Nick Del Deo

Nick Del Deo asked for more detail on fixed wireless and AI as tower revenue growth drivers, specifically if fixed wireless is a primary motivator for site work or piggybacks mobile deployments, and what AI use cases are most promising for driving wireless traffic. He also inquired about CoreSite's reported land purchases in the Bay Area and Dallas-Fort Worth, asking about the timeframe for the Bay Area land, potential megawatts, and the vision for de novo market entry in Dallas.

Answer

Steven Vondran, President and CEO, explained that fixed wireless uses existing installations, driving overall mobile data demand rather than standalone deployments. For AI, he noted early stages but anticipates video upstreaming and downstreaming (e.g., Meta glasses) will significantly stress networks, potentially requiring architectural changes for upload capacity. Regarding CoreSite, he confirmed selective land purchases in key metros but stated no new markets are ready for announcement. The rationale is strong demand (record sales, AI use cases) for both expanding current campuses and exploring new markets, with new facilities taking approximately 2-3 years from groundbreaking to revenue.

Nick Del Deo asked about fixed wireless and AI as tower revenue growth drivers, specifically if fixed wireless drives standalone deployments and which AI use cases are most promising for wireless traffic. He also inquired about CoreSite's land purchases in the Bay Area and Dallas-Fort Worth, including timeframes and rationale for new market entry.

Answer

Steven Vondran, President and CEO, American Tower, stated that fixed wireless uses existing installations but contributes to overall mobile data demand. For AI, he highlighted video upstreaming and manipulation, as well as live streaming applications, as key drivers for future network traffic. Regarding CoreSite, he confirmed selective land purchases in key metros, with a 2-3 year timeline from groundbreaking to revenue generation, driven by strong demand for interconnection-rich data centers and AI workloads like inferencing and machine learning.

Nick Del Deo asked about the relevance of American Tower's portfolio for supporting higher frequency bands (up to 10 GHz) expected from future FCC spectrum auctions, and the reason behind the dip in CoreSite's pre-lease share.

Answer

President and CEO Steve Vondran expressed excitement for new spectrum bands, including those for 6G, emphasizing that towers will be crucial for deployment and higher frequencies will drive network densification. He clarified that the CoreSite pre-leasing dip was due to projects moving from construction to in-service, not a slowdown in demand or a shift in strategy.

Nick Del Deo inquired about the relevance of American Tower's portfolio for supporting higher frequency bands (up to 10 GHz) being auctioned by the FCC, and the reason for the dip in CoreSite's pre-lease share.

Answer

President and CEO Steve Vondran expressed excitement for higher frequency bands, stating that towers will be the primary deployment method and will drive densification, benefiting long-term growth. For CoreSite, Vondran clarified that the dip in pre-leasing was due to projects moving from construction to in-service, not a slowdown in demand, which remains robust.

Nick Del Deo sought clarification on the U.S. customer delay, asking if it was a longer book-to-bill cycle or delayed applications. He also questioned CoreSite's supply chain risk management and asked for the financial contribution from the new DE1 data center.

Answer

President & CEO Steven Vondran confirmed the issue is a longer book-to-bill cycle, not a lack of applications, calling it a pure timing issue. He explained CoreSite manages supply chain risk by pre-buying long-lead items. EVP, CFO & Treasurer Rod Smith specified the DE1 acquisition is expected to contribute roughly $10 million in property revenue to the 2025 outlook.

Nick Del Deo asked for details on the data center LOI, specifically if power availability was confirmed and the timing of its termination, as well as how new deals would be announced. He also questioned the contribution of IPv4 and Waves to legacy Cogent's revenue growth and the classification of T-Mobile CSA revenue. Finally, he sought an explanation for the quarter-over-quarter decline in IPv4 leasing revenue despite an increase in leased addresses.

Answer

CEO Dave Schaeffer confirmed that power availability was confirmed for the previous LOI, which fell apart recently due to the counterparty's demand for owner financing. He indicated that new deals would likely be announced in a standalone press release within the next couple of months. He confirmed that about half of Cogent's underlying revenue growth came from IPv4 and Waves, and clarified that T-Mobile CSA revenue was not included in the Sprint bucket. The quarter-over-quarter decline in IPv4 leasing revenue was attributed to the timing of converting a retail block to a larger wholesale transaction.

