Crown Castle Inc. (CCI) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Q2 2026 Crown Castle Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Hamilton West, Vice President of Corporate Finance and Treasurer. Please go ahead.

Thank you, Nick, and good afternoon, everyone. Thank you for joining us today as we discuss our second quarter 2026 results. With me on the call this afternoon are Chris Hillabrant, Crown Castle's President and Chief Executive Officer; and Sunit Patel, Ground Castle's Chief Financial Officer. To aid the discussion, we have posted supplemental materials in the Investors section of our website at 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 section of the company's SEC filings. Our statements are made today as of July 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 Investors section of the company's website at crowncastle.com. With that, let me turn the call over to Chris.

Thank you, Hamilton, and good afternoon, everyone. We delivered solid second quarter results, increased our guidance for full year 2026 AFFO and continue to execute against our best-in-class U.S. tower strategy. On May 1, we completed an important milestone for Crown Castle and became the only publicly traded pure-play U.S. tower operator by successfully closing the sale of our small cell and fiber businesses. I want to thank our Crown Castle teammates for the determination and resilience they have shown as we quickly completed this transition and began the next phase of transforming Crown Castle into a best-in-class U.S. tower operator. Your hard work is making a difference. We now expect to drive additional cost savings this year as we continue to drive operational excellence. Longer term, we will continue to transform Crown Castle, enhancing our operational efficiency and effectiveness by focusing on the following areas: First, we continue to increase land ownership purchases under our towers, which improves margins, increases operational control of our assets and allows us to deliver more quickly for our customers. Second, we are investing in systems that streamline and automate processes, enabling our teammates to make better and faster business decisions. Third, we continue to improve cycle times and our customer experience. In the quarter, we also made progress towards recovering the remaining payments owed under our original DISH agreement. In May, the FCC approved the EchoStar Spectrum sale transaction to AT&T and SpaceX, but made the transactions contingent on the implementation of a $2.4 billion escrow account for the benefit of its vendors. We applaud Chairman Carr for his efforts to advance spectrum policy to maintain U.S. global telecom leadership while implementing protections for U.S. wireless infrastructure providers. Now the DISH Wireless has filed for bankruptcy, we will be pursuing our $3.5 billion contractual claim in the bankruptcy court. The bankruptcy remote escrow account provides a source of funding that is not subject to the normal bankruptcy estate waterfall and is intended to satisfy network-related obligations, including certain infrastructure claims. As I step back and look at the discussions we are having with our customers, I am excited about the multiple demand drivers that we will expect will benefit Crown Castle's future growth, including increasing deployment of edge compute infrastructure, continued growth in mobile data demand and additional spectrum coming to market. As I mentioned last quarter, we have initiated several trials with edge data center providers and continue to see growing interest in how our portfolio can support distributed compute deployments. We believe the edge opportunity is gaining momentum as demand for storage and compute continues to accelerate, while many large data center deployments face multiyear construction and power delivery delays. Crown Castle is positioned well to serve this demand in a capital-efficient manner through its nationwide network of tower sites, each with existing power and broadband connectivity and can provide distributed move-in ready locations for deployments reclining less than 0.2 megawatts. We are seeing interest from businesses seeking to deploy scale distributed infrastructure to support inference workloads and other high value-add applications, including cybersecurity, fraud detection and real-time data processing. Additionally, the industry continues to see strong growth in mobile data demand. According to Ericsson, U.S. mobile data consumption for smartphone is expected to more than double over the next 5 years from 25 to 52 gigabits per month, driven in part by AI-enabled applications and a projected threefold increase in uplink traffic as devices increasingly transmit video, sensor and telemetry data to the cloud. We believe the industry will benefit from an infrastructure demand cycle as Chairman Carr and the FCC advance what has been described as the largest spectrum pipeline to date with at least 800 megahertz of additional spectrum slated to be made available for commercial wireless use over the coming years. In addition to the recently announced EchoStar Spectrum transactions, the FCC has announced its plan to auction at least 165 megahertz between 2026 and 2027. Shifting to a topic that has been top of mind for many investors lately, satellites is a potential alternative to terrestrial networks. Let me summarize the key reasons why we believe that terrestrial networks will continue to be an essential for mobile phone service based on reports available on the WIA website and analysis from sell-side research. First, satellite services generally require a clear line of sight to the sky and provide weaker indoor coverage, which is significant given approximately 90% of mobile usage occurs indoors or in vehicles. Because satellite signals travel hundreds of miles farther than the terrestrial connections, their signal strength is approximately 10,000x weaker, challenging performance in dense environments where buildings, obstructions and interference can further degrade the signal. To compensate for the weaker signal, phones must operate at higher transmit power levels, increasing battery consumption. Second, satellite operators have access to significantly less spectrum. Direct-to-device satellite services generally have access to only tens of megahertz of spectrum, while each major U.S. wireless carrier controls hundreds of megahertz. Third, a typical satellite beam covers approximately 100 to 600 square miles versus roughly 3 to 20 square miles for a terrestrial cell site, requiring substantially more users to share the same spectrum resources. This means that for every megahertz of spectrum, terrestrial cell sites can support 30x more users. More importantly, as satellite operators seek to improve capacity, mobility and indoor performance, we believe terrestrial infrastructure will become an increasingly important complement to satellite networks. We believe the long-term outlook for our industry remains bright, given continued mobile data demand growth, upcoming spectrum auctions and the momentum in edge data infrastructure. We believe our clear strategy, aggressive grade balance sheet and capital allocation framework position Crown Castle to maximize long-term shareholder value. With that, I'll turn it over to Sunit to walk us through the details of the quarter.

