Crown Castle Aktie

Good morning, everyone. My name is Brendan Lynch. I cover REITs at Barclays. I'm very pleased to be here today with Chris Hillabrant, CEO of Crown Castle. Chris has been with Crown Castle for about 9 months now. I think this is his first Nareit and probably the first time a lot of you are getting to put a face with the name.

So maybe just to start, Chris, you've got experience at T-Mobile and Ericsson, Samsung, Tillman, Vantage Towers. You have many different perspectives on the communications industry. What drew you to the tower business and to Crown Castle specifically?

Thanks, Brendan. Great to be here today. Nice to see everyone this morning. Yes, I've had a long 30-year-plus career in telecom, working across operators, Verizon, T-Mobile; OEMs, Samsung, Ericsson; and then been in towers now and most recently with Vantage and now leading Crown. When I look at the business overall, I think the tower space is the best place to be.

Specifically with Crown, I'd share a story with you. When I started out, I was building towers in the Texas markets for T-Mobile at the time. And when it came time to find some extra capital, I reached out to the various tower companies, which at that time were very small. And Crown was actually the first company that I did a tower deal with, selling them about 100 towers in the Austin/San Antonio market, and then later, several hundred up in Dallas and then many hundred later in Houston. So Crown has been a great partner.

As far as tower companies go, it's been a customer-focused tower company and one that I always looked at as a strategic partner versus just another vendor. And so for me to then step in and lead this company, it's been the lifetime opportunity to be able to help turn this company around and execute the strategic plan that had been put in place prior to my arrival.

Great. So you've been with Crown Castle for about 9 months now. You closed on the fiber sale. What does Crown do best? And where do you still see opportunities for improvement?

So Crown now as the sole U.S.-only focused tower company no longer has the fiber and small cells businesses that had been taking a huge use of our capital investment. We're now in a space where we can compete and focus in on becoming a best-in-class tower company. This means finding ways to partner with our customers. It is about delivering the services that they expect in order to get them on our sites as fast as possible and then finding ways to creatively work with them in new business lines as they come up. And an example of that is recently, we've started to do trials around edge compute and finding new ways to drive the revenue per tower higher. And although this is at very early stages, we look at this as kind of an inflection point and our ability within the tower industry to perhaps start to scale and take a piece of the AI fueled growth in the marketplace.

Great. Yes, that's a very interesting opportunity, and we'll come back to that in just a bit maybe just to touch on the organic growth outlook kind of in the near term, and then we can move to the longer term as well. On the first quarter call, you mentioned that the 3.5% organic growth would likely mark the low point. Has there been any acceleration in carrier applications or activity that could lead to an acceleration in the back half for organic growth?

Yes. So to reiterate, we do think this is the low watermark in terms of growth. This has been a year where everybody is taking a deep breath as an industry, I'd say, overall. But if I look across the MLAs that we have in place with our customers, and that gives us visibility into the build that they will have into the future, we see it as a low watermark and with additional upside opportunity. We're always looking for ways to drive additional revenue. And so we're currently exploring, as I said before, not only edge compute, but also individual service packages that our customers are asking for.

One of the things that I think is a hallmark of a successful company is when you go to meet with your customers, which I do on a very regular basis, and what you hear from the customers, we want to do more business with you. This is something that's somewhat unique. It's not uniform across all tower companies and something where we think we can execute as a result of that.

Can you just elaborate on what you mean by individual service packages? That's not a term I've heard.

Yes. So as an example, today, Crown has a good services business. We typically will start off at the beginning of the process where perhaps we need to change the ground lease to take additional space for a customer, or we might need to go through a zoning process in order to help get the customer onto the tower. We'll do all of those preconstruction services, which have very good margins and something that I think we've been able to offer at a good compelling price for our customers. And so that's been very successful.

What we're hearing from customers now is more of a turnkey approach that some of our competitors have adopted. And so now we're exploring whether it makes sense for us to partner with somebody to provide those services to make it more seamless for our customers, or perhaps to do a portion of those services ourselves. So that would be one specific example.

Great. In terms of the organic growth over the next 12 to 18 months or so, what are some of the leading indicators that we as analysts could be monitoring for progress on that front?

Yes. I'm probably going to disappoint some of you here in that I would tell you the single biggest analog within the industry is when you look at the growth of data and specifically data that's being fueled by new applications in AI where people are just using it from a text perspective, but now are uploading photos or even video streams to utilize AI. It's about fixed wireless, which has exploded and driven beyond just taking up the capacity within the networks, but actually driving capacity built into the networks. That data growth is the single largest indicator of where the industry is headed, and this has been at a growth rate of 30% plus over the last 3 years. In fact, if you look at the CTIA study, I think it was something like the largest individual data growth year-over-year on record was last year. So it's very encouraging.

In addition, you see the spectrum sale, which DISH has recently concluded with both Starlink and AT&T. You'll have the 600 megahertz, which AT&T will deploy, which will require larger antennas to be deployed out there. And then the commitment of the administration to have 800 megahertz of spectrum that will be auctioned starting off in 2027. This all bodes very well for the industry as a whole. And so we see 6G, even though all the use cases haven't been fully defined yet, as a huge driver for data growth into the future.

Great. In terms of the 800 megahertz of new spectrum that's going to be auctioned off starting in 2027, what is the order of magnitude of new leasing growth that, that would create for the industry?

I think it really depends on each of the carriers, what they have in place today. So what I say by that, a couple of things. One is what type of antennas do they have in place, what type of radios do they have in place. In some cases, people have been able to use software upgrades to unlock a portion of that capacity. In other cases, they actually need to go up on to the towers and increase the number of antennas and radios to take advantage of that spectrum.

There's been some talk about C-band delays. There was an altimeter issue out previously. The industry has always found a way to work around these solutions. I remember the same thing happening with AT&T and Verizon, and they found a way to deploy it in such a way that they were able to avoid having to worry about having the altimeter technology being swapped out. So we would expect that to fuel the next several years of growth. I think the first 100 megahertz is due in 2027. With the full 800 megahertz, the commitment that's there, it will have to be cleared, it will have to be deployed, it will have to be put to use. But this could fuel the next 5 to 10 years easily of growth as they look towards 6G.

What I found really impressive was I was at a meeting at the White House several months ago, meeting with one of the domestic policy staff, and they made it very clear to us that the administration is fully behind 6G. This is something that they see an opportunity for America to lead in terms of having global technology out there in the form of 6G leadership for the U.S., which again, is something that's very good for our industry as a whole.

You mentioned before about AI applications. This is certainly a source of a lot of excitement, but there isn't much tangible at present. Can you just give us any examples that you see coming in the next couple of years where we might see those applications really start to scale?

I'm going to tell you a story because I think it kind of brings to light how powerful AI is and even somebody like myself would use it in a daily thing. There was a charity golf tournament that we were invited to recently for one of our customers. And I was curious on whether I've been to this as a COO in one of my former lives in the smaller tower company. And I was like, did the CEOs show up? And of course, there's no invite list, but I went to this customer's website. I found out that they had a picture, reel, on their website of all the people that had attended.

And so with using one of the AI platforms, I was able to say, hey, did any of the wireless company CEOs show up? And the AI chatbot basically said, well, I can't do that for privacy reasons, but what I can do is I can individually load those up against the publicly available databases and LinkedIn and try to compare them for you. And so I said, yes, please do that and it did that. And I ended up loading in several of the pictures and able to do that.

The fact that I could use an AI client to basically determine if somebody had attended a golf tournament, which is a small and inane thing, involved me uploading, I don't know how many, hundreds of megabytes of photos in there. But the way that people are using AI today is not necessarily representative of how people will use AI in the future. And that ability to upload large photographs or video streams is going to fundamentally change the way that AI is used. And so that bandwidth that's now required for uploads is diametrically going to grow as a result of that. So again, as we look towards the technology evolution, we see this as one of the key drivers of data growth traffic into the future.

Great. Let's talk about some of the challenges that the industry could face. You mentioned software upgrades. That's something that we've seen more recently where maybe you wouldn't be able to generate as much revenue from carrier activity as you would have in the past. How should we think about that type of change, or even the versatility of network infrastructure increasing with dual-band radios or RAN sharing, those types of considerations?

We were at Mobile Congress in Barcelona this year, a small group of us, to look at the evolution of antennas and radios across the major OEMs that do business here in North America. And while we do see that there is a continued densification of capacity in the antennas and in the radios, there's a portion of this which is driven by physics. So if you think back to my earlier example there of 600 meg, these are very large massive MIMO antennas that are taller than I am, 7 feet tall plus. You've got to put these out there. You can't suddenly change the laws of physics that a low-band spectrum is going to go into a smaller antenna.

Now back to the software deployment in radios, while it is true where if you already have a set of radios out that are tuned to the band to deploy, that you can initially go ahead and just add those spectrum through a software upgrade. But over time, as the data grows and the capacity increases, you need to add additional radios. So irrespective of the bands that are included there, as traffic grows, you're required to put out additional radios. And anytime you're adding radios to the network, anytime you're adding antennas to the network, it is good for Crown and for the industry as a whole.

Makes sense. Maybe just one on fiber-to-the-home rollouts. We see a lot of carriers being very active on that front. That could be liberating some spectrum for cellular use, which is currently being used for fixed wireless access. How should we think about that dynamic?

Look, most of the operators have been using WiFi calling for over a decade now. And most people, myself included, typically have their WiFi turned on, whether they're at home or in the business. So that's capacity that's currently being carried by those wireless networks, the WiFi-based networks already. This isn't something that suddenly is going to pull off all the mobile traffic. And again, when I'm out there using the types of applications that are driving that growth, I'm consuming that it's not just when I'm sitting at home, it's when I'm traveling in my car, it's when I'm out and about. This is really still the arms race within the industry of providing coverage wherever a person wants to use their mobile device.

Maybe just a couple more on the industry. I'd say 5G hasn't lived up quite to the expectations that some of the industry has had over the past couple of years. How do you think 6G might be different?

Maybe start with 5G. I think there's one piece that nobody really talks about, which has been a major benefit for the industry as a whole, which is the price to deliver per bit to the customer has dramatically decreased in that time period. And while maybe some of the more science fiction applications, people talk about remote operating theaters where a doctor in India could operate on somebody in Sweden didn't come to pass.

When I walk out in my neighborhood in Houston, I see Waymo cars everywhere. Today, that technology is embedded on the car, on the vehicle itself, but it's not too great of a leap to think about in time where that will migrate out to the network. And what it excites us about is it starts to give real relevance to edge compute and the need to put out GPUs at the edge in order to have the low latency type applications of things like autonomous driving. So while not everything came through, the fact that they were able to reduce their cost significantly to keep up with the data demand is something that was really a benefit of 5G.

Looking towards 6G, and I think I said this a second ago, those applications, which will fuel 6G, include AI, there'll be different types of applications. I would expect that still one of the primary drivers of 6G will be a new way to drive additional cost out of delivering that bit. But as 6G becomes a more focus over the next 4 to 5 years, we expect that it will drive a cycle of investment that the operators will have and that the applications that are going to emerge over time. This is no different than maybe if you turn back the clocks to a couple of decades ago when there was a huge lot of fiber that had been put into the marketplace and people were like, what are we going to do here? This is never going to be consumed, only to find that new applications came out of that and the consumption accelerated. It drove that fiber-to-the-home revolution that you're talking about. I think we're poised for a similar type of innovation to be released as the technology is deployed.

Speaking of new technologies, direct-to-device has gotten a lot of attention. I think the industry, the tower industry and you and your peers have done a pretty good job explaining how it's a complementary technology to terrestrial networks. Do you see an opportunity for direct-to-device to even be an incremental growth driver for the tower industry as well?

While not going into specific talks that we're having with potential customers, I would say that if you look at the recent announcement by the MNOs here in the U.S. to not provide a virtual mobile network operator to the satellite operators, it presents a challenge. You can add value at the very extreme edge where there's no coverage today, but it has to be out in the open air. If you're in a vehicle, if you're in your home, if you're in a place of business, the satellite signal can't get into you as a mobile user.

And so ultimately, if there was a desire to build another network, there would have to be a terrestrial component. You cannot replicate the capacity of the terrestrial networks that exist today just through satellite alone, even with the additional spectrum coming in, and it doesn't solve the in-building challenge that they would face in the kind of urban, suburban areas for in-home and in-vehicle use. So it's an opportunity. Where it goes, we'll see, but we're open for business and eager to serve all customers.

Great. Let's come back to the edge data center opportunity. You mentioned that you have some trials that you're currently involved with. Can you give us any additional detail about what that entails?

Yes. I'd start by saying, just to be clear, this is something that is at a very early stage. And it needs to be borne through a series of trials that we're conducting, that this is something that makes sense, that it's scalable, and that it's a good, solid, profitable business for us to pursue. So I don't want to overexcite people in terms of what the opportunity is. That said, what we've seen at least initially here across a number of new entrants in this place is that there is some demand. And therefore, we're excited to be a part of the, let's call it the tip of the spear that's out there looking to find this.

I think I was reading the other day, there's something like a 15-year backlog in data center capacity needs. And so anybody that has space or shelters, people that have power and people that have connectivity in the form of fiber or some backhaul instantly becomes very attractive potentially for edge data center use. So this is what we're looking at. We've got several trials in place. It looks promising so far, but we will need to thoroughly make sure that this is a good, viable and scalable business before we go in headfirst.

Is this something that you're dedicating capital to? Or should we think about it more as just leasing space at your tower sites and just collecting a revenue stream?

Yes. I mean, fundamentally, we are a real estate company, which is why we're here today, right? We do have shelters on a number of sites that were some of the tower portfolios that were purchased. In many cases, these shelters are in good shape and able to be co-located in. In other cases, they may need to be either upgraded or replaced. Again, I think we're going into this as a very limited use of our capital. We have a very high bar that we have set for putting capital to use versus saying share buybacks or staying within our investment-grade 6x to 6.5x debt. So this is a business that we can, with not a whole lot of effort, scale, we're happy to take that money.

Another business that you suggested you might try to scale more relative to the past is building new towers. There's not a lot of towers that are being built in the U.S. at present. How do you think you can take share?

So every year, there's roughly 2,000 towers that are being built across the U.S. And today, it has been very much spread across much smaller tower companies, some big ones, too. But in general, the big 3 public companies have not gotten a lot of shares of towers from their customers. I think a couple of things. One is back to my earlier comments, in some cases, customers are asking us to do more and asking us if we would consider building towers for them as anchor tenants.

Where we think the sweet spot is that through some of our analytics of understanding customers' towers of where they are and they aren't where using data available of network performance, where we can find a tower that has a minimum of 2, sometimes even all 3 customers that are interested in. These are the types of opportunities that will meet our very high hurdle in terms of the use of that capital. So it's not a huge opportunity today, but it's something that fundamentally, as a tower company, along with leasing new sites and amendments, along with buying out your ground leases, building new towers is something that we're proud to do.

I think one of your past employers, Tillman, is very active on that front. Is that a network that you can still tap into to kind of accelerate this opportunity?

Look, there was a point in time where capital was very cheap, that some of these smaller tower companies were able to gain a toehold in the industry and build a high number of towers. I think it's become far more challenging. The cost to build the tower has almost doubled since the pandemic with the run-up of inflationary cost of labor, of raw materials to build the tower, steel, concrete, et cetera. I think that more than likely, the towers that get built will be increasingly built for multiple carriers where it makes sense and very few that are back in what Tillman was known for in terms of build to relocate, far fewer of those just because the economics simply don't work.

Great. Maybe to touch on the cost savings initiatives. This has been something that's been focused for quite a while now with the fiber sale. What work streams remain to be executed on going forward?

So first of all, we're incredibly proud of the fact we were able to very quickly move to execute the fiber and small cell sale, along with our litigation with DISH and fighting to preserve our rights under that contract and pleased that the FCC Chairman ultimately put a set-aside for DISH there. These were the major things on our plate, along with relaunching Crown 2.0 as a stand-alone tower company for the first 7, 8 months of my tenure here at Crown.

As we look forward, we're focused on organic growth, but more importantly, what can we do to help drive scale and efficiency. And so you've heard terms thrown around like best-in-class, best-in-class in terms of the systems and tools that we have, measuring the cycle times by the time we receive an interest to go on one of our towers to the time that we help our customers deploy that. These are all things that we can do that will both increase customer satisfaction, while at the same time, continuing to drive cost out of our business.

So we're fairly relentless. We have a good plan in place, and we're excited with the progress so far. I don't have anything to guide you to yet in terms of expectations of where they're going to lead. But as we put these systems in place, as these tools are launched, I think long term, we're excited at the potential cost savings that would be associated with the deployment of these.

Great. You mentioned DISH there. What is the range of outcomes that we should be preparing for?

Yes. I'd like to think that the recent FCC action is now somewhat of a floor that's been established, and there's work to be done there. You still need to have a judgment against DISH in order to tap into that. There's still some work being done on finalizing how that fund will be ultimately dispersed amongst the claimants. And depending on how many people ultimately show up, we will determine on how much is left there.

We still continue to aggressively pursue DISH in court and actually feel very good about our suit and that ultimately, we should be able to prevail there. But at least now there has been a floor established, and we're very appreciative of the FCC recognizing the impact on our industry and having to set aside.

Great. Maybe a few more on capital allocation. You have indicated that you're interested in purchasing more of the ground leases underneath your towers. Can you just elaborate on that opportunity and what you evaluate in terms of location, renewal risk, strategic value, et cetera?

Yes. So let's start by saying that we are behind our key competitors. They've got now somewhere 10%, 11% ahead of where we are and are already realizing the benefits of that cost reduction. We believe that through ground purchases, and we prioritize those based on those of greatest value in terms of savings for us long term, that we can go out there and lower our costs significantly over time.

Again, we apply the same types of metrics in terms of what is the multiple that we need to pay there. I think, again, we're judicious in how we apply this. The benefit is and what I saw in Vantage, where we were able to basically quadruple or quintuple the rate of land purchases over time, is that this is something that with focus, with the right internal team and vendor pool that you can go out and execute on smartly. And because we are behind our competitors, we see this as a real opportunity for us at Crown to start to close the gap.

In terms of kind of controlling your own destiny, AT&T has some very long-dated purchase options on a large amount of towers. How should we think about the opportunity for Crown Castle to buy them out of that opportunity?

Yes. I think we always look at great opportunities that are in the interest of our shareholders. So without commenting specifically on that or other types of opportunities like that, we always look to see how we can best deploy that capital for the highest return, and it may be in that case that we did.

Great. Maybe just one last one. Kris Hinson, who was formerly IR, has been named Chief Commercial Officer; and Mark Lennon as Chief Information Officer. What are the objectives that led you to create these new positions?

Yes. I think as we launched Crown 2.0, one of the things we looked at was trying to flatten the organization. We took out several layers of management in an effort to be more responsive, to be more nimble in the marketplace, and to be able to execute smartly. And then what we've been able to do, I think, in the case of Kris, who is one of our talented leaders, is kind of pull him up and give him some additional operational experience. And because organic growth is one of the key focuses of our company over the next several years, putting somebody in place that can execute smartly and having the focus on that was in the best interest.

And then on the CIO front, we realized we really needed somebody that was AI conversant, that could bring in a fresh set of eyes to help us in driving the tools into the marketplace. We have a great opportunity ahead of us with the types of platforms that we're now implementing. These are the same platforms that we had used at Vantage, and I saw the transformative effect. So by bringing Mark in, we've got somebody to help lead that team and accelerate our progress of rolling out these new systems.

Great. A lot to be excited about. Chris, thank you very much. I'll leave it there.

Yes. Thank you so much.

Good day, and welcome to the Crown Castle First Quarter 2026 Earnings Conference Call.

[Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Kris Hinson, Vice President of Corporate Finance and Treasurer. Please go ahead.

Thank you, Chloe, and good afternoon, everyone. Thank you for joining us today as we discuss our first quarter 2026 results. With me on the call this afternoon are Chris Hillabrant, Crown Castle's President and Chief Executive Officer; and Sunit Patel, Crown Castle's Chief Financial Officer.

To aid the discussion, we have posted supplemental materials in the Investors section of our website at crowncastle.com that will be referenced throughout the call. This conference call will contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions, and actual results may vary materially from those expected. Information about potential factors which could affect our results is available in the press release and the Risk Factors sections of the company's SEC filings. Our statements are made as of today, April 22, 2026, and we assume no obligation to update any forward-looking statements.

In addition, today's call includes discussions of certain non-GAAP financial measures. Tables reconciling these non-GAAP financial measures are available in the supplemental information package in the Investors section of the company's website at crowncastle.com. I would like to remind everyone that having an agreement to sell our fiber segment means that the fiber segment results are required to be reported within Crown Castle's financial statements as discontinued operations. Consistent with last quarter, the company's full year 2026 outlook and first quarter results do not include contributions from what we previously reported under the Fiber segment, except as otherwise noted.

With that, let me turn the call over to Chris.

Thank you, Kris, and good afternoon, everyone. We delivered solid first quarter results and are reiterating our guidance for full year 2026. This is a transformative year for Crown Castle, and we believe we have an opportunity to generate attractive shareholder returns as we transition to a stand-alone tower business and pursue our goal of becoming a best-in-class U.S. tower operator. To maximize shareholder value and to reach our goal of becoming best-in-class, we are focused on 3 business priorities. Our first priority is to conclude the sale of our small cell and fiber businesses, which we believe remains on track to close in the first half of 2026. We have received almost all required approvals and have largely completed the separation of our small cell and fiber businesses.

Second, we are working diligently to preserve the value captured in our original DISH agreement from 2020. Along with the Wireless Industry Association, we have taken an active role in engaging with the relevant government authorities to ensure that DISH honors its commitments. We have also taken appropriate legal action. After DISH defaulted on its payment obligations in January, we exercised our right to terminate the agreement, and we are seeking to recover the remaining payments DISH showed for the terms of the contract. We believe we have a strong legal case against DISH and continue to vigorously pursue a legal remedy in the federal courts.

During the first quarter, we amended our pending litigation against DISH to include a claim for breach of contract alongside our request for declaratory judgment. The amendment also asserts a claim against EchoStar for their role in helping DISH evade its contractual commitments. And finally, to become a best-in-class U.S. tower operator, we are performing a thorough review of our business, looking for ways to drive improvement in our operational efficiency and effectiveness.

In the first quarter, we successfully executed a restructuring of our tower and corporate organizations, resulting in an anticipated $65 million reduction to annualized run rate cost. We have benchmarked our performance against competitors to both drive efficiency and excellence in operations. I would like to thank our Crown Castle teammates for working hard to ensure that we continue delivering for our customers during this transition period. I remain impressed by the resilience and determination along this journey. Our 2026 guidance also includes a year-over-year increase in capital expenditures as we seek to acquire more land under our towers and invest in systems and processes, which we believe will drive operational efficiency and effectiveness in the following ways.

First, we believe that acquiring land under our towers improves our margin and increases operational control of our assets, allowing us to deliver more value to the customer by meeting their needs more rapidly. Second, we believe the investments we are making to enhance, streamline and automate our systems and processes will improve the quality and accessibility of our asset information and empower the Crown Castle team to make better business decisions in a more timely manner. As I look to the future, I am excited by the opportunities in our sector, including the persistent growth in mobile data demand, the upcoming spectrum deployments by Crown Castle's customers and over 800 megahertz of new spectrum auctions beginning in 2027.

I believe our focus on becoming a best-in-class U.S. tower operator will position us to capitalize on these trends and maximize cash flow by unlocking additional organic growth and improving profitability. In summary, we believe we will generate attractive shareholder returns by focusing on the following priorities: including the sale of the small cell fiber businesses, preserving the value captured in our DISH agreement and improving our operational efficiency and effectiveness. We believe these priorities, combined with our disciplined capital allocation framework and investment-grade balance sheet will maximize shareholder value.

With that, I'll turn it over to Sunit to walk us through the details of the quarter.

Thanks, Chris, and good afternoon, everyone. We had a solid start to the year in the first quarter as we executed the previously announced restructuring. First quarter organic growth, excluding the impact of Sprint cancellations and DISH terminations was 3.1% or $30 million and included 0.3% or $3 million decrease in other billings. First quarter organic growth increases to 3.3% if DISH revenues are excluded from prior year site rental billings. Excluding the decrease in other billings, organic growth was 3.6%, this growth was more than offset at site rental revenues by $5 million of Sprint cancellations, $49 million of DISH terminations and a $26 million decrease in noncash straight-line revenues and amortization of prepaid rent. Adjusted EBITDA and AFFO in the first quarter benefited from lower repair and maintenance costs, sustaining capital expenditures and other nonlabor costs.

These lower costs were largely due to timing and seasonality, so we expect them to occur later in the year. We also experienced a modest decrease in quarterly interest expense due to lower-than-anticipated short-term borrowing rates. Turning to Page 4. Our full year outlook remains unchanged. When excluding DISH revenues from prior year site rental billing, our full year outlook includes 3.5% organic growth, excluding the impact of Sprint cancellations and DISH terminations, which we expect to mark the low point. At the midpoint of the range for full year 2026, we expect site rental revenues of approximately $3.9 billion, adjusted EBITDA of approximately $2.7 billion and AFFO of approximately $1.9 billion.

