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

Good afternoon, everybody. Simon Flannery here. Delighted to be joined again in virtual Barcelona by Dan Schlanger, the CFO of Crown Castle. Welcome, Dan.

Thanks, Simon, for having me.

Great. Before we get started, please note for important disclosures, see the Morgan Stanley disclosure website at www.morganstanley.com/researchdisclosures. And some of you who've been on our previous sessions know there's a chat box or a question box on the webcast forum, so feel free to submit at any point, and we'll try to get to those questions as we go through this.

So Dan, you set an example for the whole industry every year by putting your guidance out with Q3 results. So we appreciate that. And it was bullish, encouraging guidance, 8% FFO growth at the midpoint to the top end of your historic 7% to 8% range. You raised the dividend 11%. So help us understand what goes into that guidance, what gives you the confidence at this early stage to put that out there?

Yes. Thanks again, Simon for doing this. I'm happy to be back and glad to participate. The guidance we give every year is based on, well, obviously, what we think is going to happen in the ensuing fiscal year. But what's I think different about our business and what gives us confidence in the ability to provide guidance in October for the following year is that our business is pretty stable and pretty predictable over a long period of time. The vast majority of our business is our tower business where we have long-term agreements that allow us to charge our customers a growing rate over time and then get paid for incremental activity. That incremental activity in many cases is activity that happens in, for instance, this year in 2021, but doesn't really start to impact our financials until 2022. And that gives us, like I said, a lot of predictability and visibility into the next year. And we've been able to utilize that. And I think it helps with us in our conversations with investors to be able to talk about the next year in October because I think it de-risks the way investors think about it, but it also gives some confidence that we know how our business runs and what we're talking about because we've been able to meet our guidance year in and year out despite being pretty early in when we provide it. And in this year, we look out and as you pointed out in your introduction of this question, we're really excited because that guidance comes on the back of what is a really, really good year in 2021, where we are growing our AFFO per share in double digits. And then we're stacking another year of AFFO per share growth at 8%, which, as you pointed out, is at the high end of our long-term 7% to 8% growth target. So we look at these 2 years in combination as being a really solid point of time for Crown Castle that is driven by the activity levels we're seeing by our customers. And basically, our business is driven by the increasing demand for wireless data in the U.S., which causes our customers, the large carriers in the U.S. to spend more money, to improve the quality and reach of their network and meet that insatiable demand that we as consumers push into the network. And that's what drives our overall business, and that's why we feel good about being able to give guidance now for 2022.

Great. Well, maybe we'll pick up on that leasing point. So a year ago, there was this great hope of the C-band auction underway and that the carriers would start to really lean into 5G spend and keep up with the T-Mobile rollout of their Sprint 2.5. We saw a lot of services activity earlier in the year. So how would you say, where are we in terms of what you had expected? And to what extent has that leasing really hit versus -- in your current guidance versus is there more upside to that from, let's say, DISH instead of doing the minimum required of 15,000 towers, but it's 50,000 towers to do a full nationwide build.

Yes. Well, I don't think that last thing can happen in 2022. I don't think they can get to 50,000 towers in 2022. So we're just talking about this year's guidance. And what we look at is, all of the dynamics you just spoke to are coming to play right now and it's what's driving the really positive results that we are anticipating generating in 2022. The most -- I think the most looked at one of those is just what our tower leasing is. And that leasing activity in 2021 is about 30% higher than it was in 2020. And then we're growing yet another 20% going into 2022, which puts us in a position of being 50% above our historic 5-year average of leasing on our tower business. Those are really big moves for a business that is as big and as stable as ours is. And that, I think, is why when we look at it, we're so excited is that the overall leasing activity growth is a signal that all of our customers are spending more on their networks to increase the quality of the network and meet the demand. And as you pointed out, we also have DISH coming in and building a nationwide network for the first time in a decade or 2 within the U.S. And when all of that happens at the same time, it's pretty rare, and you get times like this where as a tower company, we're growing, like I said, about 50% more than we have over the past 5 years on average. And it's just a testament to how good the business model is, is that we are able to drive that type of growth while still investing a substantial amount in the future of our business through our small cell and fiber business that we think will drive future growth. So not only are you getting all that upfront, we're also investing in the business to drive long-term growth. I think that's what's unique about how we position Crown Castle. It's not just sitting with the tower market in the U.S. saying it's always going to be great, which we think it will be. It's just that we're adding additional avenues of growth that we think will also be great. And I think that's a pretty unique perspective that we bring.

