Crown Castle Inc. (CCI) Earnings Call Transcript & Summary

Good morning. Welcome to Day 1 of Cowen's Communications Infrastructure Summit, our sixth one. This is our first virtual version, unfortunately, we couldn't be in Boulder. But the good news is Dan just promised they'll come to Boulder in 2021. So if you guys have -- if he says, no, we're all going to go to the transcript, and it's going to say that Dan said, he's going in 2021.

Now what it's going to say Colby is that Colby said that I said that. I don't remember saying it.

Now you are twisting things. So I wanted to jump right into. I wanted to talk about guidance, which I'm sure your excited to talk about. But the low end of your 2020 EBITDA guidance implies you have to do at least $189 million more in second half than you did in the first half, which I believe is based on a sizable step-up in services revenue. Can you remind me how much in services revenue this means you'll need to do or what the gross margin on said services revenue is expected to be?

Yes, sure. First of all, thanks, Colby. All kidding aside, I'm very appreciated to be here. And it's too bad it's virtual. It's great to get to Boulder in the summer. So maybe next year, it'll work out better for all of us. Yes, fingers crossed. Yes, the second half of the year, as we've talked about for a long time, is going to be a ramp in what our expectations are in activity levels across the industry. And where that affects us the most is going to be in our services business. And the way that works is, we basically have 2 sides of our services business. We have what we would call pre construction, where we do site acquisition work and structural analysis and things to get our customers ready to go on a tower. And then we have either installation or construction work, what we would call it, which is the work that actually puts the equipment back up on or up on the tower, and then after which we start generating revenue from a leasing standard. The preconstruction work is work that can happen on a more rapid basis because we don't have to get through all the permitting and so need to get it done. So we can start that work of site acquisition, starting the permitting work and starting the structural analysis and the things of that nature. And that leads to much quicker recognition of revenue and gross margin. And we expect that type of business to accelerate in the second half of the year as we see an acceleration in activity levels over the first half. And to be clear, all of this was somewhat within our expectation when we gave guidance in October. But we couldn't really predict the timing exactly, so we took a guess of what would happen. And what we're seeing now is the start of that ramp-up in activity. What we said on our call was that ramp-up is happening slower than we expected. But we're not saying that it's a slow level of activity. It's just less than what we expected when we gave guidance in October. So what we're seeing has been an increase in activity just a little later than we expected. And then in the second half of the year, therefore, will reflect that primarily in that preconstruction work we do on the services. And that's where we'll see the kind of large increase you're talking about for the most part. And again, if that gets delayed or things are a little slower than what we expect, then that's where it will end up and show up because we realize those revenues and gross margin in period. The construction work is the work that we had a discussion around how we accounted for earlier in the year that now gets wrapped up -- some of which gets wrapped up and capitalized into our business and recognized over time within rental revenues and some of it's recognized in period. So that work has less in-period impact than the pre-construction market.

Okay. And I guess, sitting here on August 11, is it fair to assume to achieve your guidance? You would have had to already be seeing a significant step-up in revenue. And if correct, is that what you are actually seeing?

Yes. We would need to know that the activity is coming. And we have -- like I just said, we have seen an increase in activity levels. Through the year and more recently, it just has happened slower than what we expected when we gave guidance in October and slower than what we expected when we talked about it in the first quarter. So that's why we started talking about how we maintained our guidance, but believe, we may be on the lower end of that guidance given how the timing has worked out.

And this will be my last question on this and promise, I'll move on.

No. It's okay.

But I mean like to hit even just the low end of that guidance, I presume you have to see a sizable step up, not just in the fourth quarter, but actually in the third quarter. And recognizing that, that quarter obviously started on July 1, and now it's August 11, so you're effectively halfway through that quarter, I would also assume that you would have already had to see it starting already now like it's actually happening post all, for example, happening in September, again, just given the magnitude of increase. And I guess, the most simple way of asking it then would be, is that what's actually happening when you look at where you're at on August 11?