As a reminder, for the purposes of building our full year 2026 outlook, we'll assume the sale of the small cell and fiber businesses closes on June 30. Following the close of the transaction, we plan to allocate approximately $1 billion to share repurchases and approximately $7 billion to repay debt, allowing us to remain at our target leverage range between 6 and 6.5x. Our full year 2026 outlook positions us well to meet our unchanged range for AFFO for the 12 months following the anticipated close of the transaction of $2.1 billion at the midpoint.

Turning to the balance sheet. We ended the quarter with significant liquidity and flexibility, positioning us to efficiently maintain our investment-grade rating after the sale of the small cell and fiber businesses based on our previously announced target capital structure and capital allocation framework. Lastly, our outlook for discretionary CapEx remains unchanged at $200 million or $160 million, net of $40 million of prepaid rent received. To wrap up, we believe we have an opportunity to generate attractive shareholder returns as we transition to a stand-alone tower business and pursue our goal of becoming a best-in-class U.S. tower operator.

With that, operator, I'd like to open the line for questions.

[Operator Instructions]

The first question comes from Rick Prentiss with Raymond James.

Two questions for me. One, we had noticed at the FCC website that there's an application maybe to split the fiber small cell transaction into domestic and international to maybe try and get a May 1 closing. Can you update us as far as is that hopeful? What would be the process? And it seems to make sense. But if you could just comment on that FCC letter that's saying maybe you could split it into -- and the vast majority of the value seems to be in domestic.

Yes, Rick, maybe I'll just start by saying we continue to work towards our stated goal of closing the transaction by the end of first half. We have received the vast majority of approvals, as I mentioned in my statement, and continue to feel very positive about the direction that things are headed. While not getting into the specifics of some machinations that might be going on behind the scenes, we remain extremely confident that we will close by the end of first half or as soon as possible.

Okay. Makes sense. And so just trying to work the Washington levers given the government shutdown maybe had affected things. Okay. Second question that we get a lot is when you think about Crown's portfolio of U.S. towers and the peer group of both public and private companies out there, is there any reason systemically or fundamentally on why over a medium or long term, your growth rates should vary from the peer group, maybe it's something as simple as where we are in the 5G cycle and then heading into a 6G cycle.

Is there anything systemically or fundamentally different in your towers that is leading to the kind of lower new lease activity where we're seeing in this year's guidance?

Rick, you almost answered the question for me. So thanks for the context there. Yes, I think if you look at the full course of the 5G cycle to date, our organic growth has been roughly in line with at least one of the peers and slightly lagged the other. When you include DISH, organic growth was in line with peer and exceeded the other. So nothing systemically more a cycle of what you have if you go back in time to the beginning of the 5G cycle is the timing of when that growth occurred.

Okay. And then so you think of the 6G, you guys might exceed or be similar depending on those cycles as we look at 6G coming around someday.

I mean one of the benefits of having a portfolio that tends to skew towards urban and suburban where the PoP coverage is, is it actually drives for us earlier in the cycle. So yes, I think we're looking forward to the 800 megahertz of spectrum being released starting in 2027 in the auctions and what it might be for both Crown and the industry as a whole.

The next question comes from Matt McNaum with [indiscernible]

I will have 2 questions as well. Just first, on the 5G cycle, I'm just curious, are we at the point now where carriers are coming back to initial 5G coverage layers to add more densification? And is this any different from prior 3G, 4G cycles? And then secondly, maybe a bigger picture question. Is the dynamic of your carrier customers partnering with satellite players for connectivity in remote areas affected at all how they're approaching network and site planning in conversations with yourself?

Let's start off with the first question, which is around what the carrier behavior has been in terms of densification with 5G. You get a combination of 2 things. You have both the additional capacity where spectrum is available to add additional radios and tower loading on individual towers in which they're installed today. And then you have a continued densification where maybe they don't have the amount of spectrum that they need and/or they're looking to drive better in-building coverage in either residential or workplaces and therefore, go on incremental towers in the form of colocations.

And not really any change from past deployments and very specific to the individual customer and their spectrum portfolio. In terms of answering your second question on the satellites, again, this has been something that I think we've said repeatedly, we see as something that is ultimately a plus up for operators to go into very, very rural locations where maybe coverage is a little more sparse. There's a number of limitations around satellite in terms of in-building coverage, line of sight that doesn't make it a perfect surrogate for really rural sites, but rather something that is an additional plus up for the satellite companies and the operators to squeeze some incremental revenue opportunities in those very, very rural areas. And in terms of its impact on us as a business, it's really de minimis or inconsequential at this point.

Just if I can follow up quickly, Chris. the mix of applications you're seeing between amendments and new colos, has that evolved at all in recent periods?

Nothing specific, no.

The next question comes from Aryeh Klein with BMO Capital Markets.

I think you mentioned in the prepared remarks how you're looking at benchmarking yourself versus peers. And curious where you think kind of the biggest incremental opportunity remains on that front.

Yes. Thanks, Aryeh. I think best-in-class for us is something that we've defined across several pillars of our business. Think of it in terms of broad-based what do we do to become best-in-class towards the customer, towards our teammates here within the company, our shareholders and partners, which are to us landlords and vendors. And as just an example of the types of benchmarking we're doing, we're looking at for customer as an example, customer satisfaction and how can we dramatically improve our customer satisfaction over time. We benchmark against our other competitors and find ways to take actions to meet the unmet needs of the customers. It might be in the form of increased cycle time and delivery of an application.

It could be in terms of the products that we develop to meet that unmet demand. We look at this holistically of what we can do to drive a superior customer experience such that when there's choice of a customer between 2 tower companies that we win 100% of the jump balls. That's the way I think about it. In terms of teammates, another example might be is looking at employee engagement across the organization post the split. It's about training and developing our employees. It's about process improvement and tools and pay for performance.

So in each one of these, we've worked with outside consultants to help us to both define those goals and then to put in goals for 2026 specific to our company performance, but then also over the '27 and '28 so that we have a long-range transformation that allows us to make that claim that we're a best-in-class tower company. This is how we're approaching it and how we're implementing it in the company today.

And then if I could just follow up on the last question in relation to satellite risks. I guess if you think about your portfolio and maybe what's in a little bit more remote markets, is there an element that over the long run, whether that's 5 or 10 years, where you think maybe that piece is at risk? Are you able to quantify that if that's the case?

I mean we've got no indication from customers. In fact, if you look at most of the public related statements, both of the carriers themselves and even the satellite companies and the satellite industry association, all of them see this as a complementary technology. Now are there specific use cases in a very rural area for fixed wireless, which we think is, obviously, we see that they've had some success, providing emergency coverage, absolutely. But if I have to walk up the hill to the top of the hill in order to get a satellite signal to place a call, if I want to do anything in the form of mobility and broadband type experience in mobility, this is probably not the substitute that's going to eventually displace towers anytime soon based on all those data sources.

The next question comes from Michael Funk with Bank of America.

I have 2, if I could. So we've heard us here from a couple of the carriers that they intend to do more densification on their own fiber with small cells in 2026. And just wondering if you're hearing similar comments from your carrier customers and look to densify with 5G? And then I have one for a follow-up after.

If I understand the question correctly, Michael, it's around densification, specifically in the small cell business that we're listing as discontinued operations?

All the carriers utilizing their own fiber and then using small cell to add capacity rather than contracting with the tower companies for densification in some of the urban and suburban areas that you mentioned earlier?

I don't have any specific knowledge of that. I do know this is that we've seen continued demand of operators starting to ask us if we're interested in going back in the business of building macro cell towers for them. So I would assume that there's some need. As you know, the cost has gone up considerably in the last 6 or 7 years post pandemic in order to be able to build new sites and therefore, the business cases that we or any other builder of those types of facilities would apply, have to have an appropriate return. Based on those investments. And so that they might be going off and doing a spot small cell here or there, I wouldn't doubt it. But it certainly isn't something that we've seen a widespread impact into the business or the industry as a whole.

Okay. And any early conversations with AT&T about deploying some of the spectrum or requiring from deals office expected to close relatively soon first half of the year?

We have continuous conversations with AT&T and all of our customers. I mean I think we're very eager for that spectrum that DISH had to be put to work. It's a good thing for Crown and for the industry as a whole. And so I'll just leave it at that. We have ongoing commercial conversations with nothing to share at this time.

The next question comes from Richard Choe with JPMorgan.

I wanted to ask, Chris, a few alloy talked about looking at growth opportunities. And I was wondering, when should we expect, I guess, to see maybe the outcome of looking at those growth opportunities? Would it be after the close of the transaction and then kind of going forward? Or is that something that is happening now and something that you can implement sooner?

A couple of comments. One is you see from our guide that it is a second half loaded growth guide that we've given. And therefore, we're in the process of developing and starting to build that. In terms of like specific things I'd leave you with what I've said historically, which is the great news is when we talk to our customers, they're looking to do additional business with us and looking for ways that we can partner with them. Some of that is related to, obviously, new colocations or amendments. Some of it's related to an expanded service offering. Many folks are asking for turnkey based services versus the service model that we currently have. We are starting to talk to folks about new tower builds again, which is exciting as a tower company to build new towers.

And then other things like Power as a Service or shared generators, things that we believe will help us to ultimately build the revenue per tower and the profitability of Crown are all on the -- all being considered now. And then most recently, if you would have seen, I think, a press release, 1 of our partners recently released, which is around the exciting opportunity potentially here of edge compute and making our 40,000 odd sites available for colocation with data centers, given that many of our sites we have existing shelters that can be reutilized or repurpose for this usage. So there's a bunch of stuff in the pipeline, and I'd just say, look, as our guide has shown for this to be more of a second half or series of opportunities.

And I have to follow up with the edge data center comment, like how meaningful could that be this year and going into next year? And actually kind of follow up on that a little bit. Will you need to add more backhaul at your tower sites? Or is the current backhaul situation and most of your tower is pretty robust.

Yes. Let's start with as an opportunity. I would characterize this in the trial phase, right? So we've signed an additional partnership to test the waters here I think I mentioned in the last earnings call were in Mobile World Congress in Barcelona, we saw a lot of very interesting edge use cases, starting to develop there. So I think we're excited potentially where this could take us. But these are early days still. And our key is to utilize our existing assets and to find ways to drive new revenue streams. So we're looking at this as a very opportunistic thing for us to pursue, with very little capital required, but yet as a real estate company, fully utilizing our assets. So this is how we're thinking about it. I'd say let's stay tuned to this, and maybe this is something that we can continue to update you on through the course of the year as we start to see some of the initial results of the efforts underway.

In terms of the fiber, sorry, second part of that question, the question of the question, fiber, most of our sites do have fiber backhaul into them. So there's ample ability to scale those sites. One of the attractive things about tower companies as edge data centers is that you have ample fiber, you have ample power and you have space, which we have all the and, therefore, fairly easy in terms of speed to market for interested parties.

Next question comes from Eric Luebchow with Wells Fargo.

Great. Appreciate it. Just to follow up on Richard's question. I think you mentioned that there might be some opportunity for new tower builds. I think that's something we haven't seen a lot of among the public tower REITs in the last few years. Just curious like what form that could take, how significant it could be? And what kind of returns do you think you could get on that? I think, generally speaking, single tenant towers are not generally pretty low return business, but maybe you could elaborate a little bit on that comment.

Yes. And I certainly don't want to raise expectations that we're going into a mass power bill here. It's more a demand profile from our customers looking for partners to help them build towers. I think some of the other smaller companies have started to slow down and as the cost of capital, to your point, has become more expensive. It requires making sure that you really have potentially multiple tenants lined up in order to build these towers and to make the business cases work. So we have a very disciplined approach in place on how we look at this. It's initially going to be small volumes here.

But I think our hope is to eventually find a way to provide this as a service to our customers. as I think we're in a unique position given our size and scale to deliver this at a price that's effective and attractive in the marketplace, but allows for the returns that Sunit and his team require in order for us to put a cement in the ground.

Great. And just one follow-up. I think you've talked the last couple of quarters about kind of cost efficiencies through SG&A and gross margins and getting your margins up 300 or 400 basis points over some period of time. So I just wanted to confirm that and potentially anything you can reveal on kind of some of the cost initiatives that we'll see after the fiber and small cell deal closes that could kind of close some of the margin gap you have versus your 2 tower peers.

Yes, let me take that. It's Sunit. So we've already done a fair bit of that with that 20% reduction in staffing this last quarter. Having said that, I do think there are 2 big areas. One is what Chris talked about in his remarks, which is us buying ground leases at returns that take our cost of capital. We think that is a long-term opportunity for us, where structurally, our costs are higher than our peers because they own more of the towers underneath their -- more of their land and they need their towers than we do. So that is a good long-term opportunity for us that we're executing harder on.

And then the second is what we talked about, which is investments in platforms and systems and automation which we think will continue to drive efficiencies over the next few years. So yes, I mean, as I look at where we are in '26, let's say all the way after 2030 definitely things that we can do another, meaning in addition to the reduction we made probably another well over 200 basis points in margin improvements.

Next question comes from Nick Del Deo with MoffettNathanson.

Maybe Sunit, to continue on the land topic, you currently own land at about 30% of your towers. How high do you think that can go over some reasonable time horizon? And how would you characterize the level of competition to acquire land and like the number of opportunities that you're seeing?

Yes, it's a great question, Nick, because some of it is like how we engage with our landlords and make sure that they if they want to do something, they will prefer us. Some of it is financial returns. You're right. We might be competing against other people. We do believe our cost of capital is lower than many of those operators just focus on land purchases. So I mean, I think that you're beginning to -- you saw some benefit in the first quarter, you saw our CapEx is a little higher. But we do think this is a long-term opportunity. And where can we get to? I mean our goal is over the next handful of years get to a point where we own from 30% to as much as 40% of the land underneath our towers. So it's a long-term opportunity for us that we think we just stay focused on and turn up the dial on that and continue to execute well.

Okay. Should we think of the level of CapEx over the last couple of quarters as being reasonable prospectively? Or do you think that might even go a little higher to the extent that you can get the machine operating efficiently?

I think the guide we provided for this year, I think, is fine. And then we'll see kind of where we get to towards the end of the year from a run rate production perspective. And then see what guide we'll provide next year. But Yes, I think this year's guide should be adequate in terms of the range to get done what we think we need to get done.

Next question comes from Brendan Lynch with Barclays.

To start with the satellite deployments and Chris, I agree with your assessment that there isn't too much of a risk from direct to device to the tower business. Maybe you could comment on the fixed wireless access demand that you've had over the years and how that might be at some risk of increased competition from satellite -- from broadband satellite?

Well, let's start with the premise of the start of fixed wireless for the operators, and I spent half micron on the operator side, so a little bit of insights here was really about excess capacity being soaked up and monetized by the operators. Since that time, if you look at the current growth rate of data being on a CAGR of like 30% plus, it's now clear this is a new line of business and that is driving incremental activity in terms of densification and capacity in the 5G networks as these operators really go and push this as an opportunity to grow their topline business. Again, our portfolio tends to skew more towards suburban and urban. The hypothesis that you're going to replicate the capacity that a terrestrial network has to service that customer from a broadband perspective seems highly problematic to me, comparative to that very rural customer where you may have excess capacity. The coverage areas of the individual satellites are much larger in terms of the service areas that they provide to than, say, a terrestrial network in general. And therefore, I think we feel pretty confident that, that won't be something anytime soon where the satellite guys are going to be going after the urban customer, but rather the rural customer rather than the guy who's out on his boat somewhere and wants to have broadband available or the farmer out in their farmland. This is how I think we're looking at it and as the industry looks at it today.

Okay. That's helpful. And maybe a related question because we've also seen a lot of fiber being rolled out fiber to the home. How should we think about that as competition that might be a little bit more urban, suburban focused than the satellite capacity that might be available?

Well, if you're thinking about like voice over WiFi as an example, using VOIP. Obviously, it's been great for the operators to find a way to offload their networks, to provide that capacity using WiFi and broadband, but again, as they -- this is the same experience and that somebody is utilizing going on to WiFi outside of the home as a way of offloading. If there's a new business model there, I'm not aware of it. So in terms of threats that we look at is what could conceivably reduce the capacity requirements of our network across our portfolio, we don't see Wi-Fi beyond what is already being used as a huge disruptor in the marketplace and suddenly shifting a huge amounts of capacity off the operator networks. I think they would have done it already if they could.

Okay. And maybe just one other on the satellite front. To the extent that the satellite networks are going to need to connect to terrestrial networks, is there any upside potential from the satellite operators deploying at some terrestrial sites? .

I mean the good news is Crown Castle is open for business. So to the extent that one of the satellite operators decides to build a terrestrial network and going into the type of competition that you described previously. I think we're open for business and eager to offer our towers and rooftops to those operators. I haven't seen anything that says that they're going to do this in any publications. Maybe you know something that I don't. But again, it's an opportunity that exists if somebody would step into the breach the DISH has left in the market.

The next question comes from Madison Rezaei with Bernstein.

I appreciate the extra color on the DISH litigation guys. I know it's a little bit of a black box, and we're also sort of waiting to see, in the theoretical scenario where outcomes move in your favor, I guess, how should we think about sort of recoveries? Are we thinking this is potentially a primary like onetime cash proceeds? Do we think there could be something more structural how do we think that could ultimately flow through if we have any sort of context?

Well, let me start by reiterating what I always do, which is that we are aggressively taking every action to compel DISH to fulfill its obligations, right, both from a legal perspective from a lobbying and public interest perspective, I've certainly been getting the frequent flyer miles back and forth to D.C. meeting with members of the administration, members of Congress, the FCC and the like kind of telling the story, and I think hats off to the WIA or Wireless Industry Association. I think they've done a very good job may not compellingly why this is not in the public interest to allow DISH to walk away from their obligations without paying their bills.

And so I'm hopeful that there'll be some action taken, although we don't have any specific knowledge of how this will unfold exactly. In terms of the legal process, we feel really good about our lawsuits. I think we feel like we're in a good position, disputing the force majeure and the various suits that we filed. But I think I've always cautioned the folks on these calls that legal outcome is going to take at least a year. And so there is some time that it will take to get to a resolution there. And then any type of government intervention on our negotiated settlement would be on an ad hoc basis, and that would also take time. So there's no -- I don't have a crystal ball in front of me right now, but I would say if -- at the end of the day, I will feel very good having left it all out on the pitch that we've done everything we possibly can to try to drive to a favorable outcome for our shareholders. And I think legally, we're in a good position. But the timing of that, how it might manifest itself is still very much an unknown.

The next question comes from David Barden with New Street Research.

So I guess, I got 2 questions. So I guess, Chris, with respect to the upper C-band auction, which is going to come in 2027, it's kind of the biggest event that's going to really happen next year. Could you lay out what you believe based on your conversations with the community of carriers, the base case deployment expectation is. Because there's been a lot of reporting about the FAA altimeter interference with the 4.2 to 4.4 gigahertz. And I think it would be great to just get a sense as to whether when we get this auction done, is this going to be something that drives growth in '27 or '28 or '29 or somewhere beyond.

And the second question, if I could, please, is, there were a couple of questions earlier about the edge data center stuff, and we've been talking about this for a really long time, largely in part because of Crown Castle. And the question is, how does that business model look? Who owns the shed? What zoning do you require? How political could it be to get a data center plugged into a local community that uses X amount of power who owns the servers, who deploys -- how does it work? If you guys have had thoughts about that, it really interesting to hear like the evolved business model would be great.

Yes. I'll start out with the first half, and then I'll let Sunit opine on the second half. So in terms of the upper sea band and the spectrum that's made available. It is really hard to give you an estimate of when we think that will be put into service. I think the good news is as we have agreements in place with our customers, that drive the capacity loading ability of each of the sites is it's not going to require a lot of work for us to be able to partner with our customers in enabling that rollout and as rapid as they're willing to deploy it.

I do know this, there is a huge again, back to my more recent experience in D.C. There is a growing excitement amongst members -- senior members of Congress and the administration around emerging 6G and the spectrum that's being put into play here starting in '27 that will enable the U.S. to have a strong leadership position in 6G. Now how that manifests itself? What are the use cases? I can't tell you. I'm not sitting in the boardrooms of those companies. But there's going to be a lot of push from the government to enable this to provide funding for it, to provide spectrum for it.

And so I'm excited about what that means for the industry as a whole, as I think about long term. And potentially, that we'll find a way to have a long-term guidance that you guys will actually be happy with in our guide. But all I can say is we're very hopeful for where we're headed in that perspective. I think in terms of the second part of the question on the edge data center, you want to talk about that Sunit?

Yes. I mean the business model there is, look, we're a real estate company. So we sell a lot of vertical space. We also have horizontal space. So in this case, it's conditions charter space that people would rent that could have power. So we required power. In some cases, they might on power backup, they look at that. And then like Chris said earlier, all our dollars have fiber backhaul coming into the towers. So I think the advantage about what we have is you have a fiber connection, you have power and you can have a sort of secure conditions outer space. And we have a fair bit of that already because of prior initiatives.

And in some cases, we'd look to either improve or put in new charter space. But essentially, all we are doing is renting our real estate, which is what to do what we do as a business, mostly vertical real estate and in this case, horizontals. So we're not taking any depreciation of technology risk by deploying our own servers or anything like that.

David, the other thing just from my experience in actually building networks and sites and data centers is that there's this not in my backyard around data centers, too, about the requirement the power requirements and the cooling requirements. One of the advantages of the edge beyond the fact that you have really low latency is typically, these are much smaller installations. So you don't have the community uproar about a very, very large facility being put into place. And it provides some level of redundancy in that you have the the edge compute put out in multiple locations, and therefore, you have additional physical redundancy built into the network. So a couple of things of why, if anything, maybe it's even a smaller impediment to getting these out into place than the very large data centers that are getting some pushback in communities now.

The next question comes from Batya Levi with UBS.

Great. Looking at your renewal cycle, it looks like you have a big one coming up with one of your tenants in '28. Can you provide some guidance on when those discussions would typically begin and how you would approach such a renewal with potential competition from private companies or carrier own deployments, maybe even satellite coverage I think that would be helpful to understand what elements of a new contract would be of utmost importance for you, maybe the contract length or escalator. Some guidance around that would be helpful.

Yes. Thank you, Batya. Good Question. We typically don't get into specific customer discussions. But I would say over any 5- or 10-year period, we do have several at least to the 3 big ones, 1 or 2 of them where we are renegotiating either because it's a new agreement, which all our agreements are long term, 10 to 15 years. Or in some other cases, they want to occupy more space on our tower than they might have had given the deploying new spectrum band. So see it depends what those negotiations look like based on what they're needs are at the time. But I would just say that we have agreements with all our clients, and we generally try to work on them on a timely basis with all our clients. So that's all I can probably say at this point.

Maybe would you have a preference to do renewals in parts? Or does it typically have a sort of home in renewals?

It sort of depends on the situation and what the client or the carrier wants to do given what -- where they are. Sometimes you do the whole thing, sometimes you might do some interim arrangements while you're working on the whole thing. So it just depends.

The next question comes from Brandon Nispel with KeyBanc Capital Markets.

Yes. I was wondering if you could talk about your capital allocation and specifically your dividend framework. The payout ratio is going to be extremely high at 90%. And I think pre deal, we were probably expecting the payout ratio to be much lower and work its way up. And with where the stock is at, it seems to make a lot more sense and be more accretive if you were to actually cut your dividend and buy back stock, especially as we sort of forecast out AFFO growth next year, assuming you delever. So I was hoping you could talk about that and sort of your decision to keep the dividend at current levels.

Sure. Thank you. Yes, I mean, this question saw a lot of discussion and deliberation, both with the team and also the board and the finance committee of the Board and even back when we first announced this capital allocation framework. If you recall back then, people worried about DISH make it, for example. So some of this was talked through. And I think that where we came out is to basically reiterate that the dividend would stay where it is now. We do think that as we said previously, that we can grow our pretty well. And so we will, over the next couple of years or so get to the point where the dividend payout is within the ratio of the range. that we've talked about. And then in the short term, we are paying down a lot of debt because one of the key things for us is to remain investment grade, and we are going to be buying out $1 billion of shares, which should also help both return capital to our shareholders and also drive FFO per share growth.

So yes, we did contemplate or think through that more than a year ago. And as I said at the time, people worried about if this would be around. So that was part of our thinking.

Our final question comes from Michael Rollins with Citi.

A couple of topics, if I could. So the first one is if you were a private company, what could Crown Castle do differently, that's difficult or you wouldn't do whether it's operationally or strategically as a public company? And just curious if there's other considerations as you think about where is best for Crown to operate in public versus private markets?

And the second question I had was going back to the terms of contracts. And I know it's -- you can't talk about individual customers. But when you look at the cohorts of towers that you manage and the vintages and where they came from. Is there -- and you mentioned earlier that you're a real estate company. So I think of mark-to-market. In your portfolio, is there a significant number of towers that could either at some point have a significantly positive mark-to-market or negative mark-to-market that investors should be mindful of?

Yes. Great questions. On the private versus public, I think that the goals and objectives that Chris articulated, I don't think it changed like making sure we are customer experience, customer satisfaction, improving our cycle times, operating efficiently, driving productivity. I think those will remain in place. I think where we see opportunities to put money to work, like we talked about buying ground leases. I don't think that would change making investments in platforms and systems to drive more efficiency, productivity automation.