Thank you, Chris, and good afternoon, everyone. We delivered solid second quarter results as we successfully completed the small cell and fiber cell transaction. Starting on Page 3. Second quarter organic growth, excluding the impact of Sprint cancellations and DISH terminations was 3.9% or $38 million and included a $5 million increase in other billings. Second quarter organic growth increases to 4.2% if DISH revenues are excluded from prior year's site rental billings. Excluding the increase in other billings, organic growth was 3.6%. This growth was more than offset at site central -- rental revenues by $5 million of Sprint cancellations, $49 million of DISH terminations and a $25 million decrease in noncash straight-line revenues and amortization of prepayment. Second quarter selling, general and administrative costs included a onetime $7 million increase in stock-based compensation expense which is not expected to recur and does not impact adjusted EBITDA and AFFO. AFFO in the quarter benefited from a year-over-year $35 million decrease in interest expense and $14 million increase in interest income due to the receipt of $8.4 billion in net proceeds from the sale transaction closing on May 1. We do not expect a higher level of interest income to recur in the second half of 2026. Turning to Page 4. We are increasing our full year 2026 outlook for site rental revenues by $5 million at the midpoint and maintaining our adjusted EBITDA outlook as the increase in revenue and a $15 million reduction in costs are expected to be offset by a $20 million decrease in services contribution driven by lower services activity, primarily in the third quarter. We also expect a $5 million decrease to interest expense, resulting in a $5 million increase to our full year 2026 outlook for AFFO. The higher site rental revenues are driven by a $5 million increase to other billings, resulting in 3.4% full year 2026 organic growth, excluding the impact of Sprint cancellations and DISH terminations compared to our prior guide of 3.3%. Full year 2026 organic growth increases to 3.6% if DISH revenues are excluded from prior year site rental billings, which compares to our prior guide of 3.5%. We continue to expect 2026 to mark the low point for organic growth. As of the end of the second quarter, more than 90% of our full year 2026 organic growth, excluding the impact of Sprint cancellations and DISH terminations was contracted compared to approximately 80% at the beginning of the year. Our full year outlook for straight-line revenues remains unchanged at negative $60 million at the midpoint as we continue to expect a decrease in the second half of the year. The expected $15 million cost reduction consists of a $10 million decrease in site rental cost of operations and a $5 million decrease in selling, general and administrative expense excluding the impact of stock-based compensation expense, as we are seeing success with our ground list by our program and continue to drive operational efficiencies across business. We also expect a $10 million decrease in full year 2026 stock-based compensation expense at the midpoint, which does not impact adjusted EBITDA and AFFO. We remain on track to deliver our outlook for the second half of 2026 and first half of 2027 AFFO of $2.1 billion at the midpoint. Turning to the balance sheet. We ended the quarter with a leverage at 6.3x net debt to EBITDA, which compares to our target investment-grade leverage range of 6 to 6.5x net debt to EBITDA. On May 1, we received $8.4 billion in sale transaction net proceeds, which we used to repurchase $1 billion in shares and repay more than $7 billion in debt in line with our previously announced capital allocation framework. We completed the $1 billion in share repurchases in the second quarter at an average per share price of $88.66 allowing us to retire more than 11 million shares and lowering our annual dividend obligation by $47 million. Since last quarter, we repaid approximately $7.2 billion in debt, including approximately $5 billion of floating rate debt across our commercial paper program, revolving credit facility and term loan, $500 million in open market debt repurchases, $750 million in unsecured notes maturing on June 15 and $1 billion of unsecured notes maturing on July 15. In connection with the sale of the small cell and fiber businesses, we decreased the capacity of our revolving credit facility from $7 billion to $4.5 billion to better align with becoming a stand-alone tower business. Lastly, our outlook for discretionary CapEx remains unchanged at $200 million or $160 million net of $40 million of prepaid rent received at the midpoint. To wrap up, we believe we have an opportunity to generate attractive long-term shareholder returns with our investment-grade balance sheet, disciplined capital allocation framework and goal of becoming a best-in-class U.S. tower operator. With that, operator, I'd like to open the line for questions.

I was curious if you could discuss a little bit more details around the lower services activity that you're now expecting for the third quarter, does that affect the leasing activity that you're seeing from your customers? And then just finally, you mentioned that 2026 to be the low point for organic -- I think there's growth or organic activity. If you could maybe frame that a little bit more and share maybe some of the things that are giving you the conviction on the opportunities to improve organic growth going into 2027?