Great. And there's a lot of talk about supply chain. One of the other issues that's come up here recently has been the FAA's concerns around the C-band deployment and interference with altimeters. And we had AT&T on yesterday saying that they've closed some of their C-band build. Do you have -- have you seen any change in activity levels from the carriers? Do you have any insight into how quickly this will be resolved?

Unfortunately, we don't have any insight into how quickly this will be resolved. It seems like there's something within the U.S. government that needs to be resolved, and that's not something that we have a lot of input into obviously. And with regard to the activity levels, as you pointed out, I think it's better to ask the carriers how they intend to respond. But what I would say is, in general, our carriers are making very long-term investment decisions to try to improve the quality of their network and delays of a month or 2 or however long it may take, I don't think really impact those decisions because the drivers of why those investments are necessary are continuing, whether they make them now or make them in a month and waiting a month would just delay everything a month. Whereas they can get everything situated on the tower ready to be used and then just flip on the switch when they need to deploy the spectrum whenever this interdepartmental discussion is resolved. So we're not overly concerned about what might happen here. We think that it will continue -- our customers will continue to spend on their network for all the reasons that they need to spend on their network now, which is meet demand and compete on network quality for the ultimate consumer. And we don't see that really slowing down that much because of this situation with the FAA and FCC.

Great. And you're also on the supply chain more broadly, you're spending CapEx yourselves on fiber and small cell network build out. Any kind of commentary on how that situation is evolving. It seems like the telco industry has been able to manage through it [indiscernible] comm infrastructure reasonably well so far.

I think you said it well. We believe we have managed through the supply chain issues thus far pretty well. We have not seen an impact on our business. We don't anticipate a material impact going into '22. I think where we would be hit with the pressures of supply chain would likely be on crews, both to build fiber and to climb towers, which likely be the biggest place we would feel the supply chain crunch. We've done a good job within our supply chain organization of -- not necessarily because of the supply chain crunch but just because we want to manage our business as proactively as possible, having long-term agreements and having good relationships with our vendors across the country on a local and national basis. So we feel like we've positioned ourselves very well just because we wanted better visibility for ourselves that also translates into when a supply chain disruption happens that we won't be as affected as otherwise might have been the case, like I said, by entering into longer-term agreements, getting more guaranteed access to crews with the promise of us guaranteeing business for our vendors. So it's a 2-way street that I think has developed a really good partnership with a lot of vendors across the country, and we think it's reaping benefits now, too.

Great. One of the side effects of inflation -- or of supply chain is inflation and both wage inflation, equipment inflation, we're hoping it's transitory. But I think it's been nice that the tower industry has had this 3% escalator model here. But for the longest time, inflation was under 3%. And obviously, we're not there today. But how do you think about your ability to basically manage your cost base because a lot of that, I think, with ground rent, et cetera, is controlled as well and also ultimately have pricing power above and beyond that if indeed we were, let's say, a 5% or 6% for an extended period of time.