Yes. So what I want to be careful of is giving something that updates our guidance. So what we said when we gave our guidance and when we affirmed guidance in our earnings call, which is not that long ago that was we're seeing a ramp in activity, and we believe that we could make our guidance range and that this is setting up for what looks like a good runway into 2021. Because as you pointed out, there's an obvious ramp in activity. Obviously, we have to do more activity and generate more EBITDA in the second half of the year than we did in the first, which we look at and say, it just bodes well for what's going to happen going into 2021, which is why we talked about just kind of how that growth into 2021 looks pretty good from where we sit today.

Okay. So in your press release, you suggested you could still hit plus 7% AFFO per share growth this year. Is that dependent upon the step-up in services we just spoke of? Or do you think you can do so even without that?

No. We would definitely need to get to an increase in the services over what we saw in the first half. So there is an increase in activity, like I keep saying, that happens that we believe is happening and happens in the second half that will get us to our guidance range and the timing of it has always been what we were talking about. It is not really if this type of increase will happen, it's when. And our original guidance, which was given in October, assumed the closing of the T-Mobile-Sprint merger on April 1, which was what happened. It's just how that -- the activity played out against our expectations was a little slower. And again, I don't want to say that, that's happening slower than what T-Mobile expected. We don't know. It's just the activity happened slower than what we were expecting. And what we're seeing now is the back half of this year still looks like there's going to be an increase, and we feel pretty good about.

Okay. You also talked about seeing higher AFFO per share growth in 2021 than you'll see in 2020. Is that based largely on expectations, you'll see an increase in site rental growth in 2021?

It's based across the business that we see that the industry is embarking on what feels like a new wave of spending. But we [indiscernible] keep pace with 4G data demands, but also to implement 5G in earnest. And when adding all of the competitive dynamics that are going on right now with all of our customers find for what looks like a lead in 5G and trying to compete on network quality, that means that increasing the number of antennas on towers is required. And in that backdrop, we are also getting the benefit going into 2021 and beyond of having a new competitor come into the market and build a nationwide group network, which really hasn't happened in a long time in the U.S. When you add all of those things together, what we see is that 2021 is shaping up to be a very good year for us as we continue to add infrastructure to our shared models. And that's across fiber, small cells and house.

I think part of it, what I was asking, too, is, is it a function that the acceleration in growth that you called out that you anticipate for '21, so something plus what you do in 2020. Is that a function of actual fundamental improvement in growth as you just described, so that's helpful? Or was it a function of potentially below the line benefits, for example, the preferred or convert, excuse me, how that impacts the financials and other things that may be occurring below the line that kind of help get you there? I guess that was...

Sorry, I didn't realize the crux of your question. The answer is it's all of it. In AFFO, what we're trying to present is the cash flow generation of the business. And some of that's going to be operating, and some of that's going to be financing and all the assumptions that go into what we think AFFO will be. Where we come out is, however, that happens, however we grow AFFO, that's all good because that is actual money that can be distributed to our shareholders, which is what we're really trying to do is grow the dividends that we pay our shareholders on a basis of 7% to 8% per year. And that's something that we're really keenly focused on, while we continue to heavily invest in what we think will be a very long-term growth engine for us going into the future in our small cell fiber business.

Okay. And then if you were to come in -- and I don't switch topics, I promise, if you were to come in a little bit lower on the guide than you were anticipating, particularly on EBITDA, your leverage would likely stay close to around 5.5 turns versus the goal of 5 turns. Would you be willing to live with leverage above your target of 5 for longer, and therefore, that's fine, that idea, which you're okay with it? Or would you be more proactive in getting that leverage down, perhaps through an equity raise?

Yes. There are a lot of ifs in there. So what I would say is, we believe we're going to make our guide, which is why we said we were going to make our guide. That puts us down close to our target leverage rate. I don't think we need to be exactly at 5.000x leverage in order to meet our range. And I think 5x leverage is our goal and our target, but we can be a little above that or a little below that and be okay with it. We don't think that we can be much above it for a long period of time because we've gotten feedback from rating agencies that being significantly above those ranges for a long period of time and not showing a trajectory into ramping down that leverage by ramping up EBITDA. If we wouldn't -- if we were not able to achieve that, they would have some concerns over our leverage profile. We believe we are going to achieve that with the growth we're talking about, particularly into the fourth quarter. If you look at that and it does show significant improvement in leverage, which we think will position us not to sell equity in 2020, which we've talked about. If things go totally differently than what I just said, then we're going to have to assess the situation for all of its different variables and understand how that's going to work out. And we'll decide then what we're going to do. But our goal is always going to be not to sell equity. We believe that the current value of our stock does not reflect the future value that we have embedded through all of our investments. We believe that we want to hold on to that future value for the shareholders that are currently in our stock and not diluted over time. So we want to hold equity very sacred and make sure that we sell as little of it as we have to. And that's why we think we can get through 2020 without selling equity. But like you said, if there's a lot of changes to what happens in how we generate EBITDA or how much CapEx we have, then we might have to change our thinking. We just don't believe that's going to happen because we believe we're going to hit through it.