Nick Del Deo followed up on the terminated data center LOI, asking if the counterparty had confirmed power availability from utilities, which was a key due diligence item. He also inquired about the T-Mobile CSA revenue's inclusion in the Sprint bucket and the dynamics behind the quarter-over-quarter decline in IPv4 leasing revenue.

Answer

CEO Dave Schaeffer confirmed that power availability was confirmed by the previous data center LOI counterparty, and the LOI fell apart recently due to their demand for owner financing. He indicated that new data center deals might be announced in a standalone press release within the next couple of months. Schaeffer also affirmed that roughly half of the legacy Cogent revenue growth came from IPv4 and Wavelengths, with the other half from core products. He clarified that T-Mobile CSA revenue is not included in the Sprint bucket and explained the quarter-over-quarter decline in IPv4 leasing revenue as a timing issue related to a retail-to-wholesale conversion.

Nick Del Deo of MoffettNathanson LLC asked if the number of provisioned but not yet billed wavelengths increased quarter-over-quarter and questioned what is causing bidders for the data center assets to hesitate in posting firm deposits.

Answer

Dave Schaeffer, Founder & CEO, confirmed that the number of installed but unbilled waves increased "meaningfully" quarter-over-quarter, as customers were surprised by the rapid provisioning times. He attributed the data center bidder hesitation to two factors: operators struggling to get capital committed and private equity sponsors wanting to de-risk their investment by seeing end-user contracts for the assets, which currently have no recurring revenue.

Nick Del Deo inquired about the strength of Equinix's interconnection franchise and the potential impacts, both positive and negative, of major cloud service providers developing their own multi-cloud products on Equinix's interconnection business.

Answer

Adaire Fox-Martin, CEO and President, stated that cloud connectivity announcements validate the importance of the network, a core focus for Equinix. She emphasized that while cloud-to-cloud is a simple use case, customers' multi-cloud hybrid realities are far more complex, requiring Equinix's advanced networking strategies. She highlighted that many clouds are valued partners utilizing Equinix's infrastructure, and the company continues to invest in its interconnection product portfolio, including Fabric, to simplify the networking journey, support AI workloads, and enhance network observability, seeing these developments as validation of their connectivity opportunity.

Nick Del Deo inquired about the potential impact of major cloud service providers' multi-cloud products on Equinix's interconnection franchise.

Answer

Adaire Fox-Martin, CEO and President, viewed cloud-to-cloud connectivity announcements as validation of the network's importance in the AI ecosystem. She emphasized Equinix's focus on a complex multi-cloud hybrid world, requiring more sophisticated connectivity than simple cloud-to-cloud. She noted many clouds are valued partners utilizing Equinix infrastructure and highlighted ongoing investments in Equinix Fabric and VC capacity to simplify networking, support AI agents, and enhance network observability.

Nick Del Deo asked about the strategic importance of new cloud on-ramps and network nodes, specifically mentioning Nebius and Groq, relative to traditional cloud on-ramps, and Equinix's strategy for attracting AI-focused customers.

Answer

Adaire Fox-Martin, President and CEO of Equinix, highlighted the company's market-leading position in native cloud on-ramps and strong presence of AI magnets like Zetaris, Lysium, Block, Groq, Outrider, Nebius, and CoreWeave within the Equinix ecosystem. She noted that many Neo clouds use Equinix for connectivity and presence, benefiting from access to Equinix's 10,000+ enterprise customers. Equinix's Americas team actively manages these relationships to ensure strong magnet representation.

Nick Del Deo asked about Equinix's strategic position with cloud on-ramps, the importance of new deployments like Nebius and Groq, and how Equinix actively attracts AI-focused companies.

Answer

Adaire Fox-Martin, President and CEO of Equinix, highlighted the company's market-leading position in native cloud on-ramps and a strong presence of AI magnets such as Zetaris, Lysium, Block, Groq, Outrider, Nebius, and CoreWeave. She noted that many Neo clouds use Equinix for connectivity and presence, benefiting from the 10,000+ enterprise customers in the ecosystem. The Americas team specifically focuses on managing these key relationships.

