Crown Castle Inc. (CCI) Earnings

Management highlights

### Completed Strategic Transaction - Closed the sale of the small cell and fiber businesses on May 1, 2026, becoming the only publicly traded pure-play U.S. tower operator - Deployed $8.4 billion in net sale proceeds per the capital allocation framework: repurchased $1 billion in shares (11 million shares retired at an average price of $88.66, cutting annual dividend obligations by $47 million) and repaid more than $7.2 billion in debt, including $5 billion in floating rate debt - Ended Q2 2026 with a 6.3x net debt-to-EBITDA leverage ratio, within the target 6.0x to 6.5x investment-grade range, and reduced revolving credit facility capacity from $7 billion to $4.5 billion to align with the stand-alone tower business ### Core Strategic Priorities - Increase purchases of land ownership under existing towers to improve margins, increase asset operational control, and speed up customer delivery, targeting closing the ~11% land ownership gap vs. peer competitors - Invest in automated, streamlined systems and processes to enable faster, better decision-making and operational efficiency - Reduce process cycle times and improve overall customer experience to win more competitive lease opportunities ### Growth Drivers - Growing demand for distributed edge compute infrastructure: Crown Castle's nationwide tower portfolio has existing power and connectivity to support move-in ready deployments of less than 0.2 megawatts, addressing a market backlog for large data centers caused by construction and power delivery delays; trials are ongoing with multiple edge providers for high-value applications including cybersecurity, fraud detection, and real-time data processing - Strong projected growth in U.S. mobile data demand, which is expected to more than double from 25GB to 52GB per smartphone monthly over the next five years, driven by AI-enabled applications and a projected three-fold increase in uplink data from connected devices - Upcoming large spectrum pipeline: the FCC plans to make at least 800MHz of additional spectrum available for commercial use by 2030, with 165MHz scheduled for auction between 2026 and 2027; higher-frequency spectrum in the pipeline will drive network densification, increasing demand for tower capacity - Satellite technology is expected to be a complementary, not replacement, technology for terrestrial towers: satellites lack reliable indoor coverage (where 90% of mobile usage occurs), have much weaker signal strength, limited spectrum capacity, and lower user density support, so satellite network expansion will likely increase demand for terrestrial tower infrastructure ### DISH Claim Update - After DISH Wireless filed for bankruptcy following the EchoStar spectrum sale to AT&T and SpaceX, Crown Castle is pursuing a $3.5 billion contractual claim in bankruptcy court - The FCC required a $2.4 billion bankruptcy-remote escrow account for vendor claims that is outside the standard bankruptcy estate waterfall, providing a dedicated source of recovery for infrastructure vendors; Crown Castle has been appointed to the unsecured creditor committee and is contesting DISH's aggressive fast-track bankruptcy process to ensure full consideration of creditor claims

Guidance

- Increased full-year 2026 site rental revenue guidance by $5 million at the midpoint, driven by higher other billings - Maintained full-year 2026 adjusted EBITDA guidance, as higher revenue and $15 million in expected cost savings are offset by a $20 million decrease in services contribution from lower expected third-quarter services activity - Increased full-year 2026 AFFO guidance by $5 million at the midpoint, driven by a $5 million decrease in expected interest expense from early debt repayment and share repurchases - Full-year 2026 organic growth is projected at 3.4% (excluding Sprint and DISH impacts), up from 3.3% prior guidance; organic growth rises to 3.6% when DISH revenues are excluded from the prior-year comparison, up from 3.5% prior guidance - 2026 is expected to be the low point for organic growth, with >90% of 2026 organic growth already contracted as of Q2 end, up from 80% at the start of the year - Full-year 2026 straight-line revenue guidance remains unchanged at -$60 million at the midpoint - The $15 million full-year 2026 cost reduction consists of a $10 million decrease in site rental cost of operations and $5 million decrease in SG&A (excluding stock-based compensation), driven by ground lease buyouts and operational efficiency gains - Discretionary capital expenditure guidance remains unchanged at $200 million ($160 million net of prepaid rent) at the midpoint - Management reaffirms the target of expanding EBITDA margins by 200 basis points over the next year, with cost savings and margin expansion programs on track to deliver through 2028

