Good morning, everyone, and welcome to the final day of the Goldman Sachs Communicopia and Technology Conference. I'm Josh France. I'm one of the telecom and tower analysts here, and we're very happy to have Crown Castle and its CFO, Sunit Patel, with us today. Thanks for being here. Thank you. Sunit, you're not new to Crown Castle, being on the Board, but you're relatively new to the CFO role. Can you tell us what you want to implement, given your history as CFO at other companies? Yeah, and you're right. I was on the board since January of last year. I mean, as I look at the company today, we're going through a lot of change. One is the divestiture of our fiber and small cell business, which we expect to complete in the first half of next year, which will then make us a company focused just on the U.S., being a U.S. tower-only company. The good news is our strategy is clear. We have a new CEO, Kristoffer Hinson, joining us on Monday next week. That, I think, again, sets us on a steadier course. The company's been through a fair bit of change on that front in the last few years. From my perspective, as I look at where we are and what we need to do to go where we want to go, is we do want to be a best-in-class tower operator and continue to drive better efficiencies and productivity, improve our cycle times, our customer experience. We are continuing to deploy technology and system improvements to drive that. I think I'm happy that we have a plan that we're executing on that front over the next couple of years. I think the second thing is striking the right balance between top-line growth and bottom-line performance. There are quite a few levers that we can push there. We're excited to focus on operationalizing some of those. Got it. You mentioned you're in kind of the midst of a major transformation with selling the fiber and the small cell businesses. How should we think about how the company looks in 12 months from now? If there's any update on the deal process, that would be fantastic. Yeah, I think on the regulatory process and the deal process, things are going according to schedule. We still feel very confident we'll get the transaction closed in the first half of next year. Whether I look at state approvals, federal approvals, how we are doing in our discussions with both Zayo and EQT, it's going right as we had hoped, I would say. Plus, we have put out a guidance that we expect, assuming a close of the transaction on June 30 of next year, that our AFFO, the midpoint of our AFFO, will be about $2.34 billion. This year we've guided to about $1.88 billion, in terms of the midpoint of our guide. Between now and then, with the proceeds of the transaction, which is $8.5 billion as the sale price, we expect to pay down $6 billion of that. We'll have some organic growth in the tower business that we've been driving and also some level of efficiency improvements. I think we've tried to provide a picture for investors of what the company looks like post the transaction. Got it. You also mentioned, you have a new permanent CEO and in your discussions with him thus far, what kind of changes do you think he's going to bring to the company and how do you think his experience kind of helps through the transition with the fiber and small cell sale? Yeah, so I think the fiber and small cell sale is going on. Kristoffer Hinson's experience is in the wireless segment ecosystem. He was at T-Mobile for many years, running some of their operations with respect to tower operations, interfacing as regional executive there. He was with Ericsson for a number of years. For the last few years, he was at Vantage Towers in Europe, the size of that business being very comparable to our business. He's got a lot of experience, not just as a tower operator, but also from a technology equipment supplier perspective and from a carrier perspective. Excited about him joining us. Certainly someone very knowledgeable about the tower business and what some of the dynamics are currently. Got it. If we kind of think about the operations of the business, you raised your leasing guide at Q2 results. You're the only one of the three public U.S. towers to do that. Can you give us some incremental insight as to what you're seeing? Is it continuation of rural builds? Is it densification, mid-band deployments? Where are we there? I think it's a combination of things. We have clients that are just trying to expand their coverage. We have clients that are trying to deploy new bands. We have clients that are dealing with increased activity levels, could be 5G deployments in some cases. It's all of the above. I would generally say that the one constant in our business historically and what we see going forward is just continued growth in mobile data demand. While the flavor of where the demand comes is changing, the demand growth for mobile data continues to pace. Our clients are generally deploying, when you look at compared to 10 years ago, they're deploying more spectrum bands than they were 10 years ago. As you do that over time, there's the need for vertical footage on the towers or even surface area has generally crept up over time. We are obviously the beneficiary of that as a tower sector company. Got it. The carriers have upgraded more than 50% of their sites with 5G, and Verizon's pointing to 80% to 90% of their C-band kind of finished by the end of this year. How do we think about the organic growth for the next, call it, five years, next 10 years? I think the carriers have talked about their CapEx plans, which are generally flat, maybe down a little bit, but should we be able to think about like a mid-single-digit 