Yes. We don't think that, that escalator will necessarily go up very much, just like it hasn't gone down because inflation was low. That escalator was initially tied to the ground rent that we pay for the space underneath our towers, where we would enter into long-term agreements to make sure we had control over that ground when our -- when we didn't own it. And those agreements typically had 3% escalators, which would increase our costs by 3%. And therefore, we pass that on to our customers, and that's how that 3% kind of evolve. So it wasn't directly related to year-to-year inflation, it was more related to real estate inflation over time. We believe that, that -- those dynamics still are true and still intact. So we increased our revenues by 3% and ground lease, which is by far the largest line item cost in our cost structure is still growing at 3%. When we have those 2 things together, we think we're relatively well protected. The other large portion -- another large portion of our cost structure is interest expense. So between ground rent and interest expense, it's a pretty big portion of what our cost structure is. And we've spent the last 5 years really focusing on preparing the balance sheet for a potential inflationary environment. And we've done that by extending the tenor of our debt, where 5 years ago, it was close -- the tenor of our debt was closer to 5 years and now we're a little bit over 9 years and decreasing our reliance on floating rate debt where we've got to less than 10% of our balance sheet, the debt structure is floating rate debt right now. We've also reduced the secured portion of our debt structure so that to the extent that there is disruption in the unsecured markets, we still have the ability to borrow money from somewhere. All of that, if you think about it in a deflationary environment, has come at a cost because we paid higher interest expense. If we have gone very short term and very floating rate, we would have had much lower interest expense every year over the last 5 years plus. And that could have theoretically allowed us to increase our FFO per share. But we would rather have spent that as a way of limiting the risk of a reflationary environment. And as we're reaching that reflationary environment, this is all coming, I think, to help us is that we don't see a significant increase in our interest expense going into 2022. And we see the -- although growing fixed growth nature of our largest expense item of ground rent and think that inflation has very little impact on our profitability. And the evidence that about 90% of our incremental revenues are falling through to AFFO in our 2022 guidance. So we just -- we don't see inflation as being a major driver of anything for us, which is why we don't think we will go back and try to negotiate higher escalators because we don't want that to go against us in the future. And that escalator is a meaningful driver of value for our shareholders. And it's something that we want to preserve. So 3%, I think, is pretty close to where we want to keep it.

But does it change how you think about contract lengths going forward? I mean this industry also has like 10-year contracts and we saw a 15-year contract with one of your peers. How are you thinking about that when people are looking for extensions?

Yes. Again, we don't think inflation has a significant impact on our profitability over time because of all the dynamics I just went through. Therefore, it doesn't have much of an impact on how we think about contract lengths. Those contract lengths, I think, are -- they're 10 years, which give us and our customers a lot of certainty over, for us, the growth in our revenue and for them, the growth in their cost structure. That I think is valuable to both parties, which is why that contract length has remained in that general 10-year range for a very long time, and we don't see a lot of reasons to change that. That isn't to say that any contract we sign is 10 years, our DISH contract was 15 years. So it really depends on the negotiation and the specifics of the discussion. But inflation won't impact our decision-making on that front.

Makes sense. We're just winding up Auction 110 of the 3.45 spectrum. It's another almost $22 billion. How do you see that in terms of the opportunity for incremental revenue? Or is that probably going to be largely bundled into any sort of C-band amendment or colocation?

We think any time that there's incremental spectrum that is licensed and available to be deployed, it's good for our industry. We get paid as spectrum gets deployed on vertical infrastructure, and that usually includes more equipment in the form of towers, in the form of antennas, remote radio heads and fiber cabling on towers. I think the point that you're trying to make -- or that you were making not trying to make, you're making is around can the new 3.45 gigahertz spectrum be deployed in an antenna that is shared with the C-band spectrum because they are contiguous spectrum bands. I think the answer, and I'm not a network engineer, so please don't take this as gospel. But I think the answer is technologically its possible. But what we found over time is that our customers, the carriers are very focused on maximizing the spectral efficiency of the spectrum that they are deploying because spectrum is really expensive and it is the scarcest asset in the ecosystem. And whenever different bands of spectrum are deployed in a similar antenna or the same antenna, it reduces spectral efficiency. So I think it goes against the long-term evolution of the business that we would want to go down in spectral efficiency as opposed to up. So even if the first iteration of those deployments are in the same antenna, I think over time, spectral efficiency increases will lead to a split out of those antennas just to make sure we're getting the most capacity through the scarce resources spectrum. But I don't know how they're going to do -- I don't know how our customers are going to think through that and what they're going to do. We don't even know who won the spectrum yet. So it's hard to say. I think that they have done a good job over the length of their time they've been wireless companies to allocate capital very well to spectrum and then get it out in the hands of their consumers because they've had to compete for consumer on network quality and incremental spectrum is one way to do that. And we think that that's good for the tower business because like I said, more equipment on towers is better for us.

