What changed in Crown Castle's 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Crown Castle's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+348 added−318 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)
Top changes in Crown Castle's 2023 10-K
348 paragraphs added · 318 removed · 91 edited across 7 sections
- Item 2. Properties+211 / −9 · 1 edited
- Item 7. Management's Discussion & Analysis+10 / −216 · 7 edited
- Item 1A. Risk Factors+74 / −42 · 34 edited
- Item 1. Business+31 / −29 · 27 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+17 / −17 · 17 edited
Item 1. Business
Business — how the company describes what it does
27 edited+4 added−2 removed72 unchanged
Item 1. Business
Business — how the company describes what it does
27 edited+4 added−2 removed72 unchanged
2022 filing
2023 filing
Biggest changeAs part of our effort to provide comprehensive communications infrastructure solutions, as an ancillary business, we also offer certain services primarily relating to our Towers segment, predominately consisting of (1) site development services and (2) installation services. In 2022, approximately 45% of our services and other revenues related to installation services, and the remainder predominately related to site development services.
Biggest changeAs part of our effort to provide comprehensive communications infrastructure solutions, as an ancillary business, we also offer certain services primarily relating to site development services in our Towers segment. See note 16 to our consolidated financial statements for a discussion of the Company's July 2023 restructuring plan, which included discontinuing installation services as a Towers product offering.
The key elements of our strategy are to: • Grow cash flows from our existing communications infrastructure. We are focused on maximizing the recurring site rental cash flows generated from providing our tenants with long-term access to our shared infrastructure assets, 4 which we believe is the core driver of value for our stockholders.
The key elements of our strategy are to: 4 • Grow cash flows from our existing communications infrastructure. We are focused on maximizing the recurring site rental cash flows generated from providing our tenants with long-term access to our shared infrastructure assets, which we believe is the core driver of value for our stockholders.
Risk Factors" for additional information regarding expected higher non-renewals (which we define as the reduction in site rental revenues as a result of tenant churn, terminations and, in limited circumstances, reductions of existing lease rates) as a result of the T-Mobile and Sprint network consolidation.
Risk Factors" for additional information regarding higher non-renewals (which we define as the reduction in site rental revenues as a result of tenant churn, terminations and, in limited circumstances, reductions of existing lease rates) expected as a result of the T-Mobile and Sprint network consolidation.
We expect the following factors to contribute to potential demand for our communications infrastructure: • consumers' growing wireless data consumption leading major wireless carriers to upgrade and enhance their networks through the efficient use of both towers and small cells, including in connection with 5G deployments, in an effort to improve network quality and capacity and customer retention or satisfaction; • prior and future potential spectrum auctioned, licensed or made available by the Federal Communications Commission ("FCC") enabling additional wireless carrier network development; • next-generation technologies and new uses for wireless communications may potentially result in new entrants or increased demand in the wireless industry, which may include companies involved in the continued evolution and deployment of the Internet of Things; • the continued adoption of bandwidth-intensive applications could result in demand for high-capacity, multi-location, fiber-based network solutions; and • increased government initiatives to expand broadband infrastructure to support connectivity throughout the U.S.
We expect the following factors to contribute to potential demand for our communications infrastructure: • consumers' growing wireless data consumption leading major wireless carriers to upgrade and enhance their networks through the efficient use of both towers and small cells, including in connection with 5G deployments, in an effort to improve network quality and capacity and customer retention or satisfaction; • prior and future potential spectrum auctioned, licensed or made available by the Federal Communications Commission ("FCC") enabling additional wireless carrier network development; • next-generation technologies and new uses for wireless communications may potentially result in new entrants or increased demand in the wireless industry, which may include companies involved in the continued evolution and deployment of the Internet of Things; • the continued adoption of bandwidth-intensive applications, including artificial intelligence, could result in demand for high-capacity, multi-location, fiber-based network solutions; and • increased government initiatives to expand broadband infrastructure to support connectivity throughout the U.S.
We generally receive monthly rental payments and, in some cases, upfront payments, from our Towers tenants pursuant to long-term tenant contracts with (1) initial contract terms of five to 15 years, (2) multiple renewal periods of five to 10 years each, exercisable at the option of the tenant, (3) limited termination rights for our tenants and (4) contractual escalations of the rental price.
We generally receive monthly rental payments and, in some cases, upfront payments, from our Towers tenants pursuant to long-term tenant contracts with (1) initial contract terms generally between five to 15 years, (2) multiple renewal periods generally between five to 10 years each, exercisable at the option of the tenant, (3) limited termination rights for our tenants and (4) contractual escalations of the rental price.
As a result, consumer wireless devices are trending toward bandwidth-intensive devices, including smartphones, laptops, tablets, wearables and other emerging and embedded devices, and U.S. wireless carriers are among the first carriers in the world to begin offering commercial 5th Generation ("5G") mobile cellular communications services to further support such growth.
As a result, consumer wireless devices are trending toward bandwidth-intensive devices, including smartphones, laptops, tablets and other emerging and embedded devices, and U.S. wireless carriers are among the first carriers in the world to begin offering commercial 5th Generation ("5G") mobile cellular communications services to further support such growth.
Our Towers customers are primarily comprised of large wireless carriers that operate national networks. Our Fiber customers generally consist of large wireless carriers and organizations with high-bandwidth and multi-location demands, such as enterprise (including healthcare and financial), wholesale, government and education institutions. Our three largest tenants are T-Mobile, AT&T and Verizon Wireless.
Our Towers customers are primarily comprised of large wireless carriers that operate national networks. 7 Our Fiber customers generally consist of large wireless carriers and organizations with high-bandwidth and multi-location demands, such as enterprise (including healthcare and financial), wholesale, government and education institutions. Our three largest tenants are T-Mobile, AT&T and Verizon Wireless.
Over the last several years, the FCC has adopted regulations and 30 states have passed legislation intended to expedite and streamline the deployment of wireless networks, including establishing presumptively reasonable timeframes for reviews by local and state governments. Notwithstanding such developments, decisions of local regulatory authorities and utilities in certain jurisdictions may continue to adversely affect deployment timing and cost.
Over the last several years, the FCC has adopted regulations and 32 states have passed legislation intended to expedite and streamline the deployment of wireless networks, including establishing presumptively reasonable timeframes for reviews by local and state governments. Notwithstanding such developments, decisions of local regulatory authorities and utilities in certain jurisdictions may continue to adversely affect deployment timing and cost.
Our Fiber segment consists of small cells and fiber solutions. • Our small cells offload data traffic from towers and bolster our tenants' network capacity where data demand is the greatest and are typically attached to public right-of-way infrastructure, including utility poles and street lights. • We offer fiber solutions to large wireless carriers and organizations with high-bandwidth and multi-location demands.
Our Fiber segment consists of communications infrastructure offerings of small cells and fiber solutions. • Our small cells offload data traffic from towers and bolster our tenants' network capacity where data demand is the greatest and are typically attached to public right-of-way infrastructure, including utility poles and street lights. • We offer fiber solutions to large wireless carriers and organizations with high-bandwidth and multi-location demands.
The information on our website, including our ESG Reports, is not, and shall not be deemed to be, incorporated by reference into this 2022 Form 10-K or any other filings with the SEC unless expressly noted in any such other filings. Human Capital The people who work for Crown Castle are essential to our ability to execute on our strategy.
The information on our website, including our ESG Reports, is not, and shall not be deemed to be, incorporated by reference into this 2023 Form 10-K or any other filings with the SEC unless expressly noted in any such other filings. Human Capital The people who work for Crown Castle are essential to our ability to execute on our strategy.
Collectively, these three tenants accounted for approximately three-fourths of our 2022 site rental revenues. See "Item 1A. Risk Factors" for risks associated with our dependence on a small number of customers and note 14 to our consolidated financial statements. For 2022, our site rental revenues by tenant were as follows: Sales and Marketing.
Collectively, these three tenants accounted for approximately three-fourths of our 2023 site rental revenues. See "Item 1A. Risk Factors" for risks associated with our dependence on a small number of customers and note 14 to our consolidated financial statements. For 2023, our site rental revenues by tenant were as follows: Sales and Marketing.
Further, we seek to augment the long-term value creation associated with growing our recurring site rental cash flows by offering certain ancillary site development and installation services within our Towers segment. REIT Status We operate as a REIT for U.S. federal income tax purposes.
Further, we seek to augment the long-term value creation associated with growing our recurring site rental cash flows by offering certain ancillary site development services within our Towers segment. REIT Status We operate as a REIT for U.S. federal income tax purposes.
We seek to become the critical partner and preferred independent communications infrastructure provider for our tenants and increase tenant satisfaction relative to our peers by leveraging our (1) existing unique communications infrastructure footprint, (2) tenant relationships, (3) process-centric approach, (4) technological tools and (5) construction capabilities and expertise.
We seek to become the critical partner and preferred independent communications infrastructure provider for our tenants and increase tenant satisfaction relative to our peers by leveraging our (1) existing unique communications infrastructure footprint, (2) tenant relationships, (3) process-centric approach, (4) technological tools and (5) construction capabilities and expertise relative to the Fiber segment.
Approximately half of our site rental costs of operations consists of Towers ground lease expenses, and the remainder includes fiber access expenses (primarily leases of fiber assets and other access agreements to facilitate our communications infrastructure), property taxes, repairs and maintenance, employee compensation or related benefit costs, and utilities.
Nearly half of our site rental costs of operations consists of Towers ground lease expenses, and the remainder includes fiber access expenses (primarily leases of fiber assets and other access agreements to facilitate our communications infrastructure), repairs and maintenance, employee compensation or related benefit costs, property taxes, and utilities.
See note 3 to our 6 consolidated financial statements for a tabular presentation of the minimum rental payments due to us by tenants pursuant to tenant contracts without consideration of tenant renewal options as of December 31, 2022.
See 6 note 3 to our consolidated financial statements for a tabular presentation of the minimum rental payments due to us by tenants pursuant to tenant contracts without consideration of tenant renewal options as of December 31, 2023.
We further invest in our employees' professional growth and development by providing resources and opportunities to hone their skills and expand their subject-matter expertise, which empowers them to advance their careers and enables our business to prosper. We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages.
We further invest in our employees' professional growth and development by providing resources and opportunities to hone their skills and expand their subject-matter expertise, which empowers them to advance their careers and enables our business to prosper. We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages. See "Item 1A.
We generally receive monthly recurring payments and, in some cases, upfront payments, from our Fiber tenants pursuant to tenant contracts with initial terms that generally vary between three to 20 years.
We generally receive monthly recurring payments and, in some cases, upfront payments, from our Fiber tenants pursuant to tenant contracts with initial terms that generally vary between one to 20 years.
The average monthly rental payment from a new tenant can vary based on the amount or cost of (1) construction for initial and subsequent tenants, (2) fiber strand requirements and supply, (3) equipment at the site, (4) the market in the U.S. where the fiber is located and (5) any upfront payment received. Additional Site Rental Information.
The average monthly rental payment from a new tenant can vary based on the amount or cost of (1) construction for initial and subsequent tenants, (2) fiber strand requirements and supply, (3) equipment at the site, (4) the market in the U.S. where the fiber is located and the competition thereof and (5) any upfront payment received.
For both our Towers and Fiber segments, we have existing master agreements with our largest tenants, including T-Mobile, AT&T and Verizon Wireless. Such agreements provide certain terms (including economic terms) that govern underlying contracts (entered into during the term of the master agreements) regarding the right to use our communications infrastructure by such tenants.
Additional Site Rental Information. For both our Towers and Fiber segments, we have existing master agreements with our largest tenants, including T-Mobile, AT&T and Verizon Wireless. Such agreements provide certain terms (including economic terms) that govern underlying contracts (entered into during the term of the master agreements) regarding the right to use our communications infrastructure by such tenants.
Item 1. Business—The Company " for further information. As of December 31, 2022, exclusive of renewals exercisable at the tenants' option, our tenant contracts had a weighted-average remaining life of approximately six years and represented $40 billion of expected future cash inflows.
Item 1. Business—The Company " for further information. As of December 31, 2023, exclusive of renewals exercisable at the tenants' option, our tenant contracts had a weighted-average remaining life of approximately six years and represented $39 billion of expected future cash inflows.
As part of our effort to provide comprehensive communications infrastructure solutions, as an ancillary business, we also offer certain services primarily relating to our Towers segment, predominately consisting of (1) site development services relating to existing or new tenant equipment installations, including: site acquisition, architectural and engineering, or zoning and permitting (collectively, "site development services") and (2) tenant equipment installation or subsequent augmentations (collectively, "installation services").
As part of our effort to provide comprehensive communications infrastructure solutions, as an ancillary business, we also offer certain services primarily relating to our Towers segment, predominately consisting of site development services relating to existing or new tenant equipment installations, including: site acquisition, architectural and engineering, or zoning and permitting (collectively, "site development services").
This increase in data consumption is driven by factors such as growth in (1) mobile entertainment (such as mobile video, mobile applications and social networking), (2) mobile internet usage (supporting web browsing and trends in telehealth, remote working, online learning and other remote communications), (3) machine-to-machine applications or the "Internet of Things" (such as connected cars and smart city technologies), and (4) the adoption of other bandwidth-intensive applications (such as cloud services and video communications).
This increase in data consumption is driven by factors such as growth in (1) mobile entertainment (such as mobile video, mobile applications and social networking), (2) mobile internet usage (supporting web browsing and trends in telehealth, remote working, online learning and other remote communications), (3) machine-to-machine applications or the "Internet of Things" (such as connected cars and wearables), and (4) the adoption of other bandwidth-intensive applications (such as cloud services, artificial intelligence and video communications).
