The paragraph provides an introduction to the Crown Castle Fourth Quarter 2024 Earnings Conference Call, mentioning participants' roles and instructions for the call. Kris Hinson, Vice President of Corporate Finance and Treasurer, introduces himself and other key company figures on the call, including CEO Steven Moskowitz and CFO Dan Schlanger. The discussion will focus on the fourth quarter 2024 results, with references to supplemental materials available on the company's website. The call involves forward-looking statements and non-GAAP financial measures, with related reconciliations accessible online. Furthermore, CEO Steven Moskowitz announces the significant news that Crown Castle has agreed to sell its Fiber segment to EQT Active Core Infrastructure fund and Zayo Group Holdings.

EQT will acquire Crown Castle's small cell business, and Zayo will acquire its commercial enterprise fiber business, with the transactions expected to close in the first half of 2026, pending regulatory approvals. This sale concludes Crown Castle’s strategic review of its fiber assets, aiming to maximize shareholder value. The decision was made to focus more on Crown Castle's tower business, as the fiber solutions business, despite its valuable assets, has a different model and customer base requiring distinct operational capabilities.

The paragraph discusses a company's decision to separate its tower and fiber businesses, believing that operating them separately will create more value. After selling the Fiber segment, the company plans to use the cash proceeds to repay debt, strengthen its financial position, and return capital to shareholders through dividends and share repurchases. This move aims to enhance financial flexibility and focus on growing the U.S. tower business as a standalone entity. The company expresses gratitude to employees, especially those in the fiber division, for their efforts during this transition. Additionally, the company is shifting its operational strategy to prioritize free cash flow generation over revenue growth, increasing project hurdle rates, and improving capital spending efficiency, with an updated forecast for 2024.

The paragraph highlights Crown Castle's strong performance in 2024, emphasizing successful cost reductions of $100 million in operating costs and $200 million in net CapEx, surpassing revised forecasts. The company achieved 4.5% organic growth in towers, 12% in small cells, and 2% in fiber solutions, with small cell growth driven by adding over 12,500 revenue-generating nodes, the highest in the company's history. The text acknowledges the contribution of team members and advisors in completing a transaction, underscoring the company's ability to deliver for customers and shareholders amidst operational changes.

The paragraph discusses the company's enhancements in reporting organic growth for better investor transparency, highlighting separate reporting for recurring and non-recurring revenue. Growth figures are noted for towers, small cells, and fiber solutions. The company emphasizes improving disclosures for clearer understanding of business performance. Additionally, it mentions a $5 billion goodwill impairment charge for the Fiber Reporting segment due to a reevaluation of small cell development plans and higher capital costs, resulting in no remaining goodwill for this segment.

The company's 2025 outlook excludes its Fiber segment results, which will be categorized under discontinued operations, while operations for the segment continue as usual. The focus is on the tower segment, where organic growth of 4.5% is anticipated, excluding Sprint consolidation churn, as customer activity levels from 2024 are expected to persist. The growth is driven by 5G overlay work and network densification by wireless carriers. However, $205 million in Sprint-related churn will affect growth, with additional churn below 1% expected. Long-term churn, excluding Sprint, is projected to be between 0.5% and 1.5%, as remaining Sprint leases naturally conclude between 2026 and 2034.

In 2025, the company plans to increase capital spending, primarily investing in land acquisition for their towers to secure future revenue and improve margins. They aim to enhance project management and collaborate more closely with customers to expedite installation processes and make informed decisions. Their priorities include customer service and operational excellence by refining processes, leveraging technology, and enhancing automation to benefit both the company and customers.

The paragraph outlines Crown Castle's strategic priorities for improving profitability and maximizing shareholder value as it transitions to a pure-play U.S. tower company. The company plans to achieve this by leveraging its scale and operational efficiency, securing land under its towers, and practicing strong financial discipline. Following the sale of its fiber and small cell businesses, anticipated to close in the first half of 2026, Crown Castle will focus on free cash flow generation and financial flexibility. This includes setting a quarterly dividend at approximately 75% to 80% of AFFO excluding amortization of prepaid rent and reducing the annual dividend to about $4.25 per share starting in the second quarter of 2025. The company also plans to allocate $150 million to $250 million annually for organic capital expenditures, including land purchases, selective new builds, and technological investments.

The paragraph outlines Crown Castle's post-closing plans following a fiber transaction. The company aims to maintain an investment-grade credit rating by using proceeds to repay debt and target leverage between 6 and 6.5 times. It plans a $3 billion share repurchase program by the first half of 2026. The capital allocation strategy seeks to ensure near-term capital returns and financial flexibility for share repurchases and growth opportunities. As a pure-play U.S. tower company, Crown Castle expects to enhance shareholder value by capitalizing on positive market trends in wireless infrastructure driven by increased mobile data consumption and significant network investments. The paragraph concludes by acknowledging employees' contributions to achieving strong 2024 results, marked by revenue growth and reduced operating costs and capital expenditures.