Yes. Great. Mike, thanks for the question. We'll start with the first one, which is that the lower services activity, there isn't a straight line that you can draw just between the service levels and the leasing activity. And so we kept the guide for leasing unchanged with a range of $60 million to $70 million. If you look at our progress over the course of the year, we started off the year with about 80% of our organic growth was contracted, we're now at 90%. So we made progress there throughout the course of the year. In terms of the -- is this why we're saying this is the low point for organic growth. I think there's a number of factors that I'd share with you. I kind of frame these in my mind in short, medium term and long term. In the short term, as we've stated previously, we do have MLAs in place that give us strong visibility into the future contracted activity. And then as you look at the midterm, you look at the Spectrum acquisition that AT&T has with the 600 megahertz, I think I read this morning in the release, that's expected to close later this month. And once that transaction closes, I think that's a midterm driver potentially for that 600 megahertz to be deployed. We're seeing additional activity in new products for us that I mentioned in my comments here around edge infrastructure in that ecosystem, which currently is in the trial phase, but I think we have hopes that this could be something more significant over time. Then as you start to look from the mid- to long term, there's the mobile data demand that continues to grow. I think it's expected to double over the next 5 years and the -- that's supported by the emergence of new AI-enabled applications that drive increases in uplink traffic, think across smartphones, think across smart glasses, wearables, the Agentic AI assistance, again, that the operators are talking about to drive that demand. And then longer term, the FCC is me the 800 megahertz of spectrum that's starting to be auctioned in 2027. It's the combination of all of these activities, which have led us to be able to make that statement that we believe this, in fact, is the low watermark in terms of that growth.

I just have 2. First, just on network activity. I was just wondering if you could comment on what you're seeing from a network densification and kind of FWA driven densification this quarter? And then second, I was just wondering if you could comment a little bit about the $240 million combined DISH and Sprint headwind for the full year, pacing a bit below that through the first half, anything that would drive the incremental headwind in the second half?

Yes. I think the activity levels have been much in line with what we forecasted, hence the progress we've made on leasing in the first half of the year. This has pretty much played out as expected. From our perspective, I think more broadly across all 3 MNOs, there's been some pullback in the services activity that obviously showed in the results. What's driving that? We think it's a combination of some of the leadership and strategy changes that have occurred across those companies. But again, we kept our leasing guide unchanged for the year.

Yes. I think on the DISH thing, it's just timing. I think we've talked about it previously was the timing was more back-end loaded, and it's contracted. So that was just what we had expected. And I think we talked about it before at the beginning of the year.

A couple of quick questions for you. Obviously, glad to see AT&T say they can finally get the spectrum purchase over the finish line this month. Does that then trigger the contribution to the escrow account? And then we've been getting the question a lot lately, who owns the equipment that's still on your towers that DISH put there. Is that something DISH owns, but with -- the agreement termination, do you guys own that equipment, but first, does the escrow get funded with the AT&T closing? And who owns the DISH equipment? And I'll have a follow-up.

Yes. So your assumption is right. The funding of the $2.4 billion escrow is tied to the AT&T and transaction being closed. In terms of the equipment itself, and I think this is a broader context of the bankruptcy proceedings that are ongoing now, is that this will be determined along with a number of other issues related to the bankruptcy itself as to who owns that equipment. But as far as we've seen, they've abandoned it. And although we've requested for them to take it down, have not acted to this point.

And what's the process -- can you give us a time line on the bankruptcy court. We've heard some stuff might be coming up on August 10. But what do you envision kind of the time frame on the PK effort?

Yes. I think a couple of things. As we've guided on earlier calls, as we lodged our lawsuit against both DISH and EchoStar, was that the timing was less clear. We thought that it would take some time to go through the process of filing the suit and discovery. I think the good news story from the bankruptcy perspective is that this is likely to move faster than a traditional lawsuit would have. The original lawsuit by the way, has been suspended why they wait the outcome of the bankruptcy proceeding. That said, I think DISH came in with some very aggressive attempts to speed along a prenegotiated bankruptcy filing, which we have and others have vigorously contested in court and successfully been able to slow down to be able to actually get the facts on the table for us to be able to proceed down that route as an unsecured creditor. In fact, we've been appointed to the unsecured creditor committee and believe that we will be successful in prevailing with our suit ultimately.

Great. And my follow-up question is, obviously, you talked to the Spectrum pipeline. We're glad to see the FCC get the auction authority back to start that flywheel going again. But as we look into beyond the upper C-band of what might come down the pike in the 2028, '29, '30, '34 kind of time frame. What frequency bands are you hearing about? And is it frequency bands that will actually get deployed on towers given where the range is as far as what gigahertz it might be at?

Yes. We'll start with upper C band, which I think is exciting for us, 440 megahertz of combined spectrum, I think globally, it puts us in a position to lead here in the U.S. based on the decision of the FCC to focus in on bringing that to market first. The additional spectrum bands are between -- my understanding is between the 1 gigahertz and 10 gigahertz band. So obviously, considerably higher than what has been put out up to this point in the low-band and mid-band 5G spectrum. I think as we look at this, and obviously, there's a lot of work still to be done and the strategies for each of the companies as they develop their 6G strategies to come to light. In general, the higher spectrum bands is a good thing for the industry and that it will drive greater densification of the networks in order to provide a consistent user experience. This is how we're looking at it at least initially here.