Okay. Switching topics to organic growth. So 2020 guidance implies, I believe, about organic tower growth, plus about 3% for fiber solutions and then 15% small cells, which gets you to that blended 6.3%, which is your explicit site rental revenue guidance. This also compares to American and SBA or 2 comps, which have guided to 4.5% U.S. organic tower growth, again, versus year 6. Are you worth anything that could explain the higher growth you might be seeing this year versus the other 2?

Yes. Not really. It's interesting because this question happened to reverse a lot to where we were lower than they were a couple of years ago.

You're never satisfied, yeah.

Yes, I know. It's true, you're never satisfied, which is fine. You shouldn't be. You should hold us to a pretty high standard. So I'm not at all complaining. I'm just saying, when we entered the question then, we answered it, we didn't know what they were seeing that we weren't seeing. And then over time, we believe that towers is such a good business model that most all towers will grow at generally the same rates over a long period of time. So there are going to be sometimes where we're higher in the growth rates than they are. There are sometimes they'll be higher in growth rates than we are. I can't tell you exactly what's happening in order to make that -- those differences come to light. What we can say is that we feel really good about the position that we have in the market. We have 40,000 towers that are across all of the major markets in the U.S. It's throughout the geography of the U.S. that we're positioned really well that for the increase in activity or increase in spend that our customers need to have in order to meet the demands that they see coming that they're going to need our towers, just like they're going to need American towers and SBA's towers. And I don't think there's anything truly specific about any of them that says, this is what's going to attract a significantly higher growth rate to one versus the other, but there are nuances in how we've negotiated transactions and deals that I can't really speak to because I don't know what they have done. But we can say that what we've done, we believe, positions us really well for the future that's coming and puts us in a position or puts us with the right assets in the right places to get as much of that activity as we possibly can.

Okay. And I guess part of the excitement around towers, since the T-Mobile-Sprint deal was approved, has been this expectation that growth will accelerate in '21 off of '20 levels. But given that you're already 150 basis points above comps, do you think that's realistic expectation for Crown Castle?

I do. It's part of the reason that we -- when we talked about it in our earnings call that we believe that 2021 will be accelerating growth.

AFFO?

Yes. The AFFO. But like we said earlier, in order to get to AFFO growth that's better than what we have this year, you kind of have to have all the things. You have to have operating going your way, financing going your way, like it's hard to grow a business that size that much. So it's not like we're relying only on one versus the other. But like we've talked about before, it is sometimes hard to pinpoint exactly when things will happen and how they will play out exactly. But we believe that 2021 will be a good year. And we believe that the setup of the market speaks very well to our assets. So we're excited about what 2021 looks like. I don't want to give 2021 guidance. We'll do that in October. That's 3 months from now. So we'll do that well before our peers will. And we'll be able to talk about it more fulsomely about what we expect, where we expect it and when we expect it, so that we can give more of the answers to the questions you're asking then. But yes, we think it's realistic to think that we're going to be growing into 2021.

Okay. Back in November of 2012, so we're going way back. You've got 7,200 towers from T-Mobile. Do you think that, that increases or decreases the relative opportunity you have from the T-Mobile-Sprint combination?