And do you have any insight on the timing of 3.45? Because a lot of the C-band spectrum, as you know, is not freed up until December of '23. So if you're looking to build out some of these second-tier markets beyond the top 46, can you put up 3.45, let's say, in a year's time ahead of when the C-band would be available in the market?

I don't know the answer to that question specifically. I do think that, like I said, for us as Crown Castle, we're relatively agnostic to which spectrum goes where as long as there's more equipment that's being deployed. That's really what matters to us. And what generates the requirement to deploy new spectrum and to increase the amount of equipment on our sites is just the increasing data demand in the U.S., which is growing at 30% to 40% per year, and we don't see any signs of that abating which means that it would be great if that 3.45 spectrum filled the gap between the first A block C-band going to work and then the next block of C-band going to work. That would be great for us because that just means there's more continuity in incremental leasing for us. So it would be great if [ they ] came in and our customers wanted to deploy it. But there's a lot of ifs in there, and we'll again, have to wait and see who won and what their plans are.

Great. And what are you seeing in terms of tenants beyond the major carriers? We've heard Charter talk a lot about their CBRS potential to build out some markets there that may be more small cell based. But are you seeing a lot of interest from whether it's fixed wireless players or other nontraditional tenants?

Yes. We have nontraditional tenants on our towers all the time. 20% of our tower business is nontraditional tenants. And we believe that, that will continue. To your point, I think more directly though, is whether that will accelerate as new entrants come in, whether that be cable trying to further their wireless products or other fixed wireless to the home-type providers. We are seeing all of that kind of in the early stages. Those new use cases come in. But I wouldn't say that it's substantial at this point. But it certainly gives us hope that there will be more customers going forward than there have been in the past. And this has already been a great business. So that would even add to it. And I think that there's a real possibility of that for all of the use cases you just mentioned. And we're at the very early stages of trying to figure out as an industry what the competitive landscape looks like, what 5G looks like and how those all play together, how fixed wireless to the home may compete well with cable. Those are all new and I think really exciting developments in our industry for an infrastructure player like us. And it's somewhat, again, we're agnostic whether that's specifically towers or small cells because both ways will help us tremendously, and will generate significant value for our shareholders. So we're excited about all of this and think it's a great time to be in the business we're in, especially given the positioning that we have kind of developed for ourselves. That we've invested in the right assets in the right markets at the right times. That when all of this is coming together, we think we're going to be a big beneficiary.

Great. And presumably, that's how the infrastructure bill money might start to flow through to your customers most directly through some of those fixed wireless and other build-outs. Is that fair?

I think that there will be some money that flows through to our customers and future customers. I doubt that we will get money directly from the infrastructure bill. But I do think we will be a secondary beneficiary of it as our customers get capital to spend to develop infrastructure, wireless infrastructure to communities throughout the U.S. And the great part about our business model is we lower the cost of implementation and operation for our customers. And by so doing, lower the cost ultimately for our consumers. If we can do that and they use capital that they get, they will likely turn to us to help them build some of the infrastructure or build out some of the infrastructure, which we think could very well accrue to our benefit over time.

Great. And we talked at this outside about the 7% to 8% long-term AFFO per share guidance. How do you factor in the upcoming Sprint churn in the context of that? You've got it spread over a number of years starting mostly next year. But what's the right way for investors to think about the piece parts of that?

