CCI - NYSE

Good day, and welcome to the Crown Castle Inc. Quarter Four 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kris Hinson, Vice President of Corporate Finance and Treasurer. Please go ahead.

Thank you, Bailey, and good afternoon, everyone. Thank you for joining us today as we discuss our fourth quarter 2025 results. With me on the call this afternoon are Chris Hillebrandt, Crown Castle's president and chief executive officer, and Sunit Patel, Crown Castle's chief financial officer. To aid the discussion, we have posted supplemental materials in the Investor 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 as of today, 02/04/2026, and we assume no obligation to update any forward-looking statements. In addition, today's call includes a discussion 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. I would like to remind everyone that having an agreement to sell our fiber segment means that the fiber segment results are required to be reported within Crown Castle financial statements as discontinued operations. Consistent with last quarter, the company's full-year 2026 outlook and fourth quarter results do not include contributions from what we previously reported under the fiber segment except as otherwise noted. With that, let me turn the call over to Chris Hillebrandt.

Thank you, Kris, and good afternoon, everyone. We delivered the full year 2025 guidance exceeding the midpoint across all key metrics as we focused on operational execution across our portfolio. As we turn to 2026, we are in the middle of major changes across our business as we take several actions to position Crown Castle Inc. to maximize shareholder value. First, we remain on track to close the sale of our small cell and fiber businesses, which we anticipate will occur in 2026. We are completing the operational separation of our three businesses, and executing on our transition plans. Upon the close of our small cell and fiber businesses, approximately 60% of our consolidated workforce will move with the sale as we transition to a simpler US-only tower business. We have been notified that the Department of Justice has closed its Hart-Scott-Rodino review and is not requiring any action related to the transaction. We only have a handful of approvals remaining at the state and federal levels. Second, we continue to enforce our rights under the terms of our agreement with DISH. After DISH defaulted on its payment obligations back in January, Crown Castle exercised its right to terminate the agreement. As a result, we are seeking to recover in excess of $3.5 billion from DISH, in remaining payments owed under the agreement. Crown Castle is supportive of AT&T and SpaceX obtaining the announced 3.45 gigahertz, 600 megahertz, AWS-4, H block, and unpaired AWS-3 spectrum bands, which would put this valuable public resource into active use for the wireless industry and the American people. That said, we will continue to do everything possible to enforce our rights under our contract with DISH. Third, we are taking decisive action to maximize value for our shareholders in response to DISH's actions. Announcing a restructuring plan to enhance the efficiency and effectiveness of our standalone US tower business following the anticipated close of our small cell and fiber business sale. Due to DISH's contractual default, we have accelerated and expanded our restructuring plan to realign staffing levels consistent with the removal of all future DISH activity. In total, we are reducing our tower and corporate workforce and continuing operations by approximately 20%, ending at about 1,250 full-time employees. In combination with other cost reductions, we expect to deliver a $65 million reduction in annualized run rate operating costs. The majority of staffing reductions will take effect in the first quarter while the non-labor reductions will be phased in throughout the year following the anticipated close of the small cell and fiber business sale. Finally, I would like to reaffirm our capital allocation framework and update our expected use of proceeds from the small cell and fiber business sale. First, when we reset our dividend last year, we considered the composition and risk profile of our cash flows as a result, we expect to maintain our dividend per share at $4.25 on an annualized basis until reaching our targeted payout ratio of 75% to 80% of AFFO, excluding the impact of amortization of prepaid rent. Thereafter, we intend to grow the dividend in line with AFFO excluding the impact of amortization of prepaid rent. Second, we plan to invest between $150 million to $250 million of annual net capital expenditures to add and modify our towers, to purchase land under our towers, and to invest in technology to enhance and automate our systems and processes. Third, we plan to utilize the cash flow we generate to repurchase shares while maintaining our investment-grade credit rating. Fourth and finally, we plan to remain at a target leverage range between six and six and a half times using the proceeds from the small cell and fiber business sale. As a result, we plan to allocate approximately $1 billion to share repurchases and approximately $7 billion to repay debt. As I look forward to a full year 2026 and beyond, I am excited by Crown Castle Inc.'s opportunity as the only large publicly-traded tower operator with an exclusive focus on the US. The US tower model continues to benefit from attractive business characteristics including long-term revenues from investment-grade customers contracted escalators, and high incremental margins. I believe that these characteristics will be supported by continued mobile data demand growth and a significant volume of spectrum being made available to motivated mobile network operators. To maximize revenue growth and profitability, we are focusing on becoming the best operator of US towers with the following strategic priorities. One, we are empowering the Crown Castle Inc. team to make the best and timely business decisions by investing in our systems to improve the quality and accessibility of asset information. Improving customer experience on cycle time and their interactions with us. Two, we are strengthening our ability to meet the business's needs by streamlining and automating processes to enhance operational effectiveness, and three, we will continue to drive efficiencies across the business. We believe that these strategic priorities combined with our disciplined capital allocation framework and investment-grade balance sheet will drive attractive risk-adjusted returns. With that, I'll turn it over to Sunit to walk us through the details of the quarter and our full-year 2026 outlook.

