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

Good morning in Houston. Good afternoon, East Coast. Good morning here in Utah as well. I'm Rick Prentiss, Head of Telecom Services Research at Raymond James. First, I hope you and your families are doing okay in these difficult times. Also, our thoughts are with those folks in Texas where Crown Castle is based. Obviously, that was a heck of an issue, temperature and water and power, just really thoughts go out to everybody with COVID, but particularly Texas is getting the double [indiscernible]. This is the 42nd Annual Raymond James Institutional Conference. It's my 25th Institutional Conference at Raymond James. It's my 100th earnings season, which is enough slings and arrows on the back. But it's the first virtual institutional conference. We miss not being together in person. We miss Dan not being able to join us in Orlando, Sunny Orlando, which is a great spot to be. But hopefully, 2022, we'll all be back together in person in Orlando to do this. So without further ado, I'd like to welcome Dan Schlanger, CFO of Crown Castle for joining us. Dan, Hi.

Hey, thanks, Rick, for having us. I agree with everything you said. Hopefully [indiscernible], but also miss [ being in ] Orlando. I'm just talking to some people about we always get together over at Orlando and everybody is missing it. So hopefully, this time next year, we'll see you there.

And in full disclosure, I think our Park City Summit is coming up in mid-August. And we're actually highly hopeful and confident that, that actually might be one of the first in-person events again to get together. It's a small group that would get together and talk telecom policy, but it feels good with the vaccines and everything else where we're headed. While we do this session, we have the ability for you guys and gals over the line to send a message by a chat. You can also send it into my e-mail account. But as everybody knows that we got no shortage of list of questions to ask as we go forward, but do feel free to shoot me an email or put it into the chat.

Dan, I think I'm going to start with -- you guys reported early. Thank you. We had a crazy flurry last week of earnings. But clearly, there's been a pullback in the tower stocks. How do you think about what's driving that change and how you look at '21 and beyond?

Sure. I think it's always hard to tell what moves the stock. I think what we focus on, generally speaking, is what moves our company and the value we're creating over time. And frankly, we couldn't be more excited than where we are today. We look forward -- and right now, we're still at the very early stages of 5G. We're just starting to see kind of the earnest investment start in 5G. And yet we're still growing our business substantially based on the investments that our customers, the carriers are making and improving their networks over time. And we look at our '21 guidance, and we see that our tower growth is accelerating from around 5% in 2020 to around 6% in 2021 at the revenue line. And that we're going to drive AFFO per share that's growing around 10% in 2021. And then all these things are just indicative of, despite not yet seeing tremendous investment in 5G, we still have a great business that is growing in a very sustainable way. And then as we see those 5G investments coming in longer term, past 2021, that we see that we have an outsized exposure to that upside through our small cell and fiber business, where we think that a lot of that spend will ultimately end up building more fiber and small cells, which is a business that we think that we are uniquely exposed to and think that the longer term that we will have a significant uplift in the revenues we have generated from those businesses and potentially even increase our growth rate over time, depending on how it all plays out, but one way or the other, we feel really good about getting to our 7% to 8% dividend per share growth rate target over the long term. And in addition to all that, we look at our '21 growth and compare it to what our peers are seeing and we're significantly higher than what our peers have come out with their outlooks. And we don't see any reason that over the course of the next several years that we might be able to continue a pattern of outperforming at the tower revenue line, given where we are with our customers, where we have our agreements and where we've positioned our assets. And so we think that we've done everything we can to position the company for short-term, medium-term and long-term growth while providing us the most opportunity to continue to invest in the business that we think has tremendous upside and optionality to 5G future.

Terrific. Clearly, one -- 2 of those, we'll start first. One of the items that's allowed you to be above your peers on '21 is I would expect the DISH MLA. Now DISH isn't going to help '21 probably a ton. But as you think about that MLA, how should we think about how that plays out over time for you guys versus the industry?