As of January 31, 2023, we employed approximately 5,000 people, all of whom were based in the U.S. From time to time, we also add contingent workers to support our business. We believe attracting, developing and retaining talented employees is paramount to serving our customers and our communities and creating value for our stockholders.
As of January 31, 2024, we employed approximately 4,700 people, all of whom were based in the U.S. From time to time, we also add contingent workers to support our business. We believe attracting, developing and retaining talented employees is paramount to serving our customers and our communities and creating value for our stockholders.
Our fiber assets include those we acquired from: (1) NextG Networks, Inc. in 2012, (2) Quanta Fiber Networks, Inc. in 2015, (3) FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy, Inc. in 2017, (4) Wilcon Holdings LLC in 2017 and (5) LTS Group Holdings LLC in 2017.
Our fiber assets include those we acquired from LTS Group Holdings LLC, Inc., Wilcon Holdings LLC and FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy in 2017, Quanta Fiber Networks, Inc. in 2015, and NextG Networks, Inc. in 2012.
We actively partner with non-profit and community organizations to create a diverse talent pipeline. In addition, our board of directors is currently comprised of 60% female or racially diverse directors, including each of the four most recently appointed directors. The well-being of our employees is a crucial element of our safety culture, employee engagement and productivity.
We actively partner with non-profit and community organizations to create a diverse talent pipeline. In addition, our board of directors is currently comprised of 58% female or racially diverse directors. The well-being of our employees is a crucial element of our safety culture, employee engagement and productivity.
Our Towers tenant contracts and pricing are not influenced by whether or not we perform the respective site development or installation services. See "—Services" below for a further discussion of our tower installation services. As of December 31, 2022, the average number of tenants (calculated as a unique license together with any related amendments thereto) per tower was approximately 2.4.
Our Towers tenant contracts and pricing are not influenced by whether or not we perform the site development services. As of December 31, 2023, the average number of tenants (calculated as a unique license together with any related amendments thereto) per tower was approximately 2.5. Fiber Segment.
These services are typically non-recurring and highly competitive, with several competitors in most markets. Typically, our site development services and installation services are billed on a fixed fee basis, and the terms and pricing of both site development services and installation services are negotiated separately from our tenant contracts. 7 Customers.
We do not always provide the site development services for our tenants on our communications infrastructure as other service providers also provide these services (see also "—Competition" below). Typically, our site development services are non-recurring and are billed on a fixed fee basis, and the terms and pricing of site development services are negotiated separately from our tenant contracts. Customers.
Removed
We have the capability and expertise to install, with the assistance of our network of subcontractors, equipment or antenna systems for our tenants. We do not always provide the installation services or site development services for our tenants on our communications infrastructure as other service providers also provide these services (see also "—Competition" below).
Added
See note 16 to our consolidated financial statements for a discussion of the Company's July 2023 restructuring ("Plan"), which included discontinuing tenant equipment installations or subsequent augmentations (collectively, "installation services") as a Towers product offering.
Removed
Our core values shape our culture, drive our decision-making and guide our interactions with one another and our customers. Our 2022 annual employee survey indicated strong employee engagement exceeding U.S. company norms. We continue to focus on building and retaining a more diverse workforce and a more inclusive community to make our company stronger and more innovative.
Added
In 2023, approximately 51% of our services and other revenues related to installation services, and the remainder predominately related to site development services.
Added
We also conduct company-wide employee surveys to help us understand how they feel about working at our company and track the results to inform our human capital strategies. We continue to focus on building and retaining a more diverse workforce and a more inclusive community to make our company stronger and more innovative.
Added
Risk Factors" and note 16 to our consolidated financial statements for further discussion of our July 2023 restructuring activities, which included reducing the total employee headcount by approximately 15%.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
34 edited+40 added−8 removed70 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
34 edited+40 added−8 removed70 unchanged
2022 filing
2023 filing
Biggest changeOur Fiber segment has expanded rapidly, and the Fiber business model contains certain differences from our Towers business model, resulting in different operational risks. If we do not successfully operate our Fiber business model or identify or manage the related operational risks, such operations may produce results that are lower than anticipated.
Biggest changeIf we do not successfully operate our Fiber business model or identify or manage the related operational risks, such operations may produce results that are lower than anticipated. Over the last decade, we have allocated a significant amount of capital to our Fiber business, which is a much less mature business for us than our Towers business.
We have the option to purchase the leased and subleased towers from AT&T at the end of the 15 respective lease or sublease terms for aggregate option payments of approximately $4.2 billion, which payments, if such option is exercised, would be due between 2032 and 2048. • 31% of our towers are leased or subleased or operated and managed under master leases, subleases or other agreements with T-Mobile (including those which T-Mobile assumed in its merger with Sprint).
We have the option to purchase the leased and subleased towers from AT&T at the end of the respective lease or sublease terms for aggregate option payments of approximately $4.2 billion, which payments, if such option is exercised, would be due between 2032 and 2048. • 31% of our towers are leased or subleased or operated and managed under master leases, subleases or other agreements with T-Mobile (including those which T-Mobile assumed in its merger with Sprint).
The loss of any one of our largest tenants as a result of consolidation, merger, bankruptcy, insolvency, network sharing, roaming, joint development, resale agreements by our tenants or otherwise may result in (1) a material decrease in our revenues, (2) uncollectible account receivables, (3) an impairment of our deferred site rental receivables, communications infrastructure assets, or intangible assets (including goodwill), or (4) other adverse effects to our business.
The loss of any one of our largest tenants, including DISH, as a result of consolidation, merger, bankruptcy, insolvency, network sharing, roaming, joint development, resale agreements by our tenants or otherwise may result in (1) a material decrease in our revenues, (2) uncollectible account receivables, (3) an impairment of our deferred site rental receivables, communications infrastructure assets, or intangible assets (including goodwill), or (4) other adverse effects to our business.
While we maintain insurance that includes coverage in the event of cybersecurity or other information technology breaches, there can be no assurances that such coverage will be adequate to cover exposure from such incidents. Our business may be adversely impacted by climate-related events, natural disasters, including wildfires, and other unforeseen events.
While we maintain insurance that includes coverage in the event 17 of cybersecurity or other information technology breaches, there can be no assurances that such coverage will be adequate to cover exposure from such incidents. Our business may be adversely impacted by climate-related events, natural disasters, including wildfires, and other unforeseen events.
Consolidation among our tenants will likely result in duplicate or overlapping parts of networks, for example, where they are co-residents on a tower or small cell network, which may result in the termination, non-renewal or re-negotiation of tenant contracts and negatively impact revenues from our communications infrastructure.
Consolidation among our largest tenants will likely result in duplicate or overlapping parts of networks, for example, where they are co-residents on a tower or small cell network, which may result in the termination, non-renewal or re-negotiation of tenant contracts and negatively impact revenues from our communications infrastructure.
Our failure to obtain these agreements in a prompt and cost-effective manner may prevent us from expanding our footprint, which may be necessary to meet our contractual obligations to our tenants and could adversely impact our business. Our services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
Our failure to obtain these agreements in a prompt and cost-effective manner may prevent us from expanding our footprint, which may be necessary to meet our contractual obligations to our tenants and could adversely impact our business. 16 Our services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
The expansion or development of our business, including through acquisitions, increased product offerings or other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results. We seek to expand and develop our business, including through acquisitions, increased product offerings, or other strategic growth opportunities.
The expansion or development of our business, including through acquisitions, increased product offerings or other strategic opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results. We seek to expand and develop our business, including through acquisitions, increased product offerings, or other strategic opportunities.
As a result, changes in tenant plans such as delays in the implementation of new systems, new and emerging technologies (including small cells and fiber solutions), or plans to expand coverage or capacity may reduce demand for our communications infrastructure.
As a result, changes in tenant plans such as delays in the implementation of new systems, new and emerging technologies (including small cells and fiber solutions), or change in plans to expand coverage or capacity may reduce demand for our communications infrastructure.
Due to the long-term nature of our tenant contracts, we generally expect that the impact to our site rental revenues from any termination of our tenant contracts as a result of such potential consolidation would be spread over multiple years.
Due to the long-term nature of our tenant contracts, we generally expect that the impact to our site rental revenues from any termination of our tenant contracts as a result of such potential consolidation would be spread out over multiple years.
Our focus on and disclosure of our ESG position, metrics, strategy, goals and initiatives expose us to potential litigation and other adverse effects to our business. In recent years, our investors, tenants, employees and other stakeholders have increased their focus on ESG matters and disclosure.
Our focus on and disclosure of our ESG position, metrics, strategy, goals and initiatives expose us to potential litigation and other adverse effects to our business. In recent years, certain of our investors, tenants, employees and other stakeholders have increased their focus on ESG matters and disclosure.
Additional information concerning these towers and the applicable purchase options as of December 31, 2022 is as follows: • 22% of our towers are leased or subleased or operated and managed under a master lease or other related agreements with AT&T for a weighted-average initial term of approximately 28 years, weighted based on towers site rental gross margin.
Additional information concerning these towers and the applicable purchase options as of December 31, 2023 is as follows: • 22% of our towers are leased or subleased or operated and managed under a master lease or other related agreements with AT&T for a weighted-average initial term of approximately 28 years, weighted based on towers site rental gross margin.
The business model for our Fiber operations contains certain differences from our business model for our Towers operations, including those relating to tenant base, competition, contract terms (including requirements for service level agreements regarding network performance and maintenance), upfront capital requirements, landlord demographics, deployment and ownership of certain network assets, operational oversight requirements, government regulations, growth rates and applicable laws.
The business model for our Fiber operations contains certain differences from our business model for our Towers operations, including those relating to tenant base, competition, contract terms (including requirements for service level agreements regarding network performance and maintenance), upfront capital requirements, labor costs, landlord demographics, deployment and ownership of certain network assets, operational oversight requirements, government regulations, growth rates and applicable laws.
As of December 31, 2022, approximately 53% of our towers were leased or subleased or operated and managed under master leases, subleases, or other agreements with AT&T and T-Mobile (including those which T-Mobile assumed in its merger with Sprint). We have the option to purchase these towers at the end of their respective lease terms.
As of December 31, 2023, approximately 53% of our towers were leased or subleased or operated and managed under master leases, subleases, or other agreements with AT&T and T-Mobile (including those which T-Mobile assumed in its merger with Sprint). We have the option to purchase these towers at the end of their respective lease terms.
While our Fiber operations have certain risks that are similar to our Towers operations, they also have certain operational risks (including the scalability of processes) that are different from our Towers business, including: • the use of public rights-of-way and franchise agreements; • the use of poles and conduits owned solely by, or jointly with, third parties; • risks relating to overbuilding competitive fiber assets; • risks relating to the specific markets in which we choose or plan to operate; • risks relating to construction hazards, including boring, trenching, utility and maintenance of traffic hazards; • construction management and construction-related billings to tenants; • risks relating to wireless carriers building their own small cell networks, or tenants utilizing their own or alternative fiber assets; • the risk of failing to optimize the use of our finite supply of fiber strands; • damage to our assets and the need to maintain, repair, upgrade and periodically replace our assets; • the risk of failing to properly maintain or operate highly specialized hardware and software; • network data security risks; • the risk of new technologies that could enable tenants to realize the same benefits with less utilization of our fiber; • potential damage to our overall reputation as a communications infrastructure provider; and • the use of CLEC status.
While our Fiber operations have certain risks that are similar to our Towers operations, they also have certain operational risks (including the scalability of processes) that are different from our Towers business, including: • the use of public rights-of-way and franchise agreements; • the use of poles and conduits owned solely by, or jointly with, third parties; • risks relating to overbuilding competitive fiber assets; • risks relating to the specific markets in which we choose or plan to operate; • risks relating to construction hazards, including boring, trenching, utility and maintenance of traffic hazards; • construction management and construction-related billings to tenants; • risks relating to efficiently and rapidly adjusting the size of the personnel needed to operate our Fiber business; • risks relating to wireless carriers building their own small cell networks, or tenants utilizing their own or alternative fiber assets; • the risk of failing to optimize the use of our finite supply of fiber strands; • damage to our assets and the need to maintain, repair, upgrade and periodically replace our assets; • the risk of failing to properly maintain or operate highly specialized hardware and software; • network data security risks; • the risk of new technologies that could enable tenants to realize the same benefits with less utilization of our fiber; • potential damage to our overall reputation as a communications infrastructure provider; and • the use of CLEC status.
Approximately 10% of our towers site rental gross margin for the year ended December 31, 2022 was derived from towers where the leases for the land under such towers had final expiration dates of less than 10 years.
Approximately 10% of our towers site rental gross margin for the year ended December 31, 2023 was derived from towers where the leases for the land under such towers had final expiration dates of less than 10 years.
Among other things, such transactions and activities may: • disrupt our business relationships with our tenants, depending on the nature of or counterparty to such transactions and activities; • divert capital and the time or attention of management away from other business operations, including as a result of post-transaction integration activities; • fail to achieve revenue or margin targets, operational synergies or other benefits contemplated; • increase operational risk or volatility in our business; • not result in the benefits management had expected to realize from such expansion and development activities, or those benefits may take longer to realize than expected; • impact our cost structure and result in the need to hire additional employees; • increase demands on current employees or result in current or prospective employees experiencing uncertainty about their future roles with us, which might adversely affect our ability to retain or attract key employees; or 13 • result in the need for additional TRSs or contributions of certain assets to TRSs, which are subject to federal and state corporate income taxes.
