Simon Flannery

Simon Flannery asked how the Golden Dome opportunity is expected to mature for Iridium in 2026, specifically if contracts are anticipated to materialize this year to provide upside to guidance, or if it's more of a 2027 and beyond opportunity. He also inquired if PNT business growth is expected to outpace the overall portfolio growth in 2026.

Answer

CEO Matt Desch indicated that Golden Dome is 'probably more of a 27 and beyond' opportunity, though there could be engineering service revenue upside in 2026 from RFQs. He noted the addressable market is in the billions, and Iridium expects a meaningful fraction. CFO Vince O'Neill confirmed it's 'probably a fair assumption' that PNT growth will outpace overall portfolio growth in 2026.

Simon Flannery asked if it's fair to assume that the PNT business growth will outpace the overall portfolio growth in 2026.

Answer

CFO Vince O'Neill confirmed, 'Yeah, that's probably a fair assumption, Justin, at this point.'

Simon Flannery from Morgan Stanley asked for key milestones regarding the financial impact of Iridium's D2D service and the addressable market. He also questioned the timeline for broadband ARPU stabilization, referencing a potential base level for the business.

Answer

CEO Matt Desch projected that the D2D service will be commercially available in early 2026, with a very small financial impact that year, followed by a significant ramp-up in 2027-2029. CFO Vince O'Neill added that broadband ARPU pressure will continue in 2025 as customers migrate to companion services, and he affirmed the analyst's assumption about a previously discussed base level for the business.

Simon Flannery inquired about the potential for returning to run-rate growth in 2025, the revenue recognition timeline for the new SDA award, and trends in broadband and voice ARPU. He also asked for more detail on the revenue contribution from the acquired Satelles business.

Answer

CEO Matt Desch expressed confidence in a return to 'normal growth' in 2025, citing favorable equipment comparisons and new contracts, but deferred specific guidance. CFO Tom Fitzpatrick explained that the Satelles PNT service is the primary growth driver within the 'Hosted Payload and Other' revenue line and is on a trajectory to reach $100 million in annual service revenue by 2030. Desch added that broadband ARPU is evolving as expected into a companion service.

Simon Flannery from Jefferies asked for an elaboration on market conditions in the U.S. during the quarter, particularly whether the market and the short-cycle business held up.

Answer

CEO Morten Wierod confirmed that the U.S. market performed well, reporting 9% overall order intake growth. He noted that all four business areas contributed to this growth and that business momentum was healthy throughout the quarter, including a strong finish in March.

Simon Flannery from Morgan Stanley asked for the timeline on the Galileo FDX product, including when service revenues are expected, and requested details on the Satcom Direct revenue model, such as ARPU and revenue trends, following the acquisition.

Answer

CEO Chris Moore projected the FDX product would launch in the summer, with service revenue beginning to ramp in Q1 2026. CFO Zach Cotner clarified that the Satcom Direct business trends at a low-$40 million monthly revenue run-rate, with about 20% from MilGov. He noted that while the company is not disclosing GEO ARPU, the JX product is expected to see modest growth but also face some pressure. He also confirmed no significant changes in overall industry pricing.

Simon Flannery asked about Crown Castle's interest in international tower M&A and the medium-term growth outlook for AFFO and dividends per share after the fiber sale.

Answer

CEO Steven Moskowitz stated that while the immediate focus is on the U.S. and executing the fiber transaction, the company would remain opportunistic regarding inbound international deals. CFO Dan Schlanger affirmed the goal for dividend growth to mirror AFFO per share growth over time, based on a 75-80% payout ratio, but refrained from providing guidance beyond 2025.

Simon Flannery inquired about current carrier activity levels, the sustainability of the 11,000 to 13,000 new small cell node run rate, and the expected timeline to realize benefits from the tower portfolio digitization initiative.

Answer

CFO Dan Schlanger confirmed the 11,000-13,000 node outlook for 2024 but deferred future guidance, noting the Q3 services margin pickup was due to timing. CEO Steven Moskowitz described carrier activity as moderate and consistent, with confidence in future investment driven by 5G buildouts. He added that benefits from tower digitization will take time, with a goal to improve market share capture by mid-2025.

Simon Flannery from Morgan Stanley asked about the expected duration of EBITDA margin compression, the outlook for CapEx and free cash flow in 2025, the deployment timeline for the extended MSS constellation, and when the new 2-way IoT service might become a material contributor to revenue.

Answer

Executive Rebecca Clary projected the EBITDA margin compression to last 12-18 months, driven by investments in XCOM RAN and MSS product development, not the extended MSS network. She also detailed that Phase 2 satellite CapEx is split 50-50 with their customer. CEO Paul Jacobs declined to provide a specific MSS timeline due to customer sensitivities. He added that the 2-way IoT service is currently in beta, with a revenue ramp expected to begin in 2025 and become more significant in the following year.