Yes. We have included some disclosure in our supplemental earnings materials that show the revenue associated with contracts that are set to expire by year over the next 5 years. And with T-Mobile, we've broken that out between sites that are dual residency, T-Mobile and Sprint and sites that are single residency. And it was in that schedule, in 2023, there's $105 million of revenue that is set to expire that's associated with dual residency sites between Sprint and T-Mobile. That's the big chunk. And then there's another one, there's another big chunk of $185 million or so that's in 2028 or in thereafter column in that schedule. We believe that T-Mobile will likely focus on those dual residency sites for most of their synergies. And although it's not a projection that we've put in there, I think it's a good way to provide sizing for how big the churn event could be and when that churn could happen. And what we would say is that's kind of our business as usual case. That would be if we didn't enter into a new agreement with T-Mobile, that's when we would expect the major chunks of nonrenewals to happen would be in those 2023 and 2028, when those dual residency sites come up. But we will always look for ways of entering into agreements that may help us with churn or just overall revenue growth, and we are always in negotiations with our customers, including with T-Mobile to try to figure out if there is such an agreement to be reached and whether we can come up with something that's good for us and good for them and provides us a way of putting the most revenue towards us as we possibly can with the least amount of risk while still meeting whatever goal they want in terms of synergies and certainty around their cost structure. And if we can find a way to both get something we want, we'll sign that agreement and be very happy to talk about it when it comes. If not, then we're very happy with the business as usual case knowing that in 2023 there is some risk to a revenue reduction associated with the revenues on the Sprint dual residency sites.

Great. Well, I want to pivot to small cells and fiber. But first, maybe a conceptual question. One of the big debates I think, in the industry is this notion of converged digital infrastructure and Crown Castle for a number of years has pursued this strategy across the various categories of digital infrastructure. And now we see American Tower making the acquisition of CoreSite and we've got other examples through the industry. So what gave you the confidence to see that the opportunity to -- that the sum is greater than the -- the whole is greater than some of the parts here.

Yes. For us, the convergence was always in our heads, and I think it's playing out this way that wireless and wired infrastructure is basically the same thing. The only wireless part of the wireless network is the part from the tower, from the antenna to the phone itself. Everything else becomes wired very quickly. And we saw that. And as we saw that the density of towers was not going to be sufficient to withstand the density of demand that would be coming both just as a continual march of, like I mentioned before, 30% to 40% incremental data demand each year plus the advent of 5G with new use cases and requirements for lower latency and higher speeds, that towers just are not sufficient to meet all of that demand. And therefore, we thought small cells were going to be necessary when we started making these investments. And I think since then it have proven to be right. I think all of our customers are talking about small cells being necessary as well. And as you start getting to where those small cells are closer and closer together, the convergence happens kind of naturally. The wireless portion of the network gets shorter and the wired portion gets closer to the consumer to provide those parameters of performance in low latency and high speeds. So we were comfortable with that. And then we add to that the similarity in all the business drivers between towers and small cells being similar customer base, similar underlying growth driver being data demand, similar contract structures. All of those things led us to believe that this was -- the ability to offer a portfolio of towers, fiber and small cells was going to be helpful as that density really happened. Convergence is a consequence of that density, but not necessarily -- in the way we were thinking about it as the driver. It wasn't convergence drove the density. It was the density drove the convergence. And we've been very pleased with how this has played out because I think it has followed the pattern that we would have expected is that build out towers, build out small cells when towers don't meet the demand that is coming or that is already there, and go back and forth between those two. And we're seeing all of that occur within the U.S. right now, very much according to the thoughts that we had, and we're very pleased about that because what's happening is we're proving out that the model we thought was going to happen is happening. While still generating a greater than 7% return on the investments we've made, even though we're in the very early innings of this 5G deployment and the density that I was speaking about. So I think that it's all going the way we would have expected and it speaks well to what the future holds for Crown Castle and our portfolio of assets we've put together. And that we feel like we have the right assets in the right places at this point to be able to take advantage of these opportunities and really see that organic growth is what's going to drive our future more so than M&A because we just don't see what assets we would need to buy as opposed to the ones that we're going to build out within the network that we already have.