I don't think that would change. The only real change in a private company is, I believe, how much leverage you might take and what would you do with your cash because you're not paying dividends out, whether you pay debt down or pay to your shareholders. But from an operational perspective, I don't know that we would do anything, but I'll let Chris to jump...

I was just going to say, I just came from leading the private tower company in Europe, and there's not a lot of differences. And in fact, you still pay dividends even as a private company. So I don't know that there's any real advantages or disadvantages. I think in the end, we should always be guided by what's in the best interest of shareholders that would guide a decision like that. I think it would be very expensive possibility. But it -- look, we would do whatever is in the best interest of shareholders always. But I can assure you, in terms of running a private tower company versus a public tower company. We all face the same series of pressures to drive efficiency, a highest return on invested capital. And it's about servicing the customer. And I don't really see any advantages one way or the other only in terms of the valuation of of how they're looked at in the public and private markets that would differentiate them. No real advantages that I would see, but that's one man's opinion.

Yes. And then on your question with respect to repricing tower asset value, in terms of contracts, we have quite a few levers with clients. One is, to the extent they want more space on an existing tower beyond what they have contracted for, how would you charge for that. To the extent they want to add new dollars, what's the pricing for that? And in some cases, you might either have average cost over tower. In some cases, you might have market specific pricing. So just depending on escalators is another one. So depending on the client, the history where you are, what kind of money we might or might not be leaving on the table, competition, et cetera. what kind of commitments the clients is making the new tower or needing more space on an existing tower. We -- all of that gets factored into our commercial models to try and figure out what -- how we can craft win-win outcomes for both sides.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Crown Castle Quarter 4 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Kris Hinson, Vice President of Corporate Finance and Treasurer. Please go ahead.

Thank you, Bailey, and good afternoon, everyone. Thank you for joining us today as we discuss our fourth quarter 2025 results. With me on the call this afternoon are Chris Hillabrant, Crown Castle's President and Chief Executive Officer; and Sunit Patel, Crown Castle's Chief Financial Officer. To aid the discussion, we have posted supplemental materials in the Investors section of our website at crowncastle.com that will be referenced throughout the call.

This conference call will contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions, and actual results may vary materially from those expected. Information about potential factors which could affect our results is available in the press release and the Risk Factors sections of the company's SEC filings. Our statements are made as of today, February 4, 2026, and we assume no obligation to update any forward-looking statements.

In addition, today's call includes discussion of certain non-GAAP financial measures. Tables reconciling these non-GAAP financial measures are available in the supplemental information package in the Investors section of the company's website at crowncastle.com.

I would like to remind everyone that having an agreement to sell our fiber segment means that the fiber segment results are required to be reported within Crown Castle's financial statements as discontinued operations. Consistent with last quarter, the company's full year 2026 outlook and fourth quarter results do not include contributions from what we previously reported under the fiber segment, except as otherwise noted.

With that, let me turn the call over to Chris.

Thank you, Kris, and good afternoon, everyone. We delivered the full year 2025 guide, exceeding the midpoint across all key metrics as we focused on operational execution across our portfolio. As we turn to 2026, we are in the middle of major changes across our business as we take several actions to position Crown Castle to maximize shareholder value.

First, we remain on track to close the sale of our small cell and fiber businesses, which we anticipate will occur in the first half of 2026. We are completing the operational separation of our three businesses and executing on our transition plans. Upon the close of our small cell and fiber businesses, approximately 60% of our consolidated workforce will move with the sale as we transition to a simpler U.S.-only tower business. We have been notified that the Department of Justice has closed its Hart-Scott-Rodino review and is not requiring any action related to the transaction. We only have a handful of approvals remaining at the state and federal level.

Second, we continue to enforce our rights under the terms of our agreement with DISH. After DISH defaulted on its payment obligations back in January, Crown Castle exercised its right to terminate the agreement. As a result, we are seeking to recover in excess of $3.5 billion from DISH in remaining payments owed under the agreement.

Crown Castle is supportive of AT&T and SpaceX obtaining the announced 3.45 gigahertz, 600 megahertz, AWS-4, H-Block and unpaired AWS-3 spectrum bands, which would put this valuable public resource into active use for the wireless industry and the American people. That said, we will continue to do everything possible to enforce our rights under our contract with DISH.

Third, we are taking decisive action to maximize value for our shareholders in response to DISH's actions by announcing a restructuring plan to enhance the efficiency and effectiveness of our stand-alone U.S. tower business following the anticipated close of our small cell and fiber business sale. Due to DISH's contractual default, we have accelerated and expanded our restructuring plan to realign staffing levels consistent with the removal of all future DISH activity.

In total, we are reducing our tower and corporate workforce in continuing operations by approximately 20%, ending at about 1,250 full-time employees. In combination with other cost reductions, we expect to deliver a $65 million reduction in annualized run rate operating costs. The majority of staffing reductions will take effect in the first quarter, while the non-labor reductions will be phased in throughout the year following the anticipated close of the small cell and fiber business sale.

Finally, I would like to reaffirm our capital allocation framework and update our expected use of proceeds from the small cell and fiber business sale. First, when we reset our dividend last year, we considered the composition and risk profile of our cash flows. And as a result, we expect to maintain our dividend per share at $4.25 on an annualized basis until reaching our targeted payout ratio of 75% to 80% of AFFO, excluding the impact of amortization of prepaid rent. Thereafter, we intend to grow the dividend in line with AFFO, excluding the impact of amortization of prepaid rent.

Second, we plan to invest between $150 million to $250 million of annual net capital expenditures to add and modify our towers, to purchase land under our towers, and to invest in technology to enhance and automate our systems and processes. Third, we plan to utilize the cash flow we generate to repurchase shares while maintaining our investment-grade credit rating.

Fourth and finally, we plan to remain at a target leverage range between 6 and 6.5x, using the proceeds from the small cell and fiber business sale. As a result, we plan to allocate approximately $1 billion to share repurchases and approximately $7 billion to repay debt.

As I look forward to a full year 2026 and beyond, I'm excited by Crown Castle's opportunity as the only large publicly traded tower operator with an exclusive focus on the U.S. The U.S. tower model continues to benefit from attractive business characteristics, including long-term revenues from investment-grade customers, contracted escalators and high incremental margins. I believe that these characteristics will be supported by continued mobile data demand growth and a significant volume of spectrum being made available to motivated mobile network operators.

To maximize revenue growth and profitability, we are focusing on becoming the best operator of U.S. towers with the following strategic priorities: one, we are empowering the Crown Castle team to make the best and timely business decisions by investing in our systems to improve the quality and accessibility of asset information and improving customer experience on cycle time and their interactions with us. Two, we are strengthening our ability to meet the business' needs by streamlining and automating processes to enhance operational effectiveness. And three, we will continue to drive efficiencies across the business.

We believe that these strategic priorities, combined with our disciplined capital allocation framework, and investment-grade balance sheet will drive attractive risk-adjusted returns.

With that, I'll turn it over to Sunit to walk us through the details of the quarter and our full year 2026 outlook.

Thanks, Chris, and good afternoon, everyone. Our full year 2025 results were highlighted by 4.9% organic growth, excluding the impact of Sprint churn, as our customers continue to augment their 5G networks. Due to our outperformance and organic growth, we ended the year near the high end of the guidance range for 2025 site rental revenues. The outperformance in revenues, combined with higher-than-expected services contribution, ongoing efficiency initiatives and lower interest expense allowed us to exceed the high end of the guidance range for 2025 adjusted EBITDA and AFFO.

Turning to our 2026 outlook. At the midpoint, we are projecting site rental revenues, adjusted EBITDA and AFFO of $3.9 billion, $2.7 billion and $1.9 billion, which are meaningfully impacted by the following three items: first, due to the termination of our contract with DISH Wireless announced in January, our 2026 full year guidance does not include any contributions from DISH resulting in $220 million of churn in full year 2026.

Second, for the purposes of building our full year 2026 outlook, we have assumed the small cell and fiber business sale transaction will close on June 30. Third, as Chris mentioned, we're reducing our run rate operating cost by $65 million on an annualized basis, resulting in a $55 million impact to full year 2026 and a $10 million incremental impact to 2027 due to timing.

Moving to Page 5, our full year 2026 outlook includes organic growth at the midpoint of 3.3% or $130 million, excluding the impact of Sprint cancellations and DISH terminations in 2026. Full year 2026 organic growth is expected to be 3.5% at the midpoint if DISH revenues are excluded from prior year site rental billings. This compares to 3.8% for full year 2025 on a comparable basis, excluding DISH revenues from prior year. We expect our 2026 organic growth guide of 3.5% growth to mark the low point.

This expected growth is more than offset at site rental revenues due to the $20 million impact of Sprint cancellations, $220 million of DISH churn and a $90 million decrease in noncash straight-line revenues and amortization of prepaid rent.

Turning to Slide 6. The expected $110 million decrease to site rental billings is more than offset by the following items, resulting in an anticipated $15 million increase in 2026 AFFO compared to 2025. A $25 million reduction in expenses as the staffing and other cost reductions drive $50 million of expense savings in full year 2026, partially offset by standard increases on the remaining cost base. A $5 million increase in service contribution as service activity levels similar to 2025 are complemented by $5 million of expense savings from the workforce reduction. A $120 million decrease in interest expense, primarily from the repayment of approximately $7 billion of about 4% interest rate debt following the anticipated close of the small cell and fiber business sale, partially offset by refinancing. A $25 million decrease in other items driven primarily by a decrease in amortization of prepaid rent.

Turning to Page 7. We decreased our guidance for AFFO in the 12 months following close by $240 million to $2.1 billion at the midpoint. Our original guidance of $2.34 billion at the midpoint included a $280 million contribution from DISH in the second half of 2026 and the first half of 2027, which we have removed. This is partially offset by a $40 million reduction in interest expense from increasing the assumed debt repayment following the anticipated close of the small cell and fiber business sale by approximately $1 billion to approximately $7 billion.

Turning to Page 9, the revised guide for AFFO for the 12 months following the close of the small cell and fiber business, which includes a half year of growth compared to full year 2026, is $180 million higher and consists of $120 million of interest expense savings related to the anticipated debt repayments made with the small cell and fiber business sale proceeds, $50 million of growth in the underlying business and $10 million of cost savings related to the 2026 reduction in force.

Turning to the balance sheet. We ended the quarter with significant liquidity and flexibility, positioning us to efficiently maintain -- effectively maintain our investment-grade rating after the sale of the small cell and fiber business based on the target capital structure and capital allocation framework that Chris mentioned earlier.

In conclusion, we're pleased with our full year 2025 results and believe we are well positioned to deliver our outlook for full year 2026 and our updated range for estimated AFFO for the 12 months following the small cell and fiber business sale closing of $2.1 billion at the midpoint.

Longer term, we are excited by the opportunity for Crown Castle, and we believe we are taking the necessary actions to become a best-in-class U.S. tower operator. We believe our focus on operational execution, combined with our capital allocation framework and investment-grade balance sheet will deliver attractive long-term risk-adjusted returns for shareholders.

With that, operator, I'd like to open the line for questions.

[Operator Instructions] Our first question comes from Ric Prentiss with Raymond James.

I want to focus my questions wrapped around, obviously, DISH, but then also the fiber-small cell sale. A couple of quick ones. Maybe you can elaborate a little bit further on. Any update on the status of working with DISH? Why terminate the agreement? And what do you get out of terminating the agreement? And then I have a couple of other quick ones.

Yes, I think simply spoken, why do we terminate, DISH stopped performing under the contract. Our contract was very clear with DISH, and we're enforcing it to best protect the value of the contract.

And so terminating, you feel, gets the best kind of protective value. Obviously, we appreciate knowing what the number was, over $3.5 billion owed.

Yes. I mean at the end of the day, Ric, we had a contract with DISH. DISH has chosen not to honor it. With DISH in default, we exercised the termination rights for the agreement and can accelerate the entire obligations now. And this termination was because this is the remedy that was called for when a party defaults. And so in the end, we're vigorously enforcing our rights and trying to protect our shareholders for the terms of the agreement.

Okay. And obviously, we have taken the DISH stuff out of our model, guidance looks pretty close to what we had laid out there. I appreciate all those details.

One piece I'm wondering on is, is there any change to the purchase price of $8.5 billion for the fiber-small cell transaction because you're noting approximately $7 billion of debt paydown, which would make sense given where you want to keep leverage, cut interest costs and then stock buyback of just $1 billion. So is there any change to the fiber-small cell proceeds and how you think about using what was originally $8.5 billion and might still be?

Yes. So Ric, there's no change to the purchase price. Obviously, you have normal transaction costs and closing adjustments, those sorts of things. But -- so we just kept it at approximately $7 billion and $1 billion pending the close of the transaction. So no other reason other than that, there's no change to the $8.5 billion purchase price that we announced.

Okay. And then as far as the timing of the buyback, obviously, this deal to close, fiber-small cell, has been going on a long time. You really couldn't say much until you got closer to the deal closing. We're into February. First half isn't that far away. It sounds like a handful of state and federal approvals are left. How should we think about the execution then of a $1 billion buyback? How fast could or should that be put to work?

I think at this point, not knowing exactly when the transaction will close, we are thinking about that, and we'll have more specifics to share about that as we get through closing. So not much detail at this point, but we're clearly committed to making that happen.

Last one for me, wrapping it all together. You mentioned a handful of state and federal level approvals left. Any lessons learned from like Frontier-Verizon through California or other processes? Or where do you think the long pole in the tent might be as far as getting those final handful over the finish line?

Yes. So I think our team, together with the teams at Zayo and EQT have made pretty solid progress. As you point out, California is always a sensitive one. I think we're adequately focused on all of those, but I'm pleased with the DOJ thing happening, but I think that, yes, we hope to get all of these worked through and still stick with the original time line we have of closing in the first half. But in terms of lessons learned, I don't think there are any specific lessons learned, but we do keep up with what's going on with the other transactions.

I would just say more broadly, Ric, is I've been here 4.5 months. And what I've seen is a steady pace of progress along that time period, nothing has jumped out as unexpected. And I think our teams working collectively are doing a great job of threading the needle and getting all the approvals in place.

Our next question comes from Michael Rollins with Citi.

I'm just curious if you could provide more characterization of the leasing environment. And over the last few months, as carriers have been working their budgets, some have access to more spectrum that's readily deployable in their networks. Have you seen a shift or change in how they're approaching whether it's densification and colo, whether it's the amendment strategy in activity?

And can you maybe give a little bit more characterization of -- you mentioned, I think, in the prepared comments that 3.5% you're expecting to be kind of the low. Maybe a little bit more detail as to what can drive that higher over the next few years?

I'll start and maybe hand it over to Sunit. So thanks, Michael. I think if you think back at where we are at this point, there's a couple of headwinds, if you will, around -- it's a cyclical 5G coverage in the deployment cycle of, say, a 10-year, decade-long deployment cycle, and there's been great progress made by the operators in getting initial coverage out. You have a couple of new CEOs in the MNOs in place, which are obviously coming on strong, finding their ways and talking about overall cost reductions and focus within their businesses as they revise their strategy.

I think that's counterweighted by tailwinds, which were mentioned, which are all around the frequency bands that are becoming available, both in the last year as well as the plan for the FCC to auction off at least another 800 megahertz of spectrum beginning in 2027 is -- and the nature of the spectrum, although we don't know the exact frequencies, we see them as higher band frequencies will naturally drive a higher densification of cell site deployment. And so we do expect that, that becomes a tailwind both for the industry and for Crown as those plans come to fruition. So these are kind of the market dynamics that are shaping the industry right now. And I don't know, Sunit, if you want to talk specifically about 2026. But...

Yes. I think what I would say is just further supporting what Chris said. I mean, we think the mobile data demand continues a pace at pretty healthy terms, pretty healthy growth rates, as we talked about last quarter. All the three major MNOs have acquired spectrum in the last year. The FCC is auctioning 800 megahertz of spectrum beginning next year. So -- and then when we look at our leasing activity from -- our current leasing activity gives us some visibility into future activity. So when you put all that together, yes, we think that the 3.5% is a low point for us, and we should do better from there.

And then the other point to mention also is if you were to look at our other billings, both in terms of the guide this year and last year, it's about a $10 million swing. If you adjust for that, I think that the growth levels are about the same last year this year. So as we look forward, we think this should mark a low point, and we should do better.

Our next question comes from Jim Schneider with Goldman Sachs.

This is Josh on for Jim. Can you help us bridge the '26 leasing outlook versus what you reported in '25? We know DISH was 0 revenue a few years ago and has stepped up, but what's the best way to think about how much they've been contributing on an annual basis so we can see what's happening kind of underlying with the carriers?

And then similar to that, if we look at 2019 and 2020, before 5G deployments and before DISH and before Sprint, T-Mobile integration work, your activity -- your new leasing was about $100 million to $125 million. Can you help us think about what's changed or the moving parts to get from then to now?

Yes. Let me handle the DISH contribution. So I mean, as you can see, last year, organic growth was 4.9% on a comparable growth, excluding DISH in both periods, it's 3.8%. When you look at that difference, I think what it says is that DISH contributed about $50 million roughly to organic growth in 2025. And as we've said previously, this was all contractual, not really activity driven, including what was expected for this year.

And then on your other comment, I mean, when you look back at the 5G cycle, I mean, I think that T-Mobile upon -- while they were concluding the Sprint-T-Mobile merger, which was closed in April of 2020, there was a pretty aggressive deployment of 5G. So when you look beyond that late in the cycle, we always see people, whether it's densification, amendments, that activity continues. So I don't have the exact numbers for back then, but I think it's comparable to what we were seeing back then.

Our next question comes from Michael Funk with Bank of America.

Yes. So you have a multipronged approach with DISH. Obviously, you've sued under your rights for the termination, presumably lobbying the FCC and then also through the court. So can you update us on the process and expected timing around the different approaches that you're pursuing?

I mean, I don't think we want to go into the specifics about our legal strategy and the timing of that. I think if we kind of take a step back and say -- and recap, we've taken steps, we filed suit against DISH. We have, as an industry under the auspices of WIA, gone in to meet with the FCC commissioner to kind of make our case of why we believe that DISH should be obligated to pay for its bills. And we continue to take a number of steps, which I won't list here in details, but include all manner of activities as Crown, specifically, to be aggressive in defending our shareholder interest.

This -- unfortunately, with the courts working its way through, this could be anywhere from a year or longer until we start to see things back from the courts. And therefore, it won't be something that we'll be updating you in the short term, but we will continue to drive and defend our position against the actions that DISH has taken.

Our next question comes from Eric Luebchow with Wells Fargo.

Great. I just wanted to follow up on one of the questions earlier. I think, Sunit, you talked about how organic growth this year, you expect it to improve somewhat in '27 and beyond. And maybe you could just talk through what gives you confidence there, whether that's anything you're seeing from a densification standpoint on new billings, whether there's ways to drive steady-state churn down, particularly now that you'll just have three well-capitalized large carriers comprising the majority of revenue. Anything you could offer there would be helpful.

Well, with respect to churn, I don't think we see much change in the churn outlook we've provided previously. But I think in terms of specifics, as we said earlier, we did have the -- we do have some visibility into leasing activity. So that's helpful as we look at next year.

But I think if you look at comments made by our clients so far, I mean, they bought more spectrum, they've got to deploy more -- they want to deploy more spectrum, the data demand growth cycles continue. So we think we'll do better than where we are here. If you look at performance last couple of years, it's been a little better on the margin. So that's why we think this is a low point for us.

And specifically, I think we have a good view into our contracted leasing activity from our MLAs gives us pretty good visibility into the future activity levels, which is why we're able to say that.

Great. Appreciate that. And then just one follow-up. I know you talked about reducing, I believe, 20% of your operating expenses. Maybe you could just talk about the flow-through between SG&A and gross margin? Kind of where we're going to see the biggest impact there? And any kind of indication on where you can get cash SG&A down to the next couple of years as you go through this cost restructuring?

Yes. So I mean, we talked about $65 million of run rate operating cost savings. So in year, we'll see $55 million, most of that is through the SG&A line. So of that $55 million, $45 million roughly will hit the SG&A line. And then $5 million will come in site rental cost of sales and about $5 million on the services side.

And then from a run rate perspective for those same items, which adds to $65 million. It's about $50 million from the SG&A side, $5 million from the site rental cost of sales and $10 million from the services cost of sales. That's why I said it would be, the $65 million, we'll see $55 million in year and an incremental $10 million next year. So those are the components.

I mean I think the reality is we've started to size up the opportunity longer term. But I want to remind everybody, this is a year of transition for our company. We're executing the sale agreement. We're managing through DISH. We're putting a reorganization of the go-forward team in place. And so while we're focused on working to become a best-in-class operator and updating systems and improving operational effectiveness by streamlining and automating processes and tools, it's going to take a while.

So we accelerated our activity now as a response to the current situation with DISH, and we have good ideas of where we're going to go. But I think we'll have to guide in the future as we make progress as we really need to focus in on execution, given all that's coming at us this year. This is really a plan of execution for Crown as we become a stand-alone U.S.-focused tower company.

Our next question comes from Richard Choe with JPMorgan.

I wanted to follow up on the discretionary CapEx and the augmentation, the $150 million to $250 million. As you deploy that, how will that contribute to, I guess, new leasing revenue? Do you expect to see some of that this year? Or is it more for future years? And where could that go over time?

Yes. So I think some of that, we had the opportunity to do ground lease buyouts, which I think benefits our cash flows going forward. Some of it is for new tower builds, we see opportunities for that. So those -- and then the third component would be investments in systems and platforms, which should drive better operating effectiveness and efficiency going forward.

And as we look forward, what's the willingness for Crown to do more MLAs? And is it something the carriers still want? Or are we moving more to a pay-as-you-go type of method over the next few years?

I mean I don't think we've seen any change there. We've generally operated with MLAs with our clients. We obviously go through various phases here and there, but that's been our general approach.

In general, I would say that operators prefer having the certainty of understanding an operating agreement and being able to anticipate cost. And therefore, it's something that I think the industry as a whole prefers along with the customers.

Our next question comes from Nick Del Deo with MoffettNathanson.

First, Sunit, just a moment ago, you alluded to new tower builds as the use of CapEx and seeing opportunities. I know that Crown has done a lot from a new-build perspective, at least in a material way for a number of years. Are you able to dimension the number of new builds you're targeting or at least how it's changed versus recent years or any attributes of the towers you're looking at like initial yields?

Yes, tough to quantify it at this point. I mean, our key criteria is have the capital, willing to do it if it makes economic sense. We do know that as data demands are growing, people have needs in various areas.

One key example of this, I think, just in general, is you've seen recently, Verizon closed the Frontier deal, AT&T closed the Lumen deal, is a big move towards conversion. So when you think about the geographies of where Frontier operates or where the Lumen properties are, we think there will be opportunities as they look to provide a converged offering, which means they'll need both wireless coverage, including fiber-to-the-home. So that's just one example of an area where there might be opportunities and there are others.

So tough to quantify for you at this point in time, Nick, but I think it's just saying we're willing to look at that when it makes economic sense.

Yes, maybe to build on that. One is we've said we're going to be very selective and really only pursue opportunities that have those attractive economics that Sunit mentioned, but more importantly, if you look at the dynamics of the industry, one of the things that's happened since COVID is the price to build a new tower has gone up considerably. And so it has a headwind for the industry in terms of build overall in terms of the business case that you have to have.

And oftentimes, if -- in the past, you would build a single carrier tower and hope to get additional colocators, that's become increasingly difficult. And so for us, although our volume is not high, typically we will focus in on those towers where we have a minimum of two customers committed so that we know that the economics make sense and the return profiles are correct.

And it's something that -- if you look back historically over the last 10 years, and I know because I've worked both in the disruptive part of the tower industry and now here as a leader of the Big 3 is that traditionally, MNOs haven't always looked for the Big 3 tower companies to provide those new tower builds. But that's starting to change. And the conversations we're having with customers are that they would like a one-stop shop based on ease of doing business with and strategic partnerships with tower companies like Crown.

And so we think there's an opportunity there. We're sizing that up. We're exploring it, but we will be incredibly disciplined in the go forward because that CapEx spend has to be with the right return before we move forward in any kind of scale in this part of the industry.

Okay. Okay. That's great color. Can I ask one about the '26 leasing forecast? I guess can you share anything about the degree to which the amount you're budgeting for is locked in, whether due to MLA commitments or because you have leases that are already signed versus activity that you've estimated?

Yes. I think at this point, about 80% of our organic growth is contracted.

Our next question comes from Brandon Nispel with KeyBanc Capital Markets.

Two questions, pretty similar. On the leasing -- core leasing number, the $65 million, is that weighted more first half, second half this year? And really, is it concentrated in any one of the big three customers or more evenly split?

And then I'm not sure I heard it, but post the fiber transaction, have your thoughts around what you want your financial leverage to be changed just given the leasing levels are quite a bit lower than when you initially announced the transaction?

Yes. I mean, as we said, our framework hasn't changed in terms of our capital allocation. So we still look to keep our leverage in that 6 to 6.5 range that we've announced last March, I think. So no change there per se. And in terms of leasing activity, I think it will be a little more weighted towards the back half.