Simon Flannery inquired about the contracting status and timeline for the new satellites, whether a previously guided revenue step-up is still expected, the correct revenue run-rate excluding a one-time item, and the cash flow mechanics of the new deal.

Answer

CEO Paul Jacobs confirmed work on the new satellites is underway but offered no specifics on vendors. CFO Rebecca Clary clarified that the 2025 revenue step-up from the initial satellite launch is not affected by the new agreement. She advised that the $7.5 million out-of-period item should be excluded for run-rate analysis and explained the new deal's $1.5 billion in funding will cover CapEx over the next few years. She also confirmed the recent debt refinancing is complete.

Simon Flannery of Morgan Stanley asked about the evolution of the CoreSite data center integration strategy, particularly concerning AI and edge computing, and questioned the rationale for owning the assets versus a potential separation. He also asked about the drivers behind increased spending on U.S. tower land purchases.

Answer

CEO Steven Vondran stated that the company remains confident in the long-term convergence of wireless and wireline edge, making CoreSite a strategic asset. He affirmed that as long as American Tower is the best owner to maximize its value, they will hold it. CFO Rod Smith explained that the increased capital for land purchases, rising to approximately $200 million, is a selective strategy to secure long-term revenue on their best towers, achieving returns well above their hurdle rates and increasing land security to the high 70% range.

Simon Flannery questioned the company's dividend policy heading into 2025 and asked about the potential for CoreSite capital expenditures to exceed the guided $480 million, seeking to understand the parameters for data center investment.

Answer

Rod Smith, EVP, CFO and Treasurer, explained that long-term dividend growth is expected to mirror AFFO per share growth, likely in the mid-single-digit range, while maintaining the current payout ratio. Steven Vondran, President and CEO, confirmed that CoreSite CapEx is not constrained and could grow beyond the guided $480 million, highlighting that funding optionality exists through private capital partners to support attractive, low-risk development yields.

Simon Flannery requested an update on the Millicom deal timeline, including the potential for closing in stages, and asked for an outlook on international churn beyond 2025, particularly from the Oi consolidation in Brazil.

Answer

President and CEO Brendan Cavanagh indicated the September 1 closing date for the Millicom deal is a best guess, with a desire from both parties to close earlier, potentially in stages, pending regulatory approvals. On international churn, he noted that Brazil remains the primary source due to the Oi consolidation and related network rationalization, and that some of this churn has been pulled forward. He expects churn to stabilize as these consolidations are completed.

Simon Flannery asked about the new build-to-suit agreement with Millicom, including how returns are underwritten and the expected timing of the builds. He also inquired about the company's target leverage ratio in light of M&A and share buybacks.

Answer

President and CEO Brendan Cavanagh stated that the build-to-suit deal is expected to yield returns north of double digits, even before accounting for future lease-ups, with no fixed build schedule over the 7-year term. Regarding leverage, he noted it is at a historical low of 6.4x and that he prefers to deploy excess capital towards value-enhancing M&A or share repurchases rather than further deleveraging.

Simon Flannery of Morgan Stanley asked about the supply chain situation, particularly the challenges in securing power for new developments and the ability to meet project timelines and cost targets.

Answer

CEO Andrew Power stated that the supply chain, especially for power, remains 'incredibly tight' in almost all markets. He noted that Digital Realty uses its scale and relationships to find solutions, but if more power were available sooner, they would have more demand. He also mentioned the company is well-positioned with its existing land bank and feels well-insulated from potential future tariffs due to its procurement strategies.

Simon Flannery asked about the impact of recent AI developments, specifically the growing importance of inference workloads, on Equinix's business outlook for 2025 and beyond. He also requested an update on the U.S. xScale joint venture's progress.

Answer

CEO Adaire Fox-Martin stated that continued innovation in AI, including lower inference costs, represents a secular demand driver, noting that over half of the top 25 deals in Q4 were related to HPC and AI. She emphasized Equinix's pivotal role in a multi-cloud world for AI. CFO Keith Taylor added that the company is investing heavily in the xScale business, with a goal to have a U.S. asset operational in 2027, and has budgeted approximately $40 million in incremental operating expenses for the xScale expansion in 2025.

Simon Flannery of Morgan Stanley inquired about the path back to the 8-10% long-term revenue growth target, considering the current 7-8% underlying growth, strong bookings, and new expansion plans for 2025.

Answer

CEO and President Adaire Fox-Martin highlighted that Q3's record bookings were driven by precise sales execution and demand shaping into non-Tier 1 metros, creating a strong backlog and pipeline for future quarters. CFO Keith Taylor added that while some cross-currents like network optimization persist, strong gross activity, a robust Q4 exit rate, the new xScale 2.0 initiative, and rising interconnection pricing provide confidence for growth heading into 2025.

Simon Flannery of Morgan Stanley asked for a breakdown of the fiscal 2026 CapEx forecast, specifically the portion related to ViaSat-3 launches versus maintenance spend, and inquired about the strategic goals behind the recent management reorganization.