5% organic growth for the next few years and beyond? Yeah, I mean, we haven't provided any specific guidance with respect to us, but what I would say is, you know, the combination of escalators we have in our contracts with the clients, compared with new levels of activity, whether that is clients wanting to expand their coverage or expand the number of bands they're occupying or expand the type of speeds or throughput they can put through these radios and antennas, has all been helpful or will continue to be helpful for us. I think that will, they'll continue. A more recent example of that is, when you see the purchase of the two bands, but like the 600 MHz band by AT&T, as they deploy that, that's another example of where you'll have to deploy radios, and that means generally it should be a positive cross, for example. Got it. As we think just about your leasing for the year, it's $110 million, $120 million. Is that a fair run rate to think about? I know you talked about organic a bit there, but given the amount of new spectrum that is coming to the carriers, do you think that the 5G build cycle will take longer than 4G or similar or slower or faster? Where do we stand there, do you think? Yeah, so I don't have private specific guidance on next year, but I would say we feel good about our leasing activity where we sit here at this point in the year, looking out. I would say on the 5G side, yeah, I think there's still a fair bit of 5G deployment to go when you look at the wireless carriers and look at what% of the sites are 5G deployed. I think T-Mobile ran ahead of that compared to AT&T and Verizon, so there's a fair bit there. Secondly, there continues to be expansion in the number of towers they want to go to, all three of the carriers. I think that's also a plus. Got it. You hinted at it a bit with the spectrum deal from last week, I think it was at this point. Your EchoStar revenue exposure is about 5%. If you want to update us there with a more specific number, we would be happy to take it. Can you talk to us about the contracts that you have in place with them? Their ability to churn, I think they've signed a 20,000 tower deal with you guys. I think it spends out to 2034, 2036. 2036. How do we think about their payment and the potential churn that could come? Are you confident that you're going to get your payment from now into the middle of next decade? Yeah, so it's the contract, as you point out, is 2036 to 20,000 towers. With the number of towers that we currently have, we don't see, it doesn't really impact, we're not impacted by leasing activity or lack of leasing activity from them per se. It's pretty much a fixed sort of contract with escalators that we typically have. No, we feel good about our contract and as you point out, duration is still 2036. Clearly, the financial health of our clients in aggregate or EchoStar looks like it's improved a lot since two weeks ago, given the stock price. Their obligations have certainly improved, but we have a contract that we feel good about. In your leasing guide, is there, I want to make sure I heard this right, there's nothing in the $110 to $120 million from EchoStar or is there some in there, and does that go away? How do we think about in your guidance how much that could be driven by EchoStar? Yeah, as I said, the nature of the contract, the leasing activity from there doesn't impact that. Got it. Okay. I guess the expectation is AT&T potentially does less densification of the 3.45 because they can do a software upgrade and that'll give them more capacity, but they're going to have to deploy the 600 that they bought. As we think about that coming online, maybe starting in 2026 or 2027, whenever that comes online, do you have the ability to generate incremental kind of colocation revenue as they put a 600 MHz antenna or do you think it's going to be more amendment driven, and are there antennas that can do both 600 and 700 that would kind of fit within their deployments already? Yeah, it's tough for me to comment on the specifics of our contracts with any client per se, but what I would say is, as I said earlier, I think that when they do get around to deploying the 600 MHz spectrum that they've acquired, it should be a positive for us. The specific question on 600 and 700 MHz, you should talk to some of the equipment suppliers to get your own determination, but I think the other thing to keep in mind in the background is with every year, as carriers look to push both more throughput to a particular tower because of growth in mobile data, deploy more bands, keep up with technology, evolutions in antenna and radio technology, generally these creep in terms of vertical foot creep, what they need from carriers like us in general. They're also trying to accommodate more bands within the space they have. I would say it's certainly better for us than it was before they bought the spectrum. Got it. Last. Yeah, probably the long term, obviously, take a while for them to get through approvals. Understood. Last question on this. If EchoStar wanted to kind of buy out the contract early, how do you think about that kind of negotiation? It's really tough for me to comment here. I'd just be speculating on all of that. Understood. See what happens. Figured I'd take a shot. As it relates to the U.S. Cellular T-Mobile, can you kind of remind us the size of your U.S. cellular business today and how much revenue is from overlapping sites, and kind of think maybe if there's any years that there's certain contracts that are coming up that would drive churn? Yeah, the impact for us from that transaction is de minimis. You won't even see it in our