Our next question comes from Brendan Lynch with Barclays.

Maybe just to start on the longer-term outlook. I appreciate that the 3.5% is kind of a trough here in 2026. But you've previously guided to 5% growth through 2027, obviously, with DISH, that doesn't seem achievable at this point. But maybe you could give some color on what the longer-term growth rate might be either out through 2027 or if you could give even further commentary, that would be helpful.

Yes. I mean I don't think, at least from my recollection, in the last few years, we've provided any outlook beyond the current year. So I think no specifics to provide there other than I would just mention that the combination, the backdrop was sort of constant demand growth on mobile data traffic continue to grow, combined with our clients buying more spectrum and having plans to more -- deploy more spectrum and more spectrum being available. We feel pretty good about the long-term outlook, but I don't think we've provided the outlook beyond the current year, at least for the last few years that I...

Okay. And maybe just on software upgrades. Obviously, that has been a consideration more recently. Your customers are clamoring for more spectrum, nobody denies that, but maybe the potential for them to deploy more of it via software upgrade instead of new leasing might be a headwind, all else equal. Can you just give some commentary on how you think that's going to affect the industry going forward?

Maybe I'll start, and you can jump in. So I think if you're referencing as an example, AT&T's deployment of the 3.45 spectrum, specifically where they had already deployed radios that -- and antennas that could utilize that band on a portion of their portfolio, and were able to very rapidly roll out that spectrum basically with just the software to unlock those channels. That certainly does exist in some cases.

But as an example, the other spectrum that AT&T purchased the 600 megahertz, these are typically new radios and new antennas because the physics are such that you have these massive MIMO antennas for the low bands that provide -- it's called the beachfront property spectrum in terms of the spectrum goes further, it penetrates in buildings for urban and suburban-type scenarios. This is something that they don't currently have deployed and would potentially involve having new antennas and new radios deployed out at sites in order to take advantage of that spectrum.

So it really depends on the exact frequencies and whether those frequencies that have been purchased have already been predeployed on a certain number of sites, whether they're able to do that. And in the case of AT&T, as I just said a second ago, it is a portion of the sites that they had the equipment on. There's still a number of additional sites that they would have to deploy in order to take advantage of deploying frequencies. So that's a good case study, I think, hopefully, in answering your question.

Yes. And also, software upgrades are very helpful, but at the same time, remember there are limits to how much data rates can be pushed through and the power required to do that. So ultimately, like any of these things, if you look at the rate of bit growth, that's why radios and antennas have to keep getting replaced over time.

Our next question comes from David Barden with New Street Research.

It's nice to talk to you again. So my first question is -- I don't want to throw Ric under the bus, but Ric and I are probably the two oldest guys on this call. And I don't remember the last time that there was a time when a carrier decided we're not going to pay our bills.

So could you walk us through exactly what happens when the carrier doesn't pay their bills? Are you going to go send a team of guys out there and snip wires? Or are you going to like rip this stuff down and sell it to China for scrap metal? Like what does that look like? And how do you account for that? Like I just don't know. So that's question number one.

And then the second question would be, just your guys' understanding. So we've been talking a lot to governments, to the carriers about the C-band, upper C-band auction, its proximity to the radio altimeter band up at the 4.2 to 4.4 and how that could slow down deployment. And I'm wondering if you guys have a view on kind of how the next big, massive spectrum auction that's going to happen in the United States could ultimately affect the tower industry?

Yes. Well, maybe just start with the first one. I mean, we don't really want to go into a disclosure of our specific commercial agreements with a specific customer as a practice. But at the end of the day, if a customer doesn't pay and they're in default and you serve them and you terminate a contract, then there's an obligation for them to remove their equipment in a timely basis as per the terms of the contract, right? So...

It's on them? It's not you, it's them?

It's them. It's them. So -- and ultimately...

There's no way DISH is going to do that. You know DISH is not going to do that.

Yes, yes. So well, we'll see. We'll see what happens there as they approach their cure period. The contract has been terminated and they -- it's their obligation to remove the equipment.

More broadly speaking, I've been in the industry a long time as well, almost 30 years or 30 years, half of it as an operator. And I also can't remember a time since maybe before the consolidation of those regional carriers that ultimately became T-Mobile or part of AT&T or Verizon, where we had somebody just turn out the lights and walk away from obligations like they have. It's pretty amazing, actually, to have witnessed this in my lifetime.

On your second question, to try to answer it, so if you recall when the initial C-band auctions had occurred and they started to deploy, there was a number of concerns about the potential interference with the altimeters and the avionics, and it caused a bunch of headaches working with the FAA in the industry in order to come up with a plan on how they would deploy that, which has subsequently been fixed. I think there were some good lessons learned there of how the MNOs can work alongside with government to come up with solutions to be able to deploy it.

And so it's not as if this will be the first time that they had to navigate through these types of challenges. And again, while there was an initial hiccup in the deployment, they very rapidly solved it, and I think are in a much better position now overall as a result with the solution that worked for all parties.

So these will consistently be challenges as you start to auction off spectrum that has use -- is in use by others, including government entities, on figuring out how to best clear the bands and provide the use of that spectrum, putting it to work. There's clearly a huge demand by operators to have access to additional spectrum. And from what the FCC has signaled, they're in a position with that 800 megahertz that they've indicated that they intend to auction in '27 is to take rapid action to put it to use. And more importantly, that rises the tide for all boats and all tower companies as a result of that spectrum being deployed.

So we're -- we support it. We believe it's the right thing to do for public resource, which is, again, why we support ultimately DISH's sale of the spectrum to AT&T and SpaceX.

And I really appreciate that. And if I could ask one follow-up. Sunit, when Charlie fails to follow through on his obligation to remove the equipment, how long does it take before we find out? And then what happens?

Again, I hesitate to answer specifics on that because as you can imagine, these are fairly large contracts with all kinds of provisions. So I mean, I'd just leave it at that. But what I will say is we are doing everything we can within the contract in Washington, as Chris was talking about, to make sure we are enforcing our rights and being aggressive about it.

Our next question comes from Batya Levi with UBS.

Great. One more follow-up on the leasing question. The slowdown that you -- that we're potentially seeing, excluding DISH, is that across the board or maybe specific to a player?

And can you help us understand the amendment versus densification mix? Is the back half weighted more related to potential densification efforts flowing through?

And another one on the cost side. How does the $65 million lower cost outlook compare to your prior expectations given the progress you've made last year?

Yes. Thanks. I think, first of all, on the slowdown point, as I was saying, if you look at the '25 numbers and the '26 guide, if you were to adjust for the change in other billings, the growth this year is about what it was last year, in the same ZIP code. So not much change there, I would say, compared to last year. Most of it is on account for change in other billings.

And then in terms of the proportion on colo versus amendment, we haven't seen anything. It's about the same ratio as we've seen last year.

And then the -- yes, I mean, the leasing activity, as I said, is in line with what we have seen last year, excluding the impact of DISH in both periods.

And on the cost side?

On the cost side, I think that we did say upon the announcement of the transaction when we provided the guide post the close of the transaction that we are -- take some costs out. So I think what you're seeing here is in line, but I think the bigger point that we've talked about in previous calls is we think there is continued opportunity for us to make some investments in platforms and systems in the next couple of years, drive better customer experience, whether it's cycle times or interactions with customers, more efficiency, higher productivity levels.

So I think as Chris Hillabrant mentioned, we are on a pathway to pursue a series of initiatives that we think, both in terms of investments and automation that we think -- including some AI efforts that we think will continue to drive improvement on the cost side over the next couple of years.

Our final question comes from Aryeh Klein with BMO Capital Markets.

I imagine there are some legal costs associated with DISH. Is that in G&A? And is it of any significance?

And then the composition of share repurchase and debt repayments a little different than previously discussed with less repurchases. Is that largely to maintain leverage ex DISH?

Yes. So let me cover the legal costs. So yes, I mean, we've thought about it as we provided our guidance. There can always be something extreme, but I think it's factored into the guidance that we provided.

On your second question, I think that -- sorry, give me a second. Yes. I mean on your second question, I think we -- the capital allocation framework we outlined was for leverage of 6 to 6.5. So if you look through that, with the change in the DISH outlook and you look at our EBITDA and AFFO outlook, we thought it made sense to pay down more debt and stay within the range because as we said previously, the key for us is to be investment grade. So this keeps us in the leverage ratio we had outlined and continues to preserve financial flexibility and also provide good risk-adjusted returns for our shareholders.

At this time, there are no more questions. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Great. I think we're going to get started now. Thanks, everyone, for coming to our conference. I'm Batya Levi with the communications team at UBS. And our next speakers are Chris Hillabrant, President and CEO; and Sunit Patel, CFO of Crown Castle. Thank you so much for joining us.

Great.

Thanks for having us.

Thank you. You both have a long tenure in the space in infrastructure, wireless, telecom. And maybe, Chris, you could start us off with what brought you to Crown Castle? And how do you think the company is positioned as we go to the next year?

Yes. Well, first of all, let me say Crown is a great company. And so a career that spans over 30 years, first chapter of my career working in the operator space. I work for Verizon predecessor PrimeCo, later years at T-Mobile. I went in the OEM space. I worked with Ericsson, I worked with Samsung. And then over the last 6, 7 years, I've been here in the tower space. And I have to say, both as a former customer and now as CEO of Crown is, to me, Crown is one of those great telecom companies here in the U.S. So when the opportunity came up to come and apply for the job and went over the Board, it was a no-brainer for me. It's a great company with a great future ahead.

In terms of our focus areas and looking at where we're headed as a company, as you know, we're in the midst of a fairly major transaction. So the first priority for myself and Sunit and the rest of the team is really how do we execute that sale. The good news is we're well on track with our guidance of having that complete by the end of first half '26. And now that the government is back open, we're seeing good progress there.

The second is really around relaunching Crown. It's Crown 2.0, the pure-play U.S.-focused tower company that is best-in-class in the industry. And so a lot of the time and effort that we have as a leadership team is focused in on both defining that and executing it. And then I think third is about trying to figure out how we can drive additional efficiencies out of the organization. And so the good news is having recently come as a CEO of a European tower company, many of the exact same types of projects that I've been focused on in Europe are the exact types of projects that we're doing here at Crown. And the good news is that the team has already started this journey. We're well on our way, even though there's still miles and miles to go.

Sunit is pretty good at that.

Yes.

Maybe one topic that has come up more recently is one of your tenants, DISH and the litigation around that. So can you just remind us the exposure and then why you decided to litigate? And how should we think about the process from here on?

Yes, I'll start out, and then I think Sunit can add some additional details. But -- so DISH representative of approximately 5% of our overall revenues, continues to pay their bills on time, of which we're thankful, has elected to go down a route whereby they're selling their spectrum assets and attempting to perhaps get out of the obligations that they have signed. As contracts go, we feel like we have a great contract with them, and it runs through 2026.

2036.

Sorry, '36. Thank you. Thank you. Through 2036. And it's something where we think is legally defensible. We recently elected to file a lawsuit in order to fully protect our rights. And so as you would have seen from the filing, the argument around a force majeure is something that we and our legal team feels really doesn't hold water. So at the end of the day, we have a good contract. We expect them to pay for that contract. If in the future, there was an opportunity to go and have a negotiated settlement. I've heard that others have talked about this in the space. For us, it would have to be something that made good sense for ourselves and our shareholders. We're not looking to let them out of their obligations, but understand that the market would love the surety of putting this behind us ultimately.

Right. And the question comes up, 5% of your revenues in terms of the organic revenues, like has DISH been growing from '24 to '25? And throughout the contract, is there sort of like a run rate level? Or does it keep going?

Yes. So I mean, as you know, DISH started from 0 just a number of years ago. So they have been growing. But our contract with them is pretty secure in terms of the amounts that they owe us. It's not dependent on their deployment per se. So that's why it's -- from our perspective, it's a fixed payment stream, if you like, or determined payment stream. And like we have this year, when we talk about next year's guidance when we report fourth quarter, we'll talk about how much DISH revenue is there.

Makes sense. Maybe, Chris, your prior experience with some of the other tower operators and now just looking at Crown and the U.S. market, can you talk a little bit about your maybe initial findings on what are some similarities, some differences, opportunities with the U.S. tower portfolio?

You're talking about specifically Europe or my experience earlier in the U.S. at other tower companies?

A little bit of both.

Okay. So maybe start off with the differences between the European market and the U.S. market. I think it comes as no surprise to say the European telco operator market is very fragmented. Lots of very small operators and even the very large operators have recently been looking at selling off portions of their portfolio to raise additional capital to private equity. So it's a very dynamic marketplace. In some of the markets in Western Europe, it's hypercompetitive with tower companies having overbuilt other tower companies and operators seeking to leverage and to get the lowest possible price from their OpEx.

The other thing is that while this is truly a scale business, and I think the U.S. tower cos have really coalesced kind of the big 3.5 or big 4 here in the U.S., it remains very fragmented in Europe. And therefore, the need to ultimately drive scale economics in terms of how those businesses are run, supply chain, operational processes, tools, organizational structure are all still far earlier having just recently exited from being operator-owned assets in the European market.

Now if you contrast that to the American market, one that is mature, has very large players, has some very small players that are kind of playing in the new tower build arena. Here, in general, I'd say we're further along the continuum in terms of the maturity of our processes, the tools. But even still, it's representing a great opportunity for us. And again, one of the focuses that I have as a new CEO of really going with a fine-tooth comb over the organization, looking at how we do business with our customers to find ways to offer better value. And part of that includes going out to meet with our customers, hearing from them on what their unmet needs are and what role Crown can play in helping them to meet those needs.

One thing that has been consistent so far in the meetings that I've had is they're incredibly excited to have a former operator now running a tower company that understands their business and is willing to help shape a product -- series of product offerings that best meets their needs in the future.

In terms of maybe as you look at a public tower company and the types of contracts you have with the incumbent wireless operators or potential new tenants and contrasting that to some of the private tower companies, are there distinctive sort of are there distinctions that matter for the carrier that choose you versus some of the other smaller ones?

I would say the smaller and having worked previously at Tillman, having worked for a smaller tower operator is they have seized probably the lion's share of new tower development. But the types of contracts that you see and that I've seen both operating in that space and seeing others in that space tend to be a different type of model. It's a all-you-can-eat versus, say, an amendment-specific type site license on a site-by-site basis. The financial modeling that has gone into place because they don't have the scrutiny of the public markets, I think, is far more questionable in terms of whether these things make sense from the long term. And what's more is, if you look at the history, particularly over the last 10 years is that there's been a phenomenon whereby the smaller tower operators are typically building the towers and then in many cases, then turning around selling them out to the big 3 or others.

And so there is some form of market rationalization where they come back in and our average is part of a larger portfolio. But I'm not thrilled with the economics. And in the case of Crown, our intent is to have a very disciplined approach to that CapEx investment to make sure that the deals that we do make sense, that they're accretive and not dilutive to our business.

Right. I think Verizon has mentioned this that they would like to diversify their tower portfolio and potentially give new business to some of the smaller private names. In that, is the opportunity for that next level of carrier activity going away from the public tower companies to the others?

I don't think so. I think that the quality of Crown's portfolio and quite frankly, for many of the established tower operators is really good, consistent. They're located in the urban and suburban areas where most of the capacity growth and the demand for investing in incremental in-building coverage will differentiate one operator versus the other. And so I think we're excited to see the leasing activity that we've had. It's been very steady. And we have great partnerships with our customers.

That said, this is a marketplace which allows for growth outside of the big 3.5 with a lot of other companies that will fulfill other niches like maybe Verizon is looking to do here.

Right. Okay. And let's talk a little bit about the U.S. carrier activity and demand, maybe sort of like taking a view near term and a little bit of midterm. We are -- investors are concerned that with more spectrum held by the carriers, they're going to take a pause. First, maybe before that, where are we in terms of the 5G deployment? Do you expect some pause? And let's talk about if we will see an inflection.

Look, it's a good question. To be fair, we're probably in the middle of that 5G deployment cycle. If you think in terms of most of these technology waves are roughly a decade long, give or take, that the first wave of getting low-band 5G out and mid-band 5G out for capacity has occurred in many cases. But the fact of the matter is, as an example, the DISH sale of additional spectrum to AT&T, and there's a rumor that eventually, in addition to SpaceX, maybe Verizon is a player here. In general, for the industry, when more spectrum is deployed, it means that more radios are being placed out on towers, more antennas are being placed out on towers. And again, depending on the MLA with the individual operator, in general, this is a good tailwind for the industry overall in innovation.

I think the second piece of this beyond additional spectrum deployment, if you look at data growth in the industry as a whole, one of the really eye-opening stats that I read was, I think, CTIA, which is the Operator Industry Association, was something like 30% compound growth per year. In fact, just last year, it was over 32 trillion gigabytes of data growth, the all-time record in last year and on top of 30% the prior 2 years. It doesn't appear as if data demand is in any way starting to flatten out or to be lowered, which, again, is a tailwind as carriers seek to deploy that capacity to stay ahead of capacity constraints as they look at new technologies like fixed wireless as a new way to monetize that spectrum. It's a general good augur for the industry as a whole that continued demand will be in place.

The -- I guess in the past, the thought was that any time the carriers touch the tower to deploy new spectrum, it will be good for towers. And now there is maybe potentially if it's adjacent spectrum, you can just use the software upgrade and the carrier doesn't have to pay something incremental. With these holistic MLAs, maybe more of the flexibility went towards the carriers. What are your...

So the OEMs like Nokia, like Samsung, like Ericsson, they're developing radio kit, which has the ability to expand through software, the ability to activate additional spectrum, which is true. That's -- there's no dispute in that. But the reality is the more spectrum is put into play and the additional capacity as people discover, hey, before I didn't have coverage in doors, now I do or suddenly, I couldn't really download applications. Now I can do that and all-you-can-eat customer as all the -- as most of the operators' customers are in the U.S. is then it changes behaviors.

And to me, a good example to give you a parallel here is imagine if you have a morning commute every day, driving you from, say, New Jersey into New York. And every day, there's a known coverage gap, you know you're going to drop a call in a place. What do you do? You hang up the phone every single day when you get to that spot and you say, hold on, I'll call you back in a second. And so to the network operator that is looking at how that site performs, they're like, I don't see a problem. I don't have a drop call problem because the user is actively self-selecting and ending the call. But then as soon as you fix it, then suddenly people realize, oh, I can actually place a call here. I'm starting to use it. It changes the behavior of the users.

And as more spectrum is put into play, the customer experience goes from like okay to suddenly a great experience where I can download a movie or download an application. It really does change behaviors and ultimately will drive the data demand curve that we've talked about, which again, is the benefit for the industry as a whole.

And then the carriers need to keep that going, right? So as there is more usage on the network, I guess that's going to require another level of activity on the tower.

Yes. Again, and I'll let Sunit chime in here. I mean, I think the bottom line is there's an expectation. Each of the big 3 operators has a claim on we have the best network. You turn on the Sunday morning NFL game and you see an ad from one of the carriers talking about how great their network is. The bad news is when you're on the operator side, running an operations team is that if you start to fall behind in your capacity deployment, it is incredibly difficult to catch back up. And I know this because I've had this happen to me a couple of times where capital has been scarce and you tighten down the screws and you stop investing in the network.

And if at the end of the day, in a very competitive mature network for customers in the U.S., people suddenly stop spending in that capacity, it could be a very high-risk strategy in that the majority of new acquisitions are oftentimes churn from your competitor. So it becomes a very interesting dynamic, I think, in terms of the risk of not investing to keep up with capacity.

But Sunit, do you have a thought there?

Yes. I mean -- and I spent most of my time on the operator side, both wireline and wireless. And I think the simple thing is that as data demand keeps growing, you have a choice to address it and deal with it. The vectors are a little different for wireless operators. So it's network speed, network quality and network reach. And so ultimately, that's an important part of the economic proposition for all of us as buyers of the service. There's what you're paying per month, there's handset subsidy and then there's network. And ultimately, the network is the foundation. One competitor in this case, like T-Mobile has made a lot of strides in the last few years deploying mid-band spectrum and some of the others are not trying to catch up. It's a good thing for us.

I mean the other thing also is there's been massive growth in data demand in the middle of the network on the fiber side with AI and data centers. There's huge amounts of data being thrown around. As that translates into various applications, whether it's on your phone for AI or robots or drones or all kinds of IoT things, cars, et cetera, that should continue to fuel mobile data demand growth. And we're core part of facilitating that. So we're excited about what all of this means over the next number of years.

And that's a good point in terms of as you have conversations with the carriers and next stage of network planning, do you have a sense where -- which company is at what level in terms of requirements just to do some catch-up because of the drop calls or needs to do a bit more amendment, need to start the densification. You don't have to name names but do you think that there is more activity to be had and at different levels when you look at the main 3 providers?

It's all relative because I would have told you, having spent the last 2 years in Europe, as an example, European networks when GSM first rolled out were vastly superior to their American counterparts. I think all 3 operators here in the U.S. have done a really good job of building out good solid networks that have fast data speeds that are reliable. Now can they get better? They always can. Having the experience when you sit right next to a cell site and you're seeing hugely vast speeds of data and the ability to have a call and not have a drop, you have to keep served. The fact that we're here in a subterranean meeting room and the fact that I have good 5G coverage is in of itself wouldn't have been here 10 years ago, right? I mean this is relatively new.

And so again, the investments that operators need to do is it's not just one and done. You cover an area and you're fine with that. As your customer base grows and as the capacity needs for those customer bases grow, the sites inevitably shrink and you end up putting new sites in and around it to densify it. So -- the good news is I don't think their job is ever completely done. And in an environment where it's very competitive between these 3 players that have equally spent a lot of money on their networks, I think it fuels a whole new set of expectations every year just because you were great this year, the bar gets risen up every year to go that much better.

Right. Today, we heard from AT&T and T-Mobile CEOs kind of like suggested that we're at peak CapEx for wireless. What do you think that means for tower companies?

Well, I mean, I think -- so there are 2 aspects as it pertains to our business. They were spending a lot of CapEx. So peak or a little decline. The fact is they're still spending billions of dollars a year on network infrastructure. And so for us, whatever they are spending is on the margin positive for us because the -- whether they are replacing older technology radios, antennas are putting in new. Ultimately, if you believe that they're going to keep occupying more spectrum bands and dealing with more and more data throughput, it generally means you need more space on a tower, the ability to occupy more surface area or the ability to put more weight on a tower, all those things are positive for our revenue base.

So obviously -- you do see some oscillations here or there. But the fact is even if you believe they're going to spend less than peak, there's still a lot of capital they're spending to keep upgrading their networks.

We always get the question in terms of where are we in terms of amendment versus densification mix. Where are we? And are you seeing a little bit of a pickup in the densification activity?

Please jump in here but I think our demand has been fairly constant, and there hasn't been a huge shift between one and the other. The mix has been relatively similar over time. For us, I think if you think about the organization, amendment revenue is important. And obviously, we have a focus in on that. Finding ways to win new colocations on our existing towers is a huge priority for us. And so when I think about how does our sales team function, what do we do to partner with the operators to help them identify where those areas of weakness are. I gave you that example with drop calls just a few seconds ago, is we want to be very proactive because in reality, whatever it is that they put into the networks, again, that just forms the baseline of what expectations are for the next year going in.

And then with the competition in the marketplace, and it seems to be very frothy in terms of the investments in, again, that raises the stakes so more people have accessibility to 5G handsets, that drives the overall data consumption and it starts off the cycle anew. The final piece I would say is I was in Barcelona last year for the Mobile Congress, which is our big annual trade show. And I went into each of the OEMs' spaces. And at least in 2 of the 3, they do have 6G terminals. So even though the standard hasn't been finalized yet, still in work between the operators and the equipment providers is there's already a concept of where 6G might take it.

So again, if we're halfway in the development cycle of 5G and 5G deployment and so maybe they reach peak is there's the specter of 6G coming along maybe at the end of the decade or soon into the new decade as fueling the next arms race in terms of capabilities and new business models that are yet to be discovered.

Right. And within that, are you also in conversations maybe with nontraditional potential tenants on the towers? Anything you could sort of like share with us where do you think there is some information about Starlink potentially looking to do an MNO hybrid satellite, terrestrial. Do you think that could be an opportunity? I saw that you announced a private wireless network. Is that a new sort of vector that you could go into?

I think with the fact that the industry is coalescing around 3 major customers in terms of active networks is this is an area of opportunity for us that we need to go out and to get serious about and chase. One of the things I saw in Europe was a whole new series of network uses, things like everything from predicting rainfall in a given area to wildfire, early wildfire prevention and identification. It still feels like we're at the fairly early rounds of where IoT and that -- I mean, there's been a lot of hype, so I even hesitate to bring it up.

Other than to say there are other parts of the world where this part of the business is now starting to pick up. So there could be some models of where we might adopt those business opportunities. And we've continued to invest in building the capability of our -- both our product teams and our sales force to look at some of these nontraditional activities as new investment opportunities.

Okay. Maybe putting all of that together and looking at, again, 3-, 5-year outlook in terms of the building blocks to get to your organic growth. How should we think about carrier activity we talked about. I think churn is coming towards the end -- to the low end of it, given your exposure to consolidation and you have a fixed escalator. So is mid-single-digit growth attainable from here on?

Why don't you start on the financial side, and then I'll talk about the outlook.