Among other things, such transactions and activities may: • disrupt our business relationships with our tenants and landlords, depending on the nature of or counterparty to such transactions and activities; • divert capital and the time or attention of management away from other business operations, including as a result of post-transaction integration activities; • fail to achieve revenue or margin targets, operational synergies or other benefits contemplated; • increase operational risk or volatility in our business; • not result in the benefits management had expected to realize from such expansion and development activities, or those benefits may take longer to realize than expected; • impact our cost structure and result in the need to hire additional employees; • increase demands on current employees or result in current or prospective employees experiencing uncertainty about their future roles with us, which might adversely affect our ability to retain or attract key employees; or • result in the need for additional TRSs or contributions of certain assets to TRSs, which are subject to federal and state corporate income taxes. 13 Our Fiber segment has expanded, and the Fiber business model contains certain differences from our Towers business model, resulting in different operational risks.
Excluding the anticipated impact from the T-Mobile and Sprint network consolidation, we expect consolidated annual small cell non-renewals to remain in line with our historical range of 1% to 2% of annual site rental revenues.
Excluding the anticipated impact from the T-Mobile and Sprint network consolidation, we expect each of towers and small cell non-renewals to remain in line with our historical range of 1 to 2% of their respective annual site rental revenues.
In addition, if we fail to comply with our covenants, our debt could be accelerated. We have a substantial amount of indebtedness (approximately $21.7 billion as of February 21, 2023). See "Item 7. MD&A—Liquidity and Capital Resources" for a tabular presentation of our contractual debt maturities.
In addition, if we fail to comply with our covenants, our debt could be accelerated. We have a substantial amount of indebtedness (approximately $22.8 billion as of February 20, 2024). See "Item 7. MD&A—Liquidity and Capital Resources" for a tabular presentation of our contractual debt maturities.
We have the option to purchase these towers from AT&T at the end of their respective lease terms for aggregate option payments of up to approximately $405 million, which payments, if such option is exercised, would be due prior to 2032 (less than $10 million would be due before 2025).
We have the option to purchase these towers from AT&T at the end of their respective lease terms for aggregate option payments of up to approximately $400 million, which payments, if such option is exercised, would be due prior to 2032 (less than $15 million would be due before 2029).
We operate in a challenging labor market and failure to attract, recruit and retain qualified and experienced employees could adversely affect our business, operations and costs. Our ability to sustain and grow our business and execute on our strategy requires us, in part, to attract, recruit and retain qualified and experienced employees, including key management personnel and other talent.
Failure to attract, recruit and retain qualified and experienced employees could adversely affect our business, operations and costs. Our ability to sustain and grow our business and execute on our strategy requires us, in part, to attract, recruit and retain qualified and experienced employees, including key management personnel and other talent.
Further, we do not maintain, and do not expect to maintain, insurance policies that provide adequate coverage in the event that our actions (or those actions of those acting on our behalf) contribute to a wildfire event, as a result of the fact that such insurance policies are generally not economically available. 17 As a result of competition in our industry, we may find it more difficult to negotiate favorable rates on our new or renewing tenant contracts.
Further, we do not maintain, and do not expect to maintain, insurance policies that provide adequate coverage in the event that our actions (or those actions of those acting on our behalf) contribute to a wildfire event, as a result of the fact that such insurance policies are generally not economically available.
There may be risks and challenges associated with small cells and fiber solutions being comparatively new and emerging technologies that are continuing to evolve, and there may be other risks related to small cells and fiber solutions of which we are not yet aware. Failure to timely, efficiently and safely execute on our construction projects could adversely affect our business.
There may be risks and challenges associated with small cells and fiber solutions being comparatively new and emerging technologies that are continuing to evolve, and there may be other risks related to small cells and fiber solutions of which we are not yet aware.
In addition, the construction projects (including modifications of existing communications infrastructure) can pose certain safety risks, including: • risks resulting from elevated work, including falling hazards; • risks of third-party non-compliance with safety regulations, industry best practices or other applicable standards; • risks associated with utility hazards, including gas line, electrical or sewage strikes, which may result in explosions, electrocution and other potentially catastrophic events; and • risk of potential wildfires, including due to welding, grinding, cutting, or other construction activity. 14 Such safety risks may cause personal injury or loss of life, severe damage to or destruction of property, suspension of operations or services, or significant damage to the environment, creating financial, regulatory or reputational damage that could adversely affect our business.
In addition, the construction projects (including modifications of existing communications infrastructure) can pose certain safety risks, including: • risks resulting from elevated work, including falling hazards; • risks of third-party non-compliance with safety regulations, industry best practices or other applicable standards; • risks associated with utility hazards, including gas line, electrical or sewage strikes, which may result in explosions, electrocution and other potentially catastrophic events; and • risk of potential wildfires, including due to welding, grinding, cutting, or other construction activity.
For various reasons, we may not always have the ability to access, analyze, or verify all information regarding titles or other issues prior to acquiring communications infrastructure. Further, we may not be able to renew ground leases or other agreements on commercially viable terms.
For various reasons, we may not always have the ability to access, analyze, or verify all information regarding titles or other issues prior to acquiring communications infrastructure.
Our ability to retain rights to the land on which our towers are located depends on our ability to purchase such land, by acquiring fee interests and perpetual easements, or renegotiate or extend the terms of the agreements relating to such land.
Further, we may not be able to renew ground leases or other agreements on commercially viable terms. 15 Our ability to retain rights to the land on which our towers are located depends on our ability to purchase such land, by acquiring fee interests and perpetual easements, or renegotiate or extend the terms of the agreements relating to such land.
Despite existing security measures, certain of our information technology and communications infrastructure may be subject to damage, disruptions, or shutdowns due to unauthorized access, computer viruses, ransomware or other malicious software, cyber-attacks and other security breaches.
Despite existing security measures, certain of our information technology and communications infrastructure may be subject to damage, disruptions, or shutdowns due to unauthorized access, computer viruses, ransomware or other malicious software, cyber-attacks and other security breaches. In addition, our reliance on cloud- or internet-based services and on remote access to information systems increases our exposure to potential cybersecurity incidents.
Our services business is generally driven by demand for our communications infrastructure and may be adversely impacted by various factors, including: • competition; • the timing, mix and amount of tenant network investments; • the rate and volume of tenant deployment plans; • unforeseen delays or challenges relating to work performed; • economic weakness or uncertainty; • labor availability and productivity; • our market share; and • changes in the size, scope, or volume of work performed. 16 If radio frequency emissions from wireless handsets or equipment on our communications infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues.
Our services business is generally driven by demand for our communications infrastructure and may be adversely impacted by various factors, including: • competition; • the timing, mix and amount of tenant network investments; • the rate and volume of tenant deployment plans; • unforeseen delays or challenges relating to work performed; • economic weakness or uncertainty; • labor availability and productivity; • availability of key components; • our market share; and • changes in the size, scope, or volume of work performed.
We often experience unforeseen delays from municipalities and utility companies that result in longer construction timelines than expected, which impact our ability to timely deliver on our projects.
Our failure to perform timely and in accordance with the performance criteria exposes us to penalties specified in the contract or possible litigation. We often experience unforeseen delays from municipalities and utility companies that result in longer construction timelines than expected, which impact our ability to timely deliver on our projects.
Any significant increase in the amount of our variable rate debt or interest rate on such debt could adversely impact our borrowing cost, financial results and our ability to meet our dividend growth targets, strategically deploy our capital or execute our business plan. See "
Any prolonged period of elevated interest rates or further increases to interest rates on such debt could continue to adversely impact our financial results and our ability to meet our dividend growth targets, strategically deploy our capital or execute our business plan. See "
Our ESG initiatives and goals may be difficult to implement and may increase operating costs and result in changes to certain of our operations, assets and processes. In addition, a number of governmental and self-regulatory organizations are developing climate change-based laws and regulations, with varying scopes and complexity, that could, if adopted, significantly increase compliance burdens and associated costs.
In addition, a number of governmental and self-regulatory organizations have 18 developed or are developing climate change-based laws and regulations, with varying scopes and complexity, that could, if adopted, significantly increase compliance burdens and associated costs.
We cannot guarantee that tenant contracts with our largest tenants will not be terminated or that these tenants will renew their tenant contracts with us. In addition to our three largest tenants, we also derive a portion of our revenues and anticipated future growth from (1) fiber solutions tenants and (2) new entrants offering or contemplating offering wireless services.
We cannot guarantee that tenant contracts with our largest tenants will not be terminated or that these tenants will renew their tenant contracts with us.
Over the last decade, we have allocated a significant amount of capital to our Fiber business, which is a much less mature business for us than our Towers business. Our Fiber segment represented 31% and 33% of our site rental revenues for the years ended December 31, 2022 and 2021, respectively.
Our Fiber segment represented 34% and 31% of our site rental revenues for the years ended December 31, 2023 and 2022, respectively.
Our three largest tenants are T-Mobile, AT&T and Verizon Wireless.
Our three largest tenants are T-Mobile, AT&T and Verizon Wireless. In addition to our three largest tenants, we also derive a meaningful portion of our revenues and anticipated future growth from DISH Network Corporate ("DISH").
Over the past 11 months, the Federal Reserve has raised the federal funds rate eight times for a cumulative increase of 4.50% and has signaled further increases in the near-term, which could further increase interest rates on our variable rate debt.
Since March 2022, the Federal Reserve has repeatedly raised the federal funds rate for a cumulative increase of 5.25%, which adversely impacted the interest rates on our variable rate debt and refinancings of fixed rate debt. As of February 20, 2024, approximately 8% of our outstanding indebtedness consisted of variable interest rates.
Removed
Such tenants (including those dependent on government funding) may be smaller or have less financial resources than our three largest tenants, may have business models which may not be successful, or may require additional capital.
Added
We anticipate that this consolidation will result in approximately $200 million in Towers non-renewals in 2025. We expect an additional impact of $35 million in Fiber non-renewals, with $10 million impacting results in 2024 and the remainder in 2025.
Removed
We anticipate that this consolidation will result in higher Towers non-renewals in 2025, which are expected to reduce site rental revenues by approximately $200 million. Except for full year 2025, we expect our annual Towers non-renewals to remain in line with our historical range of 1% to 2% of annual site rental revenues.
Added
Our review of potential strategic alternatives may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or the outcome could adversely affect our business. There is no guarantee that any transaction resulting from the strategic review will ultimately benefit our shareholders.
Removed
Additionally, we anticipate that the T-Mobile and Sprint network consolidation will result in small cell non-renewals, which are expected to reduce site rental revenues by approximately $45 million, with approximately half occurring in 2023 and the remainder occurring in 2024 and 2025.
Added
In December 2023, our board of directors established a Fiber Review Committee to oversee and direct the review of strategic and operational alternatives that may be available to us with respect to our Fiber business, including potential sale, merger, spin-off, joint-venture and financing transactions, as well as a range of other strategic and operational opportunities for improved value-creation.
Removed
In addition, our increased reliance on cloud- or internet-based services and on remote access to information systems to accommodate our hybrid work environment increases our exposure to potential cybersecurity incidents.
Added
There is no assurance that the process will result in the approval or completion of any specific transaction or outcome. We are actively working with financial advisors and legal counsel in this strategic review process. The process of reviewing potential strategic and operational alternatives is time consuming and costly and may divert management's attention.
Removed
We have experienced an extremely competitive labor market that continues to tighten due to macroeconomic conditions and elevated levels of turnover stemming from the COVID-19 pandemic. To remain competitive, some employers are offering increased compensation and benefits and opportunities to work with greater flexibility, including remote work on a permanent basis.
Added
It may also be disruptive to our business operations and long-term planning, which may cause concern to our current or potential investors, customers, employees, strategic partners, vendors and other stakeholders and may have a material impact on our operating results or result in increased volatility in our stock price.
Removed
We currently operate under a hybrid work model, meaning that the majority of our employees have the flexibility to work remotely for a portion of the workweek. As the competition for talent remains intense, we have experienced, and may continue to experience, increased costs to attract, recruit and retain necessary talent, including increased compensation, benefits or other employee-related costs.
Added
Any potential transaction or other strategic alternative would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, regulatory approvals, and the availability of financing for a potential transaction on favorable terms.
Removed
Our failure to successfully attract, recruit and retain key employees could adversely impact our business, operations, and costs. 18 Risks Related to Our Debt and Equity Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments limit our ability to take a number of actions that our management might otherwise believe to be in our best interests.
Added
There can be no assurance that any potential transaction or other strategic alternative will be successfully implemented, achieve the intended benefits or provide greater value to our stockholders 14 than that reflected in the current price of our common stock.
Removed
As of February 21, 2023, approximately 12% of our outstanding indebtedness consisted of variable interest rates, with a weighted average rate of 5.6%.
Added
Until the review process is concluded, perceived uncertainties related to our future may result in the loss of potential business opportunities, volatility in the market price of our common stock and difficulty attracting and retaining qualified talent and business partners. Failure to timely, efficiently and safely execute on our construction projects could adversely affect our business.
Added
Such safety risks may cause personal injury or loss of life, severe damage to or destruction of property, suspension of operations or services, or significant damage to the environment, creating financial, regulatory or reputational damage that could adversely affect our business.
Added
During 2023, due primarily to a decline in tenant activity, services and other revenues decreased by 36% compared to the year ended December 31, 2022. In July 2023, we announced the discontinuation of installation services as a Towers product offering while continuing to offer site development services on our towers.
Added
See note 16 to our consolidated financial statements and "Item 7. MD&A—General Overview—Highlights of Business Fundamentals and Results" for further discussion of our July 2023 restructuring activities. If radio frequency emissions from wireless handsets or equipment on our communications infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues.
Added
As a result of competition in our industry, we may find it more difficult to negotiate favorable rates on our new or renewing tenant contracts.
Added
Our ESG initiatives and goals may be difficult to implement, may be contrary to interests of other stakeholders and may increase operating costs and result in changes to certain of our operations, assets and processes.