Sure. It doesn't really help all '21 that much because as DISH has been very public about, they don't anticipate getting a lot of the equipment needed to go on towers until late in this year, which means we won't have a tremendous amount of impact for -- from DISH in '21. And we signed that deal after we gave our initial outlook in October of last year for -- or in our outlook for '21, it didn't change our outlook because the assumptions we have made around the activity weren't tremendously different after that deal and before that deal for 2021. Now going forward, we think it does change activity levels. And the fact that DISH is talking about the agreement with us, ultimately setting Crown Castle up as their anchor tower provider or infrastructure provider, we really think does make a difference because it will allow us, in our opinion, to receive an outsized portion of their growth going forward in the next several years because both the agreement itself, the relationship we're developing with DISH, the interaction we're having on a daily basis to understand what they're doing and what they want to be doing. And also as part of that agreement, there's a fixed payment that is -- has been entered into from DISH to us as -- through that agreement. And whether they go on 2 towers or 20,000 towers, that payment stays the same. And it's a substantial payment, which means that the more towers they use from Crown Castle, the more they can amortize that payment over. So it becomes a better deal for them to use more and more of our towers, which was exactly what we were trying to incentivize them to do. And we think what they're going to be doing over the next several years is exactly what they've been talking about, is build out a nationwide 5G network that will compete favorably with the other carriers. And for them to do that, they're going to need to be -- to meet their requirements, they're going to need to be in the most populous centers in the U.S. in the near term, and we have 70% of our towers in the top 100 markets in the U.S., which we think puts well with -- fits well with how they're thinking about their business. And we think that given the combination of the location of our assets, the share size, the number or the 40,000 towers we have and the agreement we have that does give them incentive to move or to utilize more of our towers as opposed to fewer. We think all of that should lead us to have a very good insight to getting more than our fair share of the DISH network build in the near term.

Okay. Clearly, one of the other items that's helping you have above-peer growth rate is the lack of Sprint churn in the short term. Getting a lot more clarity from American Tower around the total magnitude of their Sprint churn, the breakdown of how it hits significantly 4Q '21 and then continues strong. SPAC gave a lot of clarity on kind of how the Sprint churn has teed up maybe about 1/3 of it being in the next couple of years and a big chunk, half of it being in '25, '26. Help us kind of put parameters around how you see the Sprint churn affecting you guys? If you have any rough idea on the magnitude and [ pacing? ]

Yes. I can give you some insight into that. But I think I want to start just with -- when we saw all this coming together, the Sprint and T-Mobile merger coming together, we made a concerted effort to go back and renegotiate some of the agreements we had with them to push out where the term of those agreements would come, which has resulted in us having 5 to 6 years left on average for those agreements. And that, we believe, was important because it gives us and T-Mobile time to understand what we each want and need out of the relationship and how much T-Mobile will want to add to their network versus how much they want to take away from the Sprint network. And how we can ultimately potentially work together to come up with something that solves some of their issues and solves some of our issues and we come out with a win-win and come up with a new agreement that may work. If it doesn't work, business as usual, works for us, too. We have a very good MLA already in place. But there are certain things we would want. I don't think we want all the churn to hit all at once. I think that is disconcerting and spreading it out, maybe better but it also may be better for us to keep that turn in place and just move on, depending on what the other side of that might look like for us. And if T-Mobile wanted to, say, accelerate the churn, what would we get in return? So we have all of the time and space to have those true negotiations. And we think we can do that because we have a good relationship with T-Mobile and believe we will continue to have a good relationship with them over time. And so it's hard to say exactly how it's going to play out. We do -- we did historically disclose, and we do continue to disclose how much revenue is associated with agreements that churn over the next 5 years by customer. And historically, before the T-Mobile and Sprint merger occurred, we broke out Sprint, obviously, because it was a separate company, we no longer do that because there is no separata Sprint. But we showed that there was in the neighborhood of a couple of hundred million dollars of churn that could happen in 2023 to give you some sizing and -- of what that looks like. That's significantly less than what our peers have talked about. But I also think that we have an opportunity, like I said, to talk to T-Mobile and have time because it isn't until 2023, to walk through this and try to figure out the better ways for us and for them to manage our relationship together. So we were not sure how it's going to impact us. But even with that impact, we believe that we have set ourselves up to have less of that churn over time than our peers have seen and what they've alluded to in their longer-term guidance. And we think that there's nothing that would point to us having a significant reduction in overall tower growth over a longer period of time. And we think that we may be able to maintain a really good, favorable, even in comparison, tower growth going forward because of, like I said before, the agreements we've reached, the assets we have and the relationships we have with our customers.

