Crown Castle said its customers are accelerating the selection and identification of new small cell locations in high-traffic locations
Crown Castle is seeing lower activity in the tower business as operators in the U.S. have already significantly reduced network spending, the company’s CEO, Jay Brown, said in a conference call with investors.
“Across each U.S. wireless generation, the deployment of new spectrum, followed by cell site densification has increased network capacity and enabled exponential mobile data demand growth. For us this has played out with an initial surge in tower activity to build out the latest generation network, followed by a consistent level of activity over a long period of time to support our customers,” Brown said.
The executive noted that as a part of the most recent upgrade to 5G, the U.S. wireless carriers spent more than $100 billion to acquire spectrum from 2020 to 2022. That drove record tower activity levels, Brown said. “I believe this initial surge in tower activity has ended. In the second quarter, we saw tower activity levels slowed significantly. As a result, we are decreasing our 2023 outlook primarily, as a result of lower tower services margin,” he added.
Brown also said that the company’s tower organic revenue growth outlook remains at 5% despite this lower level of activity. “The resilience of our tower revenues is the result of our decision to pursue holistic long-term agreements with each of our major customers,” he said.
He went on to say that the company still anticipates double-digit annual revenue growth in its small cell business over the next several years, as it executes on its existing small cell backlog of 60,000 nodes.
According to Brown, Crown Castle’s customers are now accelerating the selection and identification of new small cell locations to densify portions of their networks that have experienced the most traffic, as the initial 5G surge in tower activity has passed.
“The results of our early move into establishing a leading portfolio provide us with a platform for continued growth throughout the 5G era. With our diversified asset base, we have positioned ourselves to benefit from carrier activity on towers and small cells,” the executive said.
The company said that site rental revenues grew 10%, or $161 million, from the second quarter of 2022 to the second quarter 2023.
Crown Castle recorded a net income of $455 million in Q2, compared to $421 million for the second quarter 2022.
Crown Castle owns, operates and leases more than 40,000 cell towers and approximately 85,000 route miles of fiber supporting small cells and fiber solutions.