Thanks, Chris, and good afternoon, everyone. Our full-year 2025 results were highlighted by 4.9% organic growth, excluding the impact of Sprint churn, as our customers continue to augment their 5G networks. Due to our outperformance in organic growth, we ended the year near the high end of the guidance range for 2025 site rental revenues. Outperformance at revenues combined with higher than expected services contribution ongoing efficiency initiatives, and lower interest expense allowed us to exceed the high end of the guidance range for 2025 adjusted EBITDA and FFO. Turning to our 2026 outlook. At the midpoint, we are projecting site rental revenues adjusted EBITDA, and AFFO of $3.9 billion, $2.7 billion, and $1.9 billion which are meaningfully impacted by the following three items. First, due to the termination of our contract with Dish Wireless announced in January, our 2026 full-year guidance does not include any contribution from DISH, resulting in $220 million of churn in full-year 2026. Second, for the purposes of building our full-year 2026 outlook, we have assumed the small cell and fiber business sale transaction will close on June 30. Third, as Chris mentioned, we're reducing our run rate operating cost by $65 million on an annualized basis, resulting in a $55 million impact to full-year 2026 and a $10 million incremental impact to 2027 due to timing. Moving to Page 5, our full-year 2026 outlook includes organic growth at the midpoint of 3.3% or $130 million excluding the impact of Sprint cancellations and DISH terminations in 2026. Full-year 2026 organic growth is expected to be 3.5% at the midpoint if DISH revenues are excluded from prior-year site rental billings. This compares to 3.8% for full-year 2025, on a comparable basis excluding DISH revenues from the prior year. We expect our 2026 organic growth guide of 3.5% growth to mark the low point. This expected growth is more than offset at site rental revenues due to the $20 million impact of Sprint cancellations, $120 million of DISH churn, and a $90 million decrease in noncash straight-line revenues and amortization of prepaid rent. Turning to Slide 6, the expected $110 million decrease to site rental billings is more than offset by the following items resulting in an anticipated $15 million increase in 2026 AFFO compared to 2025. A $25 million reduction in expenses as the staffing and other cost reductions drive $50 million of expense savings in full-year 2026 partially offset by standard increases on the remaining cost base. A $5 million increase in service contribution as service activity levels similar to 2025 are complemented by $5 million of expense savings from the workforce reduction. A $120 million decrease in interest expense primarily from the repayment of approximately $7 billion of about 4% interest rate debt following the anticipated close of the small cell and fiber business sale partially offset by refinancing. A $25 million decrease in other items driven primarily by a decrease in amortization of prepaid rent. Turning to Page 7, we decreased our guidance for AFFO in the twelve months following close by $240 million to $2.1 billion at the midpoint. Our original guidance of $2.34 billion at the midpoint included a $280 million contribution from DISH, in 2026 and 2027 which we have removed. This is partially offset by a $40 million reduction in interest expense from increasing the assumed debt repayment following the anticipated close of the small cell and fiber business sale by approximately $1 billion to approximately $7 billion. Turning to Page 9, the revised guide for AFFO for the twelve months following the close of the small cell and fiber business, which includes a half year of growth compared to full-year 2026, is $180 million higher and consists of $120 million of interest expense savings related to the anticipated debt repayments made with the small cell and fiber business sale proceeds, $50 million of growth in the underlying business, and $10 million of cost savings related to the 2026 reduction in force. Turning to the balance sheet. We ended the quarter with significant liquidity and flexibility, positioning us to efficiently maintain and effectively maintain our investment-grade rating after the sale of the small cell and fiber business based on the target capital structure and capital allocation framework that Chris mentioned earlier. In conclusion, we're pleased with our full-year 2025 results and believe we are well-positioned to deliver our outlook for full-year 2026 and our updated range for estimated AFFO for the twelve months following the small cell and fiber business sale closing of $2.1 billion at the midpoint. Longer-term, we're excited by the opportunity for Crown Castle Inc., and we believe we are taking the necessary actions to become a best-in-class US tower operator. We believe our focus on operational execution combined with our capital allocation framework and investment-grade balance sheet will deliver attractive long-term risk-adjusted returns for shareholders. With that, operator, I'd like to open the line for questions.