Yes. Great. So you have guided to a smaller level of activity in '21 and '22. And I think you've described it as the carriers really having limited capital resources that are allocated to macro and coverage first. So I think what investors are looking for is the kind of the visibility into that kind of reacceleration. So how do you kind of look forward? And what should we look forward to feel that you can get back to the historic run rate or even higher in that '23, '24 time frame?

Yes. The first thing I would say is that we got the biggest small cell award in our history earlier this year from a company that historically had said that they weren't going to outsource a lot of their small cells that Verizon gave us a 15,000 small cell node order. I think that's the first sign that we are still seeing significant demand. And importantly, that happened at a time when Verizon was very focused on towers, on macro sites being their deployment mechanism. They recognized that, that's going to stop at some point and they need to have small cells in the pipeline in order to fill the next leg of growth for their network. I think other companies may very well follow suit. And then over the next 3 to 5 years, we are going to see that type of acceleration that you said in the number of small cells being deployed in the U.S. And as that happens, I think that our business model will continue to prove out, and I think we'll continue to win people over. And I think that's going to be a great thing for Crown Castle shareholders.

Well, talking about winning people over. Can you just talk about the competitive environment for small cells? And I think investors understand in the macro tower environment, there's very few competitors in an area. But how do you think about your win share these days? And what's going on in the overall market competitively?

We think our share of the small cell market is in the neighborhood of 50%, with the vast majority of the non-Crown Castle performs, small cells being our customers building their own small cells as opposed to really third-party competition. And we believe that competitive dynamic has not changed very much as evidenced by our ability to maintain pricing and still get volume orders like we have. So we think the competitive dynamics are staying relatively stable and that we will compete favorably with our customers because we are able to share our infrastructure which allows us to lower the overall cost of implementation and operation for our customers. And as long as that's the case, that ultimately, those economics went out, and our offering will take over a lot of what they want to build. But we don't anticipate ever getting to 100% market share, and we think that self-perform will continue in many portions of many markets going forward. And that doesn't mean that we won't make money in those markets. We still have the ability to build and get additional tenancy, both from the initial customer and then the other customers that are in that market. And the initial yields we get of 6% to 7% mean that we don't have to get a lot of co-location in order to meet and exceed our cost of capital. So we think this is a -- it's a very good business. And competitively, we think we are extremely well positioned because we are the biggest with the most history, the most expertise and the most assets in the market.

Great. And historically, one of the challenges and particular during COVID has been permitting and zoning. How long is it taking to get through the system? Is there any opportunity to accelerate that? Or is it very much market by market?

On average, it takes us about 18 to 36 months to get through zoning and permitting. It is by far the longest lead time item within the build that we have. We have not seen that expand or contract during COVID, and we don't anticipate a significant difference going forward. As you pointed out, there are plenty of environments in municipalities where it's faster than that and they're plenty that are much slower than that, and it is very local. But our national reach and our history and our expertise, I think, really comes to bear here because we were able to talk to those municipalities having done so in other places nearby very often and give them references. Here's what we've done before, here's how we did it, this is the type of process we used, it worked out really well, please talk to them. And I think that allows us to deploy in areas where other companies will have a hard time. And I think that's a competitive advantage for us is how hard it is to get through zoning and permitting because even though it does take 18 to 36 months, which is a long time, it's somewhat predictable for us. It's not exactly because by location, sometimes it's highly unpredictable. But we have enough portfolio. We think that's a good average time. And as has been the case in the tower market. I think if you would have asked people 15 years ago, do you think it's still going to take 9 to 12 months to get an amendment of a tower cleared through zoning and permitting that's where they would have said, no, of course, we can shorten it. But that hasn't shorten at all. But that hasn't made the tower business a bad business. It just becomes the way you do business at some point. And right now, as I said, I think it's a competitive advantage for us. So we would like it to be shorter. I think it will be better for the industry if we could get more on air faster. But we don't think it's an impediment to us going forward.

