DigitalBridge Group, Inc. (DBRG) Earnings Call Transcript & Summary

All right. Welcome, everybody. This is always, I think, one of the most interesting conversations I have every year at this conference. And it's a pleasure to welcome to the first installment of the Communacopia + Technology Conference, Marc Ganzi, the President, CEO and Founder of DigitalBridge. Marc, thanks so much for being here with us on the West Coast this year.

Thanks, Brett. It's great to be here actually. It's -- the nice merging of the conference gives us a chance to connect with more customers. So this is -- I hope we get to do this again because it's been great for us. We've had a very busy 2 days here, not only seeing investors, but some of the great customers that have been here, particularly from the cloud side and from the application side, customers that we don't get to touch every day. So we're really happy with the format.

Another synergy. So there you go.

Yes.

So I think anyone in the room knows you're a digital infrastructure company, but you are a digital infrastructure company unlike any other. And so I think it might be helpful at the beginning of this conversation for you to sort of articulate how you've created a business model that is differentiated from what they see from most of the other large tower and data center operators that they are probably more familiar with.

Yes. So we're -- we've spent the last 2 years merging with another organization and sort of cleaning up the balance sheet and getting ourselves in a position where we could rotate to cash and clarity. And I think now 2 years into the job of sitting in the public chair CEO spot, we've achieved that mission. We sold about $50 billion of real estate. We've rotated to about $50 billion of digital infrastructure. And now we have a very clean and easier story for investors to digest. That ascension from $14 billion of digital assets to pro forma today $50 billion and eventually going to $70 billion pro forma for Switch and for the Deutsche Telekom tower portfolio really puts us among the top 3 digital operators in the world. And so we've used really the investment management model and our balance sheet to enable us to get scale quickly. And I think this business is a scale business. And if Tom Bartlett were sitting here, if Bill Stein were sitting here, they would tell you that scale matters. It matters from how you finance assets. It matters to the dialogue that you're having with customers. But at the end of the day, the business that we're in is about serving customers. My customers are Microsoft; Amazon; SAP, who was just up here; Salesforce, who was here earlier. It's the same thing for Bill Stein. My customers are Telefónica, Vodafone, Verizon, AT&T, Claro, same customers that American Tower has. We're doing the same things. We've just done it in a slightly different format, and we grew really fast. And so getting from sort of $14 billion of assets to north of $50 billion of assets did require us to go out and work in a more what you would probably call an alternative asset format, which is we inherited an investment management platform from the predecessor company we merged with. We took a step back. We looked at that investment management framework and we said, well, look, if we're going to go play in big processes like Zayo and Switch and partner with DT, with Deutsche Telekom, to quote Roy Scheider in Jaws, we're going to need a bigger boat. And so we've used other people's capital to go out and we raised the first fund. We raised the second fund. We've actually raised $13 billion of co-invest along that road at the same time, and it's enabled us to show up in scale and really be competitive in situations where we want to win, where we see high-quality assets. And so you look at the process with Switch, we had to compete against Digital Realty. We had to compete against Brookfield. We look at the Deutsche Telekom process. We had to compete against KKR, GIP, Stonepeak, American Tower, Cellnex. Those were formidable competitors. 5 years ago, we would have had no shot at navigating those auctions. But we not only navigated those auctions, we won those auctions because we played to win and we had the capital to do it. What I find interesting is when you look at what's happened in the last 2 to 3 years with Equinix thinking about how they grow hyperscale, they couldn't do it as a public vehicle, in their current public format. So they had to go out and raise third-party capital from GIC and a few other LPs. When American Tower showed up in Europe and they saw the size of the checks they had to write, they had to call PGGM and CDPQ to start raising third-party capital to go be competitive in the European theater. So we're doing the same thing. We've been doing it for about 8 years, as you know, in terms of leveraging other people's capital. I think what's unique about our model is we are doing the same things as our public brethren in the digital infrastructure space, except the capital we're raising, we do get fee and we get carry. And that's where we begin to look a lot like a Blackstone or a KKR and Apollo because our investment management business is a very interesting business because most of our funds are typically 11 to 13 years in duration. By the way, that's longer than a cell tower lease. That's longer than a data center lease. So our cash flows are quite long now. And if you look at, for example, the DataBank continuation fund we did last week that we closed on, that fund structure actually has no end of fund life, so the fee and the carry is permanent capital. And so this permanency to how we're creating revenues and how we're creating EBITDA is a lot like what you would see at a Digital Realty or American Tower, except the credit look-through is GIC, Allianz, AXA, State of Texas, PSP. And so we have long-lived cash flows that look a lot like a digital REIT, except it's not a 5-year lease or a 10-year lease on a tower or a data center. So it's kind of interesting. We're able to show up and play on that theater. But at the same time, what's interesting about where DigitalBridge is today, we'll have 30% EBITDA growth this year. And we had almost 100% EBITDA growth last year in the digital investment management business. That business is growing incredibly fast. We're able to form capital. We recently launched a core strategy. We launched a credit strategy. We launched a ventures platform. And so we're finding that our ecosystem is our ability to invest across the ecosystem, and to have those different products is also now increasing our revenues and is increasing our FEEUM. So it's been a really interesting journey the last 2 years. I didn't think we'd end up where we are today. I never thought we'd be, by the end of this year, close to $70 billion of assets under management. That was pretty interesting. But most importantly, I like our growth profile, and I really like the stability of our cash flow profile. That's something that we really changed in the last 2 years. And so as we navigate this crisis and we're thinking about what we want to offer to investors is our cash flows show up in turbulent times and our cash flows show up in good times. There's really no differentiation. I think what investors love about digital infrastructure is you're around in '01, you're around in '08 and digital infrastructure actually worked quite well through those cycles. And I think where we are today, this particular story and the way we're approaching it will work incredibly well through navigating kind of the next couple of years.

