Richard Choe

Richard Choe asked about expectations for domestic colocation revenue growth throughout the year and what carriers are seeking, as well as the primary drivers of growth in Brazil, distinguishing between new builds, 5G upgrades, densification, and spectrum over the next few years.

Answer

Brendan Cavanagh, President and CEO, stated that domestic incremental revenue is expected to be $35 million, with activity levels remaining steady, driven by a mix of densification and coverage expansion. For Brazil, he noted that most growth would be organic new lease-up, driven by new spectrum auctions, network expansion, and densification, highlighting the lower site density compared to the U.S.

Richard Choe asked about expectations for domestic collocation revenue growth through the year, including carrier focus, and the primary drivers of growth in Brazil, such as new builds, 5G upgrades, densification, and spectrum over the next few years.

Answer

Brendan Cavanagh, President and CEO, explained that domestic incremental revenue is expected to be $35 million, with steady activity throughout the year, driven by a mix of densification and expansion. For Brazil, he noted that most growth would be organic lease-up, fueled by new spectrum auctions, network expansion, and densification, highlighting the significantly lower sites per person compared to the U.S.

Richard Choe from JPMorgan Chase & Co. asked about the expected timing for increased collocation activity to translate into revenue and sought more detail on the drivers behind the strong performance in the services business.

Answer

President and CEO Brendan Cavanagh explained that the shift towards more new collocations, versus amendments, slightly delays revenue commencement but is a positive long-term trend. He confirmed the full-year outlook for new lease contributions remains unchanged, implying a second-half acceleration. He attributed the services strength to increased site acquisition and construction work, including on third-party towers, which strengthens carrier relationships.

Richard Choe followed up on the services business, asking if the guidance increase was due to near-term activity or full-year confidence, and questioned the total revenue capacity of the services segment.

Answer

President and CEO Brendan Cavanagh explained the services guidance increase was a mix of both a strong Q1 performance and growing backlogs that provide confidence for the rest of the year. He affirmed that SBA has the capacity to handle significantly more volume, referencing a prior year when services revenue was nearly $300 million, well above the current outlook.

Richard Choe asked about the mix of new business between amendments and colocations and whether there was any potential to accelerate the remaining Sprint-related churn into 2025.

Answer

President and CEO Brendan Cavanagh clarified that in the U.S., new colocation revenue contributions are now greater than amendment revenue. Regarding Sprint churn, he explained that accelerating it is unlikely, as most of the 2025 impact is from leases that have already expired or will soon, leaving little time or financial incentive for T-Mobile to negotiate an early payoff.

Richard Choe asked about the drivers behind the increase in site development revenue and whether more small, accretive domestic M&A deals could be expected.

Answer

President and CEO Brendan Cavanagh explained that the strong services quarter was driven by increased carrier construction activity, which is partly linked to the shift toward new leases that require more comprehensive site work. On M&A, he stated that while the company is always looking, opportunities for small, attractively priced domestic deals are limited due to high valuations and market competition.

Richard Choe asked about renewal pricing and overall pricing for new business in the data center segment. He also inquired about the tower business's application pipeline, whether it has shifted, and if an inflection higher is expected.

Answer

Steven Vondran, President and CEO, American Tower, reported generally higher pricing and mark-to-market exceeding historical norms for data centers, driven by supply-demand imbalance, enabling mid-teens or better returns on new capital. For towers, he noted slightly fewer total applications due to some carriers completing initial 5G overlays, but highlighted a positive inflection with a higher number of new colocations, which yield higher revenue per transaction, indicating overall consistent activity.

Richard Choe asked about renewal pricing and overall pricing for new business in the data center segment. He also inquired about the tower business's application pipeline, whether it has shifted, and if it's expected to inflect higher at some point.

Answer

Steven Vondran, President and CEO, stated that CoreSite is seeing generally higher pricing, with mark-to-market exceeding historical norms due to supply/demand imbalance, enabling mid-teens or better returns on new capital. For towers, he noted slightly fewer total applications expected this year, not due to reduced demand but because some carriers are completing initial 5G overlays, often covered by holistic agreements. He highlighted an inflection towards a higher number of new colocations, which are positive due to higher revenue per transaction, and expects overall consistent activity to continue or improve as networks densify.

Richard Chu asked about the drivers of the $5 million incremental non-run rate revenue in the U.S. business, any higher-than-normal churn affecting quarter-to-quarter growth in the U.S. data center business, and whether the cost efficiency review could lead to strategic or CapEx changes.