I think it positions us well. I can't tell you what would have happened had we not owned those, but owning more towers are better than owning less towers. So I think it's better that we have those 7,200 towers, and if we wouldn't for any period of time, including a period of time where Sprint and T-Mobile have come together, and T-Mobile has talked very openly about how they want to increase the spending on their network and compete very favorably on network quality. So we think that more towers is better. I think the relationship we have with T-Mobile, in part because of that transaction is very good. So that's another reason why we're happy we have done that transaction. And then you add to it just that we have a long-term contract still in place that it gives us and T-Mobile time to figure out what they want to do and what we want to do and come up with something that will, in the future, hopefully, benefit the 2 companies together can come up something that's mutually beneficial. I think all of those factors add to why we're so excited about our position with T-Mobile. But that also absolutely includes owning the towers, the base centers.

Do you think [indiscernible] when -- I'm trying to phrase this in a way that you'll answer because I know you don't like to talk too specifically about any one company, or customer. But when you think back about your ownership of those towers, do you think that you've got your fair share or outpunched, if you will, others as it relates to the investment that T-Mobile has made because you've owned those towers? In other words, because you have that bigger base of the towers, which you acquired from them, you've seen a greater portion of their spend go to you versus perhaps others?

Yes. It's really hard to say. I don't know. What I can say though is that having those towers with T-Mobile on it on those towers has absolutely given us the opportunity to work with T-Mobile as they've expanded their network coverage because they've added equipment across those towers. It has been a very good transaction for us. I believe it's been a very good transaction for them because like all the transactions we have in buying towers from our customers in that time period, we gave them significant upfront value in cash in order to use that cash to spend on their networks. And T-Mobile is no exception. So we believe, like I said before, that just added to the mix of facts that we think are positive in terms of the relationship with T-Mobile and where we see those spend going from here.

I have to laugh. I got a question, and I'm just going to say it, says, are you going to ask Dan about the Elliott pressure to get better returns in fiber spend? Be patient people, we'll get there.

I have seen this on your list of questions, Colby.

So on T-Mobile 2Q call, so let's just stick with T-Mobile for one more moment. On T-Mobile's 2Q call last week, they said they've already begun decommissioning towers and again, recognizing that you have 7,200, even though I would assume most of those are Sprint cell sites, have you seen any of this decommissioning start to happen yet?

Yes. I'm not going to get specifically into what T-Mobile is doing. But we will -- I will say that we understand that they will decommission towers as part of their merger and as part of generating synergies for the merger. So we understand that. We understand that that's good business. And as we've talked about, we feel like we're in a really good position because we have 5, 6 years left on the contracts with T-Mobile and what were the contracts with Sprint. So we think that as those -- because it gives us time and T-Mobile time to figure it out, that we can work together to understand what each other wants and then try to come to something that's a mutually beneficial arrangement. Clearly to us, reducing the amount of decommissioning or churn on our sites is really important to us, but so is maintaining a good relationship and continuing to see the growth in the business. So we have a lot of things to balance, and we will get to a conversation with them and have those points in mind. And hopefully come up with something that works really well.

Okay. So shifting over to fiber. So you spent $1.4 billion in fiber CapEx in 2019. And you said you expect to spend $1.2 billion in 2020, yet you still expect to grow at similar levels, about 3% for fiber solutions and 15% for small cells, as we mentioned earlier. How are you able to grow at similar levels to 2019 while spending $200 million less?

It's really the timing of when that capital happens. So there's not a direct relationship between CapEx and growth, particularly when we talk about the small cell business, there's lags between some of the capital spend and when we ultimately generate revenue because we're building a lot of assets, and then we're putting small cells on air over a long period of time. So it's timing of how that capital is spent and when it starts generating returns. The -- on the fiber solutions side, it can be the mix of what type of investments we're making at any one period as well. So everything really depends on the timing when the capital comes in and what we're spending it on, I wouldn't say that $1.2 billion to $1.4 billion is a significant change or $1.4 billion to $1.2 billion is a significant change. Because it could be that we have a little bit more co-location, and that could help. So there are lots of aspects that can go into that, but that specifically was more about how the timing of the capital came in.

Not a structural change that we're seeing, you're not at a bending of the curve, if you will, where you want to convince -- or not convince, I'm sorry. You want to affirm or say to investors that this is a new trend where we'll be able to sustained growth with CapEx coming down. This is just more of, I guess, an anomaly or something, at least that's not going to be consistent.