Nick Del Deo of MoffettNathanson LLC inquired about the drivers behind the strong interconnection additions in Q2 and the expected trend for this metric in upcoming quarters.

Answer

CEO Adair Fox-Martin attributed the 6,200 net interconnection additions to robust demand from cloud and AI expansion activities. She explained that customers are securing their network presence for future workloads, driving pull-through for products like Fabric Cloud Router and Network Edge, and expressed confidence in the continued growth of this franchise.

Nick Del Deo of MoffettNathanson LLC inquired about the drivers behind the significant step-up in interconnection additions in Q2 and the outlook for this metric, given its recent volatility.

Answer

CEO Adair Fox-Martin attributed the strong 6,200 net additions to cloud and AI expansion activities, which drove interconnection revenues up 8% year-over-year. She noted that this growth reflects customers securing their network presence for future workloads and highlighted the pull-through from products like Fabric Cloud Router and Network Edge, expressing confidence in the franchise's continued growth.

Nick Del Deo asked if there's a meaningful disconnect between public and private data center valuations, and if so, what steps Digital Realty is taking to narrow or capitalize on any such gap, such as leaning harder on private capital initiatives.

Answer

Chief Investment Officer Greg Wright explained that valuation differences often relate to the mix of assets (e.g., land vs. cash-generating) rather than a fundamental disconnect. He noted strong underlying dynamics of increasing demand and constrained supply are driving value. President and CEO Andy Power added that Digital Realty is capitalizing on this through its evolving funding strategy, including the successfully oversubscribed initial fund and other private capital partnerships, totaling over $15 billion in dry powder, to fund hyperscale growth alongside public shareholders.

Nick Del Deo asked if there's a meaningful disconnect between public and private data center valuations, given recent high-profile transactions and debt securitizations, and what steps Digital Realty is taking to capitalize on any such gap.

Answer

Chief Investment Officer Greg Wright explained that valuation differences often stem from the mix of assets (e.g., land vs. cash-generating) rather than a public/private disconnect, emphasizing that strong demand and constrained supply drive value. President and CEO Andy Power added that Digital Realty's evolved funding strategy, including over $15 billion in private capital partnerships, allows them to leverage both private and public capital to fund hyperscale growth, contributing to a record backlog and strong performance.

Nick Del Deo from MoffettNathanson asked about the expected timing for when enterprise AI adoption will begin to significantly compound demand in Tier 1 markets. He also inquired about the potential share of AI inference use cases that will require distributed, low-latency deployments.

Answer

CEO Andy Power stated that the timing is still unknown, as current enterprise demand is more focused on digital transformation and becoming 'AI ready.' He believes the trend will mirror the cloud's evolution, where workloads eventually moved to a hybrid model, and that Digital Realty is well-positioned for when this shift occurs with AI.

Nick Del Deo from MoffettNathanson asked about Crown Castle's new tower build strategy, specifically if the company could dimension the number of new builds targeted, how this has changed versus recent years, and any attributes like initial yields. He also inquired about the degree to which the 2026 leasing forecast is locked in, distinguishing between MLA commitments and estimated activity.

Answer

Sunit Patel, CFO, stated it's difficult to quantify new builds but emphasized pursuing opportunities that make economic sense, citing convergence trends (e.g., Verizon/Frontier, AT&T/Lumen deals) as potential areas. Chris Hillabrant, President and CEO, reiterated a selective approach, focusing on towers with a minimum of two committed customers due to increased build costs, and noted a shift where MNOs are increasingly looking to major tower companies for new builds. Sunit Patel confirmed that approximately 80% of the 2026 organic growth is contracted.

Nick Del Deo asked for quantification or changes in new tower builds compared to recent years, including attributes like initial yields, and the degree to which the 2026 leasing forecast is secured by MLA commitments versus estimated activity.