numbers. It's very small from a churn perspective. Got it. There's the thought and part of some of the law changes that we've had that there's some spectrum auctions probably coming towards the second half of the decade. What you know about the spectrum that could potentially be auctioned, do you think these are incremental drivers for the kind of traditional tower deployments, or do you think these are spectrum bands that are maybe used in different ways, like a small cell configuration or something like that? Yeah, I mean, I think if I were to do a broad categorization in terms of low band, mid band, and high band, a lot of the high band spectrum is in the 20, 30 plus gigahertz range. You get super high speeds, but the distance is quite limited. I think mid band gives you a lot of good balance between speed and distance. Low band has a wide radius of propagation for that signal. I think the answer to your question, in general, is those auctions should benefit us as a tower sector because, as I said, you're going to continue to see mobile data growing, and as more spectrum bands are deployed, while in some cases you can have radios that can accommodate some wider range of spectrums, in general, it means more vertical foot on the tower over the longer term. Got it. If we kind of shift to some kind of financial questions, you know, you have a lot of options in terms of dividend growth or inorganic tower builds or M&A or buyback. Can you give us an update on how you think about the kind of different return hurdles for each one of those different options? Domestic M&A, ground lease purchases, build suits, etcetera, etcetera. Yeah, so one thing just to say upfront, obviously we were clear with respect to our capital allocation guidelines upon the announcement of the transaction. You know, we reset the dividend. We say that our dividend would grow, would be set at about 75% to 80% of our FFOs. As we grow our FFO, the dividend should grow. We talked about taking proceeds from the $8.5 billion sale of these assets, using $6 billion to pay down debt, using the balance to buy back stock. I think that, given that as background, generally with respect to buying ground leases, we have about 30% plus of the ground underneath our leases that we own versus the rest is leased. There's an opportunity there. We can certainly build new towers, although we have 40,000 towers, so the universe of new towers you can build in any given year would be small, but over time they could add up. We're certainly looking at that where it makes financial sense. Thirdly, I think from an M&A perspective, we're not focused on that currently. We think we've got a lot to do with just getting the transaction done, driving efficiencies. In terms of specific return thresholds, let's say on purchasing leases, we don't advertise it, but we want to make sure that it's better than us, let's say, buying stock back or something like that. Meaning they have to be fairly attractive. Right. For us to do that, we are going to try and increase our level of activity in that area. Again, these kind of benefits take time to really see. In any given year, what we do might not seem meaningful, but when you measure things over three, five, seven-year periods, it does accrete value. Got it. Meaning that you can see visibly. Sure. You mentioned that you're not so focused on kind of M&A given the deals that you're trying to get finished. Just on valuation discrepancy and private tower multiples versus where the public trade's at, what are you seeing and are there any other kind of factors that would go into your thinking as to if you do want to execute on some M&A in the U.S.? I mean, on the disparity, your perspective would be as good as mine. There's a wide disparity. You could argue that on the private side, maybe there's more optionality to add new tenants because they usually have an anchor to get going on things and therefore there's optionality to do that. Beyond that, I can't, I don't know, I don't have good theories for the pricing disparity between public multiples and private multiples. Fair to say the privates are still significantly above where the public trade is? Yeah, although it's tough because it's not like they're, it's not a liquid market in terms of transactions. Judging by multiples in the past, yes. Got it. In terms of total amount of capital that you can use for buybacks and dividends and build-to-suit and etc., etc., can you remind us about that total capital amount that you'll have in any one year post the fiber sale and then how much of that you can kind of, you think about or if it's, we're going to give, we know what the dividend is going to be, given 75%, but like what's your total capital amount? We don't spend as much in CapEx per se for tower builds and for, you know, buybacks. I mean, it's, when you look at roughly about $4 billion of revenue in the tower side, your CapEx is $100 to $200 million sort of zip code. It's small in the scheme of things. We did say that post the transaction, our AFFO would be $2.34 billion, which would be the midpoint of the guidance we provided from July 1, 2025 to June 30, 2027. From there, as we said, 75% to 80% would be the dividend. We've set the dividend at $4.25 per share and then the balance can be used for other things. Got it. You've been operating three kind of distinct businesses for years now. I have to think that there are a lot of ways that you can become significantly more efficient by having one business, just what most people think is a relatively simple tower business. Can you kind of help us think about the moving pieces and how to size the potential cost