Dish Network reassured investors during its last quarterly conference call in February that it will meet its previously committed milestones for deploying a wireless network this year.
But given Dish’s track record in wireless and the size of the task at hand – Dish needs to cover 20% of the U.S. population with 5G by June and expand its reach to 70% by June 2023 – a lot of folks are wondering how it’s going to meet its goals. So they turn to vendors like tower companies for any insights they can share publicly about what’s going on.
According to Crown Castle CEO Jay Brown, Dish is indeed making progress. The wireless-to-be service provider struck its first tower deal with Crown Castle in 2020. That deal involves leasing space on up to 20,000 Crown towers and gave Dish the option to tap Crown Castle for pre-construction services, such as site engineering, zoning and permitting.
“We have obviously seen a significant commitment from them,” Brown said during Thursday's earnings call with analysts, referring to the 20,000 towers nationwide. In terms of behavior, “that’s a significant number of our sites,” or nearly half of Crown Castle’s sites in the U.S., that Dish has committed to use.
“As we look at the activity that we’re working on them with, they’re certainly behaving as a company that we would expect would get to nationwide coverage,” Brown said. “It’s been a really long time in the U.S. since there’s been a new nationwide deployment of a network from scratch, and the activity that we’re seeing from Dish is consistent with their desire to build out nationwide.”
Besides Dish, Crown is seeing an uplift in terms of activity in the tower business across the board from all of its carrier customers, Brown said.
U.S. carriers have invested more than $200 billion into their networks, including spectrum and capex, over the last four years, he said. “We believe we are best positioned to benefit from this virtuous cycle in the U.S., with towers, small cells and fiber, all of which are necessary for the deployment of 5G,” he said.
The company expects to deliver another year of 6% organic tower revenue growth in 2022. Small cell deployments of 5,000 this year will rise to more than 10,000 per year starting in 2023, Brown said.
Q1: Relatively dull?
“The stability and predictability of the tower leasing model, especially in the U.S., is one of its most appealing attributes,” said MoffettNathanson analyst Nick Del Deo in a note for investors after Crown released its quarterly results on Wednesday. “It also means that, in most years, Q1 earnings reports will be relatively dull affairs.”
Crown Castle’s Q1 2022 results were solid in an absolute sense and generally in line with expectations after factoring in variances associated with non-cash revenue and a handful of other items, like a $15 million site rental revenue benefit that isn’t expected to recur in coming quarters, he said.
Crown Castle posted revenue of $1.74 billion for the first quarter of 2022, which was better than what many analysts had predicted. Service revenue was $166 million, while site rental revenue was $1.075 billion.
Site rental revenues grew 15%, or $207 million, from the first quarter of 2021 to the first quarter of 2022. Income from continuing operations for the first quarter 2022 was $421 million compared to $121 million for the first quarter of 2021.
First-quarter adjusted EBITDA was $1.1 billion compared to $897 million for the first quarter of 2021. Capital expenditures during the first quarter of 2022 were $281 million.