Yes. I would -- I'm not sure I'd characterize it in any of the ways you said it. I believe that the difference between last year and this year's capital is more timing than it is a structural change in the market itself. I don't think we've reached the point yet where we have [indiscernible] that we would say that the vast majority of our future bills are going to be co-location as opposed to anchor build, which would be the bend of the curve you're talking about. What we see right now is a continuation of a lot of what we have seen historically of anchor builds still happening because there just isn't the right fiber through most of the areas where we're attacking to really have small cells go on that. So what we've -- as we've talked about in the past, what we focused on is to have really good fiber in very good markets. And the way we would define that is high-capacity fiber, meaning lots of transit fiber in the top 25 to 30 markets in the U.S. And as we focus on that, what we continue to do is make sure that we are a good partner to our customers, and we respond to their RFPs, including where we don't already have fiber. And that just hasn't really changed yet. Over time, it will, and this is exactly what happened in the tower business. We would build towers or buy towers that weren't yet leased up in many locations, thinking in the future, they would lease up. But at some point, there's enough of them, like we have now in towers where the lease up is happening, and we're generating a good return. And on the fiber and small cell business, we have not yet reached that rate. And we continue to build, which is why you see more of a steady climb in our yields than you would really spikes in values as we talked about on our earnings call.

This ties to the question that I will be explicit and ask it. Elliott has said it would like to limit fiber CapEx to $600 million a year, so significantly below the $1.4 billion in '19 or $1.2 billion this year. And all projects be tied to a plus 40% revenue ROI. Why isn't that something that you want to do? I mean it sounds like it's just true what you said, which is that you're building a 10-year-plus business and it's going to take a tremendous amount of CapEx to get there and to prematurely cut it off now would be to cut your leg off here where there's a huge opportunity that you'd be basically limiting yourself from by doing that. But I mean, can you do -- is there more of an olive branch that can be extended? And is there something else you can do here?

Yes. So there are a lot of questions you asked there. So let me try to take them somewhat in order. The recommendation from Elliott of getting to a 40% return on any fiber CapEx would limit us to only doing some sort of lease-up for fiber solutions. So more enterprise, more buildings being attached to the fiber we already own because you can't get to those 40% by really building significant fiber. It would be the exact opposite of our strategy and what we've articulated in our strategy for having bought and built the fiber that we have bought and built over the last 5 years. The strategy has been and will continue to be or investing in fiber that we believe will be good for small cells, like I just said, high-capacity dense metro fiber. And because those are long-term investments, we don't get 40% returns or yields, which is what they're asking for. We've been very open about this. We get 6% to 7% yields on the anchor build. And then 20%, 30% yields returns on co-location to bring up those anchor builds to what are over and above our cost of capital returns. And as we think -- as we've articulated, the future value that we think will be generated from this strategy really is in that co-location of small cells, and you got to build the anchor in order to get co-location. And if we were to limit our future spend only to 40% plus projects, not only would we not build anchor builds for small cells, we actually, as I just said, couldn't do co-location for small cells. And that's where the real juice has been in the shared infrastructure model. That would be like saying, you can't add another tenant because we don't want you to spend any money whatsoever. Like I said, that it's completely the opposite and would turn our strategy upside down. And we believe that the incremental value that we would generate from small cells is huge. And as we talked about in our earnings call, we see that we could -- if you get to kind of the 4G densities that we believe are available over the next 10 years, we could generate significant value. But if you believe like most people do that 5G is coming, and it will add significant density of small cells within the U.S., that density will ultimately be co-location on the fiber that we're building and buying or have built and bought over the last 5 years.

I think implied in that, though, is that you're going to see an acceleration in growth, right? It kind of goes back to Jay's point on the call about 1 million small cell TAM. If you, however, were to continue to grow at 3% on the fiber solutions business and 15% on small cells, so we don't see an acceleration. In that scenario, should CapEx come down?

