's not large enough to to to be on the be beyond around in your but i certainly think oh
spk_7: over time ah add the as we see five g developed it them that the need for this to be for wireless up to use to be ubiquitous i think will drive uses for cbr s and i think the other big component of it is obviously everyone is trying to figure out how to get more spectrum into the hands of of of the wireless up writers and cigarette is another way to do that and i think that spectrum will be utilized over time and i think we stand to benefit from that of that spectrum is deployed
spk_2: so it's nice to see the fcc but more spectrometers on the block to
spk_1: agree they while guys it's threatening to it take the next class ten from and neck down the our moffat nathan fun hey morning things like my questions i'm not first i noticed that both the number of least extended ah and an immigrant leases acquired in a quarter and would reply the lowest in many years and and they've been trying it out some time the only be just your talk a bit about the state of a market for land acquisitions and and extensions and the how much headroom you think you have left to push on that front
spk_2: durga morning neck
spk_1: this has been a focus of ours for about fifteen eighteen years something like that where we've we've been specifically focused on extending the maturity of our of our ground leases when we started that activity i think we're in the neighborhood about seventeen or eighteen years the remaining term on average ah and we had in the neighborhood of about twenty percent or a lot
spk_7: less than twenty percent of the land that with own ah and we've increased over the over the last fifteen to eighteen years with increase the percentage of land owned ah
spk_1: to about a third deliver a third of our overall overall ground leases and in addition to that with taken the average maturity third to longer than thirty years so there's been a concerted effort for us to get well ahead of the have any date which are a landlord would have a a termination right or gain leverage from a financial damn point of or what those those extension terms with the and up in other team has just done a phenomenal job of a long period of time the have consistently improving the quality of the assets and reducing the risk albeit
spk_2: relatively small on an individual tower basis cumulatively at the i would put that in the category of dan was talking about balance sheet rest that's another risk that we've methodically eliminated in the in the business and and really excited about where we are today it's an ongoing activity as long as we're in the business work and gonna continue to be there's so we we are constantly working on are buying outland that makes sense at it that we can it but
spk_7: that we can acquire at the appropriate multiple ah and at the same time working on extending gramley says and some component of the ground with as i think will always be in that in that maintenance mode where we're extending and working to to extend that so some of the activity coming down is just a result of terrific execution over a long period of time and the natural evolution
spk_2: of once we get eighty hundred years on the ground least or we acquire it than that comes up the board and and there's no longer any work to do on that side so it'll probably in terms of quantity or number continue to come down our overtime and and will continue to make the right financial decision around buying are extending that leases
spk_10: did you see a practical limit as to where you can take the ownership
spk_2: ah there are owners of these are groundless is that i think will will wanna hold the property forever so there there is a there is a an absolute component where we're going to always have gramley says as a component of the business some portion of our ground leases are also on on things like government land
spk_1: and ah and obviously those will remain in the hands of government entities we won't be able to acquire that so yeah there's a natural limitation we're not really close to it yet there is that the just the practical aspects of it where people loved on the land and and believe that crown castle be there to pay the groundlings for a long period of time so the good good stream of income that they want to continue to hold police and we're happy to be a less the if that's the right financial relationship to remain in as long as we have a term answer and he a price okay at and know maybe one not one on the small cell frank i'm in i'm sure you guys have pretty good intelligence for were in a where the carriage of self building small cells and and in some cases may be why they went in house vs using the vendor like you know what are the factors that you've been observing as your kind of most correlated your to carriers choosing to deploy on their own for particular builds versus leasing it was it is it's proximity their own while in assets are some local market attribute or or something else sure i think there's probably to two factors you mentioned one of them proximity to existing plant that they have is certainly a reason why they would self perform and use their existing plants to do it
spk_0: add to the other is and frankly as that there are places where we're not interested in putting the capitol because we don't see the least up opportunity so there are limited
spk_22: the number of providers the third party capitol building the small cells and obviously ourselves and and inside of the digital colony portfolio as as they're delivering not is another as of offering to customers but beyond that there just aren't anybody there isn't anybody else is doing that at scale so i'm worth the
spk_9: elective in terms of the opportunities and places where we want to invest the capital and put the capital it's gotta not only need that kind of initial return that we've also got to be comfortable that there's gonna be big demand ah over time for other carriers to need it and in places where we would look at it and evaluate the know does not meeting the return threshold five or to have either the cost to build them or the lack of certainty of least up the know the be locations where we would pass and and decide not to invest the capital and and the carrier with would self perform such combination of those two would lead to the vast majority the reasons why they would help before you know we talked about the some in the past but you know our