Great. As you noted, you guys were early in the cycle, that was before the DISH agreement, the original October guidance. Your January update unchanged was before the C-Band auction really finalized. How should we think about how the C-Band auction really finalized, how should we think about how the C-Band is reflected in your guidance knowing that the carriers have their analyst days coming up in just over a week?

Yes. We don't give guidance by band. What we give guidance to -- what we believe the activity will be to withstand the demand growth that's happening in the U.S. that is the underlying driver for our business. And we believe that wireless demand growth continues to be in the neighborhood of 30% to 40% per year, which requires our customers, the carriers, to spend a fair amount of money each year to keep their networks running and competitive and meeting that demand. And look, what we did when we gave our guidance and why we updated it in January with no change, is there was nothing that we had seen and could see coming that would change our belief in what that amount would be over time, especially over 2021. And so what we got to was that our guidance continues to call for, and as I pointed out earlier, we're about 6% growth in the tower business because that's what we think our carrier customers will ultimately spend in order to meet the demands of 2021, inclusive of whatever bands are thinking of or whatever company, in the case of DISH, the timing of all that. I think what the C-Band really points out is that the carriers see a tremendous amount of value in owning spectrum that they can deploy to meet demand in the future. And that mid-band spectrum that was part of C-Band and somewhat part of -- not somewhat, but part of T Mobile's purchase of Sprint or merger with Sprint, that's really valuable spectrum that can help the industry move towards a 5G environment. And what we're really excited about is when our customers, the carriers, have a lot of spectrum that is not being yet deployed or not been yet deployed, it's sitting fallow, not generating return and lots of demand for that spectrum in the case of customers wanting better quality of network and then competing on network quality with each other, and when we see all of that come to fruition and come together in one spot, that's when it has always been good for the tower industry. That leasing has increased over time when there is lots of spectrum, lots of demand and lots of competition going on. And we feel like we're seeing that with the addition of -- the potential addition of 5G coming in with a network upgrade without taking down the old network. We think that, that sets up for a long-term growth pattern for the tower business that -- as I started this conversation with it, we're really excited about as we sit here today.

And I won't say C-Band, but mid-band in general, used to be -- we didn't even think of 2.5, let alone 3.5 of being deployed on towers. How should we think about how you're viewing this new definition of sub-6 gigahertz mid-band affecting towers versus small cells?

We think ultimately, it's going to be an all of the above strategy for almost every band. But this mid-band spectrum, as you're pointing out, is a nice combination of propagation characteristics where they go far enough, the waves go far enough and capacity characteristics that there's enough bandwidth within the band of spectrum to carry the data that is necessary to meet the demands going forward. And we believe that because of that, that it will -- the C-Band and all the other mid-band spectrum, will be deployed both on towers and small cells depending on whether in a specific market or a specific submarket for a specific carrier, the capacity is the issue or the coverage is the issue. And if it's coverage, I'll think a lot of it will be on towers. If it's more capacity issues, there'll be a lot more on small cells. And depending on how those propagation characteristics actually play out in the real world, as you get higher and higher in the bandwidth, it gets more and more likely it will be on small cells. But we believe mid-band will be squarely in the camp of being utilized both on towers and small cells. And what's so exciting about that for us is both are great. For us, what we -- part of what we've done purposefully is set as a company up such that it's not better for us one way or the other, both are good, that small cells and towers will drive good value and significant growth. And we feel extremely well positioned regardless of how our customers want to deploy that spectrum and think that we are unique in that situation because of the investments we've made over the last 10, 15 years.

And one of the things this new mid-band spectrum coming out, we have 2 more auctions hopefully scheduled for this summer and this fall to bring even more out, is a question on millimeter wavelength, the stuff that's over 6 gigahertz. How do you view what's happening in the above-6 gigahertz spectrum band as far as work activity, but also does it maybe tee up some more outsourcing?