I was going to ask this question later [ but I'll ask now ] because you talked about the durability of the cash flow and the cash flow growth. What is the priority for the cash that you generated? Is it to recycle and reinvest it back into new funds? Or are you looking to return more over time?

Well, it's an interesting quarter right now. We'll actually return some capital back to investors this quarter. The DataBank transaction was really interesting. We weaponized -- we used the balance sheet correctly, made a material investment in what we think is one of the best edge computing businesses. But within 18 months, we turned that investment into almost 2x MOIC. And so we're paying that money back, obviously, to the balance sheet. But at the same time, we're triggering carried interest. So we'll actually report some carried interest in this quarter. And we also exited our digital [Audio Gap] And so that will trigger also some varied interest. So we're returning profits back to public investors in this quarter. We announced a small dividend that we would release, which we'll do that shortly. And so part of this is returning capital. But also, as you've highlighted, some of it is also to recycle capital into our best and new ideas. And so some of the new ideas we've been prosecuting obviously has been our credit strategy, which has worked extremely well in this environment. It's exceeded our expectations. Our core strategy has worked really well. And at the same time, we've been very clear and transparent with the Street that we're also going to pay down debt. And so we did that 2 weeks ago. We started paying down more of our preferreds. We've been very surgical finding windows where we think the market doesn't appreciate the value of what we build. And so there are counterparties that are willing to transact at a discount on the preferreds, and we've been plucking those off very selectively. We also announced a share buyback program. We bought back $5 million of our stock last week. We'll continue to buy back our stock if we think it makes sense and we think there's intrinsic value in using our balance sheet to buy back our stock. To be honest, that's my last preferred use of the cash. I think right now, we like the idea of continuing to seed new investment management products. We've just about invested 92% out of our second fund. So we're looking ahead to next year and future strategies. So we want to sit on cash because we do think next year is going to provide opportunity. And we have close to $600 million of cash and cash equivalents on our balance sheet today, and I'd like to continue to build that liquidity position about $900 million.

