Crown Castle at KeyBanc Forum: Strategic Shift to U.S. Towers

On Tuesday, 12 August 2025, Crown Castle International Corp (NYSE:CCI) took center stage at the KeyBanc Capital Markets Technology Leadership Forum. The company outlined its strategic transformation into a pure-play U.S. tower company, following the planned $8.5 billion divestiture of its fiber and small cell business. While the move promises increased operational efficiency and shareholder returns, it also involves navigating regulatory approvals and leadership changes.

Key Takeaways

• Crown Castle plans to divest its fiber and small cell business for $8.5 billion, focusing solely on the U.S. tower market.
• $6 billion from the proceeds will be allocated to debt reduction, with the remainder earmarked for share buybacks.
• Christian Hildenbrand is set to become the new CEO in September, bringing extensive industry experience.
• The company raised its tower leasing revenue guidance due to increased activity and shorter cycle times.
• Crown Castle remains committed to maintaining an investment-grade credit rating and achieving long-term growth.

Financial Results

• Divestiture Proceeds: Of the $8.5 billion from the sale, $6 billion will be used to reduce debt, with the rest allocated for share buybacks.
• Tower Leasing Guidance: Increased from $110 million to $115 million at the midpoint, reflecting heightened leasing activity.
• AFFO Guidance: Expected to reach approximately $2.3 billion from July 1 to June 2027, post-divestiture.
• Organic Growth Target: Aims for a sustainable growth rate of around 5%, excluding impacts from Sprint churn.

Operational Updates

• Regulatory Approvals: The divestiture process is on track, with regulatory approvals progressing as planned, including a standard second request from the DOJ.
• Cycle Time Improvement: Notable improvements in cycle times have been observed, with further enhancements anticipated over the coming years.
• Sprint Churn: Expected to impact revenue by approximately $20 million annually for several years.
• U.S. Cellular Impact: Minimal effect anticipated from the T-Mobile/U.S. Cellular transaction.

Future Outlook

• Long-Term Growth Strategy: Focused on sustainable growth through revenue increases, cost efficiencies, and strategic share buybacks.
• AFFO Per Share Growth: Targeted in the high single to low double-digit range.
• Leverage Ratio and Credit Rating: Aiming for a leverage ratio between 6x to 6.5x net debt to EBITDA, with a commitment to maintaining an investment-grade credit rating.
• Capital Allocation: Plans to distribute dividends at 75% to 80% of FFO.

Cost Efficiency

• Cost Savings: Anticipated through the consolidation of operations into a single business, automation, and system improvements.
• Expense Reduction: Focused on achieving efficiencies expected to materialize by late next year.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - KeyBanc Capital Markets Technology Leadership Forum:

Brandon Nispel, Analyst, KeyBank: All right. Good morning, everybody. Welcome to day two of the KeyBanc Technology Leadership Forum. My name is Brandon Nispel. I cover towers and comm services for KeyBank.

Thanks for everybody for being here this morning. This is a twenty five minute fireside chat. With us today, we have Crown Castle, Sunit Patel, CFO. Sunit, thanks for being here.

Sunit Patel, CFO, Crown Castle: Thank you. Thanks for having

Brandon Nispel, Analyst, KeyBank: Suneet, 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?

Sunit Patel, CFO, Crown Castle: 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 three for many years, where I was CFO, took the company from $1,000,000,000 to $8,000,000,000 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 spent a lot there was plenty of exposure to the wireless side. With respect to Crown, I joined the Board of Crown Castle January and then stepped off the Board in March to take on the CFO responsibility. So lots of operating experience, lots of M and A experience, wireline, wireless and happy to be here at Crown, the tower side.

Brandon Nispel, Analyst, KeyBank: Great. You’ve been with Crown for six months. What are your initial impressions? What are the opportunities? What are the challenges that you face?

What yes, go into that for us.

Sunit Patel, CFO, Crown Castle: Yes. So I’ll start with for those of you who don’t know us too well, we’re ground 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 small cell business for $8,500,000,000 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 six 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. And 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 three businesses, small cell, enterprise fiber and tower to just the tower businesses. 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.

Brandon Nispel, Analyst, KeyBank: And obviously, lot of industry experience that you bring 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?

Sunit Patel, CFO, Crown Castle: 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

Brandon Nispel, Analyst, KeyBank: think

Sunit Patel, CFO, Crown Castle: 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 and A deals.

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

Brandon Nispel, Analyst, KeyBank: Well, make life you’re new to Crown. You actually have a new executive coming in, new CEO, Christian Hildenbrand, just announced a week or two 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 Yes. Brings to the

Sunit Patel, CFO, Crown Castle: We’re quite excited to have Chris join us as CEO. He has great operating experience, most recently as 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, he understands that aspect of it. And he has what I would describe as great wireless ecosystem experience. He was at T Mobile for many years as an operating executive, rose through 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

Brandon Nispel, Analyst, KeyBank: him. Okay. So relative to sort of the strategic priorities you guys outlined before, no real change that

Sunit Patel, CFO, Crown Castle: you No change. See Yes. The focus now is just on execution, getting through this divestiture, which we expect to complete in the 2025. And as I said, being best in class operators, so really focus on that aspect, whether it’s clients or internal.

Brandon Nispel, Analyst, KeyBank: So talk to us about the divestiture. You guys have sort of six to nine months that 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?

Sunit Patel, CFO, Crown Castle: 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.

Brandon Nispel, Analyst, KeyBank: Remind us sort of where and the timing around those type of approvals?

Sunit Patel, CFO, Crown Castle: 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 expect to.