Well, we think outsourcing is the most efficient way of deploying infrastructure for any type of wireless infrastructure. That is true of small cells and tower. We've seen the effect that towers have had, where we have been able to free up a lot of capital for our customers and reduce their ongoing cost of operations by having -- share the cost of the infrastructure across multiple customers. That is also true in small cells. And as you're pointing out, millimeter wave technology will likely be deployed on small cells because it is hard to get on a tower and still have propagation characteristics that make sense. And because it will require so many small cells, we believe, again, that outsourcing becomes more and more important as you get more and more density because we can share it more and more. And that lowers everybody's cost. And we also think that it provides our customers a separate source of capital that we're able to provide capital that is outside where they would have to go in their own ways in the public markets to go get that capital because we can access capital and provide a different return stream. And we think we access different pockets of capital that way. So not only do we provide something that is lower cost, we actually provide a service of, we put the capital in place, and it doesn't burden their capital structure. And we think all of that leads to showing that outsourcing is a very -- is the most economically advantageous way of deploying infrastructure across large parts of the U.S. That's not to say, though, that outsourcing is the only way that any infrastructure will be deployed. I think small cells will be deployed by the carriers themselves as they self perform. I think that we have never and never will anticipate that we have 100% market share. So we believe that what we need to do is just continue to provide the value that outsourcing provides, which is lowering the cost and hopefully lowering the time to market because co-locating on a small cell takes less time than building from scratch, and we will have more and more deployments on which to co-locate. So we can lower cost, lower time to market and provide capital. Those are the things that we need to continue to push on and make sure that those are always true so that our customers see value and we see growth.

When you think about market share, what do you think your market share will be going forward in the markets you're in? And obviously, there's markets that you're not in, would you consider going into them?

Yes. The markets we're in, where we have fiber and we have small cells, we would anticipate we have a very good competitive advantage to get the additional small cells that would come because of all the things I said, it's lower cost and lower time to market. And those are the things traditionally, any customer buying anything cares about as long as the quality is there. And we have proven over our long history of building small cells that we do what we say we're going to do, we deliver what the customer wants and it works. And so as long as we deliver those things, we think we have a very good shot at winning where we already have fiber and small cells in place. Where we don't have fiber and small cells in place in new markets, that will all depend on the competitive dynamics at the time and where we see returns going. So we are not in the business of just generating more revenue. We're in the business of generating return on the capital that we are investing. And providing that return back to our shareholders over time in the form of an increasing dividend. And that means that every time that we invest in a new market, we have to believe that colocation will happen because we do not make a return over and above our cost of capital with the first tenant. We need a second tenant in order to do so. So the first tenant on a small cell system generates about a 6% to 7% return. The second tenant gets us into the low double digits, which clears our cost of capital. We need to make sure that, that colocation happens in a time frame that is approximate enough to the initial investment that we make that money in a time and then are able to generate increasing dividend growth. And therefore, if a new market comes up, we have to evaluate that market, make sure that, that 6% to 7% initial yield stays true and make sure that there's enough colocation opportunity for us to feel comfortable that we're going to get to that low double-digit. And hopefully, the third tenant mid to high, the teens types of returns to continue to deliver value for our shareholders. If that is what we see, then we'll continue to invest. If it's not, we won't. But that's how we are always going to bounce off those investment ideas in new markets as we look into the future.

Great. Return on capital, great point. I've known you guys a long time. I've known you, since Jay, who's CEO, was Treasurer, before CFO and now CEO. So you guys have engaged with shareholders for a long period of time. Last year, there was one that went pretty public with, hey, I'd like you to cut your CapEx dramatically. I'd like to raise your dividend dramatically. I'd like to see some Board changes and governance changes. Haven't heard a lot lately. You guys have got your shareholder meeting coming up this spring. Can you update us as far as kind of the process and where you're at and how you view that conversation?