efficiency? You've thrown the bucket in your slide deck with kind of a cost takeout, but is there incrementally more than that? We'll start there. Yeah, I think the guide that we provided incorporated some of that, those efficient, you know, the, so there are several things, right? There's exactly the thing you talked about, which is the dissynergies of running three businesses. By running one business, simpler business, you should be able to take cost out there. There is us, you know, investing in systems, platforms, process improvements, you know, that should drive also further cost changes. At least for the short term, by short term, I mean, in this period, second half of next year, the first half of next year, our guidance incorporates all of that. Over time, you know, going beyond that, we think we can continue to do a little better as, you know, because it takes some time to do some of these platform deployments, system deployments in phases that we should be able to do a little better because we do have an objective of being industry leading from that perspective. Is that two years, three years, four years? More like, I would say two to three max. Okay. But yeah. As you kind of think longer term about your margin profile, where do you think that can go and how efficient can you be there? We haven't provided specific long-term guidance, but I would say that if you look at the embedded or implied margin that we have in the AFFO guide that we've given, I think over time we can do a little better than that. That's all we've said so far. Got it. You know, one of the things that I think is helpful to me, at least as I think about any company and kind of the financials, is kind of the algorithm. The sprint churn will be done and we won't have to talk about that hopefully anymore. Yeah. How do we think about if you can grow organically X%, what that means for EBITDA growth Y%, and then AFFO kind of goes Z%? Is there a, what's the best way to think about how that works? Yeah, hopefully at a future forum, we'll provide more precision. The incremental margins are pretty high, both to the EBITDA side and to the AFFO side for every new dollar of revenue. You know, what does high mean? If our current EBITDA margins are in the high 60%, and they will improve with some of these changes I was talking about. You can say it's definitely higher than 70%, whether it's 80% or 90%, but it's high. We've got good operating leverage in the business. Got it. As you buy back stock, is a high single-digit kind of AFFO per share growth rate a fair way to think about the algorithm here? Again, we haven't provided specifics, but I think we can definitely drive much higher AFFO growth than the top lines of it. Okay. Turning back to some activity levels, like fixed wireless has been, you know, we all dreamed the dream, I don't know, five, six, seven years ago on 5G, and it was going to bring all these applications of classes and who knows what. What we got was really fixed wireless thus far. The carrier, your carrier customers have effectively said they're not devoting any specific capital to fixed wireless today. Maybe that changes if they get some, say, get some, you know, actual results around what the returns could be for that. As you think about that opportunity, how do you think that kind of comes into your business? Do you think this is a real opportunity in the near term? Do you think this is something over the long term? Do you think that your towers are situated to be a real beneficiary there? Yeah, so having spent most of my career on the wireline side and being intimately aware of the economics of fiber deployment, and then I was at T-Mobile, so I understand that fixed wireless deployment economics. I would say fixed wireless is a relevant and a meaningful niche. It is because there are areas where it is cheaper and economically more productive to do fixed wireless versus, you know, doing fiber builds. There is a fair bit of space there to do that. I do think you will continue to see those deployments where they make sense. They make sense more sort of on the fringes of urban areas or suburban areas, you know, into the rural areas. There are a lot of different variables of calculations that go into that. I do think it continues to be an area where you'll see them deploying it, especially as a substitute for fiber though. Is there a way to, the best way to think about the amount of your towers that are kind of situated in either urban or kind of suburban areas, which would be in theory best placed for incremental fixed wireless deployments? Yeah, I mean, if you look at our footprint in general, we're sort of more, you know, large MSA oriented. I'll give you an example. If you look at the city of Houston, it's 50 miles by 50 miles. There's a lot on the fringe that could be relevant. In a sense, I think our footprint is well suited because when you get to that boundary line between suburban and rural, that's usually also a good area where fixed wireless would work well. If it's completely rural, then you can talk about satellite, for example. Sure. To that point, do you think satellite becomes an incremental driver industry-wide, not necessarily for the towers, but do you see that as like a competitive threat to your customers? I think that satellite has several features that are attractive and certain things that are drawbacks. Clearly, the attractive is ubiquity everywhere. You can get decent speeds when there is capacity. For the same reason that Verizon looked at some of the high-band spectrum or congestion in Manhattan or wherever you need small cells, there are limits to how much throughput you can handle