spk_2: view of the number of mothballs that is gonna be needed in the market or aligns pretty closely with and a number of the that carriers have made where they've indicated there's going to be in a more than a million small cells in the us we certainly don't anticipate building all of those and so i think as long as as long as the businesses around and we're we're building from
spk_9: most note i think we're gonna continue to see the wireless carriers self perform an opportunity for value creation is to be rigorous and disciplined in our approach to evaluating those market that have the best potential for leafs up and then making sure that we're really thoughtful about which ones we pick and then how we build the python on cost and on time and i end and those are those are sort of that value opportunities that would that we're looking for and then they'll be like of small felt the think that will exist in the us that are that are going to be self performed by the carriers and i would look at that as overall activity is just a trajectory that i think aligns well with our strategy
spk_1: thanks jack
spk_2: that and went out that i david barton with bank of america
spk_1: hey i think some i should take my question so i guess jay i'm just as at had a collective level on is there anything that you're seeing from the operators from a geographic army search for a perspective that would lead you to believe that there is an appetite among the carriers collectively the one see ban on
spk_2: to to deploy eighty sooner rather than later
spk_1: some of the spectrum outside of the of the first phase of a black clearing meeting i eat there there's a lot of opportunity for the carriers to deploy beyond the first forty five markets on that should they choose to do sell and has a very safe you have any color as is is to whether you have some insight into whether that may or may not be happy and then the second a question would be again with respect to the idea
spk_2: that the the carriers of mostly looking at the end of the macroclimate start primarily because of the gear and back all that they have a nice see if i am are you seeing are expecting that the that that kind of incumbent our carriers arm are going to be gaining a lion's share of of the demand here or are you see you know the kind of interlopers the new ah power companies the unity is the film ends of the world are they are they getting a super normal share of that are be so little part of the conversation at the margin as we think about the suit upon it thinking
spk_1: that morning dave on your on your first question a minute i'm gonna mostly bag off and and let the carrier speaks the to curb how they're thinking about the band appointed that it's probably just a little too specific for us to make those those kind of comment or are indications we're we're we're obviously than mention a my earlier car
spk_2: minutes we're seeing a lot of the band activity is driving a while eating activity and i think over time the driver of our our businesses as i mentioned before kind of stalking years of growth and it's gonna take multiple years for see ban to be deployed and we think is going to be great for us for an extended period period of time but specify the city beyond that i'll let the but the carriers speak to kind of their own their own plans and initiative
spk_23: ah on on the second component of your question around where the activity go
spk_24: in our history i think it's a really helpful
spk_0: it indicates indication of where the kurds are going to deploy this by g network and how they think about the see ban spectrum it is always most cost effective to deploy the spectrum on on locations where they have existing infrastructure they've already got connectivity there they've already got power the get the basic infrastructure there to be able to add additional spectrum bands
spk_9: so at least initially i think the vast vast majority of the activity will end up on on fights where they are are ready located on ah so the existing owners the towers were these carriers are cool located on those sites i think we'll see the preponderance of activity for some extended period of time or as it gets built out and
spk_25: none of the spectrum begins to be used and and step to it is the densification activity i and and them that activity of likely to go frankly again on existing sites with the carrier is not yet oh located on the opportunity for or for new and upcoming tower companies is generally pretty limited up places that are outside the poor areas where the big
spk_7: at least the three the public tower company down there their assets ah in the places where new housing development or the extension of suburbia the sprawl those kind of areas those companies that you mentioned are often building towers than those locations
spk_1: damn
spk_2: putting their capital up to the to meet that need a data that the sort of sort of second third kind of level of activity i think the vast majority of at an early days than even maybe even in a medium term it is on existing site
spk_1: great they check be shit operator man i'd ask ask what bush okay thank our last question come from brand and misspelled where he bank capital market great thank you for squeezing the and i want to go back called this question why on the cash encounter them in agreement with fries and i think that's generally referred to as in industrial as a use the and am curious historically speaking how long as the contract in committed new and portion in the contract lasted
spk_25: when he signed it again it previously out of the trend of the time
spk_26: and can you help but think about he entered the value you ascribe to the use the relative to the term extension that would be great them as second question around the mobile turned the disclosure super helpful can you provide would be turn was this quarter and then that odelet seven hundred million or sell of colocation and other
spk_1: sprint sites that you have what would be a good number or as you look out of the time for you to retain
spk_10: thanks
spk_0: but the are on the first question brandon i'm in a bag off that question that little more specificity than we would get into a on our customer contractor that as i mention the called the earlier there's a component of that is related to giving them knowledge of what the

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