Segment performance

Following the completed sale of its small cell and fiber businesses on May 1, 2026, Crown Castle is now a pure-play U.S. tower operator, with all financial results reported for the tower segment only. Q2 2026 organic site rental growth (excluding Sprint cancellations and DISH terminations) was 3.9% ($38 million), rising to 4.2% when DISH revenues are excluded from the prior-year comparison. Organic growth excluding other billing increases was 3.6%. Site rental revenues were offset by $5 million in Sprint cancellations and a $25 million non-cash decrease in straight-line revenues and prepaid rent amortization. Q2 2026 AFFO benefited from a $35 million year-over-year decrease in interest expense and a one-time $14 million increase in interest income from $8.4 billion in net sale proceeds, which is not expected to recur in H2 2026. Q2 selling, general and administrative costs included a one-time $7 million non-recurring increase in stock-based compensation that does not impact adjusted EBITDA or AFFO.

Risks & headwinds

- DISH has attempted to assert that it can implement an 85% haircut to the net present value of its remaining lease obligations to Crown Castle; Crown Castle's legal position is that the contract was canceled for nonpayment with accelerated claims, so the 15% bankruptcy cap does not apply, and the final outcome of the claim will be determined by bankruptcy court proceedings, with uncertainty over the size and timing of recovery from the $2.4 billion escrow account - There is near-term softness in network services activity driven by leadership changes, strategic shifts, and layoffs at major U.S. mobile network operators that have slowed decision-making on projects - Higher frequency future spectrum allocations for 6G are still in early planning, with uncertainty over the timing and scope of deployment on terrestrial towers - The edge compute opportunity is still in the trial phase, with uncertainty about how quickly it can scale into a meaningful revenue source - There is ongoing industry uncertainty about the long-term impact of satellite mobile services on terrestrial tower demand, even though management expects it to be complementary

Analyst Q&A

• Q: Why is 2026 expected to be the low point for organic growth, and does lower third-quarter services activity indicate weaker customer leasing demand? /

  A: There is no direct link between lower services activity and leasing demand, and full-year leasing guidance of $60-$70 million remains unchanged. The conviction that 2026 is the low point is based on multiple factors: already contracted visibility for 90% of 2026 growth, upcoming AT&T 600MHz spectrum deployment that will drive midterm growth, emerging trials for edge compute infrastructure that is expected to scale into new revenue, projected long-term doubling of mobile data demand from AI applications, and 800MHz of new spectrum scheduled for auction starting in 2027 that will drive densification. (372 characters)

• Q: When is the $2.4 billion DISH vendor escrow funded, who owns DISH's abandoned equipment on Crown's towers, and what is the timeline for the bankruptcy claim process? /

  A: Escrow funding is contingent on closing of the AT&T-EchoStar spectrum transaction, expected in late August 2026. Ownership of the abandoned DISH equipment will be determined as part of the bankruptcy proceedings, as DISH has not removed it despite requests. The original lawsuit against DISH is suspended during bankruptcy, which is moving faster than a traditional civil suit. Crown Castle was appointed to the unsecured creditor committee, and has successfully contested DISH's overly aggressive fast-track timeline to ensure full consideration of creditor claims. (398 characters)

• Q: What is Crown Castle's framework for ground lease buyouts, and what are the current limits for edge compute power at tower sites? /

  A: Crown plans to gradually increase ground lease buyout investment in a disciplined manner, only pursuing acquisitions that generate returns well above the firm's cost of capital. For edge deployments, the 0.2 megawatt limit is a general guideline based on existing available power at most sites; most sites can currently support tens to low hundreds of kilowatts of power for smaller distributed edge workloads without major new capital investment, with incremental power upgrades possible for larger demand if the returns justify the investment. (361 characters)

• Q: What is Crown Castle's updated capital allocation priority following the completion of the initial $1 billion share repurchase? /

  A: The capital allocation framework has not changed. Priority is first given to funding the sacrosanct dividend, then funding high-return capital expenditure including ground lease buyouts. Next, excess cash is used to maintain leverage within the 6-6.5x net debt to EBITDA target range, and any remaining excess cash will be used for share repurchases. Management remains disciplined about only deploying capital to high risk-adjusted return opportunities. (299 characters)