Answer

President and CEO Steve Vondran clarified that the $5 million incremental non-run rate revenue and data center fluctuations were due to small, one-time activities, not material churn. He stated the cost efficiency review focuses on operational efficiencies (supply chain, automation, AI) and is not expected to lead to strategic or CapEx shifts, though aggressive land buying in other geographies could be explored later.

Richard Chu asked about the $5 million in incremental non-run rate revenue in the U.S. business, the slightly lower quarter-to-quarter growth in the U.S. data center business, and whether the cost efficiency review could lead to strategic or CapEx changes.

Answer

President and CEO Steve Vondran clarified that the $5 million non-run rate revenue and data center growth fluctuations were due to small, non-material one-time items. Regarding the cost efficiency review, Vondran stated the focus is on operational efficiencies (supply chain, automation, AI opportunities) rather than strategic shifts or CapEx changes, though potentially more aggressive land buying in other geographies could be considered later.

Richard Choe from JPMorgan Chase & Co. asked for color on the expected cadence of the services business margin contribution throughout the year and inquired about the performance of the Canadian business and any ambitions for expansion in that market.

Answer

CEO Steven Vondran indicated a good services backlog for 2025, driven by both normal deployment and niche construction services, with more visibility in the first half of the year. Regarding Canada, he described it as a small but well-performing business. He stated that any potential expansion would be subject to the same strict M&A criteria as Europe, requiring appropriate pricing and terms, and there is no strategic imperative to build scale for its own sake.

Richard Chen requested an update on cost management initiatives and asked about the potential for further divestitures in emerging markets where American Tower may lack sufficient scale or face challenging long-term trends.

Answer

Steven Vondran, President and CEO, highlighted ongoing SG&A reductions and a broader, long-term focus on globalizing operations to expand margins. Regarding divestitures, he stated that while there is nothing planned on the scale of the India sale, the company continuously evaluates its portfolio for value maximization, citing recent smaller sales of land and fiber assets as examples of this ongoing process.

Richard Choe asked about the significant increase in recurring CapEx and capitalized leasing costs from 2025 to the 2026 guidance.

Answer

SVP of Public and Private Investor Relations Jordan Sadler explained that the increase was partly due to a carryover of projects from a lighter 2025 and a strategic effort to build out space and improve the portfolio to support strong enterprise leasing, noting that these costs remain in line with industry averages at around 7% of revenue.

Richard Choe inquired about the significant increase in recurring CapEx and capitalized leasing costs from 2025 to the 2026 guidance.

Answer

SVP of Public and Private Investor Relations Jordan Sadler explained that some of the increase for 2026 is a carryover of projects that did not complete in 2025. The remaining increase is attributed to efforts to continue building out space and improving the portfolio to support strong enterprise leasing, noting that these costs remain well in line with the industry average at around 7% of revenue.

Richard Choe of JPMorgan Chase & Co. asked whether the current development CapEx range of $3.0 to $3.5 billion should be expected to continue going forward, given the increasing demand and opportunities.

Answer

CFO Matt Mercier noted that CapEx spend is already up 50% year-over-year and is expected to pick up in the second half. CEO Andy Power added that with the new private capital funding model, the company has the levers to accelerate gross CapEx to meet customer demand in a timely manner without overtaxing the balance sheet.

Richard Choe from JPMorgan Chase & Co. inquired about the potential impact of tariffs on the company's supply chain and when those effects might appear in development costs.

Answer

CEO Andrew Power stated that Digital Realty anticipates a very modest impact, estimated at less than 5% on potential build costs. He attributed this resilience to long-standing vendor relationships, vendor-managed inventory programs, and a supply chain heavily focused on the U.S., Mexico, and Canada under USMCA protections. Power added that the company has been proactively ordering components and does not expect significant cost impacts to materialize for several quarters.

Richard Choe from JPMorgan Chase & Co. inquired about the 2025 cash renewal outlook of 4-6%, asking if it could see a similar outperformance to 2024's 9% result, and if that would require more packaged deals.

Answer

CFO Matt Mercier explained that the 4-6% guidance for 2025 does not assume any pull-forward of 'packaged deals' like those that boosted the 2024 results to 9%. He noted that while the mark-to-market environment is positive, somewhat elevated expiring rates in 2025 temper the outlook, with an improving mark-to-market expected in outer years.

Richard Choe inquired about the potential for more large 'package deals' on renewals and asked if these specific deals were the main driver behind achieving 4% escalators on new leases.