Added
We have encountered a competitive labor market for experienced talent in our industry due, in part, to macroeconomic conditions. Our stock price decline has caused, and may continue to cause, a failure to achieve certain metrics on which vesting of our performance-based equity awards is based.
Added
If our total compensation package is not viewed as competitive, our ability to successfully attract, recruit and retain key employees could adversely impact our business, operations, and costs, which could result in the loss of institutional knowledge and expertise of departing employees.
Added
In addition, see " —Changes to management, including turnover of our top executives, could have an adverse effect on our business.", "—Actions that we are taking to restructure our business in alignment with our strategic priorities may not be as effective as anticipated." and "—Our review of potential strategic alternatives may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or the outcome could adversely affect our business.
Added
There is no guarantee that any transaction resulting from the strategic review will ultimately benefit our shareholders." for a discussion of the strategic and operational review, recent management changes, the recent reduction in force, and the potential adverse impact on our workforce therefrom. Changes to management, including turnover of our top executives, could have an adverse effect on our business.
Added
Our business has experienced significant executive management changes. In December 2023, we announced the departure of Jay A. Brown, our President and Chief Executive Officer ("CEO"), the appointment of Anthony J.
Added
Melone, a member of our board of directors, to serve as an interim President and CEO, and the creation of an ad hoc CEO Search Committee of the board of directors to conduct a search for our next CEO. The timeline for identifying and integrating a new CEO is currently unknown.
Added
We must timely hire a new CEO, successfully integrate the new executive and smoothly transition that person into their new role within our organization to achieve our long-term operating objectives. In addition, we have experienced the departure and transition of leadership in our Towers organization.
Added
These leadership changes may be inherently difficult to manage and may hamper our ability to meet our financial and operational goals as new management becomes familiar with their roles and the business. Such changes may also result in added costs, uncertainty concerning our future direction, decreased employee morale, and the loss of personnel with deep institutional knowledge and industry relationships.
Added
Any of the foregoing could result in significant disruptions to our operations and impact our ability to execute on our strategy and pursue strategic initiatives. Further, we have increased our dependency on the remaining members of our executive management team to facilitate a smooth transition in leadership roles.
Added
Since our executive officers are at-will employees, they could terminate their employment with us at any time, and any such departure could be particularly disruptive in light of the recent leadership changes. If we are unable to mitigate these or other similar risks, our business, results of operations and financial condition may be adversely affected.
Added
Actions that we are taking to restructure our business in alignment with our strategic priorities may not be as effective as anticipated. In July 2023, we initiated the Plan as part of our efforts to reduce costs to better align our operational needs with lower tower activity.
Added
The Plan included reducing our total employee headcount by approximately 15%, discontinuing installation services as a Towers product offering, and consolidating office space. As a result of the foregoing actions, we incurred $85 million of restructuring charges in 2023.
Added
We expect to incur an additional approximately $14 million of related charges during the first half of 2024, primarily related to the office space consolidation.
Added
The actions announced in July 2023 associated with the Plan and related charges are expected to be substantially completed and recorded by June 30, 2024 while the payments are expected to be completed for the employee headcount reduction and office space consolidation in 2024 and 2032, respectively.
Added
In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the execution of these actions.
Added
We have made certain assumptions in estimating the 19 anticipated savings we expect to achieve under the Plan, which include the estimated savings from the elimination of certain headcount and the consolidation of office space. These assumptions may turn out to be incorrect due to a variety of factors.
Added
In addition, our ability to realize the expected benefits from the Plan is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.
Added
As such, we may not realize, in full or in part, or sustain, the anticipated benefits from the Plan or do so within the expected time frame, and anticipated benefits may not be adequate to meet our long-term profitability and operational expectations.
Added
Furthermore, the Plan may result in unintended consequences, including: • employee attrition beyond the intended reduction in force; • damage to our corporate culture and decreased employee morale and productivity among our remaining employees; • diversion of management attention; • adverse effects to our reputation as an employer (which could make it more difficult for us to hire new employees in the future); • loss of institutional knowledge and expertise of departing employees; • inability to timely and efficiently scale our workforce in response to shifting demand in our business; and • potential failure or delays to meet operational and growth targets due to the loss of qualified employees.
Added
If we experience any of these adverse consequences, the Plan and other strategic initiatives may not achieve or sustain their intended benefits, or the benefits, even if achieved, may not be adequate to meet our long-term profitability and operational expectations, which could adversely affect our business, results of operations and financial condition.
Added
Actions of activist stockholders could impact the pursuit of our business strategies and adversely affect our results of operations, financial condition, or stock price. We have been, and may in the future be, subject to activities initiated by activist stockholders.
Added
In December 2023, we entered into a Cooperation Agreement ("Cooperation Agreement") with Elliott Investment Management L.P., Elliott Associates, L.P. and Elliott International, L.P. (collectively, "Elliott").
Added
Pursuant to the Cooperation Agreement, we agreed, among other things, (1) to promptly appoint Jason Genrich and Sunit Patel as members of the board of directors, with an initial term expiring at the Company's 2024 Annual Meeting of Stockholders, (2) to establish a Fiber Review Committee to conduct a strategic and operational review of our Fiber business and (3) to establish a CEO Search Committee to conduct a search for the next CEO of our company.
Added
In addition, another activist investor has notified us of its intent to nominate a slate of nominees to stand for election as directors at our 2024 Annual Meeting of Stockholders in opposition to the nominees recommended by our board of directors.
Added
We strive to maintain constructive, ongoing communications with all stockholders, and we welcome constructive input from all stockholders toward the shared goal of enhancing long-term stockholder value.
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Item 2. Properties
Properties — owned and leased real estate
1 edited+210 added−8 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
1 edited+210 added−8 removed0 unchanged
2022 filing
2023 filing
Biggest changeApproximately 53% of our towers are leased or subleased or operated and managed under master leases, subleases, or other agreements with AT&T and T-Mobile (including those which T-Mobile assumed in its merger with Sprint). We have the option to purchase these towers at the end of their respective lease terms. We have no obligation to exercise such purchase options.
Biggest changeWith respect to business combinations that include towers that we lease and operate, such as the AT&T and T-Mobile leased and subleased towers (including those which T-Mobile assumed in its merger with Sprint), we evaluate such agreements to determine treatment as finance or operating leases and identification of any bargain purchase options.
Removed
Item 2. Properties Communications Infrastructure We own, lease or manage more than 40,000 towers geographically dispersed throughout the U.S. Towers are vertical metal structures generally ranging in height from 50 to 300 feet. Our tenants' wireless equipment may be placed on towers, building rooftops and other structures.
Added
Item 2. MD&A—Results of Operations " for further discussion of the Plan. ◦ The actions announced in July 2023 associated with the Plan and related charges are expected to be substantially completed and recorded by June 30, 2024, while the payments are expected to be completed for the employee headcount reduction and office space consolidation in 2024 and 2032, respectively.
Removed
Our towers are located on tracts of land that support the towers, equipment shelters and, where applicable, guy-wires to stabilize the tower. Additionally, we own or lease approximately 85,000 route miles of fiber primarily supporting our (1) approximately 120,000 small cells on air or under contract and (2) fiber solutions.
Added
Common Stock Dividend During each of the quarters in the year ended 2023, we paid a common stock dividend of $1.565 per share, totaling approximately $2.7 billion, which represents an increase of approximately 4.7% from the common stock dividends paid in the aggregate in the year ended 2022.
Removed
The majority of our fiber assets are located in major metropolitan areas. Our small cells and fiber are typically located outdoors and are often attached to public right-of-way infrastructure, including utility poles or street lights. See the following for further information regarding our communications infrastructure: • "Item 1. Business—Overview" for information regarding our tower and fiber portfolios. • "Item 7.
Added
We currently expect our common stock dividends over the next 12 months to be a cumulative amount of at least $6.26 per share, or an aggregate amount of approximately $2.7 billion. Over time, we expect to increase our dividend per share as we grow cash flows. Any future common stock dividends are subject to declaration by our board of directors.
Removed
MD&A—Liquidity and Capital Resources—Material Cash Requirements" for information regarding our lease obligations. • "Schedule III - Schedule of Real Estate and Accumulated Depreciation" for further information on our productive properties.
Added
See notes 10 and 17 to our consolidated financial statements.
Removed
See note 4 to our consolidated financial statements and "Item 1A. Risk Factors" for a further discussion. Substantially all of our communications infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications.
Added
Outlook Highlights The following are certain highlights of our outlook that impact our business fundamentals described above. • We expect that, when compared to full year 2023, our full year 2024 site rental revenues growth will be positively impacted by tenant additions, as large wireless carriers and fiber solutions tenants continue to focus on meeting the increasing demand for data.
Removed
Additionally, if so inclined as a result of a request for a tenant addition, we could generally replace an existing tower with another tower, replace a small cell network antenna with another antenna or overlay additional fiber in order to provide additional coverage or capacity, subject to certain restrictions.
Added
We expect site rental revenues to decrease year over year due to the absence in 2024 of payments received in 2023 that T-Mobile paid to satisfy remaining rental obligations for certain canceled Sprint leases, net of estimated non-renewals, as a result of the T-Mobile US, Inc. and Sprint network consolidation and a decline in long-term deferred revenue amortization. 31 • We expect to continue to invest a significant amount of our available capital in the form of discretionary capital expenditures for 2024 based on the anticipated returns on such discretionary investments. ◦ We expect that our discretionary capital expenditures will increase as we accelerate the pace of small cell deployments. • We also expect sustaining capital expenditures of approximately 1% of net revenues for full year 2024, consistent with historical annual levels. • As part of the aforementioned Plan: ◦ In 2024, we expect to realize $105 million in labor and facilities cost savings, of which $50 million is expected in selling, general and administrative, $40 million in services and other costs of operations and $15 million in site rental costs of operations.
Removed
Offices Our principal corporate headquarters is owned and located in Houston, Texas. In addition, we have offices throughout the U.S. in locations convenient for the management and operation of our communications infrastructure, with significant consideration being given to the amount of our communications infrastructure located in a particular area.
Added
The 2024 costs savings are expect to be partially offset by a $40 million reduction in services and other gross margin due to the discontinuation of installation services. See "Item 1A.
Removed
We believe that our facilities are suitable and adequate to meet our anticipated needs.
Added
Risk Factors" for a discussion of risks related to our restructuring activities. • In December 2023, we announced a strategic and operating review of our Fiber segment. 32 Results of Operations The following discussion of our results of operations for 2023 compared to 2022 should be read in conjunction with "Item 1. Business," "Item 7.
Added
MD&A—Liquidity and Capital Resources" and our consolidated financial statements. For a discussion of our results of operations and financial condition for 2022 compared to 2021 that is not included in this 2023 Form 10-K, see "Part II, Item 7.
Added
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 24, 2023.
Added
The following discussion of our results of operations is based on our consolidated financial statements prepared in accordance with GAAP, which requires us to make estimates and judgments that affect the reported amounts (see "Item 7. MD&A—Accounting and Reporting Matters—Critical Accounting Policies and Estimates" and note 2 to our consolidated financial statements). See "Item 7.
Added
MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures" for a discussion of our use of (1) segment site rental gross margin, (2) segment services and other gross margin, (3) segment operating profit (loss), including their respective definitions, and (4) Adjusted EBITDA, including its definition and a reconciliation to net income (loss).
Added
Our operating segments consist of (1) Towers and (2) Fiber. See note 14 to our consolidated financial statements for further discussion of our operating segments.
Added
Highlights of our results of operations for 2023, 2022 and 2021 are depicted below: Years Ended December 31, Percent Change (In millions of dollars) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Site rental revenues: Towers site rental revenues $ 4,313 $ 4,322 $ 3,804 — % 14 % Fiber site rental revenues 2,219 1,967 1,915 13 % 3 % Total site rental revenues 6,532 6,289 5,719 4 % 10 % Site rental gross margin (a) : Towers site rental gross margin 3,370 3,404 2,915 (1) % 17 % Fiber site rental gross margin 1,533 1,317 1,282 16 % 3 % Services and other gross margin (a) : Towers services and other gross margin 127 238 187 (47) % 27 % Fiber services and other gross margin 16 3 3 433 % — % Segment operating profit (loss) (a) : Towers operating profit (loss) 3,393 3,527 2,995 (4) % 18 % Fiber operating profit (loss) 1,355 1,130 1,111 20 % 2 % Income (loss) from continuing operations 1,502 1,675 1,158 (10) % 45 % Net income (loss) 1,502 1,675 1,096 (10) % 53 % Adjusted EBITDA (b) 4,415 4,340 3,816 2 % 14 % (a) See "Item 7.
Added
MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures" and note 14 to our consolidated financial statements for our definitions of segment site rental gross margin, segment services and other gross margin and segment operating profit. (b) See reconciliation of this non-GAAP financial measure to net income (loss) and definition included in "Item 7.
Added
MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures." 33 2023 and 2022 Total site rental revenues for 2023 grew by $243 million, or 4%, from 2022.
Added
This increase was predominately comprised of the factors depicted in the chart below: (In millions of dollars) (a) Represents site rental revenues growth from tenant additions across our entire portfolio and renewals or extensions of tenant contracts, exclusive of the impacts from both straight-line accounting and amortization of prepaid rent in accordance with GAAP.
Added
(b) Core leasing activity and non-renewals include $170 million and $21 million, respectively, of payments received from and non-renewals associated with Sprint Cancellations, respectively. (c) Prepaid rent amortization includes amortization of upfront payments received from long-term tenants and other deferred credits, inclusive of $59 million of accelerated prepaid rent amortization associated with the Sprint Cancellations.