Okay. As you've said in the past, you were one of the early advocates for being invested across multiple types of telecom infrastructure. We've historically seen very specialized businesses, and some of them have started to diversify. What's interesting about the portfolio you manage is that it's very diversified yet you still operate each business with a specialized focus. And so I was curious if you could maybe explain why you think that setup is the right setup. And how are you able to create the synergies when technically these are different companies?

Yes. No, it's a great question, and it's one we're getting a lot now. We have 27 portfolio companies on a global basis today, and what's unique about that is I do think the ecosystem has changed. I've been doing this as a CEO for 28 years. And I think how our customers are purchasing today is very different from how they purchased 2 decades ago or even a decade ago. What's interesting is our customers' networks have changed, and the software-defined layer of the network has really changed the narrative. And I think if you were to -- again, I was listening to Karl yesterday from Equinix. He's a friend, and I liked what he was saying around Equinix's pivot into mobile infrastructure and how they're spending more time on C-RAN and O-RAN deployments with the mobile carriers because that's a really important part of the fabric of their ecosystem going forward. Where cloud hits mobility is right in where Equinix wants to be in terms of edge computing. I was with Rod Smith at a competitor conference a couple of weeks ago and he's like, "Look, we had to have CoreSite." I said, "Why? Why did you have to have CoreSite?" He said, "Well, we have to be part of the discussion around cloud and where cloud meets mobility." So I think our peer set has accepted what we were talking about -- you and I were talking about 6, 7 years ago that this is -- that the market is converging and that infrastructure -- if you don't understand how to sell through converged solutions, which is dark fiber, ultimately having some sort of data center solution, whether it's a high-powered node or whether it's a periphery node and then those nodes being ultimately connected to small cells and towers, all of this stuff interconnects back. And the connective tissue is really that SDN layer of the network. And as I think about what we're doing over the next decade is we're spending more and more time on the software-defined layer of infrastructure because I think that sort of metaphysical connection between the cloud and mobile is where there's going to be a lot of activity. And for example, the RAN hubs that we build, whether it's O-RAN or C-RAN, doesn't matter, but the architecture of a lot of the O-RANs that we built for DISH and a lot of the C-RAN that we built for T-Mobile, those are really edge data centers. I mean if you sort of boil it down, it's a protected environment. It's a raised floor. It's power. It's cooling. It's backup power. And ultimately, when you walk in, you no longer see base stations. You just see racks, right? And you walk into an O-RAN hub for DISH, by example, for Charlie, and you'll see 20 racks with either Nokia or Ericsson. And then behind that, you'll see a separate set of racks and there's maybe 2 or 3 racks of Mavenir, then there's 5 racks of Amazon. And you're beginning to see how this ecosystem ties together. Now in that instance, the connective tissue is Mavenir, right? They're providing that sort of interconnect fabric on a sort of virtualized environment. And we have to lease to those folks. It's no longer a one-to-one linear relationship where I'm just leasing to Verizon. I've got to understand how to lease to Mavenir. I have to understand how to build edge mobile infrastructure for Amazon. And at the same time, we're interfacing less and less with the carrier. We're interfacing more with Nokia's cloud team or Ericsson's cloud team. So the landscape has changed. It's changed a lot in the last 20 years. And I think where our team is spending a lot of time is on that virtualized layer of the infrastructure. And as I think about the future of DigitalBridge, yes, we'll have $70 billion soon, going to $100 billion of hard assets. But really, as we turn the page and we think about SD-WAN and we think about software-defined networks, we have to be central in that discussion as an investor, as an owner, as an operator. And that's where a lot of our intellectual time is being spent and thinking about the future of DigitalBridge.

But those traditional competitors, it seems like even if they're beginning to diversify, could never offer as much as your collection of companies could to any customer because as you've learned, trying to do all of this on your own balance sheet is just an overwhelming thing. You never would've gotten scale if you were trying to do this on your own. And even a company as big as American Tower would be hard-pressed to own as many data center assets and fiber assets and small cell assets as you own. So how do you think about the positioning of the DigitalBridge family of companies as we go through this next generation of network development?