We will now begin the question and answer session. To ask a question, If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Ric Prentiss with Raymond James. Please go ahead.

Thanks. Good afternoon, everybody. Focus my questions wrapped around, obviously, DISH. But then also the fiber small cell sale. Couple of quick ones, maybe you can elaborate a little bit further on. Any update on the status of working with DISH? Why terminate the agreement and what do you get out of terminating the agreement? And I have a couple other quick ones.

Yeah. I think simply spoken why do we terminate DISH stop performing under the contract. Our contract was very clear with DISH, and we're enforcing it to best protect the value of the contract.

And so, terminate, you feel it gets the best kind of protective value. Obviously, we appreciate knowing what the number was. Over $3.5 billion owed.

Yeah. I mean, in the end of the day, Ric, you know, we had a contract with Dish. Dish has chosen not to honor it. With DISH in default, we exercise the termination rights for the agreement and can accelerate the entire obligations now. And this termination was because this is the remedy that was called for when a party defaults. And so in the end, we're vigorously enforcing our rights and trying to protect our shareholders for the terms of the agreement.

Okay. And, obviously, we had taken the DISH out of our model. Guidance looks pretty close to what we had laid out there. Appreciate all those details. One piece I'm wondering on is there any change to the purchase price of $8.5 billion for the fiber small cell transaction because you're noting approximately $7 billion of debt pay down, which makes sense given where you wanna keep leverage, cut interest costs. And then stock buyback at just a billion. So is there any change to the fiber small cell proceeds how you think about using what was originally $8.5 billion or might still be?

Yeah. So, Ric, there's no change to the purchase price. Obviously, you have normal transaction costs and closing adjustments, those sorts of things. But so we just kept it at approximately $7 billion and $1 billion pending the close of the transaction. So no other reason other than that. There's no change to the $8.5 billion purchase price that we announced.

Okay. And then as far as the timing of the buyback, obviously, this deal to close fiber small cell has been going on a long time. You really couldn't say much until you got closer to the deal closing. We're into February. Half isn't that far away. Sounds like, quote, a handful of state and federal rules are left. How should we think about the execution then of a billion-dollar buyback? How fast could or should that be put to work?

I think at this point, not knowing exactly when the transaction will close, we are thinking about that and we'll have more specifics to share about that, you know, as we get through closing. So not much detail at this point, but we're clearly committed to making that happen.

And last one for me, wrapping it all together. You mentioned a handful of state and federal level approvals left. Any lessons learned from, like, Frontier Verizon through California or other processes or where you think the long pull and the tent might be as far as getting those final handful over the finish line?

Yeah. So I think our team together with the teams at

I would just say more broadly, Ric, is, you know, I've been here four and a half months, and what I've seen is a steady pace of progress along that time period. Nothing has jumped out as unexpected. I think our teams working collectively are doing a great job of threading the needle and getting all the approvals in place.

Great. Thanks. Appreciate it, guys. Have a good day.

Our next question comes from Michael Rollins with Citi. Please go ahead.

I'm just curious if you could provide more characterization of the leasing environment and over the last few months, as carriers have been working their budgets, you know, some have access to more spectrum that's readily deployable in their networks. Have you seen a shift or change in how they're approaching whether it's densification and colo, whether it's the amendment strategy and activity, and can you maybe give a little bit more characterization of you mentioned that think in the prepared comments that 3.5% you're expecting to be kind of a low. Maybe a little bit more detail as to what can drive that higher over the next few years.

I'll start and maybe hand it over to Sunit. So thanks, Michael. I think if you think back at where we are at this point, there's a couple headwinds, if you will, around it's a cyclical 5G coverage in the deployment cycle of a say, ten-year decade-long deployment cycle and there's been great progress made by the operators in getting initial coverage out. You have a couple new CEOs and the MNOs in place. Which are obviously coming on strong, finding their ways, and talking about overall cost reductions and focus within their businesses. As they revise their strategy. I think that's counterweighed by tailwinds which were mentioned, which are all around the frequency bands that are becoming available both in the last year as well as the plan for the FCC to auction off at least another 800 megahertz of spectrum, beginning in 2027 and the nature of the spectrum, although we don't know the exact frequencies, we see them as higher band frequencies. Will naturally drive a higher densification of cell site deployment. And so we do expect that that becomes a tailwind both for the industry and for Crown as those plans come to fruition. So these are kind of the market dynamics that are shaping the industry right now. And Sunit, if you wanna talk specifically about 2026.

Yeah. I think what I would say is just for the supporting work Chris said. I mean, we think the mobile data demand continues at pretty healthy growth rates as we talked about last quarter. All the three major MNOs acquired Spectrum in the last year. The FCC's auctioning 800 megahertz of Spectrum beginning next year. And then when we look at our leasing activity from a current leasing activity gives us you know, gives us some visibility into future activity. So when you put all that together, yeah, we think that the 3.5% is a low point for us, and we should do better.

Thank you.

Our next question comes from Jim Schneider with Goldman Sachs. Please go ahead.

Hi. This is Josh on for Jim. Thanks for taking the questions. Can you help us bridge the 2026 leasing outlook versus what you reported in 2025? We know DISH was zero revenue a few years ago and has stepped up what's the best way to think about how much they've been contributing on an annual basis so we can see what's happening kind underlying with the carriers? And then similar to that, if we look at 2019 and 2020 before 5G deployments and before Dish and before Sprint T-Mobile integration work, your activity your new leasing was about $100 to $125 million. Can you help us think about what's changed or or the moving parts to get from from then to now? Thanks.

Yeah. Let me handle the DISH contribution. So, I mean, you can see last year, organic growth was 4.9% on a comparable growth excluding DISH in both periods is 3.8%. When you look at that difference, I think what it says is that DISH contributed about $50 million roughly to organic growth in 2025. And as we've said previously, this was all contractual, not really activity driven, including what was expected for this year. And then on your other comment, I mean, when you look back at the 5G cycle, I think that T-Mobile upon while they were concluding the Sprint T-Mobile merger, which was closed in April 2020, there was a pretty aggressive deployment of 5G. So when you look beyond that late in the cycle, you know, we always see people whether it's densification, amendments, that activity. Continues. So I don't have the exact numbers back then, but I think it's comparable to what we were seeing back then.

Understand. Thank you.

Our next question comes from Michael Funk with Bank of America.

Thank you for taking the question. So you have a multi-pronged approach with DISH. Obviously, you've sued under your rights for the termination. Presumably lobbying the FCC and then also through the court. So you update us on the process and expected timing around the different approaches you're pursuing?

I mean, I don't think we wanna go into the specifics about our legal strategy and the timing of that. I think, you know, if we kind of take a step back and say, recap, we've taken steps. We've filed suit against DISH. We have as an industry under the auspice of WIA, gone in to meet with the FCC commissioner to kind of make our case of why we believe that DISH should be obligated to pay for its bills. And we continue to take a number of steps, which I won't list here in details, but include all manner of activities, as Crown specifically to be aggressive in defending our shareholder interests. You know, this unfortunately with the courts working its way through, you know, this could be anywhere from a year or longer until we start to see things back from the courts. And therefore, it won't be something that we'll be updating you in the short term. But we will continue to drive and defend our position against the actions that DISH has taken.

Great. Thank you for that.

Our next question comes from Eric Luebchow with Wells Fargo. Please go ahead.

Great. I just wanted to follow-up on one of the questions earlier. I think, Sunit, you talked about how we're going to can it grow this year? You expect it to improve somewhat in '27 and beyond. And maybe you could just talk through what gives you confidence there, whether that's anything you're seeing from a densification standpoint on new billings, whether there's ways to drive steady-state churn down particularly now that you'll just have three, well-capitalized large carriers comprising the majority of revenue. Anything you could offer there would be helpful.

Well, with respect to churn, I don't think we see much change in the churn outlook we've provided previously. But I think in terms of specific as we said earlier, we did have, we do have some visibility into leasing activity. So that's helpful as we look at next year. But I think if you look at comments made by our clients so far, I mean, they bought more spectrum. They got to deploy most. They want to deploy most spectrum. The data demand growth cycles continue. So, you know, we think we'll do better than where we are here. If you look at our performance last couple of years, it's been a little better on the margin. So why we think this is a low point for us.

And specifically, I think we have a good view into our contract and leasing activity from our MLAs. Gives us pretty good visibility into future activity levels, which is why we're able to say that.

Great. Appreciate that. And then just one follow-up. I know you talked about reducing, I believe, 20% of your operating expenses. Maybe you could just talk about the flow through between SG&A and gross margin kinda where we're gonna see the biggest impact there. And any kind of indication on, you know, where you can get cash SG&A down to the next couple years to go through this cost restructuring?

Yeah. So, I mean, we talked about $65 million of run rate operating cost savings. So in year, we'll see $55 million. Most of that is through the SG&A line. So, you know, of that $55, about $45 million roughly will hit the SG&A line. And then $5 million will come in site rental cost of sales and about $5 million on the services side. And then from a run rate perspective, for those same items, which adds to $65 million, it's about $50 million from the SG&A side, $5 million from the site rental cost of sales, and $10 million from the services cost of sales. That's why I said it would be the $65 million, we'll see $55 million in year and then incremental $10 million next year. So those are the components.

I think the reality is we've started to size up the opportunity longer term. But want to remind everybody, this is a year of transition for our company. You know, we're executing the sale agreement. We're managing through DISH. Putting a reorganization of the go-forward team in place. And so while we're focused on working to become a best-in-class operator, and updating systems and improving operational effectiveness, by streamlining and automating processes and tools, it's going to take a while. So we accelerated our activity now as a response to the current situation with DISH. And we have good ideas of where we're gonna go. But I think we'll have to guide in the future as we make progress as we really need to focus in on execution given all that's coming at us this year. This is really a plan of execution for Crown as we become a standalone US focused tower company.

Alright. Thanks, guys.

Our next question comes from Richard Choe with JPMorgan. Please go ahead.

Hi. I wanted to follow-up on the discretionary CapEx and augmentation. The $150 million to $250 million, how will that contribute to, I guess, new leasing revenue? Do you expect to see some of that this year, or is it more for future years? And where could that go over time?

Yeah. So I think some of that we have the opportunity to do ground lease buyouts, I think benefits our cash flows going forward. Some of it is for new tower builds. We see opportunities for that. So those and then the third component would be investments in systems and platforms, which should drive better operating effectiveness and efficiency going forward.

And as we look forward, what's the willingness for Crown to do more MLAs? And is it something that carriers still want, or are we moving more to a pay-as-you-go type of method over the next few years?

I don't think we've seen any change there. We've generally operated with the MLAs with our clients. You know, we go through various phases here and there, but that's been a general approach.

In general, I would say that operators prefer having the certainty of understanding an operating agreement and being able to anticipate cost. And, therefore, it's something that I think the industry as a whole prefers along with the customers.

Got it. Thank you.

Our next question comes from Nick Del Deo with MoffettNathanson. Please go ahead.

Hey, thanks for taking my questions. Or, Sunit, just a moment ago, you alluded to new tower builds. You know, the use of CapEx and seeing opportunities. I know that Crown has done a lot from a new build perspective, at least in a material way, for a number of years. Are you able to dimension the number of new builds you're targeting, or at least how it's changed versus recent years or any attributes of the towers you're looking at, like initial yield?

Yeah. Hard to quantify it at this point. I mean, the key criteria is having the capital and being willing to do it if it makes economic sense. We do know that as data demands are growing, people need coverage in various areas. One example of this, I think, is the recent Verizon closed the Frontier deal, AT&T closed the Lumen deal. There's a big move towards convergence. So when you think about the geographies of where Frontier operates, so where the Lumen properties are, we think there'll be opportunities as they look to provide a converged offering, which means they'll need both wireless coverage including fiber to the home. So, you know, that's just one example of an area where there might be opportunities and others. So tough to quantify at this point, Nick, but I think it's just saying, we're willing to look at that when it makes sense.

Yeah. Maybe to build on that, one is we've said we're gonna be very selective and really only pursue opportunities that have those attractive economics that Sunit mentioned. But more importantly, if you look at the dynamics of the industry, one of the things that's happened since COVID is the price to build a new tower has gone up considerably. And so it has been a headwind for the industry in terms of build overall. In terms of the business case that you have to have. And oftentimes, in the past, we would build a single carrier tower and hope to get additional colocators, become increasingly difficult. And so for us, although our volume is not high, it's typically we will focus in on those towers where we have a minimum of two customers committed. So that we know that the economics make sense and the return profiles are correct. And it's something that, you know, if you look back historically over the last ten years, and I know because I've worked both in the disruptive part of the tower industry and now here as a leader of the big three. Is that traditionally MNOs haven't always looked for the big three tower companies to provide those new tower builds. But that's starting to change and the conversations we're having with customers are that they would like a one-stop-shop based on ease of doing business with and strategic partnerships with tower companies like Crown. And so we think there's an opportunity there. We're sizing that up. We're exploring it. We will be incredibly disciplined in the go-forward because that CapEx spend has to be with the right return before we move forward in any kind of scale in this part of the industry.

Okay. That's great color. Thanks for sharing all that. Can I ask one about the '26 leasing forecast? I guess, can you share anything about the degree to which the amount you're budgeting for is locked in you know, whether due to MLA commitments or because you have leases that are already signed versus activity that you've estimated?

Yeah. I think at this point, about 80% of our organic growth is contracted.

Okay. Great. Thank you both.

Our next question comes from Brandon Nispel with KeyBanc Capital Markets. Please go ahead.

Hey, guys. Two questions pretty similar on the leasing core leasing number, the $65 million is that weighted more first half, second half this year? And really, is it concentrated in any one of the big three customers or more evenly split? And then I'm not sure I heard it, but post the fiber transaction, have your thoughts around what you want your financial leverage to be changed just given the leasing levels are quite a bit lower than when you initially announced the transaction. Thanks.

Yeah. I mean, as we said, our framework hasn't changed in terms of our capital allocation. We still look to keep our leverage in that six to six and a half range that we've announced last March, I think. So no change there per se. And in terms of leasing activity, I think it'll be a little more weighted towards the back half.

Thank you.

Our next question comes from Brendan Lynch with Barclays. Please go ahead.

Great. Thanks for taking my questions. Maybe just to start on the longer-term outlook. Appreciate that the 3.5% is kind of the trough here in 2026, but you've previously guided to a 4-5% growth through 2027. Obviously, with DISH, that doesn't seem achievable at this point. But maybe you could give some color on what the longer-term growth rate might be either out through 2027 or if you could give even further comment here, that would be helpful.

Yeah. I mean, I don't think, at least from my recollection the years, we've provided any outlook beyond the current year. So no specifics to provide there other than I would just mention that the combination, the backdrop of sort of constant demand growth on mobile data traffic continues to grow. Combined with our clients, you know, buying more spectrum and having plans to deploy more spectrum and more spectrum being available, we feel pretty good about the long-term outlook, but I don't think we've provided the outlook beyond the current year, at least the last few years to date.

Okay. Thank you for that. And maybe just on software upgrades, obviously, has been a consideration more recently. Your customers are clamoring for more spectrum. Nobody denies that. But maybe the potential for them to deploy more of it via software upgrade instead of new leasing might be a headwind all else equal. Can you just give some commentary on how you think that's going to affect the industry going forward?

Maybe I start and you can jump in. So if you're referencing as an example, AT&T's deployment of the 3.45 spectrum, specifically where they had already deployed radios and antennas that could utilize that band on a portion of their portfolio. And we're able to very rapidly roll out that spectrum basically with just a software to unlock those channels. That certainly does exist in some cases. But as an example, the other spectrum that AT&T purchased, the 600 megahertz, these are typically new radios and new antennas. Because the physics are such that, you know, you have these massive MIMO antennas for the low bands that provide the so-called beachfront property spectrum in terms of spectrum goes further. It penetrates in buildings for urban and suburban type scenarios. This is something that they don't currently have deployed and would potentially involve having new antennas and new radios deployed out at sites. In order to take advantage of that spectrum. So it really depends on the exact frequencies and whether those frequencies that have been purchased already been pre-deployed on a certain number of sites, whether they're able to do that. In the case of AT&T, as I just said a second ago, it's a portion of the sites that they had the equipment on. There's still a number of additional sites that would have to deploy in order to take advantage of deploying frequency. So that's a good case study, I think. Hopefully in answering your question.

Yeah. And also software upgrades are very helpful, but at the same time, remember there are limits to how much data rates can be pushed through and the power required to do that. So ultimately, like any of these things, if you look at the rate of bit growth, you know, that's why radios and antennas have to keep getting replaced over time.

Thank you very much.

Our next question comes from David Barden with New Street Research. Please go ahead.

Hey, guys. Thank you so much for taking the question. It's nice to talk to you again. So my first question is, I don't want to throw Ric under the bus, but Ric and I are probably the two oldest guys on this call. And I don't remember the last time there was a time when a carrier decided we're not gonna pay our bills. So could you walk us through exactly what happens when the carrier doesn't pay their bills? Are you gonna send a team of guys out there and snip wires or are you gonna, like, rip this stuff down and sell it to China for scrap metal? Like, what does that look like, and how do you account for that? Like, I just don't know. So that's question number one. Then the second question would be, just your guys' understanding. So you know, we've been talking a lot to governments, to carriers about the C band, upper C band auction, its proximity to the radio altimeter band up at the 4.2 to 4.4, and, you know, how that could slow down deployments and I'm wondering if you guys have a view on kind of how the next big massive spectrum auction that's gonna happen in the United States could ultimately affect the tower industry. Thank you.

Yeah. Well, maybe just start with the first one. I mean, we don't really want to go into disclosure of our specific commercial agreements with a specific customer as a practice. But at the end of the day, if a customer doesn't pay and they're in default, and you serve them and you terminate the contract, then there's an obligation for them to remove their equipment in a timely basis as per the terms of the contract. Right? So it's on them. It's not you. It's them.

It's on them. It's them. So and ultimately way DISH is gonna do that.