The paragraph announces that Dan Schlanger is leaving Crown Castle after nine years, with gratitude expressed for his contributions, especially over the past year. As he discusses the company's recent performance, he mentions that Crown Castle delivered strong fourth quarter and full-year 2024 results, with 4.5% organic growth. However, unexpected advisory fees of $10 million negatively impacted the results. Looking ahead to 2025, the company plans to sell its Fiber segment, which will consequently be reported as discontinued operations. The 2025 outlook excludes contributions from the Fiber segment, except in net income and net income per share figures.

The paragraph outlines Crown Castle's financial outlook and adjustments related to its towers and fiber business sale, indicating that financing expenses will remain with the towers and that SG&A expenses have been allocated for outlook purposes. The anticipated close of the fiber business sale will impact metrics like adjusted EBITDA and AFFO, prompting adjustments in the 2025 outlook. The company expects to repay $6 billion in debt, leading to a $235 million reduction in interest expense, alongside a $310 million improvement from revenue growth and adjusted SG&A costs, resulting in an estimated annual AFFO of $2.3 billion post-transaction. For 2025, Crown Castle projects stable demand with a 4.5% tower organic growth rate, stemming from core leasing, escalators, and churn, while noting that core leasing has previously included non-recurring elements like tenant cancellation fees.

The paragraph outlines changes in the accounting for revenues, particularly back-billings and non-recurring revenues, including impacts from Sprint cancellations and early termination payments. The company anticipates $110 million in core tower leasing activity, contributing $175 million to Site Rental Billings, excluding Sprint cancellations. Despite growth in leasing, site rental revenues are negatively impacted by Sprint cancellations and reduced non-cash revenues. The company aims to generate enough AFFO to support a dividend target of $4.25 per share, aligning with a dividend policy of 75%-80% of annual AFFO. The company's strong liquidity and strategic capital structure are intended to maintain its investment-grade rating after selling the fiber business. The company expects continued strong performance in 2025 due to rising mobile data demand and expresses confidence in its tower business model.

The paragraph is a part of a discussion during a conference call, where a representative of Crown Castle reflects on the company's strategic decisions and achievements. The company is now positioned as the only public pure-play U.S. tower company following the sale of its fiber segment, which is believed to be beneficial for shareholder value. The speaker expresses gratitude to the Crown Castle team for their hard work over the past nine years and announces an opening for a Q&A session. During the Q&A, Simon Flannery from Morgan Stanley questions Crown Castle's interest in international markets for macro towers, particularly in Europe, and inquires about the company's expected financial growth, specifically concerning AFFO per share and dividend per share.

In this paragraph, Steven Moskowitz discusses the focus on the U.S. tower business and the importance of delivering quality products to two buyers in the fiber sector over the next 12 to 15 months. He mentions that while they are not actively seeking opportunities overseas, they remain open to evaluating any opportunities that come their way to create shareholder value. Simon Flannery and Daniel K. Schlanger discuss the company's 2025 guidance, predicting 4.5% growth in the tower business, and aligning dividend growth with AFFO per share growth over time. Finally, Michael Rollins from Citi expresses gratitude and good wishes to Daniel K. Schlanger.

In the paragraph, Michael Rollins asks about the leasing activities and capital allocation related to Crown Castle's domestic towers and fiber business. Steven Moskowitz responds by noting a sequential increase in application activities from Q4 onwards, primarily driven by carriers deploying mid-band spectrum and upgrading equipment for 5G initiatives. Most activities involve overlays rather than new installations, with potential for more colocations or first-time installs later in the year. Moskowitz emphasizes the stability and predictability of revenue due to comprehensive master lease agreements despite changes in application activities.

In the paragraph, several individuals, including Michael Rollins and Ric Prentiss, engage in a discussion with Daniel K. Schlanger and Steven Moskowitz about the company's financial outlook and strategic decisions. Schlanger explains that the company expects the free cash flow from the Fiber segment in 2025 to be similar to 2024, projecting around $250 million. Prentiss acknowledges the achievement of business goals and inquires about the possibility of keeping a stake in small cells, highlighting interest in network densification. Moskowitz responds that they evaluated various offers and structures from different types of buyers, implying complexity in maintaining a stake in small cells. The conversation revolves around operational expectations and strategic assessments in the business.

The paragraph discusses the sale of a small cell business, highlighting that the board decided to sell it to monetize the asset and enhance the value of the U.S. tower business for shareholders. Ric Prentiss inquires about the transaction, revealing it as a single purchase involving two parties with a total value of $4.25 billion for the fiber side and the small cell business. The transaction requires regulatory approval, expected to close within 12 to 15 months. Lastly, Steven Moskowitz mentions that preliminary discussions with rating agencies suggest that maintaining a leverage level between 6 and 6.5 times should allow the company to retain its investment-grade credit status.