And then turning to fiber solutions. I think you guided to another circa 3% revenue growth year for 2022. So help us understand the environment out there. We saw some strong demand during COVID but -- from wholesalers and others and hyperscalers and now enterprises seem to be coming back. What are you seeing out in the marketplace on pricing, demand, market competition?

We see a relatively consistent market for our business. We grew about 3% in 2020, and we think we'll grow 3% in 2021. We think we'll grow 3% in 2022. We have not seen a significant impact on either gross bookings or installs or on churn. And I think that's because of the niche of the market that we could really target is larger enterprises, more sophisticated customers that are less likely to change their direction in a short time period. So we see a little bit more limited churn than is typical for our business, so high single-digit percentage of revenue per year churn. And that's lower than industry average, all because that the targeting of our customer base, I think, really lends to more stability in that growth rate and in the long-term nature of the business. So we think that 3% is appropriate and don't see a huge impact one way or the other from COVID.

Okay. Great. And is there an opportunity there to be more aggressive, to hire more sales people to push out to -- presumably you pass a lot of small, medium-sized businesses and governments, et cetera, that represent untapped opportunity.

We think we have an appropriate scope and reach, and don't believe that there's going to be a lot more investment that is required in order to maintain this growth rate nor do we see a huge opportunity to increase the sales team and increase the growth rate. We think this is an appropriate level for us and are excited about it because, in essence, what we're doing is we're building additional revenue and return on to an asset that we're using for the small cell, which is the fiber. And on top of that, we're continuing to be very good at operating a fiber network which is hard. It's difficult to maintain and keep going a network that's delivering data to as many customers as we are. But we think those are very important capabilities to be able to bring to bear for small cells because operating a small cell system is operating a fiber system. So we think that, that is -- having that level of expertise that is on display every day because we have to compete in the fiber market does help with our negotiations and discussions with the carriers on small cells because it gives them confidence that we know what we're doing, and we're not going to let their network drop. And we're going to get it back up and running if anything does happen like a natural disaster. And we have expertise to do so. So I think that both from an economic standpoint and a capability standpoint, that fiber business is important for the future of our small cell business because it allows us to be the best small cell provider we possibly can.

Right. And one of the topics with this week's deal activity that came up again was the edge, and you've made some early investments in companies like Vapor IO. So help us understand what's the latest thinking amongst the Board and management around the edge opportunity and how to best position for it.

We think we're actually best positioned for the Edge as we sit today. The opportunity we see is that in order to meet the latency requirements for 5G applications, there will have to be potentially a computing and storage of data at the edge of the network so that you reduce the latency of that data having to move back and forth through a data center, and maybe computed and stored. And it's really the compute that's going to drive the latency. You want high compute applications being done closer to the edge to reduce the latency of that compute. Those types of applications, though, I think, are long in the future, a. And b, in order to get there, the 5G network will have to evolve to understand where that compute is necessary to drive lower latency. And that all, we believe, is going to require small cells because it's -- what we were talking about earlier is that the densification of the network leads to this necessity to have more equipment closer to the consumer, which is exactly what small cells are and then you'll understand where the data needs to be computed in a way that increases the effectiveness of that system. So we think the combination of having fiber, having small cells and having towers is the best way to attack that edge data center opportunity because we'll know where the traffic is based on our small cells and towers. We know -- we'll have the real estate that is connected and powered and we'll have the fiber that's able to connect those to edge data centers together, which is important for the latency aspects of it. And we think that combination of assets in a portfolio is exactly what's necessary for edge data centers. So we're positioned well as we sit today.

Great. Well, Dan, unfortunately, we're out of time. Great discussion. Thank you so much for joining us. Have a great afternoon, everybody.

Thanks, Simon. It's good talking to you.

Thanks likewise.