Sure. As you pointed out, we regularly engage with our shareholders to ensure that we have alignment between what we as operators of the business are doing and what they, as owners of the business, want us to be doing. And when Elliott went public last summer with their recommendations, we discussed many of those, all of those with a large portion of our shareholder base to open the dialogue because the conversations with our shareholders are really valuable to us, and we want feedback about how we're doing and what we should be doing and what they think is best for the business and their capital and it's ultimately their capital. And through that process of engagement, we got a lot of good feedback, and it allowed us to have very open and transparent dialogue with our shareholders, which is something we aim to do all the time. Throughout that period and since, we've consistently received support from our shareholders for our strategy and for how we approach our capital allocation that we've been talking about. And what we've seen recently, and as you mentioned, we have a shareholder meeting coming up in May, and we didn't receive any shareholder proposals or external nominations to our Board that we would consider at that Annual Shareholder Meeting. So we will continue to engage with our investors. We'll continue to engage with all shareholders at all times. And we will continue to take feedback on how we are investing their money because it is important to us to understand what they want and to be able to deliver on those promises. What we have done, though, and I think we've been very consistent with this, is talk about how we think about all of that, strategy, capital allocation and ultimately, returns to the shareholders. And like I said, our goal is to grow our dividend at 7% to 8% a year while investing in a business that will generate substantial growth over the years and decades to come.

Great. And has there been any updates from Elliot? I mean it seems pretty quiet. You mentioned July, I think it was when the letter went public, and now here we are in February, there was nothing to the shareholder meeting, but any -- specific to them?

Yes. We don't talk about specific engagement with specific investors. The reason that over the course of the summer and afterwards we were more open about talking about Elliot specifically was because they went public. So they talked about it publicly, we had to talk about it publicly as well. If they're not going to go public, we don't talk about specific engagement. Just like we don't, with any other investor we have. But I think it is important to note, as I mentioned just a second ago, we didn't receive any proposals for any type of shareholder engage -- from any shareholders for external Board seats or otherwise to consider in our May meeting. So there's nothing that is specific that we would talk to. But of course, if any investor comes to us with ideas on how we can do better, we would be open to listening.

Okay. Speaking of investors, inflation and interest rates are coming up more and more on people's radar. Talk to us a little bit about what your view as a CFO is as far as your balance sheet, your current structure of debt and how you see the opportunities or risk? And also, how does inflation play into the business model?

Yes. Let me take those in reverse order, if that's okay.

Yes.

The inflation doesn't really play into our business model much at all. The vast majority of our cost structure is fixed. So on our tower business, most of the cost is in the ground lease under the tower. That is about 70% of the cost structure, and it is subject to an escalation provision. For the most part, that is a fixed escalator not tied to CPI, which is why we had fixed escalators on our revenue that are not tied to CPI. So we can match our revenues with our costs. And inflation really does not impact that very much. So there's not a lot of impact from our business model -- on our business model from the inflation that you're talking about. Where it does have an impact is the cost of capital. And cost of capital is very important in a business like ours, particularly as we are in an investment cycle for our small cell and fiber business. And what we've done very purposely over the last several years is try to reduce the risk of a rising interest rate environment on our capital structure. We are very focused on delivering the highest risk-adjusted return we possibly can to our shareholders. And part of the risk that we run is in the capital. And when we look at investments in our business, we have a long-term cost of capital on the debt side that is not exactly where we are today from a debt cost because we think that we are in a low interest rate environment that will not stay this way for the next 10, 20, 30 years that our investment cycle should take into consideration. So I don't think the inflation is going to be so much that it would get us to where we would change our investment thinking because we've already baked in a tremendous amount of increase in order to ensure that we're making good long-term decisions with our shareholders' capital. But we have made a very concerted effort over the last several years to reduce the risk in our balance sheet for inflation. We have moved from around 6 years average tenor on our debt to a little over 9 years average tenor on our debt. So that we don't have as much debt in any period coming due, and it more matches our assets with our liabilities. The second thing we've gone on our balance sheet is increase the amount of fixed rate debt in our balance sheet to over 90%, so that the increase in the inflationary impact on interest rates that would drive them up wouldn't have a near-term impact on us because we don't have a lot of floating rate debt that would be subject to that inflationary environment. And we did all of that on purpose, and we could have stayed short-term debt, and we could have stayed floating rate debt and driven a little bit more return for our equity shareholders over the last several years as we were in a deflationary environment, but we made a concerted effort to reduce that risk because we believe that our shareholders really focus on the sanctity of our 7% to 8% dividend per share growth rate. And we didn't want interest rates to be one of those things that we would say, well, we didn't make it this year because interest rate [ hurdled us ]. We actually chose to try to take away a lot of that risk. Because like I mentioned before, we're trying to maximize the risk-adjusted return to our shareholders. And that carries into how we thought about our operations and our strategy, too, which is why we focused on the U.S. and that we believe it is the best market in the world for wireless infrastructure investment and ownership, partly because it has the lowest risk for us. We don't take foreign currency risk. We don't take sovereign risk. We don't take country risk. And we don't take business model risk that could be different across the world. We focus more on the U.S. And when you add all of that together, what we're trying to do is make sure that, that 7% to 8% growth target is met. And since we laid that out in 2017, we have beat our 7% to 8% growth on an average basis. And we believe that over the next several years, we'll be able to meet our 7% to 8% growth. And in 2021, as I mentioned before, we're going to be higher than that. So we are very focused on balancing that risk and reward, making sure we've made good investments, but not putting too much risk into the situation that we may be caught off guard by something. We really want to deliver, every time we say we're going to grow at 7% to 8%.