Added
(d) Represents the contribution from recent acquisitions until the one-year anniversary of such acquisitions. Towers site rental revenues and Towers site rental gross margin for 2023 were $4.3 billion and $3.4 billion, respectively, compared to $4.3 billion and $3.4 billion, respectively, from 2022.
Added
As a significant portion of our Towers site rental revenue growth was generated from long-term contracts, revenue increases under contractual cash escalators were substantially offset by a decline in the associated straight-line accounting adjustment.
Added
The $34 million decrease in Towers site rental gross margin was primarily due to higher Towers site rental costs of operations, including ground lease agreements that contain contingent payment provisions such as CPI-based escalations.
Added
Fiber site rental revenues and Fiber site rental gross margin for 2023 were $2.2 billion and $1.5 billion, respectively, and increased by $252 million and $216 million, respectively, from 2022.
Added
Both Fiber site rental revenues and Fiber site rental gross margin were predominately impacted by $170 million of payments and $59 million of accelerated prepaid rent amortization, offset by $21 million of non-renewals, each related to the Sprint Cancellations.
Added
Towers services and other gross margin was $127 million for 2023 and decreased by $111 million from $238 million from 2022, which is a reflection of the lower volume of activity from carriers' network enhancements and the volume and mix of services and other work.
Added
Our services and other offerings are of a variable nature as these revenues are not under long-term tenant contracts. See note 16 to our consolidated financial statements for a discussion of the Plan, which included discontinuing installation services as a Towers product offering.
Added
Fiber services and other gross margin was $16 million for 2023 and increased by $13 million from $3 million from 2022 primarily as a result of site abandonment fees associated with the Sprint Cancellations. 34 Selling, general and administrative expenses for 2023 were $759 million and increased by $9 million, or 1%, from $750 million from 2022.
Added
The increase in selling, general and administrative expenses was primarily related to (1) increased investment in information technology, (2) the strategic review previously announced in December 2023 and (3) certain other expenses, including facilities, returning to their pre-pandemic operations following our return to office in February 2022, partially offset by (4) a decrease in labor cost as a result of our aforementioned restructuring activities.
Added
Towers operating profit (loss) for 2023 decreased by $134 million, or 4%, from 2022. The decrease in Towers operating profit (loss) was primarily related to the previously-mentioned decreases in both Towers site rental gross margin and Towers services and other gross margin. Fiber operating profit (loss) for 2023 increased by $225 million, or 20%, from 2022.
Added
The increase in Fiber operating profit (loss) was primarily related to the previously-mentioned increase in Fiber site rental gross margin. Depreciation, amortization and accretion was approximately $1.8 billion for 2023 and increased by $47 million, or 3%, from 2022. This increase predominately resulted from a corresponding increase in our gross property and equipment due to capital expenditures.
Added
Restructuring charges in connection with the Plan were $85 million for 2023. The charges primarily consisted of $62 million related to cash payments that have been made in 2023 or are expected to be made in 2024 associated with employee severance and other one-time termination benefits and $16 million of remaining obligations under facility leases payable through 2032.
Added
Additionally, we also recorded non-cash charges of $1 million related to share-based compensation and $6 million for accelerated depreciation. Interest expense and amortization of deferred financing costs, net were $850 million for 2023 and increased by $151 million, or 22%, from $699 million during 2022.
Added
The increase predominately resulted from an increase in the interest rates on the 2016 Term Loan A, 2016 Revolver and Commercial Paper Notes, as well as an increase in our outstanding indebtedness due to the financing of our discretionary capital expenditures. See note 7 to our consolidated financial statements, "Item 1A. Risk Factors" and "Item 7A.
Added
Quantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt and interest rate increases. As a result of repaying certain of our indebtedness in conjunction with our refinancing activities during 2022, we incurred losses on retirement of long-term obligations of $28 million. We did not incur any losses on retirement of long-term obligations during 2023.
Added
See note 7 to our consolidated financial statements. The provisions for income taxes for 2023 and 2022 were $26 million and $16 million, respectively. For both 2023 and 2022, the effective tax rate differs from the federal statutory rate predominately due to our REIT status, including the dividends paid deduction. See "Item 1. Business—REIT Status," "Item 7.
Added
MD&A—Accounting and Reporting Matters—Critical Accounting Policies and Estimates" and note 9 to our consolidated financial statements. Net income (loss) was $1.5 billion during 2023 compared to $1.7 billion during 2022.
Added
The decrease was related to the previously-mentioned decrease in Towers operating profit and previously-mentioned increases in expenses, including interest expense and amortization of deferred financing costs, net, restructuring charges and depreciation, amortization and accretion, while being partially offset by the previously-mentioned increase in Fiber operating profit. Adjusted EBITDA increased by $75 million, or 2%, from 2022 to 2023.
Added
The increase was predominately related to the previously mentioned increase in Fiber operating profit (loss), partially offset by the previously-mentioned decrease in Towers services and other gross margin. 35 Liquidity and Capital Resources Overview General. Our core business generates revenues under long-term tenant contracts (see "Item 1. Business—Overview" and "Item 7.
Added
MD&A—General Overview—Overview" ) from (1) the largest U.S. wireless carriers and (2) other towers and fiber solutions tenants.
Added
As a leading provider of shared communications infrastructure in the U.S., our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of communications infrastructure, (2) returning a meaningful portion of our cash generated by operating activities to our stockholders in the form of dividends, and (3) investing capital efficiently to grow cash flows and long-term dividends per share.
Added
Our strategy is based, in part, on our belief that the U.S. is the most attractive market for shared communications infrastructure investment with the greatest long-term growth potential. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per share results. See "Item 1.
Added
Business—Strategy" for a further discussion of our strategy. We have engaged, and expect to continue to engage, in discretionary investments that we believe will maximize long-term stockholder value.
Added
Our historical discretionary investments include (in no particular order): constructing communications infrastructure, acquiring communications infrastructure, acquiring land interests (which primarily relate to land assets under towers), improving and structurally enhancing our existing communications infrastructure, purchasing shares of our common stock, and purchasing, repaying, or redeeming our debt.
Added
We have recently spent, and expect to continue to spend, a significant percentage of our discretionary investments on the construction of small cells and fiber.
Added
We seek to fund our discretionary investments with both cash generated by operating activities and cash available from financing capacity, such as the use of our availability under our 2016 Revolver, issuances under our CP Program, debt financings and issuances of equity or equity-related securities, including under our 2021 ATM Program or any similar successor program.
Added
We seek to maintain a capital structure that we believe drives long-term stockholder value and optimizes our weighted-average cost of capital. We target a leverage ratio of approximately five times Adjusted EBITDA, subject to various factors, such as the availability and cost of capital and the potential long-term return on our discretionary investments.
Added
We may choose to increase or decrease our leverage from this target for various periods of time. Our contractual debt maturities over the next 12 months, consist of (1) Commercial Paper Notes, of which we had $578 million outstanding as of February 20, 2024, (2) the 3.200% Senior Notes and (3) principal payments on certain outstanding debt.
Added
Amounts available under our CP Program may be repaid and re-issued from time to time and we intend to maintain available commitments under our 2016 Revolver in an amount at least equal to the amount of Commercial Paper Notes outstanding. We operate as a REIT for U.S. federal income tax purposes.
Added
We expect to continue to pay minimal cash income taxes as a result of our REIT status and our NOLs. See "Item 1. Business—REIT Status," "Item 7. MD&A—General Overview" and note 9 to our consolidated financial statements. Liquidity Position. The following is a summary of our capitalization and liquidity position as of December 31, 2023. See "Item 7A.
Added
Quantitative and Qualitative Disclosures About Market Risk" and note 7 to our consolidated financial statements for additional information regarding our debt as well as note 10 to our consolidated financial statements for additional information regarding our 2021 ATM Program.
Added
(In millions of dollars) Cash and cash equivalents and restricted cash and cash equivalents (a) $ 281 Undrawn 2016 Revolver availability (b) 6,291 Total debt and other obligations (current and non-current) 22,921 Total equity 6,381 (a) Inclusive of $5 million included within "Other assets, net" on our consolidated balance sheet.
Added
(b) Availability at any point in time is subject to certain restrictions based on the maintenance of financial covenants contained in our 2016 Credit Facility. At any point in time, we intend to maintain available commitments under our 2016 Revolver in an amount at least equal to the amount of outstanding Commercial Paper Notes.
Added
See note 7 to our consolidated financial statements. Over the next 12 months: • Our liquidity sources may include (1) cash on hand, (2) cash generated by our operating activities, (3) availability under our 2016 Revolver, (4) issuances under our CP Program, and (5) issuances of equity pursuant to our 2021 ATM Program or any similar successor program.
Added
Our liquidity uses over the next 12 months are expected to include (1) debt obligations of $835 million (consisting of the 3.200% Senior Notes and principal payments on certain outstanding debt), (2) cumulative common stock dividend payments expected to be at least $6.26 per share, or an aggregate amount of approximately $2.7 billion (see "Item 7.
Added
MD&A—General Overview—Common Stock Dividend" ), (3) capital 36 expenditures and (4) restructuring and related charges associated with the Plan described in note 16 to our consolidated financial statements. We may also purchase shares of our common stock.
Added
Additionally, amounts available under our CP Program may be repaid and re-issued from time to time and we intend to maintain available commitments under our 2016 Revolver in an amount at least equal to the amount of Commercial Paper Notes outstanding.
Added
During the next 12 months, while our liquidity uses are expected to exceed our cash generated by operating activities, we expect that our liquidity sources described above should be sufficient to cover our expected uses. Historically, from time to time, we have accessed the capital markets to issue debt and equity. • See "Item 7A.
Added
Quantitative and Qualitative Disclosures About Market Risk" for a discussion of interest rate risk and note 7 to our consolidated financial statements for a tabular presentation of our debt maturities and a discussion of anticipated repayment dates.
Added
Summary Cash Flows Information Years Ended December 31, (In millions of dollars) 2023 2022 2021 Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents Operating activities $ 3,126 $ 2,878 $ 2,789 Investing activities (1,519) (1,352) (1,332) Financing activities (1,654) (1,665) (1,310) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents - continuing operations (47) (139) 147 Effect of exchange rate changes on cash 1 — — Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents- continuing operations (46) (139) 147 Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents - discontinued operations (a) — — (62) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents $ (46) $ (139) $ 85 (a) See note 9 to our consolidated financial statements for further information.
Added
Operating Activities The increase in net cash provided by operating activities of $248 million for 2023 from 2022 was due primarily to a net increase from changes in working capital and growth in our core business, including $170 million of payments received from Sprint Cancellations.
Added
Changes in working capital contribute to variability in net cash provided by operating activities, largely due to the timing of advanced payments by us and advanced receipts from tenants. We expect to grow our net cash provided by operating activities in the future (exclusive of changes in working capital) if we realize expected growth in our core business.
Added
Investing Activities Net cash used for investing activities for 2023 increased by $167 million from 2022 primarily as a result of increased discretionary capital expenditures in our Fiber segment.
Added
Our capital expenditures are categorized as discretionary or sustaining as described below. • Discretionary capital expenditures are made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value.
Added
They primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure in order to add new tenants for the first time or support subsequent tenant equipment augmentations or (2) modifying the structure of a communications infrastructure asset to accommodate additional tenants) and construction of new communications infrastructure.
Added
Discretionary capital expenditures also include purchases of land interests (which primarily relate to land assets under towers as we seek to manage our interests in the land beneath our towers), certain technology-related investments necessary to support and scale future customer demand for our communications infrastructure, and other capital projects.
Added
The expansion or development of existing communications infrastructure to accommodate new leasing typically varies based on, among other factors: (1) the type of communications infrastructure, (2) the scope, volume, and mix of work performed on the communications infrastructure, (3) existing capacity prior to installation, or (4) changes in structural engineering regulations and standards.
Added
Currently, construction of new communications infrastructure is predominately comprised of the construction of small cells and fiber (including certain construction projects that may take 18 to 36 months to complete).
Added
Our decisions regarding discretionary capital expenditures are influenced by the availability and cost of capital and expected returns on alternative uses of cash, such as payments of dividends and investments. 37 • Sustaining capital expenditures consist of those capital expenditures not otherwise categorized as discretionary capital expenditures, such as (1) maintenance capital expenditures on our communications infrastructure assets that enable our tenants' ongoing quiet enjoyment of the communications infrastructure and (2) ordinary corporate capital expenditures.
Added
A summary of our capital expenditures for the last three years is as follows: For the Years Ended December 31, 2023 December 31, 2022 December 31, 2021 (In millions of dollars) Towers Fiber Other Total Towers Fiber Other Total Towers Fiber Other Total Discretionary: Communications infrastructure improvements and other capital projects (a) $ 122 $ 1,131 $ 24 $ 1,277 $ 121 $ 1,017 $ 24 $ 1,162 $ 138 $ 905 $ 33 $ 1,076 Purchases of land interests 64 — — 64 53 — — 53 64 2 — 66 Sustaining 8 44 31 83 11 41 43 95 19 49 19 87 Total $ 194 $ 1,175 $ 55 $ 1,424 $ 185 $ 1,058 $ 67 $ 1,310 $ 221 $ 956 $ 52 $ 1,229 (a) Towers segment includes $32 million, $48 million and $65 million of capital expenditures incurred during the years ended December 31, 2023, 2022 and 2021, respectively, in connection with tenant installations and upgrades on our towers.
Added
Capital expenditures increased from 2022 to 2023 and were primarily impacted by the previously-mentioned increased discretionary capital expenditures in our Fiber segment. See "Item 7. MD&A—General Overview—Outlook Highlights" for a discussion of our expectations surrounding 2024 capital expenditures.