Yes. I mean I think you summed it up well as you walk through the churn issues, we do have rent escalators, which is, as you know, being in telecom, that's a very good thing with legacy revenue that you're always dealing with in the wireline and wireless space. And as long as you believe that demand growth, mobile data demand growth of mobile data traffic will continue to grow healthily, then it means our clients will occupy more spectrum and we'll need more powerful antennas and radios to deal with more data in more places. So yes, I think your hypothesis of being able to perform at that level seems reasonable from an annual growth -- revenue growth perspective.

In terms of where I started off, which is to say we have a very focused vision of what we need to do in the short term, right, complete the sale of the fiber and small cell business, relaunch Crown 2.0 as the stand-alone best-in-class U.S.-focused tower company, look at the efficiencies that we can derive in the business that will ultimately help us to attack things like SG&A and have a better, faster, more agile business into the future. As we go into the midterm, I think there's -- we are a tower business. I think we would like to build towers in the future, certainly in greater numbers than we have here over the last few years. But again, we're going to take an incredibly disciplined approach towards only taking those deals that make sense and that are accretive and not dilutive to our business.

And then I think there's additional things that we will look at that will help to grow the AFFO, things like the underlying tower leases that we have. And we are behind today our key competitors in the U.S. marketplace. So that's an opportunity area for us to take additional cost out of the business. I think these are the midterm objectives. This business will be focused, it will be disciplined, and we will grow to the extent that we can grow. But following a path that's clearly been laid out by the Board and myself of where we're headed as a company.

Right. On the cost side, and we -- Sunit, I know that you definitely focused on how to -- you know how to optimize cost. But one thing that we hear a lot is that you've already done a very good job. So is there more opportunity to be had after the fiber sale is done? And where would that come from?

Yes. I think the short answer is yes. I think the company over the last number of years has been focused a lot on the fiber and the small cell business. So -- and I've been at the company now for 6-plus months. And as I look at the systems platform technology environment for our towers business, corporate systems, see a lot of opportunity to do several things. One, really improve our customer experience in terms of the ability to interact with us digitally and also in terms of our response times, our accuracy, billing accuracy, cycle times, how quickly we can get things done.

There's a lot of opportunity within the company to reduce the amount of duplicate effort or civil engineering, keystroke time, task time. There's a lot of opportunity for process improvements so that things are not sitting in queue for too long, inaccurate data, bringing it together, even with a very modest level of AI to significantly improve productivity and efficiency in the company. So I think we think there's a lot that we can execute on over the next 2 or 3 years beyond just the benefits of moving from running 3 businesses to 1 business. So we're quite excited about it.

Do you have a target SG&A as a percent of sales, for example, like I think that one is still a little bit more elevated than your peers. Is that the peer level is your goal? Or...

I mean we have said now for a couple of quarters, we want to be best-in-class. So we think the opportunity is to take out several percentage points as a percent of revenues over the next years.

Yes. The way I would characterize this is if this were a baseball game, we're in the third inning, right? So we've made some progress, and I want to acknowledge that we have a good team and they're focusing on trying to do the right thing. But having had the benefit of being in a small start-up disruptor tower co here in the U.S. and having worked for a large at-scale, very lean tower company in Europe, I'm convinced that this is still the early innings and the game is yet to be fully played. And so we can already see elements of where together as a team that we're going to go off and attack this. It's going to take some time, but I'm optimistic. I see what best-in-class looks like in my head, and we're going to and do our best to reach it. We're committed.

And when you look at -- you gave us a little bit of hint on how to think about '26 beyond post the fiber sale. But to think about substantial AFFO per share growth is not crazy, right?

Yes.

Okay. Maybe a couple of last minutes, just going back to capital allocation priorities. And maybe if you could just remind us where you would like to be post fiber sale. But I do also want to touch on if your appetite for M&A is just contained within the U.S.? Or do you think that there are some opportunities globally as well?

Let me answer the second part, and then I'll hand it to Sunit to reiterate what we've committed to do as a management team. But look, we will always look at the deals that are out there. It would be foolish to be ostrich with our head in the sands and not to look at deals as they come across. But we've got a lot of work to do in the short term. And we have to execute the things that I laid out for you, I think, to earn the right to be serious about any kind of M&A. So the short answer is, no, we're not looking for anything specifically. We're sure as heck not looking for anything in Europe or globally. That is not part of our strategy. So full stop on that.

But we'll look at things. And if there's a deal to be done out there, which is a good accretive deal, we would consider it. But given some of the discrepancies between the -- what I'd call -- characterize as a frothy private market compared to the public market, it may not be that any of these things make sense for us here. But we'll look at them by all means and kick the tires.

Right.

Yes. I mean just to underline what Chris said, and I'll come to capital allocation. So we've got plenty to do over the next year. Get the transaction done, streamline our costs, get the initiatives in place to take cost out over the next year. So plenty to do right there. And also, if you were to do anything on the M&A front beyond that time, it would have to be accretive with a reasonable margin of safety to our cash FFO per share. So that in itself sets a high bar. And then thirdly, just in the U.S.

In terms of capital allocation, yes, what we've said is with the proceeds of these transactions, it's an $8.5 billion sale. The goal -- our plan is to take $6 billion of that and pay down debt and the rest to a share buyback with. And then I think we've committed -- we are committed to spend 75% to 80% of our AFFO towards dividends. So as we grow that over time, we should be able to grow the dividend stream. The rest 20% to 25% of AFFO, to the extent we have the ability to buy back ground leases at decent rates of return, we'll do that. Obviously, there's limits to how much you can do that in any given year. If there might be any opportunity to build new towers that are attractive rates of return, we'd consider that.

We'll certainly make some modest investments in the scheme of our cash flow for technology platform investments. But the balance we use for share buybacks and the other foundational proposition of what investors we think are investing in with us is being investment grade. So making sure we're always investment grade, whether interest rates change or not or whatever happens, staying investment grade is critical to our value proposition to our investors.

Given where the valuations are, could you start to buy back earlier than the deal close?

I think we are set on getting to the transaction, which is not far away anymore. Government is open. We feel good about how everything is going. So yes, I think it's easier to do that as you get proceeds from a transaction. And again, we are focused on being investment grade.

And maybe one more on appetite for M&A once everything is cleared but would you like to keep it as a pure tower company? Or do you see some opportunities in other verticals that are adjacent?

I don't think so. I mean the strategy is very clear. We are a pure-play tower company. And I guess I'd expand that we have some rooftop sites but we're a tower company, first and foremost. Don't expect us to start going back into fiber small cells. or anything other than the most closest of adjacencies in the form of products and services for our customers.

Okay. Sounds good. I think we'll stop it right there. Thank you so much.

Thank you.

Good day, and welcome to the Crown Castle's Quarter 3 2025 Earnings Conference Call. [Operator Instructions] Please note the event is being recorded.

I would now like to turn the conference over to Kris Hinson, Vice President of Corporate Finance and Treasurer. Please go ahead.

Thank you, Cloe, and good afternoon, everyone. Thank you for joining us today as we discuss our third quarter 2025 results. With me on the call this afternoon are Chris Hillabrant, Crown Castle's President and Chief Executive Officer; and Sunit Patel, Crown Castle's Chief Financial Officer.

To aid the discussion, we have posted supplemental materials in the Investors section of our website at crowncastle.com that will be referenced throughout the call. This conference call will contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions, and actual results may vary materially from those expected. Information about potential factors which could affect our results is available in the press release and the Risk Factors sections of the company's SEC filings.

Our statements are made as of today, October 22, 2025, and we assume no obligation to update any forward-looking statements. In addition, today's call includes discussions of certain non-GAAP financial measures. Tables reconciling these non-GAAP financial measures are available in the supplemental information package in the Investors section of the company's website at crowncastle.com.

I would like to remind everyone that having an agreement to sell our fiber segment means that the fiber segment results are required to be reported within Crown Castle's financial statements as discontinued operations. Consistent with last quarter, the company's full year 2025 outlook and third quarter results do not include contributions from what we previously reported under the fiber segment, except as otherwise noted.

To aid in the review of our third quarter results, our earnings materials include full year 2024 results on a comparable basis. As we indicated last quarter, within 2025 outlook and in our quarterly results, all financing expenses are included in continuing operations and do not reflect the impact of any expected use of proceeds from the sale of our fiber business.

Additionally, SG&A has been allocated between continuing and discontinued operations to develop our outlook. However, these allocations may not represent the run rate SG&A for Crown Castle as a stand-alone tower company. As a result, adjusted EBITDA, AFFO and AFFO per share in our 2025 outlook and quarterly results, may not be representative of the company's anticipated performance following the close of the sale.

With that, let me turn the call over to Chris.

Thank you, Kris, and good afternoon, everyone. It's an honor to address you for the first time as CEO of Crown Castle.

As you've seen from my background, I have been in the telecommunications industry for many years, and I have long admired Crown Castle and its high-quality portfolio of approximately 40,000 towers, both as a customer and as a previous competitor. In my first 40 days, I've traveled across the country to host town halls and hear from many of Crown Castle's employees and customers. and I've gained several key insights. First, I am really pleased by the high level of engagement of our employees and their excitement on our goal to become a best-in-class U.S. tower company. We believe that the fiber and small cell sale transaction remains on track to close in the first half of 2026.

Second, I believe that the U.S. wireless communications infrastructure industry is entering a period of significant opportunity, supported by solid fundamentals, continued growth and customer demand. Third, Crown Castle is uniquely positioned to drive attractive risk-adjusted returns during this period as the only large publicly traded tower operator with an exclusive focus on the U.S.

In September, CTIA, a leading wireless industry association, reported that mobile data demand in 2024 had increased by more than 30% for the third consecutive year. We believe mobile data demand is the best indicator of long-term demand for our assets as incremental network investment by our customers is required to enable higher levels of mobile data traffic. As data demand continues to grow, it will require operators to expand network capacity by both deploying new sites and adding new spectrum bands to existing sites. We're seeing this dynamic unfold in real time. Over the past year, each major mobile network operator has acquired additional spectrum despite having collectively secured approximately 700 megahertz of spectrum less than 5 years ago. The same amount of spectrum acquired in the prior 40 years combined.

Looking ahead, the FCC has said it plans to auction at least 800 megahertz of additional spectrum beginning in 2027. As we saw during the early stages of the 5G deployment cycle, spectrum acquisitions by well-capitalized carriers tends to create significant opportunities for tower operators. With this in mind, I am excited by Crown Castle's long-term value creation opportunity as the only large publicly traded tower operator with an exclusive focus on the U.S. market.

I believe we have an opportunity to generate attractive long-term, risk-adjusted shareholder returns by focusing on becoming the best operator of U.S. towers with the following strategic priorities. First, to empower the Crown Castle team to make the best and timely business decisions by investing in our systems to improve the quality and accessibility of asset information. Second, strengthen our ability to meet the business' needs by streamlining and automating processes to enhance operational flexibility. And third, as the team has already started doing, drive efficiencies across the business.

We will advance our data management and process engineering capabilities to deliver on these strategic priorities. And over the long term, we expect to maximize cash flow by unlocking additional organic growth while driving continuous improvement and profitability. This strategy is supported by our previously announced stand-alone tower capital allocation framework, which balances the predictable return of capital to shareholders with the financial flexibility to invest in our core business.

Following the close of our sale transaction, we intend to grow our dividend in line with AFFO, excluding amortization of prepaid rent by maintaining a payout ratio of 75% to 80%. Additionally, we continue to expect to spend between $150 million to $250 million of annual net capital expenditures to add and modify our towers, purchase land under our towers and invest in technology to enhance and automate our systems and processes. We believe these enhancements, which are already underway, are fundamental to our strategic priorities to improve the quality and accessibility of asset information, enhance operational flexibility and to drive further efficiencies.

Lastly, after paying our quarterly dividend and pursuing organic investment opportunities, we intend to utilize the cash flow we generate to repurchase shares while maintaining our investment-grade credit rating.

So in conclusion, I am excited by the opportunity ahead for both the U.S. wireless infrastructure industry and Crown Castle, specifically, as the only large publicly traded tower operator with an exclusive focus on the U.S. We are well positioned to deliver attractive, risk-adjusted returns over the long term with our strategy designed to maximize organic growth while enhancing profitability and our capital allocation framework, which balances the predictable return of capital to shareholders with financial flexibility.

With that, I'll turn it over to Sunit to walk us through the details of the quarter.

Thanks, Chris, and good afternoon, everyone. We delivered solid third quarter results and are increasing our full year 2025 outlook as demand for our assets remain strong and we continue to identify opportunities to operate more efficiently.

Starting on Page 4. The tower business performed well in the third quarter, highlighted by 5.2% organic growth or $52 million, which excludes the impact of Sprint cancellations and benefits from a $5 million timing-related uplift to core leasing activity in the quarter. However, this was more than offset at the site rental revenues, adjusted EBITDA and AFFO lines, largely due to an unfavorable $51 million impact from Sprint Cancellations, a $39 million reduction in noncash straight line revenues and $17 million decrease in noncash amortization of prepaid rent.

Moving to Page 5. Our updated full year 2025 outlook includes increases at the midpoint of $10 million to site rental revenues, $30 million to adjusted EBITDA and $40 million to AFFO. The higher site rental revenues are driven by continued strong demand for our assets, which we expect will result in a $10 million increase to full year straight-line revenues and fourth quarter leasing activity and nonrenewals in line with the first half 2025 results.

We also expect a $40 million increase in AFFO, consisting of a $5 million increase in services gross margin driven by higher services activity, a $15 million decrease in expenses and $5 million decrease in sustaining capital expenditures as we continue to identify opportunities for greater operational efficiency in the tower business. And finally, a $15 million decrease in interest expense, largely due to lower-than-expected floating rates and a pushout in the assumed term out of our floating debt.

Included in our updated full year 2025 outlook is a $30 million reduction in discretionary capital expenditures from spend that has been pushed into next year. Our updated outlook for 2025 discretionary CapEx is $155 million or $115 million, net of $40 million of prepaid rent received.

In conclusion, we are pleased with our third quarter results and believe we are well positioned to meet our increased outlook for full year 2025 and our range for estimated annual AFFO following the fiber business sale closing that we reiterated last quarter of $2.265 billion to $2.415 billion. Longer term, we're excited by the opportunity for Crown Castle as the only large publicly traded tower operator with an exclusive focus on the U.S. to deliver attractive risk-adjusted returns with our balanced capital allocation framework, investment-grade balance sheet and focus on operational execution.

With that, operator, I'd like to open the line for questions.

[Operator Instructions] The first question comes from Michael Rollins with Citi.

Chris, congratulations on becoming CEO of Crown Castle.

Thank you.

So a couple of questions. First, Chris, it would be great to get your perspective. You shared some of it, of course, already in terms of some of your priorities and your initial takes. But as you look at the growth opportunities for Crown, can you frame maybe in more detail, what are the opportunities to grow further with your existing customers? And how that opportunity rates relative to the efficiency gains by divesting the fiber operations and just looking for more opportunities to be more efficient and effective?

And then just a second topic, if I could. Just curious for an update on the relationship with EchoStar. Have you received any feedback in terms of what their approach to the network may be and how you look at selecting the rest of the contractual commitments that you have with that customer?

Great. Thanks, Michael. So I think four questions in one, if I counted them all correctly. Let's start with the growth one that you mentioned, I think. Look, one of the reasons why we're so excited about becoming a large public U.S. tower operator is that we believe that we can really unlock the value on both revenue and the profitability side. Fundamentally, we will be focusing in on almost back to basics to just maximize the revenue opportunities that we have within the existing portfolio overall. And I think we feel good and as recognized by the results that you just heard today.

In terms of efficiency, look, this is one of the things that we have a huge focus in on, not only in terms of what we promised to deliver as part of this, and so we need to get through, first, the actual fiber sale itself. This is our #1 priority as a management team to get this over the finish line here by the end of first half next year. But then we're already starting to focus in on those efficiency areas. And again, you saw that in the results that we're reporting this quarter is that we started to accelerate those activities where we can. And we, as a company, will spend a great deal of focus on looking for the opportunities to drive efficiency across our platforms, both through process changes and new tools but also just execution and delivering against customer expectations in what will be a best-in-class towerco.

And then finally, on the EchoStar question that you asked, look, we have a good agreement in place. It runs through 2036. And the bottom line is we expect to be paid for the terms of the agreement.

The next question comes from Benjamin Swinburne with Morgan Stanley.

And welcome to the earnings calls, Chris. Nice to hear your voice. I wanted to ask you guys a couple of questions. AT&T this morning talked about deploying [ 3.45 ] from EchoStar kind of prior to close. In fact, we talked about getting that to 2/3 of their POPs by mid-November. I'm curious, I know you can't talk about specific carriers, but as we see the EchoStar spectrum get deployed, particularly where it's simply a software upgrade. Is there any opportunity for Crown Castle from a revenue point of view? Or how do you think about this migration of spectrum from boost to the majors? And I was just wondering, if need could talk a little bit about the one-timer in the quarter. I think you said it was $5 million. Any color on sort of what drove that would be interesting.

Yes. I'll take both. Yes, I saw those remarks. Look, I think in general, what I would say because tough for us to comment on AT&T specific plans over the next years. But in general, I would say the massive investment in spectrum, which is usually followed by deployment generally, and it depends on whether they would do a software upgrade to existing coverage areas or they want to go into more coverage areas. Again, I wouldn't know. But what I would say over the long term is more spectrum bands get occupied, and as mobile data demand continues to grow, in general, that's favorable for the tower sector, and we hope will do a good job of serving AT&T for whatever its plans are. So I think that's the main point there.

On the onetime benefit, yes, it's a combination of different things happening in the third quarter with several of carrier customers. So we had a onetime benefit. As we said, we expect to revert back to the sort of activity levels we saw in the first half of the year in the fourth quarter. So these things are never linear, sometimes you can have lumpiness and that's what you saw in the third quarter.

The next question comes from Michael Funk with Bank of America.

Chris, congratulations on your new role.

Thank you, Mike. Appreciate it.

Yes. So a couple if I could sort of following on the last one, we've heard carriers talk about less densification due to spectrum that they're acquiring. And just wondering if that's filtered through to your conversations with them, either maybe pulling back on plans that they had the discussions that they were having, or if it's too early and you wouldn't necessarily already had these conversations around densification.

No, I don't think we've seen anything as you can see, leasing is a continued strong environment for us. We're seeing solid demand for our assets and no material changes at this time.

Great. And then, Sunit, a lot of discussion about efficiency efforts. Where would you say we are in that process today if you had to innings?

Yes. I mean I think we are -- you can see with our progress every quarter, we are basically taking down the execution risk on the guidance that we have provided for next year's AFFO for the period July 1 next year to June 30 of the following year. So I think where we are is we keep looking for opportunities to drive efficiencies, various automation systems implementations in a phased approach. But clearly, the big benefit comes as we simplify it from running 3 businesses to 1 business. So I think that you'll start seeing benefiting us as we get to the close of the transaction and beyond that. But meanwhile, there's plenty to do within our tower business, our corporate segments, and that's what we are focused on.

The next question comes from Rick Prentiss with Raymond James.

And Chris, yes, always nice to start on a beat and raise quarter. So good talking to you again.

Time is everything.

It is. I want to follow Mike's question earlier. On the DISH MLA, clearly, you've got a contract that's written well, you expect to get paid, putting the spectrum on the towers was really critical to make sure they kept the spectrum rights to be able to sell it. My question wants to go at it. If we look at your '24 actuals and your '25 guidance, I know you've said in the past, you're boost, DISH boost contract had some step-ups in it. How should we think about how much was in the '24 actual in the '25 guidance that was kind of related to DISH activity that we should be thinking about that's continuing to grow while the contract is in place in '26-'27? Any kind of framework you can give us even rough basis points what it might have been?

Yes, Rick. So I mean, as we've said before, DISH represents about 5% of our revenues on the tower side. And so I think as we look forward, we'll see what happens with DISH EchoStar. We feel really good about our contract. And beyond that, it's tough to get into too many specifics given the confidentiality with our clients.

Sure. Okay. Fair enough. When you think about dealing with Charlie Ergen and Hamid and the EchoStar Boost folks. Are you willing and open to saying, well, let's look at maybe an NPV basis. let's look at here's what you owe me. Can we have some kind of discussion. And I guess the extra piece of the question would be help us understand what decommissioning costs ballpark might be? Because I think the contracts also include that they're supposed to return the towers and remove the equipment?

Yes. So what I would say, tough to tell what direction when, what discussion would go and tough for me to comment on any discussions with them generally and then -- and similarly to his comment on specific contract provisions on some of the things you're talking about, just all these things are confidential, but we are -- we feel very good about the contract we have with DISH.

Rick, maybe another one to put it is that, look, our goal here as management is to maximize shareholder value, and we're always open to working with our customers to accomplish that, right?

Yes, that's right.

Maybe leave it open-ended like that.

Okay. And last one for me. You touched on it briefly to Funk's question, that famous Slide 7 from the fourth quarter deck, where you laid out kind of that pro forma second half '26, first half '27. There's that one stack bar in there that talks about SG&A stand-alone. You had mentioned, I think, previously that you'll update that slide, are we still waiting for the deal to close? Or how should we think about when do we get more granularity on that, I'll call it, my famous Slide 7 from your 4Q deck?

Good question. I think that when we report next quarter, obviously, we'll provide guidance for 2026. And I think you can expect a little more detail then.

The next question comes from Jim Schneider with Goldman Sachs.

Chris, I was just wondering if you could maybe give us a sense of, given your prior experiences, how do those inform your role at Crown Castle? And you've been very clear about the strategic goals of the company. But on the margin, are there any areas where you might look to sort of slightly shift those goals, whether they be at the operational level at the capital allocation level or otherwise relative to what's already been laid out there?

The short answer is no. We are focused on becoming the best-in-class U.S. tower operator, full stop. I think once we close the transaction, we achieved all our operational objectives, even then the bar for say, like M&A will remain high and really limited to the U.S. for the foreseeable future, right? So the fact that I have that experience is great, but the clear strategy that we've embarked on is clearly the right strategy and the winning strategy for Crown.

Great. And then just a quick follow-up. Can you maybe just comment on the impact of the T-Mobile's acquisition of U.S. Cellular on the business over the next several quarters and years?

Yes. I'll just -- and I'll just start, maybe Sunit can bring it home. But this is fairly de minimis for us from our perspective. It should be very little impact from what we see at this time.

Yes, that's correct.

The next question comes from Nick Del via with MoffettNathanson.

I want to echo others and congratulate Chris, on your appointment. I guess, Chris, you described improving Crown Castle systems and information availability as your #1 priority in your prepared remarks. I guess, how would you describe the state of the company systems today relative to those or some of the other firms that you've led and what you think best-in-class systems can offer?

Yes. It's a great question because having just literally gone through a multiyear journey at Vantage Towers, where we were focused on the exact same types of issues. The good news is that many of the same platforms that we're in the process of utilizing over there. Crown has already started in that journey to deploy those systems here.

So overall -- and I feel like we're on the right track. This will take some period of time. There's a lot of work to be done. -- defining what best-in-class looks like in terms of the cycle times on how we deliver to our customers and the efficiency in how we spend our capital and OpEx dollars so that they're the most efficient use of that money. This is really our challenge over the next year for us really to lay out what great looks like and then bringing the team along on that transformation. The good news is I've just seen how this works because I just lived through it for the last 2 years and hope to be able to bring that same level of discipline and leadership to the team here in executing those plans.

Okay. Great. That's very encouraging. Can I ask one more kind of high-level philosophical question maybe. Most of your business today is contracted under holistic master lease agreements. Some of those may roll off over the coming years. Just wondering how you think about MLAs and the puts and takes or what you find important. Just so we understand how you might think through that as deals potentially roll off over time.

I think in the end, we will always look to do good business for Crown. And so for any future MLA renegotiations or extensions, we're always going to look for a win-win with our customers on finding both long-term value creation. What we won't do is just go run after an M&A for the sake of an MLA. We'll only do it where we see value creation for the company. And ultimately, driving that customer experience, the winning combination is ultimately to have a strategic partnership with your customers.

And again, maybe something I have some fairly unique viewpoints on having been both in the operator space, in the OEM space and now here in the tower space. But in the conversations I've had with customers so far, it's been very warm and welcoming and looking for ways to partner into the future in ways that both companies can to profit. So I'm encouraged by the direction we're headed in and stay tuned to this space.

The next question comes from Richard Gill with JPMorgan.

I wanted to see if we can get a little more color on application volumes, kind of what are you seeing? And then also, I just wanted to clarify, do you expect ex the $5 million that the second half of the year is going to be the same as the first half of the year in new core leasing? Or should it be higher?

Yes. So to answer the second question, as I said, we expect the fourth quarter to be consistent with what we saw in the first half. If you look at the first 2 quarters of the first half, they were about the same. So I think that's what we meant that the third quarter was lumpy or higher, but that the fourth quarter will be consistent with what you saw in the first 2 quarters.

And then on the application levels, I think you've heard us say previously, application levels do not necessarily correlate to our leasing activity per se. But yes, we've seen healthy levels of activity, as we pointed out in the last couple of quarters, you can see the benefit of that in our service business. So -- and it was a good quarter also in the third quarter.