Okay. But you think it will show up on towers too, that even if you get into the 5 gig, 6 gig, 8 gig stuff, you can see deployment on towers?

Yes, Ric, I mean, I don't know to be frank on this. What I can tell you, which is what we were told when we visited the White House several months ago is that there is a strong intent by this administration, including FCC to put the U.S. as a global leader in 6G technology. They see this is how we win as a country. And therefore, all the might of the federal government working with industry, which would include both the mobile network operators and us as tower infrastructure providers, working in combination to bring the spectrum to market as soon as it's practical. I mean there's still a lot of work to be done in finalizing standards and the like. But I think ultimately, they're making this 800 megahertz available to actually put to use, which obviously is a good thing for us and the industry as a whole.

Yes, Ric, the FCC had the announcement today so but basically by bridging lower and upper sea band up to the 4.14 gigahertz level, it actually extends the life of 5G and we'll further promote densification, which means more sites needed for coverage, which should be plus for the current segment.

I had a few. So first of all, on the account -- sorry, the escrow account, can you give an estimate of the estimated recovery from escrow account for CCI, obviously, a number of claimants to the escrow accounts. Any estimate that you have?

When we've looked at this in the past, it's not clear on who will actually come forward to make claims. This is still something that's in progress. When we thought about overall the share of the pie, is that ourselves and American were the largest 2 contributors, but I think it's a little premature to say exactly what will be yielded out of this. It will be based on the number of claimants that come into it. And of course, either requires a court judgment or a negotiation with DISH ultimately to unlock those funds being dispersed. So we continue to pursue both in combination, both as a claimant on the fund and then also in court as part of the bankrupt security.

Great. And then you mentioned not straight line between lower service revenue and lease and I understand that. But any more color on where you're seeing lower services revenue, sort of geographies or any more color you can add there? And then you also noted more edge activity and wondering from whom or specifically more details and applications and timing for activity around edge?

Yes. So 1 of the things that's pretty exciting, if you look at the industry as a whole, data centers are having some of the same challenges that maybe tower companies did in the decades past, which is namely getting the leasing, zoning and permitting of these facilities, in addition to power delivery and some of the other challenges that they face. One estimate I read said there was something like a 15-year backlog of data center demand versus what the data center companies could currently actually deliver based on that demand. What that's opened up for us and I think for others in the space is here, we have sites, there are sites where we have the space. In many cases, we have shelters that are actually available for retrofit, we have power, we have backhaul connectivity and therefore, can provide these edge data center opportunities. These are early days, to be clear. I would still label this as a trial that we're doing with several companies that we're engaged with currently. But as we look at this and the ability to scale over time, combined with the demand in the data center industry as a whole, this is something that we're very interested in pursuing. And we'll attempt to accelerate as a future revenue source for the company. I think we'll have more to update you as we get a little further on the process, but things look promising in the current trial.

And any more color on the lower services revenue expected?

No. Again, I think it depends in more broadly speaking for us is that in any given time, we're not the only vendor that provides services to customers. So it's a combination of the services that individual companies require. It's our ability to provide value in the areas of where they have the need for services. And as I think you know, we had departed at 1 point, the construction management portion of the services that we deliver and therefore, have a smaller revenue pie that we're chasing overall in the industry. So it's not just related to 1 part. It's a general services reduction, is the best way I can describe it for you.

I just wanted to follow up on the plan to purchase ground leases. So there's a $20 million increase in land CapEx this quarter. And I'm curious on the expected annual investment pace, maybe the typical payback period you might expect on some of these investments. And then relatedly, if the competitive environment has changed at all, the planned acquisitions?

Yes. I mean on the payback and plan to spend CapEx, yes, I mean we do aim to increase this over the next few years, but in a very financially disciplined manner, making sure that the returns or paybacks translate to returns are well above our cost of capital. So I think that's the key threshold. But we feel we should have the opportunity to do better than what the company has done in the past just by a focus on it and the attention systems, resources, internal, external. So we are looking to raise that up over the next few years.

Great. And if I could just ask 1 more. I know you said that edge computing opportunity is in the early innings. But from your perspective, what do you think is the current biggest hurdle? Is that -- are there additional power requirements when you think through this inferencing and edge computing demand, this type of workloads that will be run through this opportunity. I'd be curious, just any thoughts there.

Yes, Cameron, let me frame it up. So look, we're not having to put capital to work. This is just incremental revenue that we can unlock on sites and they monetize fairly quickly. And therefore, for us, this is a new found opportunity that seems to have a great return profile, comparative. There's clearly demand for larger data centers that would have more power than what we have at a site. And where we might be able to do that easily and inexpensively, we can look to improve that over time. The reality is the hardest thing is getting the power delivered to the site to begin with. Once you have it there, there's the ability to, through transformer swaps and bringing additional leads in to increase the power over time. We are focusing on what we can execute on now, which is monetizing the assets that we have, with the power that we have, with the space that we have, but it doesn't preclude us over time if this business grows and it seems to be a good return on investment for us to look at additional investments because that demand doesn't seem to be going away anytime soon.

