Wells Fargo 2017 Media & Telecom Conference
Crown Castle is bullish on its anticipated performance in 2018. The towerco is focused on the integration of Lightower Fiber and believes the more than $7 billion deal puts it in a good position to help carriers densify their networks with small cells. Crown Castle CFO Dan Schlanger spoke with Wells Fargo tower analyst Jennifer Fritzsche Tuesday at the Wells Fargo 2017 Media & Telecom Conference. Schlanger touched on several topics — such as the towerco outlook for next year, the Lightower acquisition, infrastructure deployment challenges, FirstNet and the stopped Sprint-T-Mobile deal — during the half-hour discussion.
Tower Business: “There is so much data demand happening and that drives our business. New demand onto macro towers and onto small cells will be very robust over the next few years.”Crown is receiving more inquiries regarding small cells and that leasing is growing, and “becoming a bigger portion” of a carrier’s network spend, said Schlanger. Crown believes small cells are co-locatable, “not necessarily on the same pole but on the fiber.” Some thirty percent of its business is co-location with “75,000 nodes on existing fiber.” The majority, 70 percent, remains macro towers.
Lightower: The benefit of closing the deal early is “we get revenue and cash flow” earlier than planned, said Schlanger. “In terms of integration, we get to move faster but it will take quite some time.” Asked what excited the towerco about Lightower most, Schlanger said: “What interested us was the asset base, 32,000 miles of dense, deep fiber in the most populated areas of the U.S.,” including Boston, New York and Washington, D.C. Crown is servicing “multi-location-high-bandwidth customers” and that requires lots of fiber, either deep, dark fiber or wavelength.” Overall the deal brings Crown a “better return with lower churn.”
Infrastructure Deployment: Asked about municipalities that ban infrastructure siting, Schlanger said: “The most difficult part” of deploying small cells is getting vertical infrastructure in place, “getting a pole up with an antenna and an RF point. Once you start talking about putting something there that was not there before, and people can see it.” Crown spends a lot of time explaining to municipalities what it can do to ease the process and how it has worked in other towns. “We can do it in many geographies at the same time. Customers ask us if we can do it and we say yes. That doesn’t mean we are not subject to a moratorium. We are.”
FirstNet: Fritzsche said it sounds like AT&T “needs to touch 47,000 towers in phase one of the buildout.” The FirstNet build is not in Crown’s 2018 guidance, according to Schlanger, because “it’s not clear how it will play out for us. All of that has to be determined,” including whether AT&T would be considered a new tenant on a tower or get an amendment on a current lease deal. We “need to have those conversations. We know it will be beneficial,” he said. Asked whether he foresees AT&T using all 96,000 existing public towers, Schlanger said no, “the shared infrastructure makes it less expensive for the carrier.”
Sprint-T-Mobile: “Over the near-term we didn’t see a lot of impact” because Crown “has long-term five-year contracts with both.”
November 8, 2017