Crown Castle (NYSE:CCI) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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Summary
Crown Castle reported solid first-quarter results and maintained its full-year 2026 guidance as it transitions to a standalone tower business.
The company is on track to conclude the sale of its small cell and fiber businesses by mid-2026, having received most necessary approvals.
Crown Castle is pursuing legal action against Dish Network for breach of contract, aiming to recover payments after Dish defaulted on payment obligations.
Operational efficiency improvements include a $65 million reduction in annualized run rate costs through restructuring.
The company anticipates increased capital expenditures to acquire more land under its towers and invest in systems to enhance operational efficiency.
Future growth opportunities include potential new tower builds, Edge computing partnerships, and focusing on organic growth driven by mobile data demand.
The dividend will remain unchanged, with a focus on maintaining an investment-grade rating and executing share repurchases and debt repayment post small cell and fiber business sale.
Full Transcript
OPERATOR
Good day and welcome to The Crown Castle first quarter 2026 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Hinson, Vice President of Corporate Finance and Treasurer. Please go ahead.
Chris Hinson (Vice President of Corporate Finance and Treasurer)
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 Hillebrandt, 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@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 Investor section of the company’s website@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.
Chris Hillebrandt (President and Chief Executive Officer)
Thank you Chris 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 standalone tower business and pursue our goal of becoming a best in class US Tower operator. To maximize shareholder value and to reach our goal of becoming best in class, we are focused on three 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 per 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 US 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 MHz of new spectrum auctions beginning in 2027. I believe our focus on becoming a best in class US 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 concluding the sale of the small cell and 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.
Sunit Patel (Chief Financial Officer)
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 disc terminations and a 26 million decrease in non cash 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 non labor costs. These lower costs were largely due to timing and seasonality, so 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 four, our full year outlook remains unchanged when excluding DISH revenues from prior year site rental billings. 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 of building Our full year 2026 outlook will 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 6.5 times. 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 or 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 standalone tire business and pursue our goal of becoming a best in class US Tower operator. With that operator, I’d like to open
OPERATOR
the line for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press Star then one on your touchtone phone. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. At this time we will pause momentarily to assemble our roster. The first question comes from Rick Prentice with Raymond James.
Rick Prentice (Equity Analyst at Raymond James)
Please go ahead. Thanks. Good afternoon everybody. Hey Rick. Hello. Hey, 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 1st closing. Can you update us as far as is that hopeful? What would be the process and seems to make sense but if you could just comment on that FCC letter that saying maybe you could split it into and the vast majority of the value seems to be in domestic.
Chris Hillebrandt (President and Chief Executive Officer)
Yeah Rick, maybe I just start by saying, you know, 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.
Rick Prentice (Equity Analyst at Raymond James)
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, about 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.
Chris Hillebrandt (President and Chief Executive Officer)
Rick, you almost answered the question for me, so thanks for the context there. Yeah, 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 one 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.
Rick Prentice (Equity Analyst at Raymond James)
And then so you think of the 6G you guys might exceed or be similar depending on those cycles too, 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 MHz of spectrum being released starting in 2027 in the auctions and what it might be for both Crown and the industry as a whole. Makes sense. Thanks guys.
Chris Hillebrandt (President and Chief Executive Officer)
Appreciate it. Thank you, Rick.
OPERATOR
The next question comes from Matt Nicknaum with Truist.
Matt Nicknaum (Equity Analyst at Truist)
Hey guys, thanks so much for taking the questions. I will have two 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 bigger picture question. Has the dynamic of your carrier customers partnering with satellite players for connectivity in remote areas affected at all how they were approaching network and site planning in conversations with yourself?
Chris Hillebrandt (President and Chief Executive Officer)
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 two 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 co-locations 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.
OPERATOR
Just if I can follow up quickly, Chris, does the mix of applications you’re seeing between amendments and new colos, …
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