Great. Are there happening -- speaking of investments, some transactions happening lately, not just internationally, but domestically, the PG&E deal, the InSite deal, Vertical Bridge has done some deals. As you look at the marketplace out there, how do you feel about valuations and what you might be interested in tucking into your very large-scale real estate operations?

Yes. We would love to own more towers. We'd love to own more small cells and fiber in the right places. We think they're great businesses and generate tremendous amounts of value as long as the entry point it is appropriate, and you can generate a return off of that. And we believe we're in a bit of a different situation than our peers are is that -- in the U.S. because we have the opportunity to invest organically in our small cell and fiber business that we think will generate really good returns. Now going back to what I said earlier, we generated 6% to 7% with anchor build. But by the time we get to a third tenant, we're at mid- to high teens. Those are returns that are hard to replicate at scale, and we're doing that in the U.S., which gives us an outlet for how we're going to make that growth happen going forward and doesn't have us where we're looking at investing through acquisitions as our primary growth vehicle within the U.S. So we think we are in a little bit different position, which makes us potentially look at those acquisitions differently. And I'm not saying they made any bad choices. I think it's always better to have more towers. We just think that our viewpoint is, how is our capital going to be used to deliver the most value over time to our shareholders. And we think right now, given the prices that are being paid, that we have a better opportunity to invest in small cells and our existing tower base than buying new. And we'll continue to evaluate that. And if that changes or if somehow we see that buying back stock is a better investment for our investors than would be investing in either small cells or acquisitions, then we'll do that. But we are driven almost exclusively by what is going to be the highest value-generating use of our capital for our shareholders.

How should we think about that available capital? I mean you have your leverage targets out there. But how much capital can you put to work each year for your capital allocation to construction projects? And how much then would be available possibly for stock buybacks or other investments?

The amount of capital that we need to invest in the business is going to be dictated by how much activity our customers want us to provide. So right now, we're building about 10,000 small cells a year, which puts us in spending about $1 billion a year net and then on our fiber business. This was not just the small cells, the entirety of our fiber gets there -- sorry, in total, not just our fiber business, $1 billion in total of net capital. So when we look at that, we believe we can fund that level of capital spending, that level of discretionary spending, just accessing the debt markets without having to access in the equity markets right now. If that were to substantially increase because our customers ask for substantially more small cells or fiber or towers or however our capital would increase, we might have to relook at that and potentially have to sell equity in order to make that happen, although that is not our preference. We want to sell as little equity as possible. We think it is highly valued in the future and not as highly as it should be today. And we want to keep as much of it to us and our current shareholders as possible. But if the investments were available that cleared our cost of capital and pushed us into needing equity, we would do so because we would ultimately think that, that added more to dividends per share than if we didn't do it. If we go the other way, and we see a reduction in capital intensity because of either a slowdown in activity, which obviously we would not want, or an increase in the colocation activity on small cells and then -- and therefore, a commensurate reduction in the capital intensity of that business, and we're pinned down significantly below where we're spending, we could have excess capital available at some point, at which point we would have to think through whether share buybacks would make a lot of sense. So we're thinking about all of that all the time. And it all depends on, like I said, the activity levels that we see and where those activity levels ultimately land in terms of whether they're new build assets, colocation access, towers or small cells.