Answer

Sunit Patel, CFO, stated it's difficult to quantify new tower builds but emphasized pursuing opportunities with attractive economics, citing convergence trends as a potential driver. Chris Hillabrant, President and CEO, added that new builds are selective, often requiring a minimum of two committed customers due to increased build costs. Sunit Patel confirmed that about 80% of the 2026 organic growth is contracted.

Nick Del Deo from MoffettNathanson asked for clarification on the sharp projected increase in discretionary CapEx for the second half of the year and whether the $10 million G&A reduction was related to tower-specific or shared overhead.

Answer

CFO Sunit Patel and Interim CEO Daniel Schlanger explained that the discretionary CapEx increase is due to backend-loaded spending, including a planned step-up in land purchases and systems investments. They clarified that the G&A savings are a result of general efficiencies across both corporate and tower business levels, continuing the benefits from cost reduction actions taken in the prior year.

Nick Del Deo asked about growth sales for the remainder of the business and insights into churn trends. He also inquired if the disclosed PCF revenue ($41 million in Q4, $116 million for the year) should be considered a 90/10 non-cash versus cash split.

Answer

Chris Stansbury, CFO, noted particular strength in IP this quarter and consistent overall churn trends, with NaaS churn rates being significantly lower and 'stickier.' Regarding PCF revenue, he confirmed that a 90% non-cash, 10% cash split is a reasonable assumption, as 90% of the cash is received upfront for builds, and the remaining 10% is recognized when the fiber is lit. A five-year outlook for PCF revenue impact will be provided at Investor Day.

Nick Deldeo inquired about growth sales trends for the remainder of Lumen's business and churn trends. He also followed up on the disclosed PCF revenue ($41 million in Q4, $116 million for the year), asking if it follows a 90/10 non-cash versus cash split, similar to the overall mix previously described.

Answer

Chris Stansbury, CFO, noted particular strength in IP this quarter and consistent overall churn trends, with NaaS offerings showing dramatically lower churn rates. He confirmed that assuming a 90/10 non-cash versus cash split for the disclosed PCF revenue is reasonable, as 90% of the cash is typically received upfront for the builds.

Nick Del Deo questioned the EBITDA implications of temporary rate increases in Public Sector Harvest revenue and asked about the cadence of PCF deals, probing whether it was mainly driven by the complexities of new construction.

Answer

EVP & CFO Chris Stansbury noted the public sector rate increases were a mix of cost offsets and temporary payments, declining to quantify further. President & CEO Kate Johnson confirmed the PCF deal cadence is dictated by new route construction complexity, stressing a disciplined approach focused on utilizing existing assets rather than speculative builds.

Nick Del Deo (MoffettNathanson) asked for further clarification on the linearity of the Verizon MLA, specifically regarding new leasing activity commitments over the 10-year term. He also inquired about the potential impact of the BEAD program's shift towards fixed wireless on SBA's new leasing perspective.

Answer

Brendan Cavanagh, President and CEO of SBA, clarified the Verizon MLA's linearity means new leasing activity is more directly tied to deployments, with a minimum annual commitment that could accelerate based on Verizon's usage. He noted term extensions could affect straight-line revenue. Mr. Cavanagh welcomed the BEAD program's fixed wireless focus as a positive for subscriber growth and network expansion, potentially aided by the Verizon agreement.

Nick Del Deo of MoffettNathanson LLC asked for feedback from other carriers in Central America regarding access to the newly acquired Millicom towers and inquired about the intended use of proceeds from the Canadian asset sale.

Answer

President and CEO Brendan Cavanagh reported that feedback on the Millicom towers has been 'quite positive' and potentially better than expected, as competitors see an opportunity to close network gaps. Regarding the Canadian sale proceeds, he described them as fungible, contributing to a general pool of capital used for the next Millicom closing, debt reduction, or share buybacks, ultimately helping to manage leverage.

Sought clarification on the 2024 commercial revenue guidance benchmark and asked what level of subsidy revenue is assumed in the company's forecast.

Answer

The commercial revenue guidance of +/- 2% is benchmarked against the full-year 2023 results. The 2024 guidance does not assume any material impact from new subsidy programs like BEAD; any funds won from those programs are expected to start flowing in 2025 and beyond.