Added
Financing Activities We seek to allocate cash generated by our operations in a manner that will enhance long-term stockholder value, which may include various financing activities such as (in no particular order): (1) paying dividends on our common stock (currently expected to total at least $6.26 per share over the next 12 months, or an aggregate amount of approximately $2.7 billion), (2) purchasing our common stock or (3) purchasing, repaying, or redeeming our debt.
Added
See "Item 7. MD&A—General Overview—Common Stock Dividend," "Item 7. MD&A—Liquidity and Capital Resources—Overview" and notes 7, 10 and 17 to our consolidated financial statements.
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Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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2022 filing
2023 filing
Biggest changeWhile the outcome of these matters cannot be predicted with certainty, management does not expect any pending matters to have a material adverse effect on us. See the disclosure in note 12 to our consolidated financial statements. Item 4. Mine Safety Disclosures N/A 24 PART II
Biggest changeWhile the outcome of these matters cannot be predicted with certainty, management does not expect any pending matters to have a material adverse effect on us. See the disclosure in note 12 to our consolidated financial statements. Item 4. Mine Safety Disclosures N/A 27 PART II
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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2022 filing
2023 filing
Biggest changeYears Ended December 31, Company/Market/Index 2017 2018 2019 2020 2021 2022 Crown Castle Inc. $ 100.00 $ 101.74 $ 137.82 $ 159.33 $ 215.21 $ 145.24 S&P 500 Market Index 100.00 95.62 125.72 148.85 191.58 156.88 FTSE NAREIT All Equity REITs Index 100.00 95.96 123.46 117.14 165.51 124.22 The performance graph above and related text are being furnished solely to accompany this 2022 Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for purposes of Section 18 of the Exchange Act, and are not to be incorporated by reference into any filing of ours, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 26 Item 6. [Reserved]
Biggest changeYears Ended December 31, Company/Market/Index 2018 2019 2020 2021 2022 2023 Crown Castle Inc. $ 100.00 $ 135.46 $ 156.61 $ 211.54 $ 142.76 $ 128.06 S&P 500 Market Index 100.00 131.49 155.68 200.37 164.08 207.21 FTSE NAREIT All Equity REITs Index 100.00 128.66 122.07 172.49 129.45 144.16 The performance graph above and related text are being furnished solely to accompany this 2023 Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for purposes of Section 18 of the Exchange Act, and are not to be incorporated by reference into any filing of ours, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 29 Item 6. [Reserved]
In addition, our ability to pay dividends is limited under certain circumstances by the terms of our debt instruments. 25 Performance Graph The following performance graph is a comparison of the five-year cumulative total stockholder return on our common stock against the cumulative total return of the S&P 500 Market Index and the FTSE NAREIT All Equity REITs Index for the period commencing December 31, 2017 and ending December 31, 2022.
In addition, our ability to pay dividends is limited under certain circumstances by the terms of our debt instruments. 28 Performance Graph The following performance graph is a comparison of the five-year cumulative total stockholder return on our common stock against the cumulative total return of the S&P 500 Market Index and the FTSE NAREIT All Equity REITs Index for the period commencing December 31, 2018 and ending December 31, 2023.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders Our common stock is listed and traded on the New York Stock Exchange ("NYSE") under the symbol "CCI." As of February 21, 2023, there were approximately 542 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders Our common stock is listed and traded on the New York Stock Exchange ("NYSE") under the symbol "CCI." As of February 20, 2024, there were approximately 571 holders of record of our common stock.
MD&A—General Overview—Common Stock Dividend," "Item 7. MD&A—Liquidity and Capital Resources—Financing Activities—Common Stock" and notes 9 and 10 to our consolidated financial statements. Over time, we expect to increase our dividend per share generally commensurate with our growth in cash flows.
MD&A—General Overview—Common Stock Dividend," "Item 7. MD&A—Liquidity and Capital Resources—Financing Activities—Common Stock" and notes 9 and 10 to our consolidated financial statements. Over time, we expect to increase our dividend per share as we grow cash flows.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
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Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
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2022 filing
2023 filing
Biggest changeQuantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt) ◦ As of December 31, 2022, after giving effect to our January 2023 issuance of $1.0 billion aggregate principal amount of 5.000% senior unsecured notes due January 2028 ("January 2023 Senior Notes") and the use of proceeds therefrom, our outstanding debt had a weighted average interest rate of 3.6% and weighted average maturity of approximately eight years (assuming anticipated repayment dates where applicable). ◦ As of December 31, 2022, after giving effect to our January 2023 Senior Notes offering and the use of proceeds therefrom, 87% of our debt has fixed rate coupons. ◦ Our debt service coverage and leverage ratios are within their respective financial maintenance covenants.
Biggest changeQuantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt) ◦ As of December 31, 2023, our outstanding debt had a weighted average interest rate of 3.9% and weighted average maturity of approximately eight years (assuming anticipated repayment dates on certain debt). ◦ As of December 31, 2023, 92% of our debt has fixed rate coupons. ◦ Our debt service coverage and leverage ratios are within their respective financial maintenance covenants.
The aforementioned percentages include towers located on land that is owned, including through fee interests and perpetual easements, which represented approximately 40% of our towers site rental gross margin. • Majority of our fiber assets are located in major metropolitan areas and are on public rights-of-way • Minimal sustaining capital expenditure requirements ◦ For the year ended December 31, 2022, sustaining capital expenditures represented approximately 1% of net revenues. • Debt portfolio with long-dated maturities extended over multiple years, with the vast majority of such debt having a fixed rate (see note 7 to our consolidated financial statements and "Item 7A.
The aforementioned percentages include towers located on land that is owned, including through fee interests and perpetual easements, which represented approximately 40% of our towers site rental gross margin. • Majority of our fiber assets are located in major metropolitan areas and are on public rights-of-way • Minimal sustaining capital expenditure requirements ◦ For the year ended December 31, 2023, sustaining capital expenditures represented approximately 1% of net revenues. • Debt portfolio with long-dated maturities extended over multiple years, with the vast majority of such debt having a fixed rate (see note 7 to our consolidated financial statements and "Item 7A.
Risk Factors" and note 14 to our consolidated financial statements for a further discussion of our largest customers. • Majority of land under our towers under long-term control ◦ For the year ended December 31, 2022, approximately 90% of our towers site rental gross margin and approximately 80% of our towers site rental gross margin was derived from towers located on land that we own or control for greater than 10 and 20 years, respectively.
Risk Factors" and note 14 to our consolidated financial statements for a further discussion of our largest customers. • Majority of land under our towers under long-term control 30 ◦ For the year ended December 31, 2023, approximately 90% of our towers site rental gross margin and approximately 80% of our towers site rental gross margin was derived from towers located on land that we own or control for greater than 10 and 20 years, respectively.
See "Item 7. MD&A—Liquidity and Capital Resources—Debt Covenants" for a further discussion of our debt covenants. • During 2022, we refinanced and extended the maturities of certain of our debt (see note 7 to our consolidated financial statements and "Item 7.
See "Item 7. MD&A—Liquidity and Capital Resources—Debt Covenants" for a further discussion of our debt covenants. • During 2023, we refinanced and extended the maturities of certain of our debt (see note 7 to our consolidated financial statements and "Item 7.
Site rental revenues represented 90% of our 2022 consolidated net revenues. The vast majority of our site rental revenues is of a recurring nature and has been contracted for in prior years. Highlights of Business Fundamentals and Results • We operate as a REIT for U.S. federal income tax purposes (see "Item 1.
Site rental revenues represented 94% of our 2023 consolidated net revenues. The vast majority of our site rental revenues is of a recurring nature and has been contracted for in prior years. Highlights of Business Fundamentals and Results • We operate as a REIT for U.S. federal income tax purposes (see "Item 1.
MD&A—General Overview—Common Stock Dividend" for a discussion of the increase to our quarterly dividend in the fourth quarter of 2022. • Investing capital efficiently to grow long-term dividends per share ◦ We had discretionary capital expenditures of $1.2 billion for the year ended December 31, 2022, predominately resulting from the construction of new communications infrastructure and improvements to existing communications infrastructure in order to support additional tenants. ◦ We expect to continue to construct and acquire new communications infrastructure based on our tenants' needs and generate attractive long-term returns by adding additional tenants over time. • Site rental revenues under long-term tenant contracts ◦ Our wireless tenant contracts have initial terms of five to 15 years with contractual escalators and multiple renewal periods of five to 10 years each, exercisable at the option of the tenant. ◦ Our fiber solutions tenant contracts' initial terms generally vary between three to 20 years (including tenant contracts with organizations with high-bandwidth and multi-location demands). ◦ As of December 31, 2022, our weighted-average remaining term was approximately six years, exclusive of renewals exercisable at the tenants' option, currently representing approximately $40 billion of expected future cash inflows. • Majority of our revenues from large wireless carriers 27 ◦ For the year ended December 31, 2022, approximately three-fourths of our site rental revenues were derived from T-Mobile, AT&T and Verizon Wireless.
Business—Strategy" ) ◦ During 2023, we paid common stock dividends totaling approximately $2.7 billion. • Investing capital efficiently to grow long-term dividends per share ◦ We had discretionary capital expenditures of $1.3 billion for the year ended December 31, 2023, predominately resulting from the construction of new communications infrastructure and improvements to existing communications infrastructure in order to support additional tenants. ◦ We expect to continue to construct and acquire new communications infrastructure based on our tenants' needs and generate attractive long-term returns by adding additional tenants over time. • Site rental revenues under long-term tenant contracts ◦ Our wireless tenant contracts have initial terms generally between five to 15 years with contractual escalators and multiple renewal periods generally between five to ten years each, exercisable at the option of the tenant. ◦ Our fiber solutions tenant contracts' initial terms generally vary between one to 20 years. ◦ As of December 31, 2023, our weighted-average remaining term was approximately six years, exclusive of renewals exercisable at the tenants' option, currently representing approximately $39 billion of expected future cash inflows. • Majority of our revenues from large wireless carriers ◦ For the year ended December 31, 2023, approximately three-fourths of our site rental revenues were derived from T-Mobile, AT&T and Verizon Wireless.
MD&A—Liquidity and Capital Resources—Financing Activities" for further discussion of our debt transactions) • Significant cash flows from operations ◦ Net cash provided by operating activities was $2.9 billion for the year ended December 31, 2022, ◦ In addition to the positive impact of contractual escalators, we expect to grow our core business of providing access to our communications infrastructure as a result of future anticipated additional demand for our communications infrastructure.
MD&A—Liquidity and Capital Resources—Financing Activities" for further discussion of our debt transactions) • Significant cash flows from operations ◦ Net cash provided by operating activities was $3.1 billion for the year ended December 31, 2023, ◦ In addition to the positive impact of contractual escalators, we expect to grow our core business of providing access to our communications infrastructure as a result of future anticipated additional demand for our communications infrastructure. • Full year 2023 results included certain impacts from the small cell and fiber solutions lease cancellations ("Sprint Cancellations") related to the previously disclosed T-Mobile and Sprint network consolidation.
Removed
Business—Strategy" ) ◦ During 2022, we paid common stock dividends totaling approximately $2.6 billion. See "Item 7.
Added
For 2023, these Sprint Cancellations resulted in $21 million of non-renewals that were offset by cash payments of $170 million to satisfy the remaining rental obligations.
Removed
Common Stock Dividend In the aggregate, we paid approximately $2.6 billion in common stock dividends during 2022. During each of the first three quarters of 2022, we paid a quarterly common stock dividend of $1.47 per share, totaling approximately $1.9 billion.
Added
Additionally, $59 million in accelerated amortization of prepaid rent from the remaining deferred revenues was recognized for the year ended December 31, 2023. • Restructuring Plan ◦ In July 2023, we initiated a restructuring plan ("Plan") as part of our efforts to reduce costs to better align our operational needs with lower tower activity.
Removed
In October 2022, our board of directors declared a quarterly common stock cash dividend of $1.565 per share, which represents an increase of approximately 6.5% from the quarterly common stock dividend declared during each of the first three quarters of 2022.
Added
The Plan includes reducing the total employee headcount by approximately 15%, discontinuing installation services as a Towers product offering while continuing to offer site development services on our towers, and consolidating office space. See note 16 to our consolidated financial statements and "
Removed
We currently expect our common stock dividends over the next 12 months to be a cumulative amount of at least $6.26 per share, or an aggregate amount of approximately $2.7 billion. Over time, we expect to increase our dividend per share generally commensurate with our growth in cash flows.
Removed
Any future common stock dividends are subject to declaration by our board of directors. See notes 10 and 17 to our consolidated financial statements.
Removed
Outlook Highlights The following are certain highlights of our outlook that impact our business fundamentals described above. • We expect that, when compared to full year 2022, our full year 2023 site rental revenues growth will be positively impacted by tenant additions as large wireless carriers and fiber solutions tenants continue to focus on meeting the increasing demand for data. • We expect to continue to invest a significant amount of our available capital in the form of discretionary capital expenditures for 2023 based on the anticipated returns on such discretionary investments. ◦ We expect that our discretionary capital expenditures will increase as we accelerate the pace of small cell deployments. • We also expect sustaining capital expenditures of approximately 2% of net revenues for full year 2023, consistent with historical annual levels. 28 Results of Operations The following discussion of our results of operations for 2022 compared to 2021 should be read in conjunction with "Item 1.
Removed
Business," "Item 7. MD&A—Liquidity and Capital Resources" and our consolidated financial statements. For a discussion of our results of operations and financial condition for 2021 compared to 2020 that is not included in this 2022 Form 10-K, see "Part II, Item 7.
Removed
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 22, 2022.
Removed
The following discussion of our results of operations is based on our consolidated financial statements prepared in accordance with GAAP, which require us to make estimates and judgments that affect the reported amounts (see "Item 7. MD&A—Accounting and Reporting Matters—Critical Accounting Policies and Estimates" and note 2 to our consolidated financial statements). See "Item 7.
