Why Crown Castle Shares Are Sliding Today

Crown Castle Inc CCI reported Q2 revenues of $1.867 billion, marginally beating the consensus of $1.86 billion.

Site rental revenues rose 10% Y/Y to $1.73 billion, with an organic contribution of around $155 million to Site Rental Billings.

Site rental gross margins rose to $1.314 billion from $1.173 billion a year ago.

Adjusted EBITDA increased 10% Y/Y to $1.19 billion.

Adjusted funds from operations (AFFO) per share, a measure of the operating performance of REITs, rose 14% Y/Y to $2.05.

Capital expenditures were $379 million in Q2, including around $361 million of discretionary capital expenditures.

Outlook: CCI reiterated FY23 guidance for site rental revenues at $6.488 billion-$6.533 billion.

The company cut the outlook for adjusted EBITDA by $50 million at the midpoint to $4.399 billion- $4.444 billion and AFFO per share by $0.09 at the midpoint to $7.50-$7.58.

Jay Brown, CEO, stated, "Expected growth in our core business in 2023 remains robust, including 5% tower organic growth, 10,000 small cell node deployments and returning to 3% fiber solutions growth by the end of the year. Longer term, as our customers spend to meet the significant increase in mobile data demand in the U.S, we have visibility to continued growth in our core business, with 75% of our expected 5% annual tower organic growth contracted through 2027 when normalized for the previously disclosed legacy Sprint rationalization in 2025."

"Augmenting that growth, we anticipate double-digit annual revenue growth in our small cell business over the next several years as we execute on our existing small cell backlog of 60,000 nodes, providing support for our expectation of returning to our long-term annual dividend per share growth target of 7% to 8% beyond 2025."

Also Read: Crown Castle's AFFO/Share Growth Likely To Lag Peers Despite Initial 5G Deployment Advantage: Analyst

Price Action: CCI shares are trading lower by 4.58% Y/Y at $108.30 premarket on the last check Thursday.