Well, I think there's -- I'm really fortunate I wake up every day and I've got 27 CEOs that work with me to show up for customers. I mean that's the big mantra that we talk about every day. When Charlie hired Dave Mayo to go build his network literally almost 3 years ago, we remember going out to Centennial and sitting with Charlie and his team and the conversation was, "Look, we just don't want to sit and have another tower meeting." And we said, "Don't worry about it. We're not going to do that." So we showed up with DataBank and we showed up with Zayo and we showed up with ExteNet and Vertical Bridge. We brought 4 CEOs to that meeting. We said, "Look, Charlie, we can build a converged network for you." And that's -- you asked when can you put that together? How do you stitch that together? We're the connective tissue, right? I showed up to that meeting with 4 CEOs. I said, "Charlie, let us build your network for you." And we ended up building a big chunk of their initial launch, biggest network. Us and Crown was a pretty big player. But as you know, American Tower and SBA signed their MLAs with DISH like literally 1 year, 2 years ago. We had already signed a Master Service Agreement with those guys 3 years ago when they were doing the RF design. And that's -- I think that's interesting because obviously, American Tower and SBA are much bigger than us. But our understanding of what Charlie needed to do and what he needed to accomplish, we were more relevant because we could bring the ecosystem to him. And I think that's kind of the key. I think same thing with our conversations with Tim Höttges and Thorsten Langheim and Srini and the guys at T-Com. When they were looking to divest on their towers, the real key driver, and I think they said this in their press conference the day after they announced the deal, was they wanted an operating partner that understood where networks were going and where networks were evolving. And we'd had the experience with Mike Sievert and Neville and his team in helping them build their 5G network. And so that had circled back to Germany, and we got a great reference from the guys in Seattle saying, "Look, if you work with the DigitalBridge guys, they're not just going to provide capital." We're not just dumb capital. We're really, honestly intellectual capital. We're a partner with Deutsche Telekom. We're helping them think through what their C-RAN architecture looks like, how can they monetize their dark fiber. They've just started building small cells for the first time. And the conversation we were having was not the conversation that KKR or American Tower or Cellnex is having. We spent 30 days building a business plan with them, explaining to them how we can make the network more efficient and most importantly, how they can monetize the cloud aspect of their network in 5G. And that was really important to them. So it wouldn't have mattered what price Cellnex put up. It wouldn't have mattered what KKR put up. There was an operational edge that we had which was really a reference from the guys in Seattle saying, "These are good guys. They've built network for us for 20 years." That is something that, no offense to KKR or Blackstone, they don't have that 20 years of operating DNA that we have. And at the end of the day, that was the differentiator in winning that deal was the fact that we could show up as an operator and credibly look them in the eye and say, "Yes, we can build the network for you," and most importantly, "We can reduce your cost," by hub-ing base stations. They hadn't thought about hub-ing yet. And we said, "Look, if you hub it, here's what we can do in terms of lowering your total cost of infrastructure." And that was kind of an aha moment for them. So we've got to keep doing that. Every day -- it hasn't changed since the '90s. I got to wake up every day and I got to prove it to customers that we can add value. It's not just a pricing matrix. It's not the lowest rent. It's not the highest price. You've actually -- I think customers are a lot more sophisticated than that today, and you've got to demonstrate that you can add value.

That transaction included some terms that we would not typically see at a stand-alone public tower company. What makes it work for you?

Well, I think there -- the 5,000 BTS take-or-pay was really important for us. That's a committed amount of build-to-suit. The 13,800 microwave amendments, which is a really important thing, they were going back and forth and they had to have a clear path to how they ultimately roll out their microwave backhaul. And so we said, "Look, why don't we just price it into the MLA upfront? Here's the design specs. Here's the wind load." And they're like, "Well, how do you know the design specs and wind load?" "Well, because we've worked with you guys in other parts of the world, and we understand that." And so we took the guesswork out of what their microwave overlay would look like. We took the guesswork out of the BTS. And we just -- we made the MLA really simple for them because we've had so many of these MLA discussions and we understand they're pain points from our discussions with T-Mo here in the U.S. So I think that those applied learnings over 20 years of getting beaten up by Dave Mayo and getting beaten up by Neville Ray, we were able to sort of fast track those discussions and move a little quicker than Cellnex and move a little quicker than KKR. And I think that actually really helped us at the end of the day. We were actually -- in the bidding, we were the lowest price. We were not the high price. I mean there was another bidder that was materially higher than us. And so the business plan was actually -- and the execution piece was really important.

Okay. So you obviously now are going to have a very large European portfolio when the transaction closes. Can you talk a little bit more about what the asset mix that you managed in Europe looks like right now? And should you be -- should we expect that you'll be broadening it either into more towers or more the adjacent infrastructure that you also operate?

Yes, I think we will be pretty, I don't want to say, overweight towers, but towers will be a pretty important position for us just based on total AUM. And we do have a tower business in the Nordics called Digita. That's been one of our older assets we've owned for about 5 years. We do have a tower asset in partnership with Liberty with Telenet in Belgium. And then we do have a really fantastic tower but mostly small cell business in the U.K. called FreshWave. We've got about 6,200 nodes. Now that's up from 3,000 nodes last year. We had a real big surge in outdoor activity. So between FreshWave, Digita, Belgium Tower Partners and GD Towers, we've got -- and a big investment, obviously, in Vantage, I forgot. We are the largest shareholder in Vantage Towers of Vodafone. So we've made a pretty big splash in European towers. It's obviously through a bunch of different platforms. But we ultimately think this transition from 4G to 5G is the right moment for us, and that's why we made a lot of these bets. That being said, our fastest organic growth business in Europe is far and away Vantage Data Centers, which is our hyperscale data center platform. We've got 12 campuses in Europe. That's up from 6 campuses last year. We've already leased over 200 megawatts this year in Europe. We think we'll lease another 60 to 120 megawatts by the end of the year. It's been a fantastic year for leasing. New construction starts in Europe were up about 138% year-over-year. So we're building faster than we built last year, and our leasing pipeline is up over close to 200% versus last year. So the ability to deliver for customers on the hyperscale side in Europe is really important. Permits are getting tougher. Sourcing land is getting tougher. And I would say [ well-served letters ] from the utility companies are near impossible at the moment. There's not a lot of power to be had in Europe. So getting there early 4 years ago and building those campuses and having excess capacity. At the time, we thought that was risky. It's now turned out to be a really good decision. And what we're finding as we lease through that final capacity, rental rates are moving up. We're having the ability to recheck rents in Europe. And I think at the end of the day, our second biggest asset will be hyperscale data centers. Our partner, Mike Fries, spoke about an hour ago. We've got a great joint venture with them in edge computing. We're up to about 138 data centers now at AtlasEdge. These are mostly Tier 2, Tier 3 locations. Footprints are typically 8,000 square meters to 40,000 square meters, much smaller than Vantage; and obviously, very focused on O-RAN, C-RAN and edge deployment. So it's a very different business than Vantage. It focuses more on edge computing. And then on the fiber side, we've got 2 fiber investments. We've got Zayo Europe; and then we've got Netomnia, which is building out secondary and tertiary fiber-to-the-home model in the U.K. So Europe is a really active theater for us today. About 34%, 35% of our AUM sits in Europe. And we got there about 6 years ago and got a big team there, about 70 people now in Europe, and we've managed to continue to grow the business there.

So you mentioned Zayo. I used to cover Zayo when it was a public company, so it would be great to get a bit of an update. It's gone through some phases of transition as it's been part of your portfolio. There's been some management transition. There's been a bit of reorganization of the assets. So I'd be curious, what is the state of Zayo right now? And then that's a great way of saying let's talk a bit about fiber because -- and just as a little more of a preamble, I think most public market investors who have experience with the public fiber companies -- there's not a lot now. There's been a few over time -- they've always sort of failed to live up to the expectations that a lot of investors had for them. And I'm curious whether we're starting to see any of that potential begin to materialize in the assets you're operating.

Well, I think the challenge for public investors in fiber is we've often comped it to towers and we've comped it to data centers. It's just not a fair comparable. They're very different businesses. And I would say in fiber, you've got sort of 3 distinct swim lanes that also provide some differentiation. I mean fiber-to-the-home has a certain set of characteristics. Wholesale fiber or transport fiber, suboceanic fiber has a certain set of characteristics, and then you have enterprise fiber. I would say there's a new emerging sort of subvertical popping out of enterprise fiber, which is really SD-WAN. That's been a real big growth area. And so getting back to Zayo and what we had to do when we bought the business from Dan, one, we had to change management. I mean Dan was a great entrepreneur, and he was really good at buying stuff. He was not a terribly great integrator or operator. So we felt like we had to bring in somebody that had really strong operational D&A. And so enter Steve Smith, and he's been a breath of fresh air, has a military background, did extremely well at Equinix. And he's a CEO that knows how to go out and hire the right people and put them in the right chair and get the mission focused. And I think that was a breath of fresh air for the culture at Zayo. And so as we went down that road and we swapped out key positions, the second thing I had to do is change the product set. We had 30 products. We had 2 different sales teams. It was very confusing. So we brought in and we simplified the sales team, one sales team, simplified the channels, went from selling 30 products down to like 6 products. And by simplifying the product set, that just wasn't -- it was easier for our salespeople, but most importantly, it was easier for our customers. We put close to $140 million of CapEx back into the network, just there was some deferred maintenance. So we had to do that to fortify the network. And then as part of the simplification of the businesses, we sold the data centers. We spun out Allstream. And we just said, look, we know what we are. We're in the business of providing connectivity to enterprise users, corporate users, wireless carriers and cloud providers. That's what we want to be. And so by simplifying the product set, selling off noncore businesses and changing the leadership, and then we changed the sales culture, we changed the commission program. And these were all changes that just were so fundamental to allow -- to enable the company to move forward. And we had a rough year in '21 in COVID. There was slight negative EBITDA growth. We've now -- sort of emerging out of COVID, we've had really positive -- this year has been very positive. We're forecasting somewhere between 3% to 5% positive EBITDA growth this year. So we've turned it around with people, with products and just being really clear with customers about what Zayo is about. And that clarity has put us in the place we are today.

So is enterprise fiber a cyclical business or a secular business?

Both. It's secular in the respects that there are swim lanes where you market to. So data center connectivity, we have one team that does that. It's a very specialized sales process. And oftentimes, we're writing a check where we're putting in infrastructure to create that connectivity. Wireless is another segment that we're in. And sometimes, we have network and we're putting folks on net, or we're bringing them onto an existing tower and we're just lighting dark fiber. Or we're actually coming off our backbone and building a lateral and we've made a decision to go build 200 towers in Tampa, of which maybe 50 to 80 are on-net and the other 120 are off-net and you've got to go build that. So it's a combination of using existing infrastructure and lighting up new infrastructure at the same time. So we do think there are industry verticals that we attack, and we attack it with different product sets and different pricing models. But at the end of the day, the meat and potatoes is selling enterprises, large corporations. We do have an SMB business that has local sales teams that sell. And then obviously, we do a significant amount of transport. Transport is still a big part of what Zayo is about. It has a fantastic long-haul network. We pride ourselves on being a great partner to other carriers. So whether it's AT&T, Verizon, Lumen, Frontier, even Dave Schaeffer at Cogent, we carry a lot of other people's traffic for them. And that has been long the bread and butter of Zayo, and we're going to keep investing in those. We've actually got a couple of new long-haul routes we're building right now, and they're very lucrative. They're expensive. It takes time to build them. We just built a new route between Dublin and Slough, and within 2 years, it's fully leased. Just to give you a sense of that investment in a long-haul specific network where we saw very specific IP data center connectivity. So the other thing I'd say is we've also made decisions to acquire platforms, and we acquired an SD-WAN platform. We acquired an E-rate platform. E-rate is up about 10% year-over-year now because we've got the right team and we've got the right platform to sell into that. In SD-WAN, we didn't -- we bought Zayo. Zayo didn't have SD-WAN. So now we're selling SD-WAN. It's been incredibly successful and just gives our salespeople another tool as part of their toolkit to sell through to key corporate logos, and corporates are -- SD-WAN is up. That's a product that's up double digit year-over-year.

The only large public tower company in the U.S. that's in the enterprise fiber space is Crown. They're also in the small cell business. And for them, it's essentially one fiber business that has 2 revenue streams. Your small cell business is literally a different business. Why is it separate? And is there inevitably more synergy that can be found across these fiber assets?

I actually think there's more synergies between tower businesses and small cell businesses than there are between small cells and fiber. And it's not that I'm diverging from Jay Brown's narrative. I would just say that what we find is the challenging part of small cells is the vertical real estate. And the reason carriers use us to go build that small cell infrastructure is because we understand how to get permits. We understand how to do the RF design. We understand how to ultimately build that network. And most of our big customers today want us to use their fiber. So greater than 50% of the new activations with Verizon and with AT&T are node-only because they've made such a massive commitment to build fiber. So I'm not going to sit there and tell Kyle Malady that, "Oh, you got to use my fiber." If you say that, you're going to lose opportunity with them, and Verizon actually is ExteNet's biggest customer. So we find where we provide value is if we can get out in front and we can work with the PUC and we can work with that specific jurisdiction to get the poles quicker than they can, they use us.

I assume that's out of region for Verizon.

Correct. And same thing with AT&T, I mean, Chris Sambar has been really clear. He's like, "Look, we want to use our fiber. If you guys can go quicker and you can go cheaper, I'll use you. But if you can't, I'm going to self-perform." And where T-Mo and DISH -- well, DISH isn't building small cell yet. But T-Mo's pretty like, "Okay. We'll go turnkey. We'll do fiber and node and pole, and you go do that for us." And I'd say most of what we're doing with T-Mo, 95% of our work with T-Mo today, is turnkey. And I would say probably less than 60% of our business with Verizon is node-only, and I would say 45% to 50% with AT&T is node-only. AT&T is deploying more fiber than ever.

I would guess the node-only deals with AT&T and Verizon, even though it's outside of their traditional regions, they probably have more than one potential use for that fiber. Whereas if it was going to be single use, that might be the instance where they'd say, "We'll do turnkey." Does that sound about right?

It does sound right, and I think that's really -- that battleground is the suburbs, right? I think for AT&T, where we have found we've been most effective for them is in some of their metro builds. And their dense CBD core builds, candidly, they're -- unless we have some special provisioning with that municipality on poles, they're self-performing because they can do it faster and quicker than us. But when we go out into corridor traffic and we go out to the suburbs, we're more effective than they are. So it's just -- it's literally the small cell business is -- it is a street-to-street kind of fight. I think Crown would admit that. You got to go corner to corner, and you got to fight your fight. I think there's some reluctance on the carriers to do these big 15,000, 20,000 node deals that we did -- that both us and Crown did 3 or 4 years ago. I think the carriers feel like those things are tough because no one ever gets to the full commitment, and then you got to true up the take or pay and it gets a little messy. So I think we're seeing more RFPs in that kind of 100 to 250 node range where, to be honest, it's just us and Crown. There's really not another viable third party in small cells. A lot of people have tried to ramp up and do small cells. And we've seen small tower companies like Phoenix and Tillman try to do it, and then they try it for 2 years and they find out it's really hard. You got to have a lot of SG&A. You got to understand how to do RF engineering. You got to understand how to do permitting, and it's just so much more complicated than towers. The great thing about small cells, which is why I like Crown, I'm sort of positive on Crown, is the strategic moat to doing small cells is the toughest thing we do. The hardest business we run on a global basis is ExteNet and FreshWave, our 2 small cell companies. It's really difficult to do small cells. Not everybody can do it.