Answer

CFO Garrett Chase stated that approximately $250 million of the FY26 CapEx is related to the ViaSat-3 buildout and that maintenance CapEx is roughly one-third of the total, but cautioned the baseline has changed. He affirmed CapEx is expected to drop beyond FY26. CEO Mark Dankberg explained the management change was an amicable parting with an executive whose primary integration tasks were largely complete, allowing for a simplified reporting structure to reduce costs.

Simon Flannery from Morgan Stanley requested an update on the Viasat-3 F2 and F3 satellites, including timing and deployment plans, and asked for the potential financial exposure from United Airlines' decision to use a competitor's system.

Answer

Chairman and CEO Mark Dankberg stated that the in-service dates for Viasat-3 F2 (late 2025) and F3 (mid-to-late 2025) are unchanged, with F2 planned for the Americas and F3 for Asia Pacific. He declined to specify the impact of the United deal, noting that Viasat's forecasts incorporate all customer plans and that the company still has a backlog of approximately 1,500 aircraft, ensuring continued growth.

Simon Flannery asked for commentary on the regulatory environment, particularly the CRTC's recent focus on roaming rates, and inquired about the current size and performance of the roaming business for Rogers.

Answer

President and CEO Tony Staffieri stated that total roaming revenue declined year-over-year and was the single biggest negative impact on ARPU in Q3. He explained that Rogers is evolving its roaming value proposition to increase the number of unique roamers. Regarding the CRTC's inquiry, he said it was not a surprise and the company will cooperate fully.

Simon Flannery from Morgan Stanley inquired about the pacing of T-Mobile's stock buyback program and the future trajectory of wholesale revenue, given impacts from ACP and the TracFone transition.

Answer

President and CEO G. Sievert first congratulated Simon on his retirement. CFO Peter Osvaldik explained the buyback strategy shifted to be more consistent after a run-up in share price. On wholesale, he stated that 2025 is expected to be the trough year, with underlying growth masked by the ACP decline and the TracFone transition to Verizon.

Simon Flannery asked for details on the copper retirement opportunity, including the percentage completed and the financial benefits from OpEx, maintenance, and real estate.

Answer

CEO Darren Entwistle and CFO Doug French detailed the program, noting a gross opportunity up to $1 billion. Key benefits include 25-30% cost-to-serve reductions and 20-25% churn improvement. French stated that less than 5% of the gross copper opportunity has been monetized to date, indicating significant future upside from both copper salvage and real estate development partnerships.

Simon Flannery asked for color on the ARPU intake from new fiber customers and whether the company is seeing any signs of macro-related softness at the low end of the consumer market.

Answer

CEO Nick Jeffery stated they are not seeing any softening in demand for their fiber product and have successfully raised promotional pricing without a negative impact on volumes. CFO Scott Beasley added that new customer ARPU is currently bifurcated, with over 60% taking higher-ARPU gigabit speeds, balanced by a mix of lower-ARPU plans for the ACP transition. He expects a return to sequential ARPU growth in Q4.

Simon Flannery asked if Frontier has granted any customer credits related to the recent cyber outage. He also questioned if the strong sequential growth in business and wholesale fiber revenue represents a sustainable new run rate.

Answer

CFO Scott Beasley reiterated the company's 8-K disclosure that the cyber incident is not expected to have a material financial impact, declining to comment on specifics like customer credits. Regarding business and wholesale, he characterized it as a "lumpy" business and advised that it should be viewed as "roughly stable" for the year, despite the strong Q1 performance, as large installations can cause quarterly fluctuations.

Asked about the company's exposure to the Affordable Connectivity Program (ACP) and the potential impact of its expiration, as well as an update on the attractiveness of state-level BEAD program plans.

Answer

Frontier has low exposure to ACP (4% of broadband customers) and does not expect a significant financial impact if the program ends. For BEAD, the company is well-positioned as its largest states (Texas, California) received the largest funding allocations, and it will participate where returns are attractive.

Asked about the speed tier mix driving ARPU growth, the sales channel mix, and the potential to gain market share as competitor cable promotions expire.

Answer

Executives noted that while they don't disclose the specific tier mix, their pricing ladder strategy is successfully shifting customers to higher speeds and increasing value-added service attachment. They are continuously optimizing sales channels by geography. Regarding competition, they believe their superior product and service will continue to win customers from cable, regardless of promotional cycles.

Simon Flannery asked about BCE's strategy for providing a national bundle in areas where it lacks fiber, noting that U.S. carriers and a Canadian peer are using fixed wireless access (FWA) to address this.

Answer

CEO Mirko Bibic responded that BCE's strategy remains primarily focused on leveraging its superior fiber network for growth. He stated that in the 75% of the country with network overlap, the emphasis is on bundling fiber and wireless. While content can be bundled with wireless in other areas, he did not indicate a plan to pursue a broad FWA or resale strategy for national bundling.