through satellite. Remember, the more bits you push through, the more power it takes, and there's power constraint limits on each of those birds up there. I don't think we're anywhere close to that. The other issue with satellite is you need line of sight. Now, it's okay if it's fixed and you're at home and you put up an antenna, but most of us are mostly indoors, whether you're in your office or places like this or in your car or at home. You're not out there walking around all the time. That does present some constraints. On the margin, yeah, satellite is viable and competitive in certain areas. We service the wireless or our clients and certainly seeing some of that in stock prices in the last few weeks, but it does have limitations. Sure. I think the theme for the past, or I guess this week, has been AI. Yeah. You know, as you think about the potential that AI can bring to your business, either on costs or incremental revenue, if you can help your carrier customers figure out where they need more equipment, or maybe be at discussions with hyperscalers with potentially putting some sort of equipment at the base of towers, how do you see how that could potentially play out for you? better customer<edited_transcript> There are several obvious things that benefit us and other enterprises, meaning your interfaces with your customers, driving productivity and efficiency through your organization, because a lot of things are AI-enabled, AI-assisted, AI-agents, AI-powered. We see quite a few benefits there that I think, while there's a lot of euphoria about all of this, these are real practical things you can implement over the next few years at a reasonable cost to drive better customer interaction and better productivity efficiency within our business. We're certainly going to be pursuing that. I think that your point about us having a better real-time sense of where our customers might have congestion or where we could help them, that's certainly another area where you can take the spread. Data from external sources, internal sources, have AI pattern recognition algorithms that highlight, you know, opportunities or areas you can present to your clients. I think that is certainly there. I think more powerful, you know, we talked about various drivers for mobile data demand. For the last number of years, a lot of the mobile data demand is eyeballs consuming data, whether it's more video or high-resolution video or whatever it is that people are watching, what they used to watch on linear TV and now looking at their phones. You can see a plethora of AI agents, apps embedded in your phone running your life behind the scenes. There's nothing you're looking at, but they know a lot of things about you and where you are and where you're going. This is just one little tidbit, but there are a lot of things that the IoT revolution has kicked in, IoT combined with AI, a lot of apps that will require mobile data transport that are not necessarily consumed by eyeballs should benefit us. Have you had conversations with any of the big tech companies on how you could help them implement whatever they're going to try to do? No, other than just becoming aware now, as they're moving from how do I solve my, how do I get solve my data center challenge or how do I solve my power density requirement with these NVIDIA chips. Moving from deploying mass-scale infrastructure, which makes GNI a commodity available to all of us, to the applications, which will, that's what really starts changing how we live our lives as a society, I think is still to come. Got it. The cable companies have been pretty happy with their MVNO and their capital-light kind of wireless deployment efforts. Do you have conversations with them about how you can help? They have some CBRS, but it feels like they're deploying that more on their own kind of infrastructure. Not too many, mostly because I think it's easier for them to leverage the scale of the big wireless platforms than trying to do it themselves. Financial calculus of it. I think people have been quite interested in the fact that you're going to be, quote unquote, a simple business kind of in a few months and it's just towers. We know kind of the growth algorithm. We know you're going to do 75% of the AFFO as dividends. You're going to have three, four customers effectively. With the minute that we have left, what are the one or two things that you think investors should kind of take away from this presentation and what are the few things that you think are being overlooked, if anything, at the moment? I'll make two or three observations. One, obviously, as a sector, we've been hit hard with the DISH news. When you look at the market value drop in the sector, we service DISH's impact to us as a sector, seems a little out of proportion. I could be wrong. Two, people are not talking about that 10-year Treasuries have dropped from, whatever, 4.4% to 4%. That's clearly a positive for us. Obviously, you need time to see if it's durable and sticks. If you're in an environment where you're both lower short-term interest rates and lower long-term rates, that's a positive for us. Finally, I would say, you know, a month or two ago, people worried about DISH's viability. I mean, our customers' financial condition has certainly improved in the last month, which is good generally. You are seeing a concentration in the sector and you'll have, you know, three essential carriers, if you like, and they have to deploy most spectrum generally. I see that as a positive over time. Got it. I think that's a good place to stop. Thanks for being here. Hope to see you next year. Thank you. Thank you.