Crown Castle (CCI) Nareit REITweek: 2024 Investor Conference summary

Business model and growth drivers

• Owns and leases 40,000 towers in the U.S. to major wireless carriers under long-term contracts with 3% escalators and 1-2% churn, ensuring stable, growing revenue.

• Barriers to new tower construction create a favorable supply-demand dynamic, supporting high occupancy and pricing power.

• Wireless data demand grows 20-30% annually, driving incremental equipment needs and revenue growth of about 5% per year.

• Small cells and fiber assets provide additional growth avenues, especially as network densification becomes necessary in urban areas.

• Small cell deployments are expected to double from 8,000 in 2023 to 16,000 in 2024, with a focus on co-location for higher returns.

Leadership and strategic review

• New CEO Steven Moskowitz brings an operational focus, aiming to improve efficiency and effectiveness, especially in tower operations.

• A strategic review is underway to assess whether fiber and small cell assets are best retained or divested, with most operating review completed.

• The review aims to optimize capital and operating efficiency and determine the best ownership structure for fiber-related assets.

Industry trends and financial outlook

• Carrier consolidation has led to episodic revenue churn, with a $200 million reduction expected in early 2025 due to T-Mobile/Sprint network rationalization.

• After this churn, growth is expected to resume at about 5% annually through 2027, with 75% of revenue already contracted.

• 5G upgrade cycles cause initial CapEx surges followed by lulls; current tower growth is 4.5% for 2024, with higher growth anticipated post-2024.

• Small cell and fiber businesses are seeing re-acceleration, with fiber solutions expected to grow 3% per year as enterprise data demand rises.