The next question comes from Batya Levi with UBS.

Can you provide a little bit more color on how we should think about the 5% organic growth ex print churn tracking into next year, maybe kind of the pieces in terms of the investment and leasing mix? And then how do you think about your scale in the Tier 2, 3 markets where incremental activity seems to be going right now? Like how would you approach maybe adding to your footprint either organically or through M&A? And finally, one clarification question. The new leasing activity of about $115 million this year, does that include any take-or-pay contribution from EchoStar?

Yes, let me take through that. So as far as organic growth in the next year, we'll come back to that when we report fourth quarter and provide guidance for 2026. So not much to comment there, but we'll have more to talk about that then.

On the scale, Tier 2, Tier 3, all of us have different footprints, but our general goal is to make sure that we can support our customers where we do have coverage or towers in Tier 2, Tier 3 markets, and we certainly have very active conversations with our clients on that. And two, we are open to, as Chris mentioned in his comments to add towers where it makes sense. So we continue to engage with clients to look at that.

And then I think your third question was on -- sorry, the leasing activity. Yes. I mean, I think, as we said, we didn't change guidance for that. So I think we continue to see good leasing activity in line with the guidance and the expectations we've laid out and the guidance that we provided for the year.

Yes, just to follow up on that. I think there is a bit of a confusion if EchoStar's contribution is in the base? Or is it also in the growth in the core leasing piece, 115. Is there some part of the contract that's embedded in that from EchoStar?

Yes. So I mean, generally, we don't comment on specific client contracts, but all our leasing activity includes activity from all our clients. So I'm sorry, it's tough to get into detail on specific to each of our clients contracts.

The next question comes from Brendan Lynch with Barclays.

Congrats, Chris, I look forward to working with you. In terms of -- you've laid out kind of the bull scenario where CTI data is supportive of growth, spectrum auctions are acquisitions of spectrum continue to be supportive. Maybe you could just help us frame some of the risks that exist in the industry related to additional spectrum swaps or efficiency gains via technology or spectral efficiency. It seems there's a lot of negative sentiment in the industry, and maybe you can kind of tackle some of these risks head on and think and inform us how we should think about them?

I mean, overall, the biggest risk is we don't have the detailed knowledge of what any of these new spectrum purchase owners are planning to do. And the correlation that we're drawing here is the fact that spectrum that wasn't being put into use is now being put into use is something that will generate incremental leasing for infill sites or capacity growth and/or lease-up amendment revenue is something that is, again, based on what we've seen this year seems to be in a very steady state. What could happen where the technology will go and allow for again, the customers have very defined space on the towers. And as they continue to deploy additional capacity, it represents a growth opportunity for us as a business.

Great. That's helpful. Maybe another question so very committed to the pure-play U.S. tower business as being your core. Can you talk about any ancillary services that would fall within the realm of tower exposure that you'd be willing to or interested in scaling more? I know that chronic scaled back on services, maybe there's an opportunity to expand that in the future or build-to-suits or anything that would kind of be within that realm?

Yes. Let's start with the fact of like -- our goal is to really maximize the revenue opportunity of our existing base of assets. And we think that there's room to go there, and that's what we'll be focused in on developing. Much of what I'm focusing on doing now over the next couple of months is meeting with our customers and to engage to understand where their unmet needs. And you're right, there are things that are services related. There could be things like share power systems, there's a whole slew of potential opportunities that are out there. What we need to do, I think, in a very disciplined way is to make an inventory of what those opportunities are, working with our customers and prioritizing them. And then making sure that there's good business to be done because I'm confident that there is business to be had. But I think it's probably a little bit early, at least in my tenure to be able to share with you what those specifics are. But know that this is a high priority for us. We want to really maximize the opportunity on our sites.

And again, based on the earlier question that somebody had on my experiences, I've seen what the order possible is of really providing a great partnership with your customers to be able to generate those incremental revenues.

The next question comes from Eric Luebchow with Wells Fargo.

Appreciate it. And Chris, great to connect over the phone. So I just wanted to check again on the cost efficiency program. I know it's in your pro forma AFFO guide you put for the last next -- into next year. But maybe you could talk about opportunities beyond what you've guided to. As we look at your margins relative to your 2 tower peers in the public market. Is there any reason why you can't get SG&A efficiency or gross margins to kind of similar levels? I know there's some structural differences given some of the sale leasebacks you have. I just wanted to get your perspective on how much runway you have on the cost side in the next few years.

Yes. So I think first, as it pertains to the guidance we provided, when that was provided at the announcement of the transaction, if there were efficiencies factored in going from running 3 businesses to 1 business. I think we're just executing a little earlier on that. But if you look out over the next couple of years, 2 or 3 years, there are several things. There's the implementations of systems, process automation, all of that, I think, will yield additional benefit over the next several years. there's the opportunity for us to buy out ground leases, as we talked about. I think that can help us. So vis-a-vis comparison to our peers.

So I think I think we've got quite a few things over the next couple of years, but certainly, the guidance that we provided for next year incorporated the sort of efficiencies you would expect moving from running 3 businesses to 1 business.

Got you. And I guess I know it's a little early for 2026 guide, but just wondering if you see anything that kind of takes you off the expectation that you've talked about where you can grow kind of 4% to 5% organically pretty consistently, even if we assume the EchoStar contribution continues to wane just based on everything they've announced, do you think that's still a reasonable assumption based on all the activity you have in your pipeline. And I guess related to that, is there any kind of mix shifting you're seeing between new colos and amendments as you look out into Q4 and into next year?

Yes. So on the last question, we're not seeing any big changes in the mix between those 2 items. And then again, we haven't really provided guidance for next year. So we'll come back and talk about it. There's obviously a fair number of things happening that we're excited about with our clients. But yes, we'll when we get to reporting fourth quarter, we'll have a much better sense of where we are and cover that then.

The next question comes from Brandon Nispel with KeyBanc Capital Markets.

Yes. I think the efficiency one has been asked and answered multiple times. So I'll refrain from that. I wanted to just maybe ask on the discretionary CapEx guide decrease this year. Why was that? And really, why is the right number? I think Chris, you said $150 million to $250 million. So I guess, yes, why decrease this year and then why so much going forward?

Yes, I think some of that is timing when you look at those capital expenditures there. There are several buckets. There's -- whether you're buying our ground leases, whether they are tower modifications, different things. But again, as we said, that's just more timing and it's pushed out to next year, nothing -- nothing fundamental happening per se, but just a push out to next year timing.

This concludes our question-and-answer session as well as our conference. Thank you for attending today's presentation. You may now disconnect.

[Audio Gap]

Panel. I'm pleased to -- I'm Jon Atkin with RBC, and I'm pleased to be spending the next 20 minutes of fireside with the Chief Financial Officer of Crown Castle, Sunit Patel. Welcome, Sunit.

Thank you. Glad to be here.

So you go a long way back and have an interesting perspective as both a Board member more recently, CFO but also having had important roles at T-Mobile and Lumen and going way back, other start-ups like Looking Glass Networks. But interested in just perspectives, given recent announcements and let's start with the AT&T purchase of Spectrum from EchoStar from a couple of weeks back. And just kind of any thoughts on how that affects mobile infrastructure usage and kind of spending as well as maybe how it might affect Crown specifically?

Yes. So you mentioned the time when I was at T-Mobile -- in charge of putting T-Mobile and Sprint together. That transaction resulted in T-Mobile gaining a lot of mid-band spectrum, which they've leveraged to the hilt in terms of 5G deployment. When I look at this most recent announcement of AT&T spending $23 billion to buy spectrum, I think that's a big signal because it's a big capital allocation shift. So while you hear about AT&T and Verizon doing both fiber-to-the-home, that's -- this clearly says that wireless data matters. It matters a lot whether you look at the price of the spectrum on a per megahertz pop or whether you look at the amount of money they've spent and also realizing this is just a down payment before you deploy the Spectrum.

So from our perspective, from a tower perspective, I think that's good generally because I also think that with the other carriers, they also have to think about their position in terms of their network leadership and network leadership is defined by several key elements. What's your coverage? How many towers are you on? What's the throughput? What's the speed you're providing to the consumer? What's the throughput in terms of actual bits handled per tower or network quality? All those important metrics to keep your churn low and keep going with mobile -- people that all of us our phones.

So I think probably the key takeaway, I think, is that it's good for the tower sector. And also, I think it also puts some of the other carriers on the defense of looking at their position and what they are going to do to respond. So I see it as a plus for us.

So not to get too technical, but we'll talk about AT&T, EchoStar, which we just chatted about a little bit. And then later on, I want to get a little bit into SpaceX, which is the more recent headline. But maybe taking a step back, there's been some management changes. There's some corporate events around divestitures of small cells and fiber. Tell us about the new CEO. I think this might be his second day on the job?

That's right. Chris Hillabrant joined us this Monday, so it's day 3 for him. And I would say -- we are pleased, as you know, the company has been through quite a few changes. Chris, most recently was running Vantage Towers, which is a very large tower operator in Europe. But he's got great mobile industry ecosystem experience. He's at T-Mobile for many years in charge of deploying some of their networks, mobile data networks regionally. He was at Ericsson, Samsung and now at Vantage. So we are pleased he's joined us on the board. As you know, we've been through a couple of CEO changes, so excited about it. And is that very deep operating experience.

With respect to the fiber sale in small cell business, I was on the Board early last year, I was on the fiber review committee and a couple of other committees. So we're glad to get that concluded, which then now allows us to focus on being just a U.S. dollar-only company. Obviously, Chris is aligned with that strategy. So we're excited about what it means for our investors going forward.

So strategy seems clear, the decks were cleared before he was selected. So is this role mainly around execution and delivery? Or are there other types of directions that we could see Crown going into as a pure-play mobile infrastructure company?

I think the strategy of being a U.S. tower only operator is clear. Clearly, there are some execution things ahead. We have to complete and conclude the sale of the fiber in the small cell business. We think that there are dissynergies in operating three businesses versus one business. So we think we'll continue to be able to drive some operating expense efficiencies. Finally, something we've talked about before, we think that some small investments in our platforms and systems, it will also allow us to drive to be the best-in-class operator. going beyond that over the next year or two, I think we obviously want to make sure we are focused on driving growth for our business, and we think there's a lot happening right here in the U.S. So we think there will be possibilities there, too.

And then just looking to the most recent quarter and current operating trends in your tower business, maybe just kind of refresh us on where we are on things like organic tenant billings growth, churn and what types of activity levels are starting to ramp or decelerate for that matter?

Yes. So as you saw, we did increase our guidance in the second quarter. Our clients continue to be quite active. You see that in us raising the guidance on our leasing activity.

I think what we see today is our clients continuing to focus on 5G deployments, coverage. Competitive intensity has increased, you can see that in churn levels with the wireless operators results. And then we also have been working on operating efficiencies. You saw we did better on our SG&A expense outlook. We are focused on process improvements, our cycle times improved, which also helped the revenue line.

Any kind of trends you're seeing around data growth, 5G use cases, AI, FWA that kind of inform your view around either this year's guide or Obviously, you haven't communicated it, but how you're thinking internally about the medium term?

Yes. I think our view is that 5G deployment is going to continue. There's still room to grow over the next number of years. Fixed wireless certainly has been a plus on the margin. When you talk about AI, I think we're still at the very, very early stages. I don't think we've seen an impact yet with respect to mobile data. Having said that, demand growth for mobile data has been pretty strong over the last 10 years, 20% to 30% growth a year. We see mobile data demand continue to grow at any point in time in the last 5, 10, 15, 20, 30 years, there have been different drivers. More recent drivers have been things like all of us watching more live or video content on our phones.

I think going forward, when you look out over the next few years, a lot of demand will be driven by our AI agents working for us in the background. So you won't all be visually driven per se, but whether it's apps on your phone that help you live your lives better, stay connected with people in different ways without you having to look at your phone, there will be other form factors, whether it's glasses or what you wear. So I think you'll see more evolutions coming.

When you think about the amount of data that's being thrown around just between data centers, with AI deployments and realize that none of that has really yet flowed into mobile data networks. I think there's a fair bit that's going to happen there that we haven't even seen or experience yet.

So on the regulatory side, you have had former FCC commissioners on your Board and whether it's things like shot clock, other kind of procedural issues that might affect colocation cycle time, approvals, permitting, auction authority. But just kind of broad brush, how do you see the federal -- and if there's any states to kind of point out as well but maybe primarily the federal level regulatory environments as it impacts towers?

Yes. So I think you've seen more recent moves by Commission Carr in terms of what are the barriers or difficulties in getting things done on a local basis permits. All of that, I think they have taken that up. We are seeing transactions being approved, including the most recent DISH one, for example. And you've seen The Big Beautiful Bill Act, which means that more Spectrum is going to be sold over the next couple of years. I mean the FCC clearly has the authority that was also underlying to do that. So I think that things on the regulatory front are positive for us as an industry. Spectrum auctions are good, making it easier for us to do our business is positive and deals are getting approved.

So we get to maybe private spectrum transfers shortly with SpaceX, but thinking about future auctions, what is it that you are sort of seeing as being potentially most impactful as it might pertain to more infrastructure being put on your sites?

So our business is driven by -- we charge based on how much space people occupy on our towers. So when you look at the environment 10, 20 years ago to now, in general, there are several things that have been constant. One is carriers occupying more spectrum bands. When they do that, generally, that means they need more space on towers. Number two, the amount of data that is going through towers has continued to go up, and I think that will continue. When that happens, that's a good thing for our business. So when you look at the specific bands that the FCC has been asked to auction or sell over the next couple of years. Some of them is in the mid-band spectrum. In general, they'll be helpful? Sure. Are they areas where carriers can use the same radios to accommodate contiguous spectrum bands? Sure. But again, when you step back and look at over a longer period of time, the constants I talked about continue to be present. They're going to be occupying more bands, we'll need more data throughput and generally, there should be good for us.

So you did mention you charge based on the space occupied on your towers, and that kind of leads me to the topic of master lease agreements, specifically kind of the holistic style. So you got paid by the drink, the more you touch the tower, the more you pay and then holistic where it's a little bit more kind of prearranged. And maybe you can kind of set the stage in terms of your philosophy that has informed you under the existing MLAs that exist? And then maybe going forward, perhaps under new management now as a soon to be pure-play tower company, how your thoughts on MLAs might differ?

Yes. So while I can't get in the details with our agreements with any of our plans for confidentiality reasons, in general, yes, we do like contracts where we have stable, predictable revenue profiles over a longer period of time, but at the same time, allowing our clients to have flexibility, as you point out, and they want to touch a tower, and they can want to touch a tower for different reasons. They want to swap out equipment, they want to upgrade equipment, they want to occupy more bands. So we try to strike the right balance between those things.

Can you maybe drill down a little bit on just sort of lease expirations, whether it's MLA driven or not, but what are kind of the years going forward that you've talked about around kind of peak exposure to that topic? And the reason I ask is just related to the AT&T EchoStar transaction where they've talked about decommissioning sites, which involves not paying for backhaul and not paying for electricity, can they also not pay tower rents?

Yes. So let me make the general point first, and I'll come to the specifics. So the general point, we provide pretty detailed disclosures in our filings with respect to our contracts and what years they go, not very specific, but generally, so investors have a good sense of that.

In terms of the DISH, EchoStar situation. We do have a firm contract with them that goes through 2036 for 20,000 towers. We feel good about our contracts. So again, we'll see how things play out, I can't speak for them, but we do have a strong contract.

So it was a 5-year deal at the time of signing more or less at the end of 2020, as I recall?

Yes. But as I said, our contract goes to 2036.

2036, I'm sorry. Yes. 15 years. So maybe quick words on capital allocation, buying back stock versus other types of priorities, dividends?

Yes. So we have a few key points there. One is we want to be investment grade. And so we will receive -- we are selling our fiber and small cell business for $8.5 billion. We've said that we're going to allocate $6 billion to debt paydown and the rest to share buybacks. So I think we're still -- and the third thing we said is that from a dividend policy perspective, we expect to pay 75% to 80% of our AFFO in dividends as we grow the AFFO, we should be able to grow the dividend. And secondly, that also means that 20% to 25% of our AFFO gives us incremental flexibility to do other things, whether it's to buy more shares back, make sure we are comfortably investment grade, but does give us flexibility there, too.

Since you reported, and you were the first tower company report, there's been some kind of growing awareness of one of the carriers engaged in kind of high rent relocation. And I'm just wondering, is that something that you think you would be exposed to? Or are you protected by MLAs? Or are you not necessarily the target for that sort of effort?

Yes. So different -- all of us as a sector, have different types of agreements with our clients. And I would say that we feel good about where we stand with respect to that. Obviously, I can't comment on others. But we generally feel pretty good. Having said that, yes, I mean, there's always some of that. But I think that we feel good about our position.

And then maybe just the last couple of minutes talking about the second kind of big Spectrum transaction involving SpaceX. We had a panel yesterday where there was kind of more of a technical discussion about the viability and use case for that sort of model. But any thoughts whether it's the economics of it or the business case...

Yes. I mean, as you pointed out, I've been in the business a long time in these sectors. What I would say, there are several things to look at. One is the throughput of data. Now remember, it takes power to move every bit. So when you think about the concept of bits per watt, keep that in mind. The amount of data that flows through fiber networks is many, many orders of magnitude larger than what flows on terrestrial mobile data networks. Similarly, the amount of data that is flowing and it will continue to flow on mobile data networks will be several orders of magnitude higher than what you see going up in the air.

So I do think that satellite data has a valuable niche but when you delve into the economics of that business and think about the number of satellites you have to put in, the other thing to remember is, at any point in time, any satellite crossing the earth, 80% of the time, of the geography, there is nobody living there, 70% of the planet is water when you add in the Sahara desert and any other extreme places. Most of the time, the satellite, there's no people it's interacting with.

So when you look at any of these businesses need high occupancy rates or utilization rates to make money. So the number of users, the number of satellites and also you need line of sight with respect to satellite communications. Most of us when we interact with our mobile devices are indoors, like here in the office, in the car, et cetera. So you're not walking out outside all the time. So it's a valuable niche. There are a lot of new applications, I remote areas, rural areas. So I think it's going to be a very good option. But I do think it will continue to be a niche option.

Audience questions? Well, I think that does it. Thanks very much for your time. Thank you.

Good morning, everyone, and welcome to the final day of the Goldman Sachs Communacopia and Technology Conference. I'm Joshua Frantz. I'm one of the telecom and tower analyst 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?

Yes. 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 -- being a U.S. tower-only company. So the good news is that our strategy is clear. We have a new CEO, Chris Hillabrant, joining us on Monday next week. So that, I think, again, sets us on a steadier course. The company has been through a favorable change on that front in the last few years.

So 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. So we are continuing to deploy technology and system improvements to drive that. So I think I'm happy that we have a plan that we're executing on that front over the next couple of years.

And then I think the second thing is striking the right balance between top line growth and bottom line performance, and there are quite a few levers that we can push there. So we're excited to focus on operationalizing some of those.

Got it. And you mentioned you're 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? And if there's any update on the deal process, that would be fantastic.

Yes. So 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. So whether I look at state approvals, federal approvals, how we are doing in our discussions with both Zayo and EQT. It's going right, right as we had hoped, I would say.

Post that, 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, so in terms of the midpoint of our guide. So between now and then with the proceeds of the transaction, which is $8.5 billion is the sale price we expect to pay down $6 billion of debt, we'll have some organic growth in the tower business that we've been driving and also some level of efficiency improvements. So I think we've tried to provide a picture for investors what the company looks like post the transaction.

Got it. And you also mentioned you have a new permanent CEO and 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?

Yes. So I think the fiber and small cell sale is going on. Chris has experiences in the wireless segment ecosystem. So he was at T-Mobile for many years running some of their operations with respect to tower operations. Interfacing -- he's a regional executive there. Then he was with Ericsson for a number years. And for the last few years, he was at Vantage Towers, in Europe, the size of that business being very comparable to our business. So he has got a lot of experience, not just as a tower operator, but also from a technology equipment supplier perspective, from a carrier perspective, so excited about him in joining us, certainly someone very knowledgeable about the tower business, and what some of the dynamics are currently.

Got it. So if we kind of think about kind of the operations of the business, you raised your leasing guide at 2Q results. You were the only of the 3 public U.S. towers to do that. Can you give us some incremental insight as to what you're seeing? Is it a 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. And we have clients that are dealing with increased activity levels, could be 5G deployments in some cases. So 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. And while the flavor of where the demand comes is changing the demand growth for mobile data continues at pace. And our clients are generally deploying -- when you look at compared to 10 years ago, they are deploying more spectrum bands than they were 10 years ago. So as you do that over time, there is the need for vertical footage on the towers or even surface area has generally trapped up over time, and we are obviously the beneficiary of that as a tower sector company.

Got it. And 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, 5 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 percentage organic growth for the next few years and beyond?

Yes. I mean we haven't provided any specific guidance with respect to us. But what I would say is 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 being absolved -- has all been helpful or will continue to be helpful for us. And I think that will -- they'll continue a more recent example of that is when you see the purchase of the 2 bands, but like the 600 megahertz span by AT&T, as they deploy that, that's some other example of where you'll have to deploy radios, and that means generally, it should be a positive for us, 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's coming to the carriers, and 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?

Yes. So we don't provide a 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. And I would say, on the 5G side, yes, I think there's still a fair bit of 5G deployment to go. When you look at the wireless carriers and look at what percent of the sites are 5G deployed. I think T-Mobile ran ahead of that compared to AT&T and Verizon. But -- so there's a fair bit there. And then secondly, there continues to be expansion in the number of towers they want to go to all 3 of the carriers. I think that's also positive.

Got it. And 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. But 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 extends out to 2034, 2036?

'36.

2036. And how do we think about their payment and the potential churn that could come? Or are you confident that you're going to get your payment from now into the middle of next decade?

Yes. So it's -- the contract, as you point out is 2036 to 20,000 towers. So with the number of towers that currently 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. So yes, 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 DISH has -- looks like it's improved a lot since 2 weeks ago, given the stock price. So their ability to meet their obligations have certainly improved. But yes, we have a contract that we feel good about.

And in your leasing guide, is there -- I want to make sure I heard this right. There's nothing in the $110 million to $120 million from DISH? Or is there some in there? And does that go away? Like how do we think about in your guidance, how much that could be driven by EchoStar?

Yes. So as I said, the nature of the contract, the leasing activity from there doesn't impact that.

Got it. Okay. And I guess the expectation is AT&T is -- potentially does less densification of the 3.45 because they can do a software upgrade and that will 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 '26 or '27, whenever that comes online, do they -- do you have the ability to generate incremental kind of colocation revenue as they put 600 megahertz antenna? Or do you think it's going to be more amendment-driven and is -- are there antennas that can do both 600 and 700 that would kind of fit within their deployments already?

Yes. So it's tough for me to comment on the specifics of our contracts with any client per se. But what I would say, as I said earlier, I think that when they do get around to deploying the 600 megahertz spectrum that they've acquired, it should be a positive for us. The specific question on 600 and 700 megahertz, 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 that every year, as carriers look to push both more throughput through a particular tower because of growth in mobile data, deploy more bands, keep up with technology evolutions in antenna and radio technology, generally, they 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 to have. So I would say it's certainly better for us than it was before they bought the spectrum.

Got it. And last...

Yes, talk about the long term. Obviously, it takes 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?

I mean it's really tough for me to comment here. I mean I'll just be speculating on all of that. So -- see what happens.

Understood. 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 are certain contracts that are coming up that would drive churn?

Yes. So 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. And there's the thought and part of the -- some of the law changes that we've had, that there's some spectrum auctions probably coming towards the second half of the decade. And 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?

Yes. 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, which sits in the 2030-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 wide radius or propagation for that signal. So I think -- the answer to your question, in general, those options 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, yes, you can have radios that can accommodate some wider range of spectrums. But 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 have a lot of options in terms of dividend growth or inorganic tower builds or M&A or buyback. How -- can you give us an update on how you think about kind of different return hurdles for each one of those different options, domestic M&A, ground lease purchases, build-to-suits, et cetera, et cetera.

Yes. So one thing just to say upfront. Obviously, we were clear with respect to our capital allocation guidelines upon the announcement of the transaction. We reset the dividend. We say that dividend would grow -- would be set at about 75% to 80% of our AFFO. As we grow our AFFO, 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. So I think that -- given that as background, generally with respect to buying ground leases, we are -- we have about 30-plus percent of our -- the ground and met our leases that we own versus the rest is leased. So 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. So we're certainly looking at that, where it makes financial sense.

And then 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, drying 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 for us to do that. And we are going to try and increase our level of activity in that area. But again, these kind of benefits take time to really see the -- in any given year, what we do might not be meaningful, but when you measure things over 3-, 5-, 7-year periods, then it does accrete value. And that you can see visibly.

Got it. Sure. You mentioned that you're not so focused on kind of M&A, given the deals that you're trying to get finished. But just on like valuation discrepancy like private tower multiples versus where the public trades at, like 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 is a wide disparity. You could argue that on the private side, maybe there is 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. But I mean, 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.

Got it. Fair to say that privates are still significantly above the public trades?

Yes. Well, it's tough because it's not like -- it's not a liquid market in terms of transactions. So judging by multiples in the past, yes.