Answer

President and CEO Andy Power clarified that pushing for higher escalators is a broad-based strategic initiative across all deals, not just a result of package deals. He described the large renewal packages as 'episodic' opportunities that arise from their extensive global customer relationships, noting that underlying renewal spreads were still healthy at nearly 6% even without the large deal.

Richard Choe from JPMorgan Chase & Co. inquired about the discretionary capital expenditures of $150 million-$250 million, asking how these investments would contribute to new leasing revenue, whether the impact would be seen this year or in future years, and the potential for growth over time. He also asked about Crown Castle's willingness to engage in more Master Lease Agreements (MLAs) and whether carriers still prefer MLAs or are shifting towards a pay-as-you-go model.

Answer

Sunit Patel, CFO, explained that discretionary CapEx includes ground lease buyouts (benefiting future cash flows), new tower builds (where opportunities exist), and investments in systems/platforms (driving operational effectiveness and efficiency). Chris Hillabrant, President and CEO, added that new tower builds are selective, requiring attractive economics and typically a minimum of two committed customers due to increased build costs. Sunit Patel and Chris Hillabrant both stated that they haven't seen a change in the preference for MLAs, as operators generally prefer the certainty of operating agreements and anticipated costs.

Richard Choe inquired about how the $150 million-$250 million discretionary CapEx for augmentation will contribute to new leasing revenue, its timing, and future potential, as well as Crown Castle's willingness to pursue more Master Lease Agreements (MLAs) and whether carriers still prefer them over pay-as-you-go methods.

Answer

Sunit Patel, CFO, explained that discretionary CapEx would be used for ground lease buyouts (benefiting cash flows), new tower builds, and system investments (driving operational effectiveness). Chris Hillabrant, President and CEO, noted that operators generally prefer MLAs for cost certainty, and Crown Castle has not seen a change in this preference.

Richard Choe from JPMorgan asked about the potential for a drop-off in leasing activity in 2026 as carriers approach peak 5G coverage, and whether the recent increase from back-billing is a sustainable trend.

Answer

Interim President and CEO Daniel Schlanger stated that it is too early to provide 2026 guidance but highlighted that leasing activity in 2025 is stronger than expected, with more core leasing anticipated in the second half. He characterized the back-billing revenue as episodic and a proof point of ongoing operational improvements rather than a consistent, recurring item.

Richard Choe asked where future tower market share gains would come from (national vs. regional players) and how the $800 million in avoided small cell CapEx would affect the future spending run rate.

Answer

CEO Steven Moskowitz stated that share gains are targeted from both large nationwide carriers, by becoming a preferred supplier, and from an increased focus on smaller, regional customers. CFO Dan Schlanger explained that while future CapEx will be $800M lower, a direct comparison to a historical run rate is difficult, but confirmed future spending will be more capital efficient due to the higher mix of colocation nodes.

Richard Cho asked about the wider revenue range in Dycom's Q4 guidance, the nature of Power Solutions' contracts within its $1 billion backlog, and Dycom's strategy for expanding Power Solutions into new data center markets beyond the DMV region.

Answer

President and CEO Dan Peyovich explained that the wider Q4 revenue range accounts for normal seasonality, midweek holidays, and the speed of fiber-to-the-home programs. He noted that Power Solutions' contracts are typically 6-12 month builds with general contractors for dozens of data centers, primarily new builds. For expansion, he stated that Dycom would leverage Power Solutions' strong position in the DMV, bring its balance sheet and relationships, and strategically evaluate M&A opportunities in other growth markets, considering growth cycles and long-term value creation.

Richard Cho asked about the wider revenue range in the fourth-quarter guidance, the nature of Power Solutions' contracts and their $1 billion backlog, and Dycom's strategy for expanding Power Solutions into new data center markets beyond the DMV region.

Answer

President and CEO Daniel Peyovich attributed the wider Q4 revenue range to normal seasonality, holiday impacts, and the varying speed of fiber-to-the-home programs. He described Power Solutions' contracts as typically 6-12 month builds with general contractors for data centers, noting their capital-light nature and different seasonality. For new markets, he emphasized a thoughtful, long-term strategy, leveraging Power Solutions' strength in the DMV, and considering both organic growth and M&A opportunities in other growing regions.

Richard Choe of JPMorgan Chase & Co. inquired about the reasons for Q2 revenue landing at the lower end of guidance, the expected revenue seasonality for the remainder of the year, and the sustainability of the company's significantly improved margins.