Removed
MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures" for a discussion of our use of (1) segment site rental gross margin, (2) segment services and other gross margin, (3) segment operating profit, including their respective definitions, and (4) Adjusted EBITDA, including its definition and a reconciliation to net income (loss). Our operating segments consist of (1) Towers and (2) Fiber.
Removed
See note 14 to our consolidated financial statements for further discussion of our operating segments.
Removed
Highlights of our results of operations for 2022, 2021 and 2020 are depicted below: Years Ended December 31, Percent Change (In millions of dollars) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Site rental revenues: Towers site rental revenues $ 4,322 $ 3,804 $ 3,497 14 % 9 % Fiber site rental revenues 1,967 1,915 1,823 3 % 5 % Total site rental revenues 6,289 5,719 5,320 10 % 8 % Site rental gross margin: Towers site rental gross margin (a) 3,404 2,915 2,631 17 % 11 % Fiber site rental gross margin (a) 1,317 1,282 1,203 3 % 7 % Services and other gross margin: Towers services and other gross margin (a) 238 187 71 27 % 163 % Fiber services and other gross margin (a) 3 3 8 — % (63) % Segment operating profit: Towers operating profit (a) 3,527 2,995 2,602 18 % 15 % Fiber operating profit (a) 1,130 1,111 1,387 (b) 2 % (20) % Income (loss) from continuing operations 1,675 1,158 1,056 45 % 10 % Net income (loss) attributable to CCI stockholders 1,675 1,096 1,056 53 % 4 % Adjusted EBITDA (c) 4,340 3,816 3,706 14 % 3 % (a) See "Item 7.
Removed
MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures" and note 14 to our consolidated financial statements for our definitions of segment site rental gross margin, segment services and other gross margin and segment operating profit. (b) During the fourth quarter of 2020, T-Mobile notified us that it was cancelling approximately 5,700 small cell nodes initially contracted with Sprint ("2020 Cancellation").
Removed
Fiber operating profit for the year ended December 31, 2020 is inclusive of $362 million of segment other operating income related to the 2020 Cancellation. See notes 2 and 15 to our consolidated financial statements for further information regarding the 2020 Cancellation. (c) See reconciliation of this non-GAAP financial measure to net income (loss) and definition included in "Item 7.
Removed
MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures." 29 2022 and 2021 Total site rental revenues for 2022 grew by $570 million, or 10%, from 2021.
Removed
This increase was predominately comprised of the factors depicted in the chart below: (In millions of dollars) (a) Represents site rental revenues growth from tenant additions across our entire portfolio and renewals or extensions of tenant contracts, exclusive of the impacts from both straight-line accounting and amortization of prepaid rent in accordance with GAAP.
Removed
(b) Represents the contribution from recent acquisitions until the one-year anniversary of such acquisitions. (c) Prepaid rent amortization includes amortization of upfront payments received from long-term tenants and other deferred credits. Towers site rental revenues for 2022 were $4.3 billion and increased by $518 million, or 14%, from $3.8 billion during 2021.
Removed
The increase in Towers site rental revenues was impacted by the following items, inclusive of straight-line accounting: tenant additions across our entire portfolio, renewals or extensions of tenant contracts, escalators and non-renewals of tenant contracts. Tenant additions were influenced by our tenants' ongoing efforts to improve network quality and capacity.
Removed
Fiber site rental revenues for 2022 were $2.0 billion and increased by $52 million, or 3%, from $1.9 billion during 2021. The increase in Fiber site rental revenues was predominately impacted by the increased demand for small cells and fiber solutions.
Removed
Increased demand for small cells was driven by our tenants' network strategy in an effort to provide capacity and relieve network congestion, and increased demand for fiber solutions was driven by increasing demand for data.
Removed
The increase in Towers site rental gross margin from 2021 to 2022 was related to the previously-mentioned 14% increase in Towers site rental revenues and relatively fixed costs to operate our towers. The increase in Fiber site rental gross margin was predominately related to the previously-mentioned 3% increase in Fiber site rental revenues.
Removed
Towers services and other gross margin for 2022 was $238 million and increased by $51 million, or 27%, from $187 million during 2021, which is a reflection of the increased volume of activity from carriers' network enhancements and the volume and mix of services and other work.
Removed
Revenues from our services and other offerings are of a variable nature as these revenues are not under long-term tenant contracts. Selling, general and administrative expenses for 2022 were $750 million and increased by $70 million, or 10%, from $680 million during 2021.
Removed
The increase in selling, general and administrative expenses was primarily related to the growth in our business and certain costs, including travel and facilities, returning to their pre-COVID-19 pandemic levels following our return to office in February 2022. 30 Towers operating profit for 2022 increased by $532 million, or 18%, from 2021.
Removed
The increase in Towers operating profit was primarily related to the previously-mentioned increases in Towers site rental gross margin and Towers services and other gross margin. Fiber operating profit for 2022 increased by $19 million, or 2%, from 2021. The increase in Fiber operating profit was primarily related to the previously-mentioned increase in Fiber site rental gross margin.
Removed
Depreciation, amortization and accretion was approximately $1.7 billion for 2022 and increased by $63 million, or 4%, from 2021. This increase predominately resulted from a corresponding increase in our gross property and equipment due to capital expenditures.
Removed
Interest expense and amortization of deferred financing costs were $699 million for 2022 and increased by $42 million, or 6%, from $657 million during 2021.
Removed
The increase predominately resulted from an increase in the interest rates on the 2016 Term Loan A, 2016 Revolver and outstanding Commercial Paper Notes, as well as an increase in our outstanding indebtedness due to the financing of our discretionary capital expenditures. See note 7 to our consolidated financial statements, "Item 1A. Risk Factors" and "Item 7A.
Removed
Quantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt and interest rate increases. As a result of repaying certain of our indebtedness in conjunction with our refinancing activities, we incurred losses on retirement of long-term obligations of $28 million and $145 million for the years ended 2022 and 2021, respectively.
Removed
See note 7 to our consolidated financial statements. The provisions for income taxes for 2022 and 2021 were $16 million and $21 million, respectively. For both 2022 and 2021, the effective tax rate differs from the federal statutory rate predominately due to our REIT status, including the dividends paid deduction. See "Item 1. Business—REIT Status," "Item 7.
Removed
MD&A—Accounting and Reporting Matters—Critical Accounting Policies and Estimates" and note 9 to our consolidated financial statements. Income from continuing operations was $1.7 billion during 2022 compared to $1.2 billion during 2021.
Removed
The increase was related to (1) growth in our site rental activities in both our Towers and Fiber segments, (2) the previously-mentioned increase in Towers services activity and (3) the decrease in losses of retirement of long-term obligations, partially offset by an increase in expenses, including (1) selling, general and administrative expenses, (2) depreciation, amortization and accretion and (3) interest expense and amortization of deferred financing costs.
Removed
Net income attributable to CCI stockholders increased by $579 million, or 53%, from 2021 to 2022. The increase was due to the previously-mentioned increase in income from continuing operations. Adjusted EBITDA increased by $524 million, or 14%, from 2021 to 2022.
Removed
The increase was predominately related to the growth in our site rental activities in both our Towers and Fiber segments as well as the previously-mentioned increase in Towers service activity. 31 Liquidity and Capital Resources Overview General. Our core business generates revenues under long-term tenant contracts (see "Item 1. Business—Overview" and "Item 7.
Removed
MD&A—General Overview—Overview" ) from (1) the largest U.S. wireless carriers and (2) fiber solutions tenants.
Removed
As a leading provider of shared communications infrastructure in the U.S., our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of communications infrastructure, (2) returning a meaningful portion of our cash generated by operating activities to our stockholders in the form of dividends, and (3) investing capital efficiently to grow cash flows and long-term dividends per share.
Removed
Our strategy is based, in part, on our belief that the U.S. is the most attractive market for shared communications infrastructure investment with the greatest long-term growth potential. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per share results. See "Item 1.
Removed
Business—Strategy" for a further discussion of our strategy. We have engaged, and expect to continue to engage, in discretionary investments that we believe will maximize long-term stockholder value.
Removed
Our historical discretionary investments include (in no particular order): constructing communications infrastructure, acquiring communications infrastructure, acquiring land interests (which primarily relate to land assets under towers), improving and structurally enhancing our existing communications infrastructure, purchasing shares of our common stock, and purchasing, repaying, or redeeming our debt.
Removed
We have recently spent, and expect to continue to spend, a significant percentage of our discretionary investments on the construction of small cells and fiber.
Removed
We seek to fund our discretionary investments with both cash generated by operating activities and cash available from financing capacity, such as the use of our availability under our 2016 Revolver, issuances under our CP Program, debt financings and issuances of equity or equity-related securities, including under our 2021 ATM Program.
Removed
We seek to maintain a capital structure that we believe drives long-term stockholder value and optimizes our weighted-average cost of capital. We target a leverage ratio of approximately five times Adjusted EBITDA, subject to various factors, such as the availability and cost of capital and the potential long-term return on our discretionary investments.
Removed
We may choose to increase or decrease our leverage from this target for various periods of time.
Removed
Our contractual debt maturities over the next 12 months consist of (1) Commercial Paper Notes that may be outstanding from time to time, (2) $750 million aggregate principal amount of 3.150% senior unsecured notes ("3.150% Senior Notes") and (3) principal payments on certain outstanding debt. We operate as a REIT for U.S. federal income tax purposes.
Removed
We expect to continue to pay minimal cash income taxes as a result of our REIT status and our NOLs. See "Item 1. Business—REIT Status," "Item 7. MD&A—General Overview" and note 9 to our consolidated financial statements. Liquidity Position.
Removed
The following is a summary of our capitalization and liquidity position as of December 31, 2022, after giving effect to our January 2023 Senior Notes offering and the use of the net proceeds therefrom. See "Item 7A.
Removed
Quantitative and Qualitative Disclosures About Market Risk" and note 7 to our consolidated financial statements for additional information regarding our debt as well as note 10 to our consolidated financial statements for additional information regarding our 2021 ATM Program.
Removed
(In millions of dollars) Cash, cash equivalents and restricted cash (a) $ 327 Undrawn 2016 Revolver availability (b) 6,649 Total debt and other obligations (current and non-current) 21,729 Total equity 7,449 (a) Inclusive of $5 million included within "Other assets, net" on our consolidated balance sheet.
Removed
(b) Availability at any point in time is subject to certain restrictions based on the maintenance of financial covenants contained in our 2016 Credit Facility. At any point in time, we intend to maintain available commitments under our 2016 Revolver in an amount at least equal to the amount of outstanding Commercial Paper Notes.
Removed
See note 7 to our consolidated financial statements. Over the next 12 months: • Our liquidity sources may include (1) cash on hand, (2) cash generated by our operating activities, (3) availability under our 2016 Revolver, (4) issuances under our CP Program, and (5) issuances of equity pursuant to our 2021 ATM Program.
Removed
Our liquidity uses over the next 12 months are expected to include (1) debt obligations of $2.1 billion (consisting of Commercial Paper Notes, the 3.150% Senior Notes and principal payments on certain outstanding debt), (2) cumulative common stock dividend payments expected to be at least $6.26 per share, or an aggregate amount of approximately $2.7 billion (see "Item 7.
Removed
MD&A—General Overview—Common Stock Dividend" ), and (3) capital expenditures. We may also purchase shares of our common stock. Additionally, amounts available under our CP 32 Program may be repaid and re-issued from time to time.
Removed
During the next 12 months, while our liquidity uses are expected to exceed our cash generated by operating activities, we expect that our liquidity sources described above should be sufficient to cover our expected uses. Historically, from time to time, we have accessed the capital markets to issue debt and equity. • See "Item 7A.
Removed
Quantitative and Qualitative Disclosures About Market Risk" for a discussion of interest rate risk and note 7 to our consolidated financial statements for a tabular presentation of our debt maturities and a discussion of anticipated repayment dates.
Removed
Summary Cash Flows Information Years Ended December 31, (In millions of dollars) 2022 2021 2020 Net increase (decrease) in cash, cash equivalents and restricted cash Operating activities $ 2,878 $ 2,789 $ 3,055 Investing activities (1,352) (1,332) (1,741) Financing activities (1,665) (1,310) (1,271) Net increase (decrease) in cash, cash equivalents, and restricted cash - continuing operations (139) 147 43 Effect of exchange rate changes on cash — — — Net increase (decrease) in cash, cash equivalents, and restricted cash - continuing operations (139) 147 43 Net increase (decrease) in cash, cash equivalents, and restricted cash - discontinued operations (a) — (62) — Net increase (decrease) in cash, cash equivalents, and restricted cash $ (139) $ 85 $ 43 (a) See note 9 to our consolidated financial statements for further information.
Removed
Operating Activities. The increase in net cash provided by operating activities of $89 million for 2022 from 2021 was due primarily to growth in our core business, which was partially offset by a net decrease from changes in working capital.
Removed
Changes in working capital contribute to variability in net cash provided by operating activities, largely due to the timing of advanced payments by us and advanced receipts from tenants. We expect to grow our net cash provided by operating activities in the future (exclusive of changes in working capital) if we realize expected growth in our core business. Investing Activities.
Removed
Net cash used for investing activities for 2022 increased by $20 million from 2021 primarily as a result of increased discretionary capital expenditures in our Fiber segment. Our capital expenditures are categorized as discretionary or sustaining as described below. • Discretionary capital expenditures are made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value.
Removed
They primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure in order to add new tenants for the first time or support subsequent tenant equipment augmentations or (2) modifying the structure of a communications infrastructure asset to accommodate additional tenants) and construction of new communications infrastructure.