Yes. The only thing I'd add to that is recognized, we have a fairly distributed solution that we can offer at scale. We're talking about commercially available power that doesn't require, as Chris said, investment on our side. So if you do the math, you can get it from anywhere from 100 amps to 400 amps, 110 volts, 220 volts, you can get 3 phase power. So this -- what we offer is really makes sense for applications or installs that don't need a big power footprint. So more edge requirements, more high value-added edge for specific applications where this makes a lot of sense. And we are seeing increasing interest in this area now. As Chris said, it's still early days, but we are seeing increasing momentum.

A couple of questions. The escrow payments, if you could maybe drill down a little bit around the pecking order that maybe your attorneys and consultants have told you to expect around look at first dips. So would it be the workers, the contract of crews, the tower companies? Where does Crown sit within that pecking order to the best of your estimation? And then secondly, interested in kind of more of a medium- to longer-term question around the AT&T and T-Mobile assets that you bought many, many years ago under the sale leaseback. I think you have the option to start paying for full ownership of those sites, I think, in 1 case, in 2032. And is there any merit to the idea that you could accelerate that process given the free cash flow that you generate it helps, obviously, the cash balances of your customers and maybe helps them to play in the network faster. So any notion towards kind of fast forward in that process?

Yes. Maybe starting with the $2.4 billion escrow, I think while there is a hierarchy, until the total number of claimants are known and until people actually start either getting negotiated settlements or court findings that would allow them to start to draw on that, it's very difficult for us to really speculate and know what will go to whom. There were certain classes of claimants in terms of how they were paying. I think they looked at smaller claimants, more of the mom-and-pops that would have contributed maybe in the first tranche and then ultimately leading up to tower companies like ourselves. So it's -- again, it's just early for us to comment on that. But again, I think the flip side of that is we have probably 1 of the largest claims out there, and ultimately, therefore, depending on the total size of the claimants would be in a position to best settle in this in the end.

On your second question, yes, we have options like that they are out there a number of years away in size. I think our view is, we always look for opportunities where we can create win-win outcomes with our clients, and we'll continue to look at that. But as you pointed out, there's still out there a number of years. But we're always looking at win-win outcomes between our clients and us.

I wanted to follow up on the new leasing guidance. I mean you're trending towards the $60 million, but you did say that 90% of the business is kind of booked for the year. So should we expect an acceleration? And can you reach that midpoint to high end? And then a clarification on maybe the edge opportunities. If you do get leasing this year in that, would that go into other billing? Or would that be a part of new leasing?

Yes. So if you do that, it'd be part of new leasing activity. And I think on the guidance in general, obviously, we'll have more to talk about it when we report the third quarter. So I think we just -- we feel comfortable with the guidance we have basically is where we are. And we made a fair bit of progress to your point from the beginning of the year to where we closed out the second quarter.

First, Chris, circling back to the edge discussion, and I appreciate the details there. How can you come up with 0.2 megawatts as the relevant breakpoint? Is that just like what former deployments at sites with empty shelters would have previously drawn? Do you think that's something you get across all your sites? Just trying to understand how you got to that number.

Sure. I mean, as I mentioned earlier, Nick, if you were to assume 3-phase power, there will be 480 vaults. It can get commercially up to 400 amps. You multiply the power by the current by the square root of 3, you'd be at over 300 kilowatts. I think we have other clients on this site. So I think all we were trying to do is not to be precise, but more to just give a sense for anywhere in the tens of kilowatts to low hundreds of kilowatts, we could be a good avenue for people that need at scale distributed infrastructure, that's all we were trying to say.

Okay. Okay. So maybe just to put a finer point on it, you think that at your average site, you could get that as opposed to just at sites where you have empty shelters and there may have been a customer previously drawing more power than is currently being consumed?

Yes. I mean the mobile operators that have their own power meters at the sites don't draw that much power. So it just depends on the site and availability. I mean for the most part for -- we don't need 3-phase power, so applications that are in the tens of kilowatts not a problem, but yet we have 3-phase power might take a little longer. But again, it doesn't mean capital investment on our part. It's more a supply chain thing with power companies.

Okay. Okay. Makes sense. And then Chris, given your background, I thought you might be able to sort of share some thoughts on some of the tensions we're seeing between towercos and carriers in Italy and Spain. And in particular, any aspects of those disputes that may or may not be relevant as you think about the U.S. tower business?

It's now it's a distant past for me, right, 10 months into this gig. All kidding aside, I would say the European markets are highly fragmented. The number of operators and tower companies is sometimes out of balance. Spain is a good example of that. Italy, less so. But there's a dynamic tension between lease rates that have escalated over years with operators that have a much less healthy ecosystem from the MNO perspective. The ARPUs available in Europe are a fraction of what they are here. And so it's not that healthy environment. As oppose to the U.S. where based on the AT&T results today and several years of of good, solid, steady growth is we have a very healthy ecosystem where it allows the operators to actually invest in their networks, which again is why this is the best wireless market globally in my personal opinion. There's always some level of tension between MNOs and tower companies just in terms of the cost of this. But when those operators went back in time, and decided to monetize their assets and got paid billions of dollars or in this case, euros to go and invest in their networks to roll out 4G and eventually 5G technologies is this was -- this is the decision that drove the best use of capital in this case. And the ownership of towers providing them to multiple customers was a much more efficient use and purpose for the tower companies to provide. So it's -- I think it's really apples and oranges based on the market dynamics. And again, I wouldn't expect to see anything even remotely similar to that here in the U.S.