At some point, it should. Like I said, depending on when we reach the point where more of those small cells go on existing fiber and our co-location, that would reduce our capital going forward. But just picking a 40% return target would force us into not really investing at all in small cells and not getting that growth of 15%, we wouldn't be able to do so. We would invest only in fiber solutions, which it is not why we want to own business. We want to own business because we firmly believe in the future of small cells. And we believe that they generate significant value over time and that values, when you look at the skew or the range of outcomes is that the opportunity to make more money is significantly higher than any potential downside that we can see in a reasonable case of scenarios. So when we look at the skew of even just the magnitude of the upside and downside, the upside is a lot more than the downside, as we pointed out, and there's 7x more upside than there is downside. And the likelihood that the upside happens is more than the likelihood that the downside happens. So when you look at all of that, cutting off those investments now doesn't make sense to us. If in 10 years, we have figured out that there are no small cells being added or at some point, where we figure out there are no small cells and we would have to reevaluate all that. Of course, in 2 years, if there are no small cells being added, we have to revalue. But as we sit today, we believe that those small cells are coming and that there's a tremendous opportunity to add value, much like we have in towers over the last 20 years by adding tenancy to already existing assets, but stopping now would cut off that opportunity. And we want to do that, we believe that our -- the path we have chosen we'll generate the best long-term returns. And the best part about it is that in the interim, while we continue to operate the business we operate and invest in the business that we see to adding value, we're still targeting generating 7% to 8% growth in dividends per share. So it's not as if we're saying to everybody, "Well, give us 10 years, and then we'll all figure it out together." We're saying, "Let us continue to do this because we see a huge amount of value over the downside. 7x upside, downside doesn't happen very often. And the likelihood of that upside is higher. But in the meantime, we'll still provide you 7% to 8% growth and a 3% dividend which is attached, in large part, to the best business ever in towers. So when we add all of that together, we look at this and say, this is the right time we'll be pushing into to an investment like this, especially with all of the activity that our customers are talking about on 5G, which will ultimately translate into small cells because the density of demand that 5G will ultimately generate.

When do you think, though, that we'll start to see it? I mean you mentioned -- again, Jay mentioned a TAM of over -- about 1 million, excuse me, installed by 2024 versus plus 200,000. You mentioned in your comments just now that if 2 years from now have gone by, you haven't seen any step-up, you would potentially have to reevaluate. I mean what is the time line that we should be expecting? And I guess, more importantly, what is it that we're looking for that's going to kind of catalyze that acceleration?

So what we did in our earnings call was try to give some indications of this. So we get 5 markets that we will continue to update on an annual basis to show how the progression in those markets has happened. And as we continue to add small cells in those markets, what we anticipate is those markets will go up, some of those will go up in yield, some may go down because we're adding anchor builds. But overall, we will continue to add yields to our overall capital and continue to add the returns in our overall capital. And while that may be a slow add in the short-term because we're building still and it's still anchor build. In the long term, we anticipate an acceleration of those yields. And what we would look for in the shorter term in the next 2 to 5 years is to ensure that we continue to add small cells at a pace that makes sense. And if there is -- there continues to be co-location where we already have fiber. But we're not going to avoid every project where we have to build anchor builds because we understand that, that is kind of required when you're in this state of maturity of a business. We're just too early on to anticipate that there's going to be a near-term switch into all co-locations. Just like it took a long time with towers to get to significant incremental yields. It's going to take a while with small cells. So what we're trying to show with those markets is the incremental progress we're making not that overall, all of a sudden, we're going to go from the 7% to 8% yields we have now, to 10% to 12% yields in 1 year, that's just not the way the business will operate. So we're going to -- what we want to show is continual improvement, continual progress, but we don't want the expectation to be because we don't believe this will happen. We don't want the expectation will to be that there'll be a significant job in any one period across the entirety of our capital, which is why we wanted to show specific markets that may have a little bit more sensitivity to what's going on with the dynamics of that specific one.

Okay. There's obviously a lot of debate about if, when the carriers do elect to build [indiscernible] that they will self-build versus use a third-party provider like Crown Castle. I know you price your small cells out to achieve a targeted 6% to 7% initial return, which you've yielded is higher than the 3% to 4% initial tower return. But does that equate to a price point that the carriers are deeming too high? And the reason I bring that up is when we have spoken with some of these carriers, and there's only 3 that you can guess that we speak to, it doesn't seem like they feel, the economics are that compelling to want to go and use a third party provider?