Got it. And in terms of total amount of capital that you can use for buybacks and dividends and build-to-suits and et cetera, et cetera. Can you remind us about that total capital amount that you'll have in any 1 year post the fiber cell? 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?

Well, so we don't spend as much in CapEx per se for tower bills and for buybacks. I mean, it's when you look at roughly about $4 billion of revenue in the tower side, CapEx is $100 million to $200 million sort of ZIP code, so it's small in the scheme of things. But we did say that post the transaction, our AFFO would be $2.34 billion, would be the midpoint of the guidance we provided from July 1 of next year to June 30, 2027. And from there, as we said, 75% to 80% will be the dividend. We 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 is 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? And we'll start there.

Yes. So I think the guide that we provided incorporated some of that -- those -- so there are several things, right? There is exactly the thing you talked about, which is the dissynergies are running 3 businesses. So by running one business, simpler business, you should be able to take cost out there. Then there is us investing in systems, platforms, process, improvements that should drive also further cost changes, but 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.

Now over time, going beyond that, we think we can continue to do a little better because it takes some time to do some of these platform deployment, 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. So...

And is that 2 years, 3 years?

I would say 2 to 3 max.

Okay. And as you kind of think longer term about your margin profile, like where do you think that can go? And how efficient can you be there?

So 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 guidance that we've given, And I said I think over time, we can do a little better than that. It's all we've said so far.

Got it. One of the things that I think it's 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. But how do we think about if you can grow organically x percent, what that means for EBITDA y percent? And then AFFO kind of go 0%. Is there -- what's the best way to think about how that works?

Yes. So hopefully, a future for -- we'll provide more precision. But yes, the incremental margins are pretty high, both to the EBITDA side and to the AFFO side for every new dollar of revenue. What does I mean? If our current EBITDA margins are in the high 60s, and they will improve with some of these changes I was talking about. So 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. And then as you buy back stock, like is a high single-digit kind of AFFO per share growth rate, kind of a fair way to think about the algorithm here?

Again, we haven't provided specifics, but yes, I mean, I think we can definitely drive much higher AFFO growth than the top line growth.

Okay. And then kind of turning back to some activity levels. Like fixed wireless has been -- we all dream the dream, I don't know, 5, 6, 7 years ago on 5G, and it was going to bring all these applications of classes and who knows what. And 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 -- they get some 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? Like 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?

Yes. So having spent most of my career on the wireline side and being intimately aware of like the economics of fiber deployment now 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 doing fiber builds. And there is a fair bit of space there to do that. And so I do think you will continue to see those deployments, whether it makes sense. Now they make sense more sort of on the fringes of urban areas or suburban areas into the rural areas. There are a lot of different variables or calculations. They go into that. So I do think it continues to be an area where you'll see them deploying it, especially as a substitute for fiber-to-the-home.

And 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?

Yes. I mean if you look at our footprint in general where sort of more large MSA oriented. But I'll give you an example. If you look at the City of Houston, 50 miles by 50 miles. There's a lot on the fringe that could be relevant. So in a sense, I think our footprint is well suited because when you get to like the boundary line between suburban and rural, that's usually also a good area where fixed wireless will work well. Because if it's completely rural, then you can talk about satellite, for example.

Sure. And I guess, 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 as a competitive threat to your customers?

I think that satellite has several features that are attractive and certain things that are draw back. Clearly, the attractive is ubiquity everywhere. You can get decent speeds when there is capacity. But 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 because remember, the more bits you push through, the more power it takes and there's power constrained limits on each of those birds up there. I don't think we're anywhere close to that. But I will -- and 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, they're walking around all the time. So that does present some constraints. So no, I think on the margin, yes, satellite is viable and competitive in certain areas vis-a-vis 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. 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. Like how do you see how that could potentially play out for you?

So there are several obvious things that benefit us and other enterprises, meaning your interfaces with your customers, driving productivity and efficiency through organization because a lot of things are AI-enabled, AI-assisted, AI agents, AI powered. So 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. So 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 of 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 opportunities or areas you can present to your clients. I think that is certainly there.

I think more powerful, we talked about various drivers for mobile data demand. And 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, people 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. So the -- and this is just one little tidbit, but there are a lot of things that the IoT revolution as it 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 like 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? How do I solve my power density requirements on these NVIDIA chips. So moving from like deploying mass scale infrastructure, which makes GenAI 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 they can -- 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 "a simple" business kind of in the 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 3 full customers effectively with the it that we have left, like 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 2 or 3 observations. One, obviously, as a sector. we've been hit hard with the DISH news. But when you look at the market value drop in the sector, vis-a-vis DISH's impact to us as a sector. It seems a little out of proportion, I could be wrong. The two people are not talking about the 10-year treasuries have dropped from, whatever, 4.4% to 4%, that's clearly a positive for us. Now obviously, you need time to see if it's durable and sticks. But if you're in an environment where you have both lower short interest rates and lower long-term rates that's a positive for us.

And then finally, I would say, 1 month or 2 ago, people worried about DISH's viability. I mean, our customers' financial condition has certainly improved in the last month, which is good, generally. And you are seeing a concentration in the sector, and you'll have 3 essential carriers, if you like, with -- and they have to deploy more spectrum generally and I see that as a positive over time.

I think that's a good place to stop. Thanks for being here. See you next year.

Thank you.

Thank you.

All right. Good morning, everybody. Welcome to day 2 of the KeyBanc Technology Leadership Forum. My name is Brandon Nispel. I cover towers and com services for KeyBanc. Thanks everybody for being here this morning. This is a 25-minute fireside chat. With us today, we have Crown Castle's Sunit Patel, CFO. Sunit, thanks for being here.

Thank you. Thanks for having me.

Sunit, you've been in the industry for a long time. I think new to Crown Castle, but been in the sort of industry a long time. Maybe for people that don't know you, why don't you share your background? And overall, what different experiences you bring to the table for Crown?

Yes. Thank you. I've been in the industry a long time. mostly in the wireline side, companies like MFS, which stood for Metropolitan Fiber Systems, MCI Level 3 for many years, where I was CFO, took the company from $1 billion to $8 billion in revenues. A lot of acquisitions along the way, divestitures. We merged with CenturyLink, which is now called Lumen. I was the Chief Financial Officer there. And then I was at T-Mobile. I was in charge of putting T-Mobile and Sprint together. So I was there a couple of years through the closure of the transaction with Sprint. So I spent a lot. There was plenty of exposure on the wireless side.

With respect to Crown, I joined the Board of Crown Castle January of last year and then stepped off the Board in March of this year to take on the CFO responsibility. So lots of operating experience, lots of M&A experience, wireline, wireless and happy to be at Crown on the tower side.

Great. You've been with Crown for 6 months, what are your initial impressions? What are the opportunities? What are the challenges that you face? Yes, go into that for us.

Yes. So I'll start with -- for those of you who don't know us too well, we're Crown Castle, 40,000 towers across the U.S. We are REIT, great business. We're the second largest tower operator in the U.S. We've announced we are selling our fiber and small cell business for $8.5 billion. So that is expected to close in the first half of next year. So we'll essentially be a U.S. pure tower play, if you like, which makes us unique from that perspective.

And yes, I've been here coming up to 6 months next month. And I would say, one, really like the tower business, like the Crown tower business, a lot of attractive features to it from a financial perspective. And it's a great culture, very resilient in all the teammates I met. It's a very resilient culture, very positive culture. So I'm really excited about it.

In terms of first impressions, I think I'm really excited about us moving from running 3 businesses: small cell, enterprise fiber and tower to just a tower business. I think that brings a lot of advantages, whether it's focus, efficiency, agility, being able to make investments in technology and systems. I do feel that, that is an area that the company, Crown, we can benefit a lot from a lot of systems and platform investments that should really help us improve our experience for our teammates, also for our clients. So that, I think, is definitely something that's a big opportunity for us.

And obviously, a lot of industry experience that you're bringing to the table. What characteristics or skill sets do you bring that you think are particularly unique? And how do you think about sort of your key priorities over the next year or a couple of years into the role?

Yes. So I think we've said we want to be best-in-class in our segment and just having the unique focus on being a U.S. tower-only business. My experience, a lot of operating experience, a lot of driving automation, productivity improvements, efficiency improvements. So I think that should be helpful here. I have worked in very large environments. As you know, the amount of things in the carrier side, the sizes are larger in terms of people and systems and complexity. So I think that could be helpful here.

We are undergoing a big divestiture right now, and I've done lots of M&A deals. So I think that's helpful. So these are some of the things as I look at us as a U.S. tower-only business, both the finance and the IT responsibility for the company. So there are a lot of things we can do, whether it's corporate systems, our contract life cycle management systems, our systems where we -- how we interface with our customers, our workflow systems internally in the tower operations side. Just across the board, I think there's a fair bit we can do to make life easier.

Well, you're new to Crown. You actually have a new executive coming in, new CEO, Christian Hillabrant, just announced a week or 2 ago, expected to join in September. Could you tell us more about Christian? What attracted you guys to him or vice versa? And what experiences he brings to the table?

Yes. We're quite excited to have Chris join us as CEO. He has a great operating experience. Most recently, he is CEO of Vantage Towers in Europe. It's a substantial business. They manage about 45,000 macro sites, 85,000 in total, including other small cell and rooftop sites. So great operating experience. That company is backed by several large private equity and institutional investors. So he understands that aspect of it.

And he has what I would describe is great wireless ecosystem experience. He was at T-Mobile for many years as an operating executive rose to the ranks there, worked at Samsung, at Ericsson on the technology side, serving wireless clients and now at Vantage. So I think he brings good breadth of experience and so will be valuable for us. He's also aligned with our strategy of being a U.S. tower-only company. So yes, we're excited to welcome him.

Okay. So relative to sort of the strategic priorities you guys outlined before, no real change that you see coming?

No change. Yes, the focus now is just on execution, getting through this divestiture, which we expect to complete in the first half of '25. And as I said, being best-in-class operators are really focused on that aspect, whether it's clients or internally.

So talk to us about the divestiture. You guys have sort of 6 to 9 months until you expect that transaction to close. What needs to happen between now and then to get the transaction closed? And then maybe internally, what are you really focused on from an efficiency perspective?

Yes. So there are several things. Obviously, the key thing is regulatory approvals, which are both federal and state approvals. On the federal side, you have the FCC, you have the DOJ, you have CFIUS, Team Telecom. So it's just a whole slew of approvals.

Remind us sort of where and the timing around those type of approvals?

I think they're generally going as planned. As we mentioned in last quarter's earnings call, we have a second request from the DOJ pretty standard. So I think all of that is going as we expected. So we continue to be very comfortable with the time line. We filed for all our approvals.

On the state side, it's on a state-by-state basis with PUCs. I think we're now starting to get a bunch of state approvals, but that also has to be managed separately. So yes, it's -- I think on the regulatory side, it's growing about as well as we expected.

Any long polls in the 10 in terms of state approvals and utility commission approvals? I know California usually is challenging for a lot of M&A.

Yes. No. I mean, I think you summed it up correctly. Nothing of note other than what you mentioned, California can be a little longer, but no surprises.

Okay. Carve-out financials, those need to be filed, I think, at some point in time. When would you expect those?

Yes. I think those are going as we thought. So they should be ready to go soon later this year. So that's that plan...

And just you expect to generate about $8.5 billion from the transaction. I don't think there's any tax involved -- tax payment involved in the transaction. Remind us what you expect to do with the proceeds?

Yes. So I think, as we said, consistent upon the announcement of the transaction, we expect to use about $6 billion to pay down debt and the balance we expect to use for share buybacks.

Okay. Let's shift to the business a little bit. Sort of the core tower business. You guys reported earnings a couple of weeks ago. You raised guidance for tower leasing from $110 million at the midpoint to $115 million. What are you seeing right now in terms of activity from the carriers that you didn't necessarily expect to start the year?

So look, I think we've seen activity levels go up broadly, whether it's by geography or by client, which has been good. That combined with us driving some improvement in our cycle times internally have driven the reason for changing the guidance, and we feel good about the guidance.

How do you feel about cycle times overall and like looking forward? Is that part of the sort of the efficiency work that you think you can do that could be beneficial?

Yes. So I think that is something that there is a fair bit of improvement to go over the next couple of years as we've started to focus in on that. So yes, I'm excited about what we can do there.

Okay. As we take a step back and look at changes that came from the One Big Beautiful Bill, bonus depreciation should certainly help your customers from a tax standpoint. There's also spectrum that is expected to be auctioned. How do you think of that as potential drivers for your business over the next couple of years?

Yes. So it is a big benefit for our clients, as you point out, with the bonus depreciation. So we generally see that as a good thing, even though some of them run both wireline and wireless businesses. And then as you pointed out, the government has put aside a fair bit of new spectrum for which you will see auctions taking place and then ultimately deployed. So it's good for the industry. It's good for us. Having said that, it does take -- it will take a couple of years for some of the -- going through the auctions, knowing who buys what swath of spectrum where and then what their deployment plans are. But generally, for the long term, that's good for the tower sector.

How do you see it sort of playing out from a customer activity perspective between now and sort of the new spectrum? I think absent spectrum customers can sort of densify or they can add equipment from a spectral efficiency standpoint. How do you see that playing out over the next couple of years?

Yes. Look, I think that continues to be a good news story generally because there are different axes that our clients compete with each other. When you think about it from a network perspective, there are really several key things. There's network coverage. Then there is capacity, meaning you might have coverage, but what is the capacity, how much bandwidth can you handle going through there. And then there's network speed. What's -- when you and I do a speed test on our phone, what's the upload, download speed.

So I think that when you look at those 3 things, what is clear is that wireless data demand has grown 20% to 30% a year consistently over the last 10-plus years. And even if you look at projections out for the next 10 years, it's still roughly on the order of 20% a year. So I think that, that data demand growth and now you do have some new drivers that are not obvious in the near term, how it impact things, but it's clear that over the longer term, you should continue to be -- it'll continue to drive mobile data demand growth with what's happening with AI. You're seeing some massive investment in data center infrastructure. And ultimately, it's to support our day-to-day lives. And so it should benefit -- over the longer term, should benefit mobile data demand in general.

Got it. One of the interesting aspects and differences between the sort of big 3 towers has been their interest or lack thereof in master lease agreements with their customers, right? I think American Tower has been on one side, really trying to pursue holistic agreements with their customer. SBA generally, on the other side, pursues more a la carte leasing structure. I think you guys would -- I'd characterize you more in the middle. What's your philosophy in terms of transacting with customers under those type of long-term agreements?

Yes. I think one, so I can't comment on the agreements. We don't know about as much as you do. But in general, we like having long-term agreements with our clients. And I think we've been operating in that way. Now you might go through phases where activity might -- with your client or your interaction might be on a specific, let's say, tower-by-tower basis. But in general, we do have long-standing agreements with our clients, and we do like it that way.

Any -- I mean, if we look at sort of your financial straight line revenue, I think, is expected to go negative, which means sort of a lot of those deals are longer term in nature, right? They're sort of towards the end of their term. How do you think about renewals on those and overall timing there?

Yes. So I mean, straight-line revenues are noncash in nature, so not really key economic driver. But to your point, yes, I mean, I think that the reality is that the infrastructure we provide as tower operators in general is fairly stable with our clients for a long-term basis. So I think that generally, we work it out with our clients. There's nothing much to read there per se. Our arrangements with our clients are generally fairly long term and work out that way.

Okay. Obviously, a big headwind for the industry this year and over the last several years has been consolidation-related churn, specifically Sprint churn for you guys in this year's numbers. As we take a step back and sort of work our way through the Sprint churn this year, how do you think of sort of the long-term sustainable churn rate? Talk about U.S. Cellular, any sort of exposure there as T-Mobile has now closed that transaction, too?

Yes. So with Sprint, I mean, we are through a big chunk of it this year. I mean, going forward, we've said publicly, it's about $20 million a year for a number of years. If you look at our churn, excluding Sprint, it's in that 50 to 150 basis points. We think we're more at the low end of that. And so we feel good about that. That's why I was making the point, our business is fairly stable, one of the attractive features of our business from an investor perspective. With respect to U.S. Cellular, we see minimal impact from that with T-Mobile, plus or minus. So don't see much of an impact.

Okay. As we look at sort of your organic growth rate, again, excluding Sprint churn, how do you think about sort of that long-term sustainable growth algorithm? I think Crown has talked about in the past getting to like a 5% growth rate, plus on the net side, American Tower is there. How do you think about getting back to that level of organic growth?

Yes. So I mean, I think we typically more recently have provided guidance on an annual basis. So I mean, if you look at our 2025 guidance, we are sort of in the ZIP code, if you look at our organic growth rate, excluding the Sprint churn. So we feel comfortable with that. We haven't really provided long-term guidance. Things change enough every year. So I think at this point, we feel good about providing annual guidance. So we'll provide guidance for '26 with year-end.

In February. It's interesting that you mentioned how stable the business is. I think you come from a couple of companies, which might not be as stable. What is your philosophy around maybe issuing some sort of longer-term guidance? Is that something you guys are looking to do? Is that something that's not interesting to you? What's your overall philosophy on the long-term outlook?

Yes. I mean, I think that we'll see. We typically do rediscuss it or discuss it every year. So with Chris joining on Board, we'll talk about that, yes.

Okay. Got you. As part of the transaction, the fiber divestiture, small cell divestiture, a lot of investors are really focused on really the operating efficiency, sort of some corporate costs that you might have and anything that you can do on the tower side to become more operating efficient. There's numbers that you have put out, and we can't put our finger on exactly what those cost structure -- that cost structure looks like. Can you help us understand sort of what you're going to do to implement some of those cost savings? And any way to sort of quantify it would be super helpful.

Sure. Yes. I mean, so to your point, we did put out an AFFO guide post close of the transaction under the assumption that if we close on June 30 of next year, then our AFFO from July 1 of next year to June of 2027 is about $2.3-plus billion at the midpoint. And I think that some chunk of it is from debt paydown that we talked about. And then some chunk of it every quarter, as we add revenue, as we grow revenue, most of that revenue drops to the AFFO line, so there is some of it.

And then the other, as you point out, is cost efficiencies. And I think that, that journey has already begun. If you look at our numbers and our raise to our EBITDA guidance relationship to the revenue guide being taken up. So it really -- I think the cost efficiencies fall in like 3 buckets, if you like. One is that the benefits are running 1 business versus 3 businesses. And you will see that. As we close the transaction and move across next year, you'll start seeing that.

Some of this is automation in systems and platforms, some more tactical that you're beginning to see some benefits in terms of reduction in cycle time. And then some platform investments will take a little longer to pay off, both corporate systems and operating systems. So I think that benefit will start showing up more late next year in the following couple of years. So those are the 3 different buckets. So we continue to be quite confident, which is why we repeated in the last earnings call in that AFFO guide. And as you've seen in our raise of our guidance, we are progressing well towards hitting that AFFO guidance.

If we sort of outline, is it sort of an even split between running one business, systems and platforms and the other item that you mentioned sort of split evenly between the cost you think you can take out of the business?

It's tough, to be too precise. But I would say that's a good way to think about it for now, yes. But I mean, I think we'll see. In terms of quantum, you will see a little bigger benefit post the close of the transaction just because you are running one business and the rest. So I would say that the 2 larger buckets would be what you would see right after we close the transaction for the time period after that. And the second would be benefits we would gain over a couple of years. And then the third, which would be a smaller one that we're already beginning to drive is some of the more shorter-term tactical things we are driving with cycle times that you're seeing us show improvements in our cost.

Got it. One of the things that I tell investors as I think about sort of Crown's long-term AFFO per share growth algorithm is sort of, I think the company can get back to a 5% AFFO per share growth rate or organic revenue growth rate. I think the cost efficiencies could be like a point or 2 on top of that for EBITDA growth of 6% or 7%. And then you got a buyback, right? You got a buyback that could be -- depends on the level of the stock, a couple of points of AFFO per share growth. And overall, it seems like the business can produce a high single, low double-digit AFFO per share growth pretty sustainably. What are your thoughts around sort of that framework for a long-term growth algorithm?

Yes. So I think the -- all the key points you've mentioned from a framework perspective, absolutely, that's our plan. In terms of specific guideposts with respect to revenue growth or cost efficiency and what those numbers will be, we'll have more to talk about that every year as we go along that journey. But I think as we've said, as you think about what you said with the stock buyback and the fact that we want to pay dividends at a 75% to 80% of our FFO, that should do several things. One, it should -- as we grow our FFO, that means you will see the dividend growing. And at 75% to 80%, that still leaves a fair bit of discretionary cash flow, whether it's further share buybacks to benefit our owners, making sure we remain investment grade under a varying rate of interest rate scenarios gives us plenty of degrees of freedom to drive that total shareholder return.

Speaking of interest rates, I think post transaction, you expect to be at a 6 to 6.5x net debt leverage ratio. Why is that the right sort of range? How do you guys come to that? How do you expect to run the business from a leverage perspective?

Yes. So I mean we're running at the lower end of that, and I think 6 to 6.5. Many people look at debt to EBITDA. The tower business is different in that our CapEx as a percent of revenue is substantially lower than the carrier universe. Your level of discretionary cash flow is a lot higher. Our key guidepost is we are focused on remaining investment grade and what it takes to be investment grade. We think that 6 to 6.5 is fine. We've been talking to the rating agencies. You've seen more recently, Standard & Poor's reaffirmed our BBB rating. And we've been in dialogue with Moody's and the other ratings. So we feel that at that range, it keeps us at investment grade. And then if things change for any reason, the main takeaway for our investors is we're focused on being investment grade.

Got it. I think with that, we're just about out of time. So Sunit, thank you very much for being here. We appreciate your time.

Yes. Thank you. Thank you, everyone.

Good day, and welcome to Crown Castle's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Kris Hinson, Vice President of Corporate Finance and Treasurer. Please go ahead.

Thank you, Ishia, and good afternoon, everyone. Thank you for joining us today as we discuss our second quarter 2021 results.

With me on the call this afternoon are Dan Schlanger, Crown Castle's Interim President and Chief Executive Officer; and Sunit Patel, Crown Castle's Chief Financial Officer.

To aid the discussion, we have posted supplemental materials in the Investors section of our website at crowncastle.com that will be referenced throughout the call. This conference call will contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions and actual results may vary materially from those expected. Information about potential factors which could affect our results is available in the press release and the Risk Factors sections of the company's SEC filings. Our statements are made as of today, July 23, 2025, and we assume no obligation to update any forward-looking statements.

In addition, today's call includes discussions of certain non-GAAP financial measures. Tables reconciling these non-GAAP financial measures are available in the supplemental information package in the Investors section of the company's website at crowncastle.com.

I would like to remind everyone that having an agreement to sell our fiber segment means that the fiber segment results are required to be reported within Crown Castle's financial statements as discontinued operations. Consistent with our first quarter reporting, the company's full year 2025 outlook and second quarter results do not include contributions from what we previously reported under the fiber segment, except as otherwise noted.

To aid in the review of our second quarter results, we have included in our earnings materials full year 2024 results on a comparable basis. As we indicated last quarter, within 2025 outlook and in our quarterly results, all financing expenses are included in continuing operations and do not reflect the impact of any expected use of proceeds from the sale of our fiber business.

Additionally, SG&A has been allocated between continuing and discontinued operations to develop our outlook. However, these allocations may not represent the run rate SG&A for Crown Castle as a stand-alone tower company. As a result, adjusted EBITDA, AFFO and AFFO per share and our 2025 outlook and quarterly results may not be representative of the company's anticipated performance following the close of the sale.

With that, let me turn the call over to Dan.

Thanks, Kris, and good afternoon, everyone. As a result of the great work by everyone at Crown Castle, we are delivering on the 3 near-term priorities I shared last quarter. First, meeting or exceeding the company's financial and operating objectives for 2025; second, facilitating the successful close of the sale of our small cells and fiber solutions businesses; and third, positioning the tower business to maximize value for shareholders on a stand-alone basis. .

As evidenced by our solid second quarter results and our increased 2025 guidance, we are delivering on our first priority. The increase to our full year 2025 outlook is underpinned both by higher demand for our assets, as our wireless customers continue to augment capacity in their networks driving higher leasing and services activity and by improved operating efficiency. On the second priority, we believe we are on track to close our sale transaction in the first half of 2026. We have already started receiving state level approvals, and we are actively engaged with the Department of Justice as we process a second request for information that we recently received.

From an operational standpoint, we have delivered to the buyers, outlines of the processes, personnel and support infrastructure required to operate each business, positioning us for a seamless transition at close.

With respect to our third priority, since announcing the agreement to sell our small cell and fiber solutions businesses, we have focused on operating the tower business more efficiently. This focus is already beginning to show up in our results as we have driven shorter cycle times that have contributed to our higher leasing expectations for the remainder of the year, we have improved the margins in our services business by reducing operating costs, and we have reduced expected full year 2025 overhead costs by $10 million. We believe our continued focus on operating the tower business more efficiently, along with our previously announced capital allocation framework will position the company to maximize value as a pure-play U.S. tower operator.

