Across the board, mobile network operators are reducing capital expenditure guidance as the industry collectively reaches something of a midpoint in the 5G cycle. In the US market, for instance, Verizon is cutting planned 2024 capex to between $17 billion and $17.5 billion from $18.8 billion in 2023 and $23.2 billion in 2022; this mirrors industry-wide declines in RAN investment. But, in an earnings call this week, Crown Castle Interim CEO Tony Melone sees some of the mistakes of the 4G era being repeated.
In its Q4 2023 earnings call on Jan. 25, Melone said that 4G deployments were initially “not sufficient to meet the promised performance levels of that technology…I think a similar dynamic is in play with 5G.”
As for what that means for Crown’s fiber, small cell and tower businesses, “The remaining densification required to deliver on the promise of 5G performance will drive not only robust tower growth but also significant demand for small cells,” Melone said.
Crown Castle CFO Dan Schlanger said the company saw a 6% growth in its small cell business last year resulting from 8,000 new nodes; an additional 2,000 nodes were built last year and will begin generating revenue in the first quarter of 2024, he said.
In full year 2023, Crown’s site rental revenues were up 4% to $6.5 billion compared to the previous year, but the company is guiding for a midpoint decrease of 2% for full year 2024. Net income for full year 2023 was $1.5 billion, down from $1.7 billion in 2022.
“We continue to forecast tower activity levels consistent with the back half of 2023, as well as accelerating small cell growth,” Schlanger said on the earnings call. He also said the fiber business saw 3% growth in the first quarter of 2023, and is expected to grow another 3% in 2024. EBITDA was up 2% for 2023 to $4.4 billion.
Fiber business review
Additionally on the fiber front, Crown Castle is conducting a “strategic and operating review” of that business line “with the goal of enhancing stockholder value.” The company’s board is also on the hunt for a permanent CEO.
In response to question asking for feedback on whether the goal is to hire a new CEO to guide the fiber-focused strategic review or finish that then bring in a CEO to execute the board direction, Schlanger said both processes are “underway. I think it’s too early to speculate on how it will play out…I think the two will naturally come together and provide us clarity in terms of how we move forward.”