So we're already running out of time. I'm going to ask you about your thoughts on network densification. And just for context, do you think about all the prior generations of wireless technologies? We've seen 4 of them already. On the tower side, they get a new technology. There's usually some new spectrum. They go and they add that technology and that spectrum to existing sites, so they're signing amendments. They then realize they need density. So they start [ going ] on more towers, and that's kind of been a virtuous cycle that we've seen through at least 4 generations. I'm curious for your thoughts on what you think the densification model is going to look like in 5G, particularly since essentially all of the incremental spectrum being deployed at this point is at higher frequencies than we've ever seen in the first 4 generations, many of which required densities that may not be suitable for towers.

Correct. Look, we've been saying it for a while. We're probably -- the small cell market today is -- has just recently passed the tower count. There's probably about 420,000, 450,000 nodes in the U.S. today. Tower counts were about 350, 360, somewhere in that range. So for the first time, we've seen small cells nodes, physical node locations, have surpassed towers. We projected 2 years ago that we'd get to about 900,000 to 1 million nodes by the end of this decade. So by 2030, we think there's 900,000 to 1 million nodes. Now that definition of node is a little weird because you could go into AT&T Stadium in Dallas and we've got 287 nodes in that deployment just in one stadium. We've got 800 miles of fiber running around Jerry World. But ultimately, I think what we have to accept is that in 5G, you are going to see more small cells. You are going to see more densification. Now what's interesting is some of these small cells are getting even smaller. The nodes are getting smaller. Where you can put them is getting easier. You can attach them to light fixtures. You can attach them to traffic fixtures. You just walk around San Francisco and you can see the smaller nodes that are being deployed. So the technology has gotten a little smaller. You don't need all that RRU, the remote radio units, where it used to be up on the pole here in San Francisco. Now you don't need that. You can basically front haul that back to your O-RAN hub or your C-RAN hub, and you don't need the RRU up on the pole. That takes away a little bit of our economics because when you had a fully loaded RRU, you're talking about -- I just lost my mic.

We lost a microphone up here.

Is that a subtle way to say I'm off the stage now? But I think that those economics are changing. And I think when we used to get $350 to $400 a node, I think in a 5G environment, I think we accept that there'll be more nodes, but I think price per node is going down because the equipment is lighter. It's smaller. It can go in different places. And so you'll pay less for poles. You'll pay $12 to $15 per pole from the PUC, and you're going to see the equipment's a lot lighter and you're not going to have as much equipment on the pole. But at the same time, you've got to be able to go quickly and do more of that. So it would be interesting. I think the next 5 to 7 years in small cells, we've got to adapt. We've got to get quicker at it. We've got to be able to deploy faster. If we don't, I think both Crown and ExteNet are in trouble. But if we can figure that out, then they're going to be very good businesses. It's kind of a really interesting inflection point for small cells right now.

I'll squeeze in one last question and it's a follow-up on the densification. So will tower portfolios enjoy the densification colocation cycle in 5G that we have seen in all the prior generations? Or do you think that actually small cell infrastructure is going to be the principal beneficiary of it?

Well, I think in the first phase, it's played out just like it played out in 4G. So we're now sort of year 2 into 5G. The amendments we're seeing and the overlays are actually higher than 4G. That's good news, largely because MIMO is really heavy equipment. It's more loading. The antennas are bigger. The RRUs are bigger. So what's interesting is while the technology in small cells is getting smaller, on the macro side, the technology has actually gotten bigger. So we're seeing bigger amendments, bigger loading and higher rents on the 5G amendments. Now do I think that there's less macro densification? Don't know yet. Each carrier is a little bit different. T-Mo says they don't like small cells as much. They prefer macros. And then you go to Verizon and they say they like small cells and they want to do more small cells because they've got fiber and they think they can go quicker. And then there's AT&T, which is somewhere in the middle. And we don't know where Charlie will be in the next 5 years. So that's where we are.

All right. Well, next year, we're going to have to schedule you for a doubleheader because I could have done this for a lot longer. Marc, thanks so much for being here.

Yes. Thank you, Brett. Thanks.