Nick, quick clarifications to one of your points of the earlier question, we do not have charters in all our sites to be clear, but I don't -- we don't think that, that is as much of a capital cost per se in the scheme of.

Great. Chris, maybe just a higher-level question. There's been a lot of debate and speculation in the industry about SpaceX potentially launching a StarLink mobile service and questions on how they get there, whether it's a terrestrial build, an MVNO, an acquisition. I'm curious if you've had any discussions with them at this point? And do you think it could create opportunity on your sites, particularly given that they're more urban in nature versus some of your peers?

I think it's probably way too early to tell and to speculate on what the various satellite operators might do in terms of creating a fourth competitive network. At the end of the day, I would tell you, we have space, we have power, we have backhaul at our sites and ultimately, we love all of our customers. And so if for some reason, they decide that this is something that they want to do for all the reasons that I laid out in my comments in terms of why satellite as a complementary technology would have to look at a terrestrial-based network to really cover and mimic with what the big 3 MNOs do today, we stand ready. But there's nothing I can share with you at this time that I know of in terms of what their plans are long term. But let's see where they end up.

Great. And just 1 follow-up for me. How should we think about capital allocation from here, given you exhausted the $1 billion buyback after closing on the fiber sale. Obviously, the stock has been under some pressure, so the buyback math seems to make sense, but rates are also up. So how do you think about prioritizing between buybacks, deleveraging and then some of the CapEx, such as ground lease purchases that you talked about as well?

Yes, nothing has changed with our capital allocation framework that we've talked about, and I probably beat to death after funding our dividend, which is sacrosanct and the CapEx needs that we have, which have a very good return profile. Any excess cash we have goes to target investment-grade leverage range of 6 to 6.5x and anything left over could be potentially used to purchase shares. I don't think anything has changed in the allocation, and we continue to be really, really judicious in the use of capital, making sure that we're seeing great risk-adjusted returns as a result.

Just a little bit on the guidance include some incremental cost savings benefit. I was hoping maybe you can talk a little bit about the broader cost savings potential you're targeting across the business? And is that opportunity larger than you previously thought? Or are you just realizing those savings maybe a little bit more quickly than previously anticipated?

Yes. So I think you've heard us say earlier that we think we can expand our margins, EBITDA margins by a couple of hundred basis points over the next year. So nothing's changed with that. The benefits really come from 2 buckets. One is the structural costs we talked about, the ground lease buyouts and the second comes from a fairly wide-ranging transformation effort to investment in systems, processes to continue to improve productivity, efficiency, but also our service levels of customer experience as measured in cycle times. So I think that's a program that we're executing on over the next couple of years that should continue to drive further margin expansion. I don't know, Chris, if you want to add anything to that?

No. I mean, look, this is part of our DNA. We won't always be able to control what our customers do and when they do it. But what we can control is having a laser-like focus here on driving efficiency and effectiveness and serving our customers. And so we will continue to look for those opportunities wherever we can. We have a very well laid out strategy of what we're attempting to do and Sunit really talked about it, it's about the investment in tools and processes that will unlock some of that value. That will take some time. If we can accelerate it, we will, but we've got a lot of work to do ahead of us. And this has been a big year of transition, which I think we've executed very well. But there's still more work to go, and we won't rest until we reach that best in class that we're talking about so much as our aspirational goal.

And then, Chris, last quarter, you talked a little bit about new tower builds. Just wondering if you had any update on that front in terms of what you're seeing out there?

Yes. Up to now, it's been fairly limited because, as I think I shared with you in the capital allocation process, we're not going to overpay for an asset, whether it's an existing tower or work in progress. Where we have been successful is identifying where there are coverage needs or potential capacity needs by multiple customers so that we can build towers for multiple clients. This is what makes sense to us versus doing something more speculative as some have done on the private side. So it's similar to the edge compute, I would say, for us, it's a work in progress. It's a trial. We would like to build more. We are a tower company, but we are only going to do it where it makes absolute financial sense for us to do so in a very disciplined approach.

Just a quick 1 for me. On the AT&T book, you've got roughly $774 million of annualized rent concentrated in that 2028 renewal. Clearly, those are from the leases struck in 2013 with the sale leasebacks and the escalators are pretty modest. Knowing that you're looking for win-wins to hear you all that in it. And obviously, please don't avoid the negotiation tactics, you be thinking about that conversation? Is that a mark-to-market opportunity? Is it a term extension? Are you sort of thinking about wrapping that into purchase option buyout discussion, how should we think about that looking forward?

Yes. So without getting into specifics of any clients, I mean, generally, we have long-term arrangements. And I think that, as you know, with AT&T, and if you look at the FCC language, they're looking to deploy the 600 megahertz spectrum, which we think should be a plus for us as tower operators, those radios and antennas to require favorable space. So I think we work closely with AT&T and all our clients as they think about their plans how we can help support that. So I think there's plenty there from a win-win outcome perspective for us and them.