Makes sense. Getting a question in, the RDOF auction made a lot of news, the Rural Digital Opportunity Fund to push fiber deeper into the footprint to serve more of rural America. Talk to us a little bit about how you see fiber going deeper into the network? What it means as far as where does population intensity makes sense for fiber small cell builds on your calculus? Yes.

Yes. For us, what we look at is, first and foremost, where do we think the small cell demand is going to develop, and where do we think there will be colocation opportunities if we were to build new. And we have focused on the top 30 markets in the U.S. because that's where we think that it is most likely that, that small cell demand will happen the fastest. And it also happens to be where our customers have already gone, which is very important to us. If our customers continue to expand where they want to build small cells beyond the top 30 markets, which we believe they will, and we see lots of colocation opportunities in those markets, then we would continue to invest. But we do not want to invest before we have a contract, before we have some sort of agreement that generates revenue at some point and ultimately generates a return at some point because being bright and too early would ultimately end up with us being wrong. We could have fiber that sits there for 50 years not being used, and then we get colocation. That's not going to work for generating the growing dividend that we're trying to do for our shareholders. So we likely will focus more on the denser urban areas and expand when our customers start to expand. But within those markets, we are focused on how do we increase the fiber footprint and the delivery of high bandwidth broadband to underserved communities and how can we make that work. And we are looking at ways, whether we serve school systems, which is -- a good way to do it is, whether we go after school systems or utilize some technology to help school systems get better connectivity to their students. We're always looking at ways to make that happen so that we can help close that digital divide within the cities that we operate.

So it sounds like a lot more customer-driven than regulatory-driven as far as where to deploy the capital.

Yes. For new markets, it's absolutely going to be customer-driven. Regulatory will ultimately -- it depends. I don't think that will drive our thought process unless there are regulations that would make it more difficult to build small cells at which point we wouldn't be interested in those places. But generally speaking, I would say, the customers are going to drive us to where the markets are going to be.

Sure. As we sit here coming up on our point in time, fast forward, March of '22, we're sitting in Orlando, having a [indiscernible] by the pool side again, enjoying the weather, enjoying comradery. What are you going to look back on saying, Rick, here's what happened in that last year since we were Zooming together to now? What are you going to be most excited about in March of '22, looking back to this time right now?

Yes. It's kind of what I started with. We are really excited with where the industry is right now. There is a tremendous amount of growth for us, and we haven't really even started on 5G. And what we will see is that investment coming more and more and we at Crown Castle being outsized recipients of that investment because of our small cell business. And a year from now or 2 years from now or 3 years from now, it will be the same thing, which is we are going to see a tremendous uptake in small cells and an increase in how that -- how many small cells are going to be necessary to meet the demands of 5G. We're going to see continued growth in our tower business, which will drive great returns for us, and we'll continue to work with our customers to make sure that they see the benefits that we provide, which are low cost -- low operating cost and fast time to market, so that we continue to drive outsourcing of infrastructure deployment in the U.S. And we think all of those trends will lead to Crown Castle operating very well over the next year, over the next 5 years. We are really excited about how we are positioned and how the industry looks like we are embarking on a potentially decades-long investment cycle that should benefit tower, small cells and fiber in ways that will be very good for our shareholders.

And when do we think edge comes into that equation? It feels like it's part of the solution over the long term, but it's really been hard to figure out when we go to that edge of the pool.

Yes. You're talking about edge computing and edge [ data ] storage. I think it will have an impact, but like you said, it will be some time in the future. I think we need to see how 5G ultimately is deployed and where we need that compute and storage capability to lower latency, so that we can meet the demands that 5G will generate. We think we're extremely well positioned for that, given our 40,000 distributed parcels of real estate that are at the edge of the network that are connected generally by fiber, and connecting to power, which is where you think that you want a data center because you have power, you have security and you have fiber and you have space. And at the edge of the network is where wired becomes wireless, which is typically small cells and towers, which is our business. So we're excited about it. We don't think that's going to be near term, but over time, we think it's going to be -- could be a very good opportunity for us.

Great. Well, we've reached our point of time. Dan, thanks for being with us today. Everyone on the call, thank you for being as well. Again, we hope you stay safe and well and your families do also. And we really, really look forward to getting together next year in person. Thanks, Dan, and stay well.

Absolutely. Looking forward to it. See you.