Answer

CEO Daniel Peyovich explained that Q2 revenue timing was influenced by the non-linear ramp-up of large customer fiber programs, but reaffirmed the full-year guidance, indicating strong momentum. He attributed the record margins to operating leverage and durable operational efficiencies, expressing confidence that this level of performance is sustainable with further opportunities for improvement over time.

Richard Choe from JPMorgan Chase & Co. asked if the strong Q2 guidance was driven by continued wireless strength or new projects ramping up. He also questioned the potential for pulling forward equipment spending ahead of tariff implementations.

Answer

President and CEO Dan Peyovich confirmed the Q2 outlook is supported by both the faster-than-expected ramp of fiber-to-the-home programs and the strong performance of the wireless business. On tariffs, he stated that while impacts are real, they are a very small component of total build costs and are considered manageable, with no immediate need to alter their strategic equipment purchasing.

Richard Choe of JPMorgan Chase & Co. inquired about the drivers for the strong performance in new lease amendments and the outlook for the remainder of the year. He also asked for clarification on the implied second-half ramp in CapEx guidance.

Answer

EVP & CFO Steve Howden clarified that Q2 lease amendment activity was normal, with Q1 having been unusually low, and that strength from Nigeria and Brazil is expected to continue. Regarding capital expenditures, Howden confirmed the guidance is second-half loaded due to the timing of project rollouts, primarily in Brazil and Sub-Saharan Africa, and expressed confidence in the new, lower guidance range.

Richard Choe of JPMorgan Chase & Co. inquired about the company's preference and timeline for initiating stock buybacks or dividends, and whether new tariffs for Nigerian carriers would stimulate network spending in 2025 or 2026.

Answer

CFO Steve Howden explained that capital return plans remain under evaluation, with the immediate priority being the ongoing asset disposal program and using initial proceeds for debt reduction. CEO Sam Darwish added a bullish outlook on Nigeria's economic recovery and stated his belief that new carrier tariffs would likely drive some network spending in 2025 due to service quality obligations.

Richard Choe from JPMorgan Chase & Co. asked for an outlook on the strength of co-investments and inquired about the expected pacing and ramp-up of the opportunity within the new TechnoC digital power platform.

Answer

CEO Marc Ganzi stated that co-investments are critical for funding large-scale projects and that DigitalBridge has successfully increased the average fee rate on this capital to 60 basis points, up from 45 basis points last year. He anticipates significant co-investment activity in the second half of the year, which will flow directly to FRE. Regarding TechnoC, Ganzi described it as a "fast path lane" for customers, providing powered land for build-to-suit projects. This model allows DigitalBridge to achieve high-teens to low-20s returns without building the data center itself, enabling a faster return of capital.

Richard Choe of JPMorgan Chase & Co. inquired about recent trends in LP decision-making amid market volatility and asked if there has been a noticeable shift in investor interest from data centers toward towers.

Answer

CEO Marc Ganzi stated that despite volatility, LPs are still allocating capital to digital infrastructure, with only two out of over 280 investors pausing. He emphasized that institutional investors have long-term commitment schedules. Ganzi noted that while towers are performing well, the data center thesis remains 100% intact. He cited strong customer CapEx guidance from hyperscalers and confirmed that DigitalBridge took in new data center co-investments during the quarter, indicating no material retreat from the asset class.

Richard Choe requested an update on the company's sales and fundraising infrastructure and asked how the AI-driven demand currently seen in fiber will translate to towers and small cells in the coming years.

Answer

CEO Marc Ganzi reported that the global sales team has grown to 35 full-time employees and continues to scale, particularly in the private wealth channel. He noted strong fundraising performance from teams in Asia and the Gulf. On infrastructure demand, Ganzi revealed a record leasing month for U.S. towers in January, attributing it to the need for network densification to support generative AI on mobile devices. He reiterated his belief that a significant small cell investment cycle will occur between 2026 and 2029.

Richard Choe asked whether the accelerating capital formation is a sustainable trend or if it will culminate with the closing of DBP III. He also inquired if the private wealth data center sidecar vehicle would be an ongoing product and a continuous fundraising channel.

Answer

CEO Marc Ganzi described the current fundraising pace as the "normal cadence" for a multi-strat firm, not a temporary peak, highlighting that all four product pillars are performing well and new strategies are planned for next year. He confirmed the private wealth channel is a key ongoing strategy, with plans to expand into new verticals and geographies, leveraging the new head of global wealth solutions to build multiple products.