Just 1 for me. I want to go back to the satellite topic. Have you seen any change to the way carriers are approaching coverage-related builds or even renewals of sites that are in more rural and remote footprints by virtue of incremental satellite coverage in some of the recently announced partnerships with satellite operators?

No. Nothing.

Okay. That was great. So if I can, I just want to squeeze in one second one. Just on transformation. I know it's only a few months since the fiber sale this formally closed. But where are you in terms of organizational transformation? I know you talked about some of the different cost opportunities. But are there incremental milestones, bigger milestones that we can anticipate over the second half of the year?

Yes. So look, I mean, this effort started right after Chris joined us last October. And I would say at this point, we have a fairly well mapped out series of transformation initiatives, both across each of our various functions and also across all of our major work streams combined with IT systems and platforms deployment to go along with that, in some cases, taking advantage of AI orchestration software and other tools like that. So I think it's well mapped out. They still including, as I told you, a goal to look at our come lease buyouts and how do we multiply that compared to the various levels of pace we had there. So it's well mapped out, some mapping to do, but I think you'll see us executing on that over the next 24 months or so. And it's fairly tangible. I don't think it's theoretical. We waited until the close of the transaction, some of that -- the planning work started last year.

The only thing I would add is, I think we're not just focusing on the organizational structure, but we're also focused in on what we can do culturally to support this best-in-class strategy. And that involves things like developing the teammates here at Crown, automating manual tasks through AI and systems and tools, making those kind of cultural changes that makes it a great place to work. And we believe that through these changes, we're going to see improvements in employee engagement and productivity and ultimately, customer satisfaction. And so that part takes a little more time and effort to get right. I mean making natural changes in the org structure was 1 piece of it. But the second piece is really investing in our employees and unleashing them so that they can really go back and hopefully delight the customers in a way that helps us win share. We want to win 100% of the jump balls. That's the way I describe it.

Chris, maybe to follow up on that. Just in terms of cycle times and improving customer experience, how should we assess the progress you guys are making on these initiatives and the best way that we can monitor it going forward?

Yes. I think 1 of the things that we probably need to do a better job, and we've been focusing on developing these measures internally as a way of measuring our progress across the business. And creating scorecards that show the progress on things like cycle times from application to NTP and generating revenue. But we have a series of initiatives underway here, right? So there's best-in-class measures around trying to lead the organic growth. There's best-in-class measures around lowering the unitary cost of the products and services that we actually sell so that we can be more competitive in the marketplace. There's ones around having a lower land cost. As an example, we talked about the ground lease buyouts. We have roughly 11% delta between ourselves and American and SBA. We aim to close that gap over the next couple of years. So I think this is something where we're doing those internal measures now. I think as part of -- as we look forward, you guys have asked for, and I think we're looking in the future of providing a longer-term guidance than just in year, this is maybe something we can come back to and say, here are those internal benchmarks that we've set that we believe will show that we're best-in-class on the things that matter most to customers.

Yes, that would be great. We look forward to that. And maybe also on the service offering, you mentioned that you're going after a more narrow set of opportunities. Do you have any interest in expanding the services offering again in the future to kind of capture more opportunities?

Well, here's the good news is, Brendan, is that our customers are asking us to do more for them. So that's usually a good sign when your customers say, "Hey, I want to do more business with you, particularly on the services side. we had pulled back from some of the construction services that we had offered previously. I think we're looking at that again, if it makes sense for us. We know that the customer demand is there. We know that they like the convenience of having a one-stop shop and our competitors have provided this. So it's not something we're ready to announce today on whether we would go down that path. But we're certainly looking at it. At the end, for us, we believe if we can offer value in services that are scalable, where we can drive a good value for money in terms of what we provide for the customer. This is what we aim to offer in the service portfolio. It's probably just a little bit early for me to fully define that for you on what that looks like. But these are ongoing negotiations we have with our customers to try to figure out how we can deliver the best, most optimized services that meets their needs, but also generates the returns that our shareholders expect.

A couple of follow-ups. First, on AFFO, the quarter came in better than expected. You started to lower the cost earlier. And -- but there was only a small raise for the year, I think, mostly on the lower interest. Can you provide more color on why that performance is not flowing through the year? Or should we just expect a higher end of that range is more reasonable? And 1 more follow-up on network services, if you don't mind. The softness versus the guidance that you gave earlier in the year. Is that change, do you think to -- due to a pause in decision-making given some management changes at the carriers? Or is it -- are you seeing some cancellation of prior projects?

I'll answer the first one. Yes, I think I had mentioned this earlier, but there's been a number of leadership changes and strategy changes at our customers. There's been large-scale waves of layoffs, which has led to some slower decision-making is how I would characterize it in my words, so take it with a grain of salt, which has led to where we are today. Again, not perfect bridge between what those services are in the leasing activity. So it's not a perfect indicator for that. But finding ways to win the services that we believe that we should win. This is a top priority for us in our services team because we like the services. It's been a good margin. We've improved margins sequentially year-over-year. So we're not looking to exit this space. But the slowdown has been a factor of, I think, the environment and the leadership changes. But Sunit, over to you.