Brandon Nispel, Analyst, KeyBank: Any long poles in the 10 in terms of state approvals and utility commission approvals? Know California usually is challenging for a lot of M and A.

Sunit Patel, CFO, Crown Castle: 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.

Brandon Nispel, Analyst, KeyBank: Okay. Carve out financials, those need to be filed, I think, at some point in time. When would you expect those?

Sunit Patel, CFO, Crown Castle: Yes. I think those are going as we thought. So they should be ready to go soon later this year. So

Brandon Nispel, Analyst, KeyBank: Going along just expect to generate about $8,500,000,000 from the transaction. I don’t think there’s any tax involved tax payment involved with the transaction. Remind us what you expect to do with the proceeds?

Sunit Patel, CFO, Crown Castle: Yes. So I think, as we said, consistent upon the announcement of the transaction, we expect to use about $6,000,000,000 to pay down debt, and the balance we expect to use for share buybacks.

Brandon Nispel, Analyst, KeyBank: 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 $110,000,000 at the midpoint to $115,000,000 What are you seeing right now in terms of activity from the carriers that you didn’t necessarily expect to start the year?

Sunit Patel, CFO, Crown Castle: 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.

Brandon Nispel, Analyst, KeyBank: 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?

Sunit Patel, CFO, Crown Castle: Yes. 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.

Brandon Nispel, Analyst, KeyBank: Okay. As we take a step back and look at changes that came from the one big beautiful build, 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?

Sunit Patel, CFO, Crown Castle: 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 sort of spectrum where and then what their deployment plans are. But generally, for the long term, that’s good for the tower sector.

Brandon Nispel, Analyst, KeyBank: How do you see it sort of playing out from customer activity perspective between now and sort of the new spectrum? I think care 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?

Sunit Patel, CFO, Crown Castle: 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 is network speed, what’s when you and I do a speed test on our phone, what’s the upload, download So I think that when you look at those three things, what is clear is that wireless data demand has grown 20% to 30% a year consistently over the last ten plus years. And even if you look at projections out for the next ten years, it’s still roughly on the order of 20% a year. So I think that data demand growth and now we do have some new drivers that are not obvious in the near term how it impacts things, but it’s clear that over the longer term, it should continue to be it will 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.

Brandon Nispel, Analyst, KeyBank: Got it. One of the interesting aspects and differences between the sort of big three 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?

Sunit Patel, CFO, Crown Castle: Yes. I think, once, I can’t comment on the agreements. We don’t know about it 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, dollar by dollar basis.

But in general, we do have long standing agreements with our clients, we do like it that way.

Brandon Nispel, Analyst, KeyBank: Any I mean if we look at sort of your financials straight line revenue, I think it’s 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?

Sunit Patel, CFO, Crown Castle: Yes. So I mean straight line revenues are noncash in nature, so not really a 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 Okay. Work out that

Brandon Nispel, Analyst, KeyBank: 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?

Sunit Patel, CFO, Crown Castle: Yes. So with Sprint, I mean, we are through a big chunk of it this year. Mean going forward, we’ve said publicly, it’s about $20,000,000 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 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 did see minimal impact from that with T Mobile, plus or minus.

So don’t see much of an impact Okay.

Brandon Nispel, Analyst, KeyBank: 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 it in the past, getting to like a five percent growth rate plus on the net side, American Tower is there. How do you think about getting back to that level of organic growth?

Sunit Patel, CFO, Crown Castle: 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 that ZIP 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% year end.

Brandon Nispel, Analyst, KeyBank: 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? Your overall philosophy on the long term outlook?

Sunit Patel, CFO, Crown Castle: I mean I think that we’ll see. We typically do rediscuss it or discuss it every year. So with Chris joining on board, I’m

Brandon Nispel, Analyst, KeyBank: sure Yes. We’ll talk Okay. About Got you. As part of the transaction, fiber small cell divestiture, a lot of investors are really focused on really the operating efficiency, sort of sunk corporate costs that you might have and 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 quite 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.

Sunit Patel, CFO, Crown Castle: 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, then our AFFO from July 1 to June 2027 is about 2,300,000,000.0 plus at the midpoint. And I think that some chunk of it is from debt pay down 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, there’s 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 guide in relationship to the revenue guide being taken up. So it really I think the cost efficiencies fall in like three buckets, if you like. One is that the benefits of running one business versus three 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 and the following couple of years. So those are the three 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 AFFO guide.

Brandon Nispel, Analyst, KeyBank: So 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, of split evenly between the cost you think you can take out of the business?

Sunit Patel, CFO, Crown Castle: 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’ll see a little bigger benefit post the close of the transaction just because you’re running one business and the So I would say that the two 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’d 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 costs.

Brandon Nispel, Analyst, KeyBank: 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 one point or two on top of that for EBITDA growth of six or seven. 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?

Sunit Patel, CFO, Crown Castle: Yes. So I think the all the key points you 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 for the 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.

Brandon Nispel, Analyst, KeyBank: Speaking of interest rates, I think post transaction, you expect to be at a six to 6.5x net debt leverage ratio. Why is that the right sort of range? How did you guys come to that? And how do you expect to run the business from a leverage perspective?

Sunit Patel, CFO, Crown Castle: Yes. So I mean we’re running at the lower end of that, and I think 6% to 6.5%. Many people look at that to EBITDA. The tower business is different in that our CapEx as a percent of revenue is substantially lower than the Carrier University. Our 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 and Poor’s reaffirmed our BBB rating. 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.

Brandon Nispel, Analyst, KeyBank: 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.

Sunit Patel, CFO, Crown Castle: Yes. Thank you. Thank you, everyone.

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