In the second quarter, we made progress implementing our capital allocation framework by decreasing our dividend per share to $4.25 on an annualized basis, which will increase our financial flexibility going forward. Following the close of our sale transaction, we intend to grow the dividend in line with AFFO excluding amortization of prepaid rent by maintaining a payout ratio of 75% to 80%. Additionally, we expect to spend between $150 million and $250 million of annual net capital expenditures to modify our towers, purchase land under our towers and invest in technology to enhance and automate our systems and processes. We believe these enhancements, which are already underway, are fundamental to our operational objectives of improving customer service, becoming the best operator of U.S. towers by increasing productivity and efficiency.

Lastly, after paying our quarterly dividend and pursuing organic investment opportunities, we intend to utilize the free cash flow we generate to repurchase shares while maintaining our investment-grade credit rating, which we believe will drive attractive shareholder returns.

To wrap up, as supported by our updated full year 2025 outlook, we are making solid progress across our 3 near-term priorities. We are on track to exceed our financial and operational objectives for 2025. We are making both regulatory and operational progress in the separation of the small cell and fiber solutions businesses and believe we are on track to close the transaction in the first half of 2026, and we are focusing on driving efficiencies and implementing our capital allocation framework, which we believe will position the tower business to maximize long-term value creation.

With that, I'll turn it over to Sunit to walk us through the details of the quarter.

Thanks, Dan, and good afternoon, everyone. Starting on Page 4 of our earnings presentation. We delivered higher-than-expected second quarter results, demonstrating the solid performance of the underlying tower business highlighted by 4.7% organic growth, excluding the impact of Sprint Cancellations, a $6 million year-over-year increase in services activity contribution and a $37 million year-over-year decrease in SG&A, primarily driven by the reduction in staffing levels and office closures announced in June 2024, and the absence of $20 million of advisory fees incurred in the second quarter of 2024.

These items, however, were more than offset at the site rental revenues, adjusted EBITDA and AFFO lines largely due to an unfavorable $51 million impact from Sprint Cancellations, a $34 million reduction in noncash straight-line revenues and $16 million decrease in noncash amortization of prepaid rent.

Our updated outlook for full year 2025 includes increases of $10 million to site rental revenues, $25 million to adjusted EBITDA and $35 million to AFFO.

Moving to Page 6. The $10 million increase to growth in site rental revenues is a result of higher organic contribution to site rental billings, driven by higher activity levels. This increase, which brings the full year outlook for organic growth to 4.7%, excluding the impact of Sprint Cancellations, benefits from a $5 million increase to core living activity and a $5 million increase to change in other billings, which primarily consists of back billings. We also expect a $35 million increase at the AFFO line, consisting of: first, the $10 million increase to site rental revenues; second, a $10 million decrease in overhead expenses as we identify opportunities for greater operational efficiency in the tower business; third, a $5 million increase in services gross margin driven by the higher activity levels; and finally, a $10 million decrease in interest expense due primarily to a pushout in the assumed term out of our floating debt.

Our outlook for discretionary capital expenditures which includes modifying our towers, purchasing land under our towers and investing in technology and systems that will enhance profitability remains unchanged at $185 million or $145 million, net of $40 million of prepaid rent received.

In conclusion, we're making solid progress against each of our top near-term priorities. We believe we remain on track to close the sale of our small cells and fiber solutions business in the first half of 2026. With our increased focus on operating the tower business as efficiently as possible, we continue to expect to meet our range for estimated annual AFFO that we reiterated last quarter of $2.265 billion to $2.415 billion at anticipated transactions close. And we believe our focus on operational execution, investment-grade balance sheet and our capital allocation framework will position the tower business to maximize long-term shareholder value on a stand-alone basis.

With that, operator, I'd like to open the line for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Jim Schneider with Goldman Sachs.

This is Josh on for Jim. Just two, if I could. Can you give a bit more information on what's driving the higher leasing activity? And if this is related to rural builds or some other project that you're seeing from the carriers? And then secondly, each of the carriers is talking about or spoken about their time line for 5G deployments. But from your standpoint, relative to this point in 5G versus 3G and 4G cycles, how should we think about what's left to deploy? And how do you think about the tail of 5G being longer or shorter than those?

Thanks, Josh. The higher leasing activity really is across the board from all of our customers and across our footprint. I think what we're seeing is a continuation of our customers seeing a need to augment their network capacity because they're seeing subscriber growth as they each -- most of them announced over the course of the last few days. And they're seeing an increase in churn. And I think when you see those types of things from our perspective, subscriber growth and increased churn usually leads to an increase in activity because the network needs to be augmented to keep up with the incremental demand that's being placed on it. So there's nothing I'd point to specifically other than it's just activity levels are higher than what we expected when we gave guidance at the beginning of the year.

On the time line of 5G, this deployment cycle versus others, the 4G cycle was 10 to 12 years that took to go from the beginning of the 4G cycle until we really started 5G in earnest. I don't think there's anything that would lead us to believe that the 5G cycle would be any shorter. I think there is something that would say that the 5G cycle might be longer just because the quantum of incremental data continues to grow. So even though the percentage of data growth in the U.S. is relatively consistent, because the base is growing, you're getting an increase in just the amount of data that needs to be trafficked over the networks, which we think is going to take a long time for our customers to continue to build out their networks to withstand all that incremental demand.

The next question comes from Michael Rollins with Citi.

I'm curious to ask about the pro forma post divestiture Crown Castle. So in the past, I think you talked about generating and you referenced it, I think earlier, enough AFFO per share, so the dividend payout at 4.25% would be 75% to 80%. And then there could be a second leg after that in terms of efficiencies beyond just the general organic growth of the business. So curious, as you've been focusing more on the go-forward Crown strategy, and efficiencies, what you're learning about the size of opportunity in that second leg of maybe how much more incremental efficiency you can generate and the speed at which you could get to the first leg and the second leg once the deal closes.

Thanks for the question, Mike. I'm going to try to use the language you use and use a first leg, second leg even though that's not exactly how we set it. But I'll use that language to be consistent with how you asked the question. We we've given in the first quarter and Sunit said in the prepared remarks, that we still believe we will be able to reach the range of outcomes for the annualized period after close that we had in our presentation last quarter of around $2.3 billion to $2.4 billion of AFFO. Obviously, we expect to get there by the time we close the transaction or we wouldn't put that out as our expectation. So we believe we will be able to get to that level of savings that would allow us to reach and generate that level of AFFO by the time we close the transaction. So that, I think, covers your first leg question.

Your second leg question is beyond just being a simpler business that allows you to operate more efficiently and drive costs out, what can you do going forward that would be even more? We don't really have a time frame on that nor do we have a way to quantify it at this point because we are working on that currently. We are updating our systems. We are updating our processes currently. And as we go through that process, we will identify places where we believe we can get more efficient that will drive higher AFFO growth over time, but we're not in a position now that we will be able to quantify when or how much.

The next question comes from Michael Funk with Bank of America.

So Sunit, maybe a question for you, if I could. Going back to the post-close structure, you've talked a lot with the allocation of expense between the stand-alone business versus the divested business. Where are the most questions on overlapping costs left to evaluate and deciding the final breakdown of expense between the divested and then the core tower business?

Yes. I think if I understand your question right, Michael, I think look, it's -- there are dissynergies in running 3 disparate businesses. We've got the fiber business, the small cell business and the tower business. So I think just with the simpler business, that helps a lot, whether it's a corporate levels, IT functions at the tower level. So I think that as we have been going through the course of this year through some of our separation activity, it's beginning to highlight areas that we would have to take a look at post closing. So -- but the main point I'd make is running 3 businesses versus 1 is a big, big difference in simplification, which is why we think we should be able to drive efficiencies over time. Dan?

But are there areas like maintenance, for example, there's still some questions and allocate that cost between the 2 businesses? Or is it more the overlapping costs, business support IT accounting, things of that nature that you still question?

Yes. On the corporate side, not as much because the businesses are unfairly separately, otherwise, meaning the fiber and small cell and the tower business. So not much overlap on things like maintenance that you mentioned. It's more on the corporate side.

Okay. One more quick one, if I could, please. When thinking about capital allocation priorities, how should we think about programmatic versus opportunistic buybacks? .

Yes. I mean I think we mentioned this at the announcement of the transaction. But clearly, with the proceeds, debt reduction is key. If you want to keep to make sure we have an investment-grade rating balance sheet, if you like. We talked about our dividend policy, as Dan mentioned, we have set the dividend at a new level. And then going forward, post the close of the transaction, the dividend will grow and will be in that range of 75% to 80% of AFFO.

And then thirdly, we also talked about buying shares back. So that's, as you point out, and more discretionary, but we also talked about what we're going to do there. So the idea is to do all 3, which we think really maximizes shareholder value over time. And then I'll let Dan add any thoughts he has.

The only thing I would add to that, Michael, is we're going to have, again, I think, kind of 2 stages of what you would call a share reverse. The first is what do we do with the proceeds that we get from the transaction and how are we going to allocate those proceeds. As we've talked about, we're going to use the vast majority to pay down debt, and then we're going to use some to buy back stock to maintain an investment-grade rating, how we ultimately execute on that stock repurchase program is going to be a function of the timing, the market and what we think will deliver the best results for our shareholders. And so we don't have a view yet on how we will ultimately execute.

And then ongoing, we believe we will generate additional free cash flow and leverage capacity that we can utilize to invest in our business, pay our dividend and buy back stock, as Sunit pointed out. And again, how we ultimately structure all of that stock repurchase will be predicated on what the market looks like and how we think we'll be able to generate the best value for our shareholders. So I don't think, at this point, we can give a really good sense for what that execution is going to look like. But I think what we can say is we understand their pros and cons to having a programmatic share repurchase and we're having an opportunistic share repurchase. We will weigh all of that and come up with what we think is the best case scenario.

The next question comes from Rick Prentiss with Raymond James.

Good afternoon, everybody, on a busy day. First, our thoughts are with everybody in Texas. That was a very difficult time over the fourth of July. So if everybody on the team and families made it okay.

Thanks, Ric.

First question I've got, Dan, you mentioned that something you've already been achieving has been shorter cycle times. Where are we at right now? What are you guys hitting and what kind of cycle times are you achieving that's helping results?

Yes. Overall, I wouldn't say that the cycle times would show something that would be a dramatic change from when we get an application to when we put something on air and generate revenue. Those are still for most of the applications we're talking about now in the 6- to 12-month range. What we're talking about is the average cycle time. We've been able to reduce the amount of process that we put in and streamline what we do in order to drive incremental and relatively marginal changes to our cycle times. But when you're talking about a book of business, the size of ours and the number of applications that we process on a yearly basis, those incremental and marginal improvements add up to enough to -- enough outcome to impact the new leasing activity that we have in our assets. But we increased the core leasing activity by $5 million.

So it's not a tremendous impact. but is a proof point that what we're doing is working. We're putting in place incentives and getting people to work really hard to try to figure out what can we do to make our business better. And we're seeing the very early stages of all those things coming through, both in those cycle times that we're talking about, but also in the improvement to our services margin and the improvement to our cost structure. So it's just little things over and over again, we think will allow us to be the best-in-class operator of towers. And it won't be one dramatic event that we can point to and say our cycle times move by 180 days. There are going to be little things here and there, like cycle times, like cost improvements that over time, we think are going to add a tremendous amount of value through the ability to grow our cash flows more than we otherwise would have.

Okay. I think you also mentioned on the deal closing, you're still looking at the first half. You got some state levels that are making good progress are approved, DOJ. Is there anything with the FCC? And of course, we've been watching T-Mobile U.S. Cellular, Paramount Skydance, A lot of this DEI discussions or need for a letter sometimes comes out there. But is there any FCC requirement? And where are you guys at as far as any kind of DEI issues?

Yes. There's nothing that we can speak to one way or the other at this point because we're just not far enough along in the process. What we can say is that we have tried to manage our business for the interest of our shareholders because we believe that's the most important thing to do, and we continue to manage our business, the interest in our shareholders. .

Some of those things, when we are trying to drive the best outcomes for shareholders also means we try to drive the best outcomes for our customers and our communities and our employees. But the driving factor in how we make decisions is what do we think is going to make the best sense for our business overall.

And last one for me is you laid out your 3 objectives and what you're working on -- good progress on all of them. Maybe an update on is the Board actively searching for a new CEO? Are they waiting for the deal to close? Because it means or seems like the process is going well. But what is the update kind of on a CEO search? And could there be any changes in capital allocation or stock buyback plans if there was a change at the C level?

The Board is actively searching for a CEO. I don't think that they are waiting for the deal to close. I think that the they are trying to find the right person to lead this company going forward. They have not put a time frame on it as we discussed last quarter because they don't -- as you said, things are going well enough at this point where we don't need to make a change. But I think that they want to find the the CEO, who is no longer interim, as quickly as they can because it would be something that would clear up another level of uncertainty on our company, and we've had plenty of uncertainties. So it would be very good, I think, to have an announcement. And I think the Board understands that. So they're working towards it.

And I forget the second part of what you have...

Capital allocation.

Could they change the capital allocation? I think what you can take away is that the Board has made some decisions on the strategy and the future of this business. that any person who would step into the role would have to agree with or they wouldn't take the role. Because I think the Board will be very clear that we are going to be a tower only business that is focused on the U.S. and that they're going to want somebody who's going to come in and be able to make that, that tower only business, the best operator of towers in the U.S. that we possibly can be. And I think that, that will make that clear to any person who's going to come in to be the CEO.

The next question comes from Ben Swinburne with Morgan Stanley.

I guess two questions. One kind of bigger picture. I know it's early, Dan, but I was wondering if you had any updated thoughts on how gen AI or AI could drive incremental traffic by your customers and therefore incremental tower revenue, particularly as we see inferencing as a bigger and bigger part of the AI use cases.

And then second, I know it's a smaller part of the business, but service gross margins are coming in better. You guys -- that's part of the guide raise. What -- can you talk a little bit about what's happening there? How much of that might be kind of structural? Or what changes you've made to help drive that and how we should think about the service margin opportunity going forward?

Thanks, Ben. The first question on what do we see as incremental data in AI? As you pointed out, it's pretty early on to come up with a specific use case. But I think like any other technology that has come into our lives, as long as we see value in that technology, that technology will ultimately follow us where we are, which is mobile. We don't sit in our desks and only do work at our desks anymore. So anything you can think of that drives AI traffic that people currently are using when they are at the office, we'll likely make it into a world where we're going to want to use that technology as we move around the world.

And I think that, that is going to be a potential significant increase in data demand. But the exact use case is really hard to pinpoint right now of what it would be. It could be health care or autonomous driving or any of the ones we've talked about. It could be how do we implement better manufacturing techniques and how do you use mobile networks to be able to make that happen. But those types of things are hard for us to see. All we know is that technology increases and technology moves that we as consumers wanted to move with us, and that's what Crown Castle provides to the world. It's connectivity for whatever data you want to utilize wherever you are.

On the second question, with the service gross margin coming in better, I would say that the recent improvements have been structural. As we talked about, we've been looking at our processes, looking at our cost structure and trying to save money. And the tower team has done a fantastic job identifying what they can do to try to increase revenues while increasing the percentage of that revenue that falls to the bottom line. And what you've seen is an increase in service gross margin consistently over the course of the last 6, 12 months. And we believe that there is -- those are sustainable increases in service gross margin.

The next question comes from Jonathan Atkin with RBC Capital Markets.

Just a couple from my side. I wondered if you're noticing anything different around carrier activity with respect to doing their own greenfield builds. I think one of them kind of referenced in an elevated pace doing their own bills rather than perhaps commissioning build-to-suits from third parties. Any observations on that? And then with regard to just private market M&A activity in the U.S., anything that you're seeing in terms of multiples.

Thanks, John. You may have cut out a bit. So if I don't get to the second question fully, just please ask again.

We have not really been in the build-to-suit market very much over the course of the recent past because we have not seen an opportunity to generate returns over and above our cost of capital given the terms that we've seen coming from carriers. So we haven't been involved all that much in build-to-suit. And therefore, we haven't seen much of a change because we just haven't been all that involved. I would find it -- I find it hard that our customers are able to drive a lower all-in cost of operation over the life of an asset for the tower business that wouldn't be third party given the ability to share that asset is so much easier as a third party than it is as a carrier. And that has been proven over and over again of the history of the tower business. So even though that might happen -- even though it might happen that our customers want to build their own towers for a period of time, it has generally been that they ultimately sell those towers to a third-party operator because that's where the lowest total cost of operation can occur because of the sharing of the capital among all customers.

On private market multiples -- sorry, go ahead.

No. Go ahead. I have a quick third one, to go ahead and address the M&A.

Okay. Thanks, John. On private market multiples, we've said this before, I've said this before, it has always been interesting to me in my experience with this industry. The private market multiples have been higher than public market multiples. And we've never really figured out exactly why. I think that there are some theories, but it's hard to pinpoint. And we have not seen a significant change in the market dynamics for private tower assets in the U.S. Again, that really hasn't impacted us all that much. We haven't been in the market to do so. And we're not in the market now to try to go expand our footprint in the U.S. because we have enough to do right now to get the deal closed that we're already working on. So I don't think the private market multiples where they are -- where they sit today, have much of an impact on Crown Castle's outlook over the course of 2025 and even into 2026 as we get the sale of our fiber solutions and small cell business is completed.

You mentioned operations and execution in both the prepared remarks and then in response to Ric's question. On ground lease purchases, the pace of it, anything around whether that could increase in terms of outright purchases of lands or lease extensions, anything different going forward than what we've seen over the last couple of quarters?

We have not increased over -- you can see the increase over the course of this year thus far, our purchases of land under the towers. However, we are putting a focus on trying to identify the places where we think that we can generate a good return by buying that land and reducing our cost structure. We think that drives value as long as it's a good return for us, and it reduced our operating costs those things are things that we think are really valuable and can generate incremental shareholder value.

So we are looking to increase the amount of land that we purchased over time. And you should see in the back half of the year a little increase in the amount of capital that we are allocating to that land purchase program.

Next question comes from Aryeh Klein with BMO.

Dan, you mentioned capacity additions. Curious if that suggests you're seeing an uptick in colo activity. And maybe you can talk to the color versus amendment mix and how that might be changing?

And then maybe separately on EBITDA, you've had 2 quarters of outperformance at the start of the year that amounts to more than the amount that guide was raised. And if we simply annualize the first half of the year, it would get above the high end of the range. So just curious if you can provide some color on the moving parts and maybe what's been sustainable cost savings versus seasonality or timing.

On your first question, Aryeh, the capacity additions, we have not seen a significant change in the mix of co-location and amendment activity. So what we're talking about when we say adding capacity, that addition can be based on adding capacity at a tower that our customers are already on or adding capacity on towers as they are not yet on which would be the co-locations. So we're seeing both augmentation and some densification, but not at a pace that's any different than what we've seen historically.

Yes. On your second question, I mean, as we mentioned in the last call, we do have some site business. So some of the expenses were running lower, but some of them will be back-ended for the rest of the year. So I think the range we provided captures that for the EBITDA level. .

Next question comes from Batya Levi with UBS.

Can you remind us your exposure to [indiscernible] and as the remaining deal terms with the company? And do you have a sense of the overlap with T-Mobile. I think they just suggested that they will take on more towers from USM and how that could potentially impact you?

At, I'm really sorry, but you broke up when you asked that question. Do you mind asking again, I apologize.

Sure. The exposure to USM and maybe the remaining deal terms with the company. And I believe T-Mobile is looking to acquire more towers from USM and how could that impact you?

Thanks for repeating and sorry about that. We have minimal exposure to U.S. cellular towers -- U.S. cellular on our towers. It is a negligible amount that would not have an impact on our overall financial results. .

The next question comes from Brendan Lynch with Barclays.

I wanted to follow up about allocating costs between continuing and discontinuing ops. It sounds like the default is to keep expenses in continuing ops and so it's clear that it can be moved over. So should we expect that more costs are going to be moved over each quarter until the deal closes? Looks like you did this with $15 million of stock comp this quarter.

Yes, Brendan, I don't think that we're going to have a consistent move of cost from continuing to discontinuing. But as you pointed out, there is a requirement to identify, to put costs into discontinued operations that those costs are allocated solely to those discontinued operations, anything that is shared stays with the continuing operations. And we will have some minor moves here and there to change what moves into discontinued operations and what's continuing. But I wouldn't say that it's going to be a systematic march each quarter. So what you're seeing is kind of ensuring that we've made those allocations as well as we possibly can. We think we've done a very good job, and we might have some minor changes over time, but nothing that would be significant would be the way I would say.

Okay. That's helpful. And then it looks like you only incurred about $14 million of maintenance CapEx year-to-date, but guidance implies $31 million in the second half at the midpoint. Can you provide any details on what might be planned to get you to the $45 million midpoint or even into the range that you're suggesting?

Yes. Some of that is just timing and seasonality. I think we'll see a heavier expense in the second half of the year, consistent with our guidance.

There's nothing planned to specific. It's just the way that we spend money sometimes is not ratable. And we're going to make sure that our towers are maintained in a way that keeps them safe and upright and appropriate for the weight and distribution that we have on them. And the way the capital ultimately plays out over the course of the year, sometimes has lumpiness to it like this year. .

Next question comes from Richard Gill with JPMorgan.

I wanted to ask about as 2 of your, I guess, base customers and national carriers get to 80%, 90% 5G coverage. Do you expect any sort of, I guess, fall off next year as second carrier reaches that level? And maybe along with that, what are you seeing in your pipeline in the business for next year?

We're not at a point right now that we think we can give or should give 2026 guidance. So we're not going to talk through what leasing activity is going to be going into 2026. Having said that, clearly, by our increase in guidance for 2025, we're seeing a higher level of activity through this year than what we expected at the beginning of the year when we gave guidance. And if you look at the first half of the year in core leasing activity, than what we expect in the second half of the year, we expect more core leasing activity in the second half than we have experienced in the first half of the year.

So we're pleased with that result. It's good to see more revenue growth than we expect. Moving our midpoint of our guidance from 4.5% growth, excluding spread churn to 4.7% growth, excluding Sprint turn is a meaningful move for us. And we think that, that positions us well for the future as we continue to focus on growing the revenues of the company.

And some of the increase, not all of it, obviously, but some of it was from the back billing. It seems like that's been also an improvement benefit from operations. Should we see more of this going forward as you continue to improve operations? Or will it be a little bit more episodic?

I think it will be episodic when we are able to raise our guidance. But as we put into the guidance that we updated today, there's a $5 million increase in other billings, which is mostly in back billing. Some of that already occurred in the year, and some of it is yet to occur based on the work we're doing to identify where we need -- where we have equipment on towers that we need to get paid for. So we are improving all of the process around how we operate as a tower company, and that's just yet another proof point that we're making some progress.

But like we said, these are pretty small moves and -- but small moves over a long period of time will generate a whole bunch of value. So I can't say that we're always going to have consistent improvements based on the activities that we are undertaking now. What I can say is that over time, we believe those improvements will come and whether the -- which I think definitionally means they're episodic.

The next question comes from Matt Niknam with Deutsche Bank.

Just one for me. Any implications on the pacing of carrier investment post recent tax reform that you've picked up in conversations with customers?

Yes. The carriers have all released their earnings and guidance, at this point, the 3 large carriers have. I think each of them said that they were going to use those tax savings to invest in their network but I think that the majority of that increase was being directed towards fiber and not towards wireless. So we have not seen thus far any significant impact from the tax reform. But it's a little early to tell because even if they're talking about utilizing most of those -- the cash flow to go into capital allocation priorities in fiber.

We're also seeing an environment in the wireless market that is a good environment saying traffic is increasing, subscribers are increasing, churn is increasing. And like I said before, when you have that type of environment, it generally leads to investment in the wireless network. So I think we will see continued investment. I think we need -- as a country, we need to see continued investment in the wireless infrastructure to withstand the demand that we're all placing on that infrastructure. But I don't -- the carriers have not said publicly that they are utilizing the tax savings to make those investments in the wireless technology -- in the wireless infrastructure.

Our last question comes from Nick Del Deo with MoffettNathanson.

Just two relatively quick ones. So you're projecting $185 million in discretionary CapEx for the year. I think in the first half, it was $66 million, which implies a pretty sharp increase in the second half. Is that from planned investments in systems or seasonality? Or are you budgeting for something else in there? And then on the $10 million reduction in G&A that you're expecting, did that primarily relate to power G&A or share G&A?

Yes. So on the capital, yes, I mean, we'll have a whole bunch of things, as I mentioned, but one of them will be land purchases. So you'll see capital for that. Some will be in systems. Some will be in sustaining CapEx that we talked about to kind of maintain our infrastructure. So it happens to be a little more back-end loaded this year, as Dan pointed out. But we also said we are stepping up our land investments. So that's what's driving that. .

On the $10 million, yes, I mean, most of that is at -- is G&A, but G&A generally, some at corporate levels, some within the tower business.

Part of this as a result, Nick, some of the actions we took last year. As you remember, we reduced our costs last year in the middle of the year. And we continue to see benefits from having taken both people and nonlabor costs out of G&A and some of it is just the continuation of all of that work we did at a real strong focus on ensuring that every incremental dollar that we're spending is doing something very positive for the business. And I'll give a lot of credit to the managers in our company who are really focused on ensuring that our cost structure stays as tight as it can while still providing the service we need to to our customers.

This concludes the question-and-answer session and today's conference call. Thank you for attending today's presentation. You may now disconnect.