Removed
Discretionary capital expenditures also include purchases of land interests (which primarily relates to land assets under towers as we seek to manage our interests in the land beneath our towers), certain technology-related investments necessary to support and scale future customer demand for our communications infrastructure, and other capital projects.
Removed
The expansion or development of existing communications infrastructure to accommodate new leasing typically varies based on, among other factors: (1) the type of communications infrastructure, (2) the scope, volume, and mix of work performed on the communications infrastructure, (3) existing capacity prior to installation, or (4) changes in structural engineering regulations and standards.
Removed
Currently, construction of new communications infrastructure is predominately comprised of the construction of small cells and fiber (including certain construction projects that may take 18 to 36 months to complete).
Removed
Our decisions regarding discretionary capital expenditures are influenced by the availability and cost of capital and expected returns on alternative uses of cash, such as payments of dividends and investments. • Sustaining capital expenditures consist of those capital expenditures not otherwise categorized as discretionary capital expenditures, such as (1) maintenance capital expenditures on our communications infrastructure assets that enable our tenants' ongoing quiet enjoyment of the communications infrastructure and (2) ordinary corporate capital expenditures. 33 A summary of our capital expenditures for the last three years is as follows: For the Years Ended December 31, 2022 December 31, 2021 December 31, 2020 (In millions of dollars) Towers Fiber Other Total Towers Fiber Other Total Towers Fiber Other Total Discretionary: Communications infrastructure improvements and other capital projects (a) $ 121 $ 1,017 $ 24 $ 1,162 $ 138 $ 905 $ 33 $ 1,076 $ 257 $ 1,179 $ 38 $ 1,474 Purchases of land interests 53 — — 53 64 2 — 66 64 — — 64 Sustaining 11 41 43 95 19 49 19 87 14 53 19 86 Total $ 185 $ 1,058 $ 67 $ 1,310 $ 221 $ 956 $ 52 $ 1,229 $ 335 $ 1,232 $ 57 $ 1,624 (a) Towers segment includes $48 million, $65 million and $113 million of capital expenditures incurred during the years ended December 31, 2022, 2021 and 2020, respectively, in connection with tenant installations and upgrades on our towers.
Removed
Capital expenditures increased from 2021 to 2022 and were primarily impacted by the previously-mentioned increased discretionary capital expenditures in our Fiber segment. See "Item 7. MD&A—General Overview—Outlook Highlights" for a discussion of our expectations surrounding 2023 capital expenditures. Financing Activities.
Removed
We seek to allocate cash generated by our operations in a manner that will enhance long-term stockholder value, which may include various financing activities such as (in no particular order): (1) paying dividends on our common stock (currently expected to total at least $6.26 per share over the next 12 months, or an aggregate amount of approximately $2.7 billion), (2) purchasing our common stock or (3) purchasing, repaying, or redeeming our debt.
Removed
See "Item 7. MD&A—General Overview—Common Stock Dividend," "Item 7. MD&A—Liquidity and Capital Resources—Overview" and notes 7, 10 and 17 to our consolidated financial statements.
Removed
In 2022, our financing activities predominately related to the following: • paying an aggregate of $2.6 billion in dividends on our common stock; • issuing $750 million aggregate principal amount of senior unsecured notes, the net proceeds of which were used to repay a portion of the outstanding indebtedness under our CP Program and pay related fees and expenses; • prepaying in full the previously outstanding Tower Revenue Notes, Series 2018-1; • redeeming in full the previously outstanding 3.849% Secured Notes; • entering into an amendment to the 2016 Credit Facility that provided for, among other things, (1) the extension of the maturity date from June 2026 to July 2027, (2) an increase to the aggregate commitments under the 2016 Revolver from $5.0 billion to $7.0 billion, (3) certain modifications to a specified sustainability metric and (4) the replacement of the LIBOR pricing benchmark with the Term SOFR pricing benchmark; and • increasing the size of our CP Program to permit the issuance of Commercial Paper Notes in an aggregate principal amount not to exceed $2.0 billion at any time outstanding.
Removed
In 2021, our financing activities predominately related to the following: • paying an aggregate of $2.4 billion in dividends on our common stock; • issuing $3.25 billion aggregate principal amount of senior unsecured notes, the net proceeds of which were used to (1) redeem all of the outstanding 5.250% Senior Notes, (2) repay a portion of the outstanding Commercial Paper Notes and (3) repay a portion of outstanding borrowings under the 2016 Term Loan A; • issuing $750 million aggregate principal amount of senior unsecured notes, the net proceeds of which were used to (1) to repay in full the previously outstanding Tower Revenue Notes, Series 2015-1, Class C-2022, (2) to repay outstanding indebtedness under the CP Program and (3) for general corporate purposes; and • entering into an amendment to the 2016 Credit Facility that provided for, among other things, (1) the extension of the maturity date from June 2024 to June 2026, (2) reductions to the interest rate spread and unused commitment fee percentage upon meeting specified annual sustainability targets and increases to the interest rate spread and unused commitment fee percentage upon the failure to meet specified annual sustainability thresholds and (3) the inclusion of "hardwired" LIBOR transition provisions consistent with those published by the Alternative Reference Rate Committee.
Removed
Incurrences, Purchases and Repayments of Debt. See note 7 to our consolidated financial statements, "Item 7. MD&A—General Overview" and "Item 7. MD&A—Liquidity and Capital Resources—Overview—Liquidity Position" for further discussion of our recent issuances, purchases, redemptions and repayments of debt. 34 Common Stock.
Removed
See notes 10 and 17 to our consolidated financial statements for further information regarding our common stock as well as dividends declared and paid. ATM Program. In March 2021, we established the 2021 ATM Program through which we may issue and sell shares of our common stock having an aggregate gross sales price of up to $750 million.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
17 edited+0 added−0 removed60 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
17 edited+0 added−0 removed60 unchanged
2022 filing
2023 filing
Biggest changeIn October 2022, our board of directors declared a quarterly common stock dividend of $1.565 per share, which represents an increase of 6.5% from the quarterly common stock dividend declared during each of the first three quarters of 2022.
Biggest changeDuring each of the quarters in the year ended 2023, we paid a common stock dividend of $1.565 per share, totaling approximately $2.7 billion, which represents an increase of 4.7% from the common stock dividends paid in the aggregate in the year ended 2022.
Certain provisions of our restated certificate of incorporation, as amended, ("Charter"), amended and restated by-laws ("By-laws") and operative agreements, and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
Certain provisions of our restated certificate of incorporation ("Charter"), amended and restated by-laws ("By-laws") and operative agreements, and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
Our anti-takeover provisions include: • the authority of the board of directors to issue preferred stock without approval of the holders of our common stock; • advance notice and other procedural requirements relating to director nominations or proposals submitted by stockholders for actions to be taken at annual meetings of stockholders; and • provisions that the state courts or, in certain circumstances, the federal courts, in Delaware shall be the sole and exclusive forum for certain actions involving us, our directors, officers, employees and stockholders, and, unless the 20 Company otherwise consents, that the federal courts shall be the sole and exclusive forum for resolution of claims arising under the Securities Act of 1933, as amended (“Securities Act”).
Our anti-takeover provisions include: • the authority of the board of directors to issue preferred stock without approval of the holders of our common stock; • advance notice and other procedural requirements relating to director nominations or proposals submitted by stockholders for actions to be taken at annual meetings of stockholders; and • provisions that the state courts or, in certain circumstances, the federal courts, in Delaware shall be the sole and exclusive forum for certain actions involving us, our directors, officers, employees and stockholders, and, unless the 22 Company otherwise consents, that the federal courts shall be the sole and exclusive forum for resolution of claims arising under the Securities Act of 1933, as amended (“Securities Act”).
If we do not have other funds available in these situations, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, or distribute amounts that would 22 otherwise be invested in future acquisitions to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT dividend requirement and to avoid corporate income tax and the 4% excise tax in a particular year.
If we do not have other funds available in these situations, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, or distribute amounts that would 24 otherwise be invested in future acquisitions to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT dividend requirement and to avoid corporate income tax and the 4% excise tax in a particular year.
However, CCI's subsidiaries are legally distinct from the holding company and, unless they guarantee such debt, have no obligation to pay amounts due on their debt or to make funds available to us for such payment. 19 We have a substantial amount of indebtedness.
However, CCI's subsidiaries are legally distinct from the holding company and, unless they guarantee such debt, have no obligation to pay amounts due on their debt or to make funds available to us for such payment. 21 We have a substantial amount of indebtedness.
As a result, future dividend payments may hinder our ability to grow our per share results of operations or otherwise adversely affect our ability to execute our business plan. 21 Remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the Code.
As a result, future dividend payments may hinder our ability to grow our per share results of operations or otherwise adversely affect our ability to execute our business plan. 23 Remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the Code.
We have reserved an aggregate of approximately 16 million of common stock for issuance in connection with awards granted under our stock compensation plans. Further, a small number of common stockholders own a significant percentage of our outstanding common stock.
We have reserved an aggregate of approximately 15 million of common stock for issuance in connection with awards granted under our stock compensation plans. Further, a small number of common stockholders own a significant percentage of our outstanding common stock.
Future sales or issuances of common stock or other equity related securities may adversely affect the market price of our common stock, including any shares of our common stock issued to finance capital expenditures, finance acquisitions or repay debt.
Future sales or issuances of common stock or other equity related securities may adversely affect the market price of our common stock, including any shares of our common stock issued to finance capital expenditures, finance strategic initiatives or repay debt.
Economic conditions and the credit markets have historically experienced, and may continue to experience, periods of volatility, uncertainty, or weakness that could impact (1) the availability or cost of debt financing, including any refinancing of the obligations described above, (2) our ability to draw the full amount of our $7.0 billion senior unsecured revolving credit facility under our 2016 Credit Facility ("2016 Revolver"), that, as of February 21, 2023, had $6.7 billion of undrawn availability, or (3) our ability to issue the full amount of the $2.0 billion commercial paper notes ("Commercial Paper Notes") under our unsecured commercial paper program ("CP Program"), that, as of February 21, 2023, had $1.2 billion outstanding.
Economic conditions and the credit markets have historically experienced, and may continue to experience, periods of volatility, uncertainty, or weakness that could impact (1) the availability or cost of debt financing, including any refinancing of the obligations described above, (2) our ability to draw the full amount of our $7.0 billion senior unsecured revolving credit facility under our 2016 Credit Facility ("2016 Revolver"), that, as of February 20, 2024, had $7.0 billion of undrawn availability, or (3) our ability to issue the full amount of the $2.0 billion commercial paper notes ("Commercial Paper Notes") under our unsecured commercial paper program ("CP Program"), that, as of February 20, 2024, had $578 million outstanding.
As of February 21, 2023, we had approximately $750 million of gross sales of common stock remaining under our 2021 ATM Program. From time to time, we may refresh or implement a new "at-the-market" stock offering program. See note 10 to our consolidated financial statements. As of February 21, 2023, we had approximately 433 million shares of common stock outstanding.
As of February 20, 2024, we had $750 million of gross sales of common stock remaining under our 2021 ATM Program. From time to time, we may refresh or implement a new "at-the-market" stock offering program. See note 10 to our consolidated financial statements. As of February 20, 2024, we had approximately 434 million shares of common stock outstanding.
We have included the certifications of our Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 and related rules as Exhibits 31.1 and 31.2 to this 2022 Form 10-K. 23 Item 1B. Unresolved Staff Comments None.
We have included the certifications of our CEO and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 and related rules as Exhibits 31.1 and 31.2 to this 2023 Form 10-K. 25 Item 1B. Unresolved Staff Comments None.
Our By-laws permit special meetings of the stockholders to be called only upon the request of our Chief Executive Officer or the board of directors, and deny stockholders the ability to call such meetings.
Our By-laws permit special meetings of the stockholders to be called only upon the request of our CEO or the board of directors, and deny stockholders the ability to call such meetings.
Certifications We submitted the Chief Executive Officer certification required by Section 303A.12(a) of the New York Stock Exchange ("NYSE") Listed Company Manual, relating to compliance with the NYSE's corporate governance listing standards, to the NYSE on May 26, 2022 with no qualifications.
Certifications We submitted the CEO certification required by Section 303A.12(a) of the New York Stock Exchange ("NYSE") Listed Company Manual, relating to compliance with the NYSE's corporate governance listing standards, to the NYSE on May 25, 2023 with no qualifications.
As of February 21, 2023, approximately 51% of our fixed rate debt, with a weighted average interest rate of 3.4%, is scheduled to mature over the next five years.
As of February 20, 2024, approximately 51% of our fixed rate debt, with a weighted average interest rate of 3.6%, is scheduled to mature over the next five years.
We currently expect our common stock dividends over the next 12 months to be a cumulative amount of at least $6.26 per share, or an aggregate amount of approximately $2.7 billion. Over time, we expect to increase our dividend per share generally commensurate with our realized growth in cash flows.
We currently expect our common stock dividends over the next 12 months to be a cumulative amount of at least $6.26 per share, or an aggregate amount of approximately $2.7 billion. Over time, we expect to increase our dividend per share as we grow cash flows. Any future dividends are subject to declaration by our board of directors.
Any future dividends are subject to declaration by our board of directors. See notes 10 and 17 to our consolidated financial statements. We operate as a REIT for U.S. federal income tax purposes.
See notes 10 and 17 to our consolidated financial statements. We operate as a REIT for U.S. federal income tax purposes.
In such event, the then current economic, credit market or equity market conditions will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations. During each of the first three quarters of 2022, we paid a common stock dividend of $1.47 per share, totaling approximately $1.9 billion.
In such event, the then current economic, credit market or equity market conditions will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations.