[Management View]
Crown Castle management raised its financial outlook for full-year 2025, highlighting stronger-than-expected organic revenue growth and disciplined cost controls. The company confirmed regulatory milestones for the planned sale of small cell and fiber solution businesses are progressing, with state-level approvals underway and active Department of Justice engagement. Tower segment efficiencies, including SG&A reductions and shorter cycle times, are delivering quantifiable benefits, while the focus on capital deployment and dividend reset demonstrates commitment to long-term standalone value creation.

[Outlook]
Management expects to close the sale transaction in the first half of 2026. Post-sale, the company plans to grow the dividend in line with AFFO excluding amortization of prepaid rent, maintaining a payout ratio of 75%-80%. Annual net capital expenditures are projected between $150 million and $250 million for tower modifications, land purchases, and technology investments. Free cash flow will be utilized for share repurchases while maintaining investment-grade credit status.

[Financial Performance]
Crown Castle delivered higher-than-expected second-quarter results, with 4.7% organic growth excluding Sprint cancellations, a $6 million year-over-year increase in services activity contribution, and a $37 million year-over-year decrease in SG&A. However, these were offset by a $51 million impact from Sprint cancellations, a $34 million reduction in non-cash straight-line revenues, and a $16 million decrease in non-cash amortization of prepaid rent. The updated outlook for full-year 2025 includes increases of $10 million to site rental revenues, $25 million to adjusted EBITDA, and $35 million to AFFO.

[Q&A Highlights]
Question 1: Can you give more information on what's driving the higher leasing activity and if this is related to rural builds or other projects from the carriers? How should we think about the tail of 5G being longer or shorter than previous cycles?
Answer: The higher leasing activity is across the board from all customers and across the footprint, driven by the need to augment network capacity due to increased churn and subscriber growth. The 5G cycle might be longer than previous cycles due to the growing quantum of incremental data.

Question 2: What are you learning about the size of opportunity in incremental efficiency post-divestiture and the speed at which you could achieve it?
Answer: Crown Castle expects to reach the range of $2.3 billion to $2.4 billion of AFFO by the time the transaction closes. Further efficiencies are being identified through updating systems and processes, but the exact timing and quantification are not yet determined.

Question 3: Where are the most questions on overlapping costs left to evaluate and deciding the final breakdown of expense between the divested and core tower business?
Answer: Running three disparate businesses versus one is a big difference in simplification, which helps drive efficiencies over time. The main point is that the businesses are run fairly separately, so not much overlap on things like maintenance.

Question 4: How should we think about programmatic versus opportunistic buybacks?
Answer: Crown Castle plans to use the majority of proceeds from the transaction to pay down debt and some to buy back stock while maintaining an investment-grade rating. The execution of the stock repurchase program will depend on timing, market conditions, and what delivers the best results for shareholders.

Question 5: What kind of cycle times are you achieving that's helping results?
Answer: The average cycle time is in the six to twelve-month range. Incremental and marginal improvements in cycle times are adding up to impact new leasing activity, contributing to increased core leasing activity by $5 million.

Question 6: Is there any FCC requirement for the deal closing, and where are you at with DEI issues?
Answer: Crown Castle is managing its business in the interest of shareholders, customers, communities, and employees. There is no specific update on FCC requirements or DEI issues at this point.

Question 7: Is the board actively searching for a new CEO, and could there be any changes in capital allocation or stock buyback plans if there was a change at the senior level?
Answer: The board is actively searching for a CEO and is not waiting for the deal to close. Any new CEO would need to agree with the board's strategy and future plans for the company.

Question 8: How could Gen AI or AI drive incremental traffic by your customers and therefore incremental tower revenue?
Answer: As technology increases and moves, consumers will want it to move with them, potentially leading to significant increases in data demand. The exact use case is hard to pinpoint, but Crown Castle provides connectivity for whatever data is utilized wherever consumers are.

Question 9: Are you noticing anything different around carrier activity with respect to doing their own greenfield builds?
Answer: Crown Castle has not been involved much in build-to-suit recently due to terms not generating returns over the cost of capital. Historically, carriers ultimately sell their towers to third-party operators for lower total cost of operation.

Question 10: What is the pace of ground lease purchases, and could it increase going forward?
Answer: Crown Castle is focusing on identifying places where buying land under towers can generate good returns and reduce operating costs. The amount of land purchased is expected to increase in the back half of the year.

Question 11: Are you seeing an uptick in colocation activity, and how is the colocation versus amendment mix changing?
Answer: There has been no significant change in the mix of colocation and amendment activities. Capacity additions can be based on adding capacity at existing towers or new towers.

Question 12: What is your exposure to USM, and how could T-Mobile's acquisition of more towers from USM impact you?
Answer: Crown Castle has minimal exposure to US Cellular towers, and any changes would not have a meaningful impact on financial results.

Question 13: Should we expect more costs to be moved over each quarter until the deal closes?
Answer: There will be minor moves of costs from continuing to discontinuing operations, but not a systematic march each quarter.

Question 14: Can you provide details on planned maintenance CapEx for the second half of the year?
Answer: Maintenance CapEx is expected to be heavier in the second half of the year due to timing and seasonality.

Question 15: Do you expect any falloff in activity next year as carriers reach high levels of 5G coverage?
Answer: Crown Castle is not providing 2026 guidance yet, but the increase in guidance for 2025 indicates higher activity levels through the year.

Question 16: Should we see more backbilling going forward as you continue to improve operations?
Answer: Backbilling improvements will be episodic, but overall process improvements are expected to generate incremental shareholder value over time.

Question 17: Any implications on the pacing of carrier investment post recent tax reform?
Answer: Carriers have indicated they will use tax savings to invest in their networks, mostly in fiber. Crown Castle has not seen a significant impact from tax reform on wireless investments yet.

[Sentiment Analysis]
Analysts and management maintained a positive tone throughout the call, with a focus on operational efficiencies, strategic divestitures, and long-term value creation. The sentiment was optimistic regarding the company's ability to meet and exceed financial and operational objectives.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|-------------------------|---------|---------|------------|
| Organic Growth | 4.7% | 4.5% | +0.2% |
| Services Activity | $6M | $0M | +$6M |
| SG&A Reduction | $37M | $0M | +$37M |
| Sprint Cancellations | -$51M | $0M | -$51M |
| Site Rental Revenues | +$10M | $0M | +$10M |
| Adjusted EBITDA | +$25M | $0M | +$25M |
| AFFO | +$35M | $0M | +$35M |

[Risks and Concerns]
- Potential delays in regulatory approvals for the sale of small cell and fiber solution businesses.
- Uncertainty in achieving post-sale cost efficiencies and operational improvements.
- Market conditions affecting the execution of share repurchase programs.
- Exposure to changes in carrier investment priorities and economic conditions.

[Final Takeaway]
Crown Castle's Q2 2025 earnings call highlighted the company's strategic focus on divesting non-core assets and enhancing operational efficiencies within its tower business. Management's raised financial outlook and commitment to disciplined capital allocation underscore the company's dedication to long-term value creation. While regulatory and market uncertainties remain, Crown Castle's proactive approach to cost management and investment in technology positions it well for future growth and shareholder returns.