The paragraph discusses the company's capital allocation strategy, particularly focusing on a $3 billion share repurchase plan. The priority for capital allocation is on capital expenditures (CapEx) that maximize investment returns, followed by debt reduction, dividend payments, and share buybacks. Decision-making on these allocations involves a capital committee within the management team, a finance committee at the Board level, and regular discussions to ensure a disciplined approach. Brendan Lynch from Barclays inquires about the timeframe for repurchases versus options like special dividends, and Steven Moskowitz and Daniel K. Schlanger explain that decisions will be made with shareholders' best interests in mind, subject to Board approval.

The paragraph is part of a discussion on financial strategies, particularly focusing on dividend policies and capital allocation. It mentions the company's preference for regular dividends and share repurchases over special dividends as a way to maximize shareholder value. The conversation then shifts to addressing Sprint's customer churn, which is expected to be a specific component of the overall 1% to 2% churn rate, accounting for about 40 to 50 basis points starting in 2026. Additionally, Brendan Lynch and Nick Del Deo express their appreciation and best wishes to Daniel K. Schlanger for his future endeavors, indicating a farewell to him.

Nick Del Deo asks Steven Moskowitz about Crown Castle's strategy for increasing market share in the cell tower business, highlighting the perception that cell tower placement is often non-competitive due to geographic exclusivity. Moskowitz explains that Crown Castle aims to maximize revenue share by delivering superior service, making them the preferred choice for major and regional wireless carriers when selecting sites. He emphasizes the importance of having strong relationships, rapid and quality service delivery, and being seen as an essential player in the industry. Additionally, Moskowitz mentions plans to re-engage in building new towers and participating in mergers and acquisitions to cater to customer requests and expand in specific markets where Crown Castle has economies of scale.

In this discussion, executives are exploring potential agreements and opportunities that could benefit shareholders. Nick Del Deo asks about the elimination of unallocated General and Administrative (G&A) expenses in the context of transitioning to an Adjusted Funds From Operations (AFFO) model. Daniel K. Schlanger clarifies that the reduction in unallocated G&A is not specifically detailed yet, as it depends on revenue growth, cost reductions, and interest expenses. Steven Moskowitz emphasizes the opportunities for employees and cost management strategies as they collaborate with EQT and Zayo. Both are committed to updating stakeholders as decisions are made post-closing.

Jim Schneider from Goldman Sachs asks about the company's strategy for organic growth in the U.S. tower business, particularly in rural areas. He inquires about the company's aggressive approach toward tower building opportunities and questions the allocation of the $150 million to $200 million in future capital expenditures. Steven Moskowitz seeks clarification on the focus of the question, while Daniel K. Schlanger confirms interest in rural opportunities. Moskowitz highlights that the company is evaluating opportunities in rural markets, considering carrier demand and co-location potential. They are confident in their capacity for site acquisition, zoning, permitting, and construction, but emphasize the need to assess the economic feasibility of investments for both short-term and long-term benefits.

The paragraph discusses a company's capital allocation and operational initiatives. A significant portion of the capital will be invested in land to secure assets, facilitate faster colocation, and improve margins. The remaining capital will be used for corporate needs, such as system improvements. Brandon Nispel from KeyBanc Capital Markets asks about operational initiatives and long-term EBITDA margin projections. Steven Moskowitz responds that while it's difficult to quantify future EBITDA margins, the company intends to increase them by focusing on real estate investments. He highlights efforts led by Kathy Pache to address issues with landlords demanding higher rents at the end of lease terms, aiming to improve margins through strategic capital investments.

The paragraph discusses efforts to improve operational efficiency and margins by leveraging economies of scale, optimizing processes, and utilizing technology. The company is focusing on improving application-to-installation workflows, digitizing assets using drones, and exploring AI tools for asset management. These initiatives aim to enhance data accuracy, reduce error rates, and expedite deployments, ultimately accelerating revenue. The dialogue concludes with a speaker transitioning to a question about tax consequences related to a sale.

In the discussed paragraph, Daniel K. Schlanger addresses questions about the company's AFFO (Adjusted Funds From Operations) bridge and outlines certain financial impacts. He confirms that the 2024 financials include a $40 million non-recurring advisory cost. The company managed to remove about $100 million in annualized costs, with $35 million being incremental by 2025, although these savings will be offset by regular cost structures. He acknowledges the broad range for AFFO growth projections ($250 million to $370 million) and clarifies that the range is intentionally wide to avoid precise predictions for 2026, focusing instead on giving a general post-transaction outlook. The session ends with Batya Levi and the operator concluding the conference.

This summary was generated with AI and may contain some inaccuracies.