CCI Brief Update For Q1 2024

Guidance

• All earnings 2024 guidance maintained. Good.
• Guidance similar to consensus estimate. Good.
• Capital expenditures guidance maintained: Bad. I really want to see this cut.

Fundamental real estate performance was pretty good. Slightly ahead of expectations for Q1 2024.

I still believe most dollars spent on fiber capital expenditures produce an asset worth materially less than $1.00 of value.

Regarding Fiber Disposition

Management is looking at all options:

1. Selling fiber. Good.
2. Selling fiber + small cells. Good.
3. Selling partial stake (could result in a JV). Bad.

JV idea is bad because:

1. It doesn’t get CCI out of the fiber business.
2. JV reporting in our accounting system is trash (transparency is awful).
3. CCI’s best scenario is simplifying the business. JV reduces exposure, but it complicates the business.
4. It’s possible that a JV might offer the most attractive valuation for the business, but it would need to be a substantial difference to be worth the complexity.

The JV structure was only brought up in regards to an analyst question (on earnings call), so hopefully it won’t be treated as a real possibility.

I’m glad to see management making the fiber disposition a priority.

Sector Performance

• Tower: Solid 4.6% organic contribution to site rental revenues. Good. Slightly over guidance.
• Small Cells: 16.3% organic contribution to site rental revenues. Looks very good, but this involves capital expenditures.
• Fiber: 2.1% organic contribution to site rental revenues. This just isn’t enough given the capital expenditures.

Other Thoughts

Interest rates increased during the quarter.

Higher rates are generally bad for all REITs, but it is more significant for CCI because of discretionary capital expenditures.

Funding those capital expenditures requires issuing debt. Issuing more debt makes the impact of higher rates more significant.

Conclusion

4 points:

1. The quarter was pretty good for CCI.
2. Still waiting for a deal to sell fiber segment. Should take a while.
3. Fiber capex not cut yet, though we would like it to be.
4. The macro environment was (or is) still challenging with high rates.

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