Crown Castle Inc. (NYSE:CCI) shares are trading higher after the company revealed plans to improve operational performance and has provided an updated outlook for FY24.
As part of its operational review, Crown Castle uncovered opportunities for future demand for enterprise fiber and small cells adjacent to its existing high-quality fiber footprint, which encompasses 90,000 route miles across 48 of the top 50 most populated U.S. cities.
In January 2024, Crown Castle began a comprehensive strategic and operational review of its Fiber segment.
Crown Castle aims to boost returns on small cells by focusing on collocations and network-adjacent anchor nodes near its existing network.
It plans to reduce capital intensity and prioritize higher-return projects by shifting strategy. Due to operational changes and project delays, the company expects a decrease in new small-cell nodes and leasing activity in 2024. However, it remains confident in achieving double-digit revenue growth in small cells over the next few years.
In its fiber solutions business, Crown Castle plans to decrease discretionary capital expenditures in the future.
Leveraging market opportunities near existing assets, the company aims to enhance capital efficiency while targeting 2% annual organic revenue growth in 2024 during the transition to a new sales strategy.
It anticipates returning to long-term annual organic revenue growth of 3% in fiber solutions from 2025 onward.
Workforce Reduction: The company plans to reduce staff and close offices and expects to yield about $100 million in run-rate cost savings, with $60 million expected to affect FY24 results.
Outlook: Crown Castle expects a $275 million to $325 million decrease in gross capital expenditures for its Fiber segment in 2024 on revised small cell and fiber solutions strategies.
The company plans to reduce staffing levels by over 10%, generating approximately $100 million in annualized cost savings.
These measures, along with other operational savings, aim to achieve about $60 million in savings for full-year 2024, primarily affecting the Fiber segment and corporate departments.
For FY24, the company raised adjusted FFO per share to $6.91-$7.02 (from $6.85- $6.97 earlier) and revised site rental revenues to $6.317 billion—$6.362 billion (from $6.347 billion—$6.392 billion earlier).
Investors can gain exposure to the stock via Pacer Data & Infrastructure Real Estate ETF (NYSE:SRVR) and Global X Data Center & Digital Infrastructure ETF (NASDAQ:DTCR).
Price Action: CCI shares are up 0.57% at $100.42 at the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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