Yes. So look, I'll break the AFFO change in -- at the EBITDA level and then between EBITDA and AFFO. I think at the EBITDA level, you're right, we have been seeing the benefits from the cost improvements, so $15 million in the cost of sales line, a lot of that in ground rent reduction, some repair and maintenance and then on the SG&A line, those are durable improvements and we hope we'll be able to drive more improvements there over time, as we've talked about. The service weakness, which takes away from those improvements, durable improvements in cost structure has to do just with the environment right now. So this is just what we are seeing currently. We think that will come back again. So that's more just the environment right now. And so at the EBITDA line, that is why the guidance is not changing. With respect to the interest expense, you remember when we closed the transaction, we closed it 2 months ahead of at June 30 assumption. So we updated the AFFO guidance and increased it at the time. And I think this additional $5 million had to do with the timing of how we deployed the proceeds, I think we did a better job between some of the debt paydown. The share repurchase, obviously helps some because you do save in dividend obligations that result in some interest expense savings over the balance of the year. And so it's just timing of debt payments and share repurchases in the quarter. So that's why you're seeing the reduction in interest expense of $5 million, which drives the AFFO guide by $5 million.

Thank you for squeezing me in, I appreciate it. I guess I have kind of 2 questions. One is Chris, you kind of gave us 3 growth drivers for the business as we look ahead. Could you kind of maybe step us through the spectrum part of this? So we've got the DE spectrum auction is now closed. And as part of that, we have EchoStar has committed to either selling by 2028 or auctioning by 2029, their spectrum. And then Brendan Carr with their upper seabed option has come out and said that we might be able to deploy some of that spectrum by the end of and the balance in 2031. So if you could kind of step us through how you think these things make the growth trajectory for Crown Castle work. And then the second piece is with the DISH bankruptcy, they are asserting that because they have a lease agreement with you that they can take 85% of the haircut from the net present value of the lease payments that they owe you where I think your counterclaim is that it's a contract that has a superior claim. If you could kind of step us through that, so we can all understand how you guys think this is supposed to work from your perspective, it would be super helpful.

Yes. Sorry, maybe with the last 1 because I think it's a quick one, which is, yes, they're attempting to say that we're -- the 15% cap would apply to us. If you recall, we canceled the contract early based on nonpayment and accelerated those payments forward. So our position is that the 15% cap under bankruptcy law does not apply because of the nature of our agreements and the claims that we have against them. Classification and size of our claim will ultimately be determined by the bankruptcy proceeding itself in terms of that. So stay tuned to that. In terms of the spectrum, again, I think there's -- I tried to frame it earlier, and I'll try to attempt to do it again for the benefit. There's kind of the short and medium and long-term view of the spectrum and as it will impact, let's be clear. In some cases, the spectrum I'll use 1 example where AT&T was able to take the 3.45 spectrum and very quickly deploy it through a leasing agreement with DISH across a large number of sites because they already had both the equipment and the antennas that we're capable of taking advantage of that additional spectrum. That's 1 set where it has less effect overall other than if they're adding a bunch of additional radios that then breaks through the loading of our contracts, that's potentially 1 source of additional revenue. Secondly, on things like the 600 megahertz, which would be a new spectrum band, which would require a combination of the new radios or some new hybrid radios to be developed and new antennas to be deployed. Those are types of events which would drive an impact across the industry as a whole. Again, depending on the individual tower companies agreements with the customer is another source of potential growth here, let's say, over the midterm. The larger pool of the 800 megahertz, including the upper C band, which still has to find its way through there are some clearing based activities for incumbent users of that spectrum. In addition, there's the issue of some potential issues around FAA and the ultimates that might need to be upgraded. I think the FCC has actually done a pretty good job in my estimation, having been in the industry a long time of defining a process by which each of these issues can sequentially be solved. And I would just give you as an example on the lower C band, where there was an issue with deploying the lower C-band is the industry was able to move fairly quickly and put that spectrum to work very expeditiously. The longer, longer term in terms of the remainder of the spectrum, which I guess, is between 1 gigahertz and 10 gigahertz, which you heard me talk about with Rick, of what goes on, the towers and when I think, is highly speculative for us. We don't have a sense of that. The only framing again, I would give you is that the higher the spectrum the better in use for capacity and soaking up capacity because it doesn't propagate very far. Does it go into buildings very far. It would lead 1 to believe that densification would need to happen in order to have a ubiquitous customer experience with customers utilizing those new spectrums being put to use. So it's more of a capacity play than, say, like the lower band, like the 600, which is more of a coverage play. So this is how we're looking at it is short, medium and long term, 600 megahertz probably be in that nearest term driver of potential growth in the industry and then obviously, up to what's coming in the future 800 megahertz. I don't know, did that frame it for you, how you were looking for it?

No. That's great, Chris. And I know we're over time. So thank you, and we'll follow up. I appreciate it.

Thanks, David. .

This concludes our question-and-answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect.