Guidance
All earnings 2024 guidance maintained. Good.
Guidance similar to consensus estimate. Good.
Capital expenditures guidance maintained: Bad. I really want to see this cut.
Fundamental real estate performance was pretty good. Slightly ahead of expectations for Q1 2024.
I still believe most dollars spent on fiber capital expenditures produce an asset worth materially less than $1.00 of value.
Regarding Fiber Disposition
Management is looking at all options:
Selling fiber. Good.
Selling fiber + small cells. Good.
Selling partial stake (could result in a JV). Bad.
JV idea is bad because:
It doesn’t get CCI out of the fiber business.
JV reporting in our accounting system is trash (transparency is awful).
CCI’s best scenario is simplifying the business. JV reduces exposure, but it complicates the business.
It’s possible that a JV might offer the most attractive valuation for the business, but it would need to be a substantial difference to be worth the complexity.
The JV structure was only brought up in regards to an analyst question (on earnings call), so hopefully it won’t be treated as a real possibility.
I’m glad to see management making the fiber disposition a priority.
Sector Performance
Tower: Solid 4.6% organic contribution to site rental revenues. Good. Slightly over guidance.
Small Cells: 16.3% organic contribution to site rental revenues. Looks very good, but this involves capital expenditures.
Fiber: 2.1% organic contribution to site rental revenues. This just isn’t enough given the capital expenditures.
Other Thoughts
Interest rates increased during the quarter.
Higher rates are generally bad for all REITs, but it is more significant for CCI because of discretionary capital expenditures.
Funding those capital expenditures requires issuing debt. Issuing more debt makes the impact of higher rates more significant.
Conclusion
4 points:
The quarter was pretty good for CCI.
Still waiting for a deal to sell fiber segment. Should take a while.
Fiber capex not cut yet, though we would like it to be.
The macro environment was (or is) still challenging with high rates.
Poll
I thrive on reader feedback. This poll may produce split results and this part is excluded from the word count for Crown Castle International.
Whichever route we go, I will aim for transparency and clear communication.
We can go into greater detail in updates, but we also want to consider the reader’s time. If we can get 90% of the value with 20% of the words, is that a superior article?
That’s something for our readers to decide (hence the poll).
Thank you for your support.
For some reason I'm getting an error when I try to respond to the poll. My 2 cents though on length is that it's a trade-off.
For example, I like Scott's writing, but whole sections of his reports are copied/pasted from previous ones. In part I get it, you both get asked the same questions repeatedly sometimes and that might be one way to head that off. I understand that some of the copy/paste is necessary for various disclosures, but at times whole chunks of the article are copied/pasted. It feels like some of that might be better suited for a wiki format (not sure of the extent to which that's possible with you guys still needing to paywall it) so that ongoing issues and topics can be listed there for reference.
This article felt a bit too punchy though. Even the paragraphs almost felt like bullet points. I tend to prefer paragraphs to express a reasonably complete idea, otherwise things can be broken up so much that it's ironically hard to follow despite being short and uncomplicated. I think the "Other Thoughts" section is an example. All of those are really the same idea. Interest rates went up again, which worsens the outlook for CCI if it moves forward with its capital expenditures since those will need to be funded at these relatively high rates. It's three paragraphs though, which feels off and almost seems to disconnect these ideas from one another despite you obviously wanting these to be connected.
Anyway, just my 2 cents. You do this for a living, and it's ultimately your style and content that's worked for you thus far. There's no harm in changing when you think it's a good idea, but aiming to please all audiences is an impossible task.
Scott's reports seem repetitive and over-long to my taste.