Yes. I believe the economics are compelling. That 6% to 7% yield, although higher than towers, is significantly lower than any one customer can build for themselves. And that's because we get to share that capital across all of the customers. And as long as we anticipate that lease-up will happen in a reasonable time frame, we're willing to put capital to work which is at a lower cost than they could themselves. And that economic advantage is the core to our business. If we're not delivering that economic advantage, if we are doing something that is causing our shared economics to be higher than their sole economics or more costly than their sole economics then we need to work hard to figure out a way to lower what our costs are. We are always working on that. We're always looking at ways to lower costs. We think we have a very compelling offering now, but we don't want to sit and say, it's compelling now and have people us catch or beat us in the future. So we're always trying to look at ways how to deliver our costs. But we absolutely believe, and we believe that our customers understand that using a third party, not just Crown Castle, but a third-party, is a more economic way to deploy small cells. I think the harder question that we have right now is, if that's true, why are some of our customers keen on building their own small cells. And that's a hard question for us to answer because that's an internal decision they're making, and they're not going to tell us all the time. But I can tell you that we have built small cells and are building small cells for every one of the customers we're talking about, which means there is some value proposition that they believe in or they wouldn't be doing it. Now how they balance, all of the goals they have in their network builds where economics is a key driver, but not the only driver, that's something we can't tell you. What I can tell you, though, is that -- is I feel really good about our offering. And that the core value that we bring, lowering their cost of implementation and ongoing operating is what we're going to continue to bring. And that's something that we feel really, really good about and feel like we are going to have good conversations with them and prove to them that value. And that over time, economics does not -- that building something for less because you're sharing the cost is better than building something for more because everybody does themselves. And I'll add to that, that not only is it better economically, it's better generally. It's better for people who -- when we start going back to work on a more regular basis, don't want the street tripped up and all the traffic to be worse because we only have to do it once, if it's crown Castle or a third-party provider as opposed to 3 or 4x, if it's every one of the carriers themselves building fiber. So we think not only is it better economically, it's better overall, and it's better for how this infrastructure needs to be deployed within the U.S. and we think that all of those reasons will lead to us being a very, very integral part of the future of communications in the U.S.

We're in the lightning round. So if you could limit your responses to 1 minute for these last few ones, that would be helpful. But any update on the SEC investigation you first disclosed on your reported -- when you reported the third quarter '19 results?

No. There's no update. When we do have something, we will talk about it. And we can tell everybody what's going on. But right now, we don't have an update.

Are you surprised it's taking this longer to resolve?

No. Not really something that we're going to comment on. So no real update.

Okay. And then as part of the changes announced on the Q2 call, the company said the Board has committed to reviewing the company's executive compensation program. Any sense how long this process will take and when they want to make an announcement?

Yes. I think that it's going to be part of our normal compensation program or planning. So I don't know exactly. But what they've committed to is understanding what is generally accepted in the market, industry practice, best practice in the industries and what our investors want. And would like to see because I think everybody understands that the compensation, you can never get perfect. What we can try to do is incentivize the right behaviors at the right times, and they will look at that very carefully and ensure that our comp is tied to what our investors believe is important for their investment decision.

One of the things, Elliott has said is that they believe ROIC should be a factor of compensation and further should be looked at relative to comps. Do you have a view on that?

Yes. I don't really -- I think that's going to be what -- it's exactly what the compensation committee is going to look at is what are the metrics? What are the relevant benchmarks they look at? All of those will be in consideration, and we want to make sure that we're responding to our shareholders in ensuring that their voices are heard. So we'll talk to you on it next month, I think.

Great. And then last question comes from the audience. How confident are they in seeing activity from DISH in 2021? It sounded like there could be some further delay in their build-out due to timing of necessary equipment. And I guess, maybe part of that should be how important is that component to the goals you've already publicly disclosed for 2021?

Yes. DISH has been pretty open. They have a build program. They have some requirements that they have to meet. They have been imposed on them for their purchase and ownership of the spectrum. So we think that they're going to be building out a nationwide network, and we're really excited about that. To the extent that it's going to impact 2021 and beyond, we'll get more of that detail coming up when we give 2021 guidance.

Great. With that, we are out of time. Thank you so much for being here. Super, super appreciate it, and enjoy the rest of your summer.

Great. Thanks, Colby. It's good seeing you.