Yeah. So, well, we'll see. We'll see what happens there as they approach their cure period. The contract has been terminated, and it's their obligation to remove the equipment. You know, more broadly speaking, I've been in the industry a long time as well, almost thirty years or thirty years, half of it as an operator. And I've also can't remember times since maybe before the consolidation of those regional carriers that ultimately became T-Mobile or part of AT&T or Verizon where we had somebody just turn out the lights and walk away from obligations like they have. It's pretty amazing, actually, to witness this in my lifetime. On your second question to try to answer it. So if you recall when the initial C band auctions had occurred and they started to deploy, was a number of concerns about potential interference with the altimeters and the avionics. And it caused a bunch of headaches working with the FAA and the industry in order to come up with a plan on how they would deploy that, which has subsequently been fixed. There were some good lessons learned there of how the MNOs can work alongside with government to come up with solutions to be able to deploy it. And so it's not as if this will be the first time that they had to navigate through these types of challenges. And again, while there was an initial hiccup in the deployment, they very rapidly solved it and I think earna better position now overall as a result of a solution that worked for all parties. So these will consistently be challenges as you start to auction off spectrum that has uses in use by others, including government entities. Figuring out how to best clear the bands and provide the use of that spectrum putting it to work. There's clearly a huge demand by operators to have access to additional spectrum. And from what the FCC has signaled, they're in a position with that 800 megahertz that they've indicated that they intend to auction in '27 is to take rapid action to put it to use. And more importantly, that rises the tide for all boats and all tower companies as a result of that spectrum being deployed. So we support it. We believe it's the right thing to do for public resource. Which is again why we support ultimately DISH's sale of the spectrum to AT&T and SpaceX.

So thank you, Chris, and I really appreciate that. And if I could ask one follow-up, Sunit, when Charlie fails to follow through on his obligation, to remove the equipment, how long does it take before we find out? And then what happens?

Again, I hesitate to answer specifics on that because you can imagine these are fairly large contracts with all kinds of provisions. So, I mean, I just leave it at that. But what I will say is we are doing everything we can within the contract in Washington as Chris was talking about to make sure we are enforcing our rights and being aggressive about it.

Understand. Thank you guys so much. I appreciate it.

You bet.

Our next question comes from Batya Levi with UBS. Please go ahead.

Great. Thank you. One more follow-up on the leasing question. The slowdown that you that we're potentially seeing excluding DISH, is that across the board or maybe specific to a player? And can you help us understand the amendment versus densification mix? Is the back half weighted more related to potentially densification efforts flowing through? And another one on the cost side, how does the $65 million lower cost outlook compare to your prior expectations given the progress you've made last year? Thank you.

Yeah. Thanks. I think, first of all, on the slowdown point, as I was saying, if you look at the 2025 numbers in the 2026 guide, if you were to adjust for the change in other billings, the growth this year is about what it was last year in the same

And on the cost side?

On the cost side, I think that we did say upon the announcement of the transaction, we provided the guide, post the close of the transaction that we are, you know, taking some costs out. So I think you're seeing here is in line, but I think the bigger point that we've talked about in previous calls is we think there is continued opportunity for us to make some investment in platforms and systems in the next couple of years drive better customer experience, whether it's cycle times or interactions with customers, more efficiency, higher productivity levels. I think as Chris Hillebrandt mentioned, we are on a pathway to pursue a series of initiatives that we think both in terms of investment and automation that we think including some AI efforts that we think will continue driving improvement on the cost side over the next couple of years.

Got it. Thank you.

Our final question comes from Ari Klein with BMO Capital Markets. Please go ahead.

Thanks. I imagine there are some legal costs associated with DISH. Is that in G&A? Is it of any significance? And then the composition of share repurchase and debt repayment is a little different than previously discussed. With flash repurchases, is that largely to maintain leverage ex DISH?

Yeah. So let me cover the legal cost. So I mean, we thought about it as we provided our guidance. There can always be something extreme, but I think it's factored into the guidance that we provided on your second question. Sorry. Give me a sec. Yeah. I mean, on your second question, I think the capital allocation framework we'd outlined was for leverage of six to six and a half. So if you look through that, with the change in the DISH outlook and you look at our EBITDA and AFFO, outlook, we thought it made sense to pay down more debt than stay within the range because as we said previously, the key for us is to be investment grade. So this keeps us in the leverage ratio with outline and continues to preserve financial flexibility and also provide good risk-adjusted returns for our shareholders.