This cell-tower REIT is laying off more than 10% of its employees

By Tomi Kilgore

Crown Castle cuts full-year EPS, site rental revenue and capex outlook, but raises adjusted FFO view

Crown Castle announced Tuesday some changes in how it will run its fiber business, which the cell-tower real-estate investment trust said will lead to a workforce reduction of more than 10%.

The company also lowered its 2024 guidance ranges for earnings per share, site rental revenue and capital expenditures, but raised its outlook for adjusted funds from operations resulting from the change to its operating plan.

Shares of the Texas-based company (CCI), which has a market capitalization of about $43.4 billion, edged up 0.2% in Tuesday's premarket session.

Following a strategic review of its fiber segment and footprint, which consists of 90,000 miles of fiber, Crown Castle said it now believes it can reduce the capital intensity of small cell projects by narrowing its focus on locations closer to its existing network.

The company said it has already started making changes to projects that no longer meet that narrowed focus, and will either change or cancel other projects as it looks to boost returns.

The company expects the strategy shift to reduce new revenue-generating small cell nodes by 3,000 to 5,000 in 2024, and to lower new leasing activity by about $15 million a year.

"As a result of the modified strategy the company is placing on small cell and fiber solutions investments going forward, Crown Castle expects to reduce gross capital expenditures in its fiber segment by $275 million [or 46%] to $325 million in 2024 and is reducing staffing levels by more than 10% from current levels," the company said in a statement.

That suggests nearly 500 employees could be laid off, as the company had about 4,700 employees as of Jan. 31.

The company expects these moves to generate savings of about $100 million a year.

Separately, as a result of the changes to its operating plan, the company cut its guidance range for 2024 EPS to between $2.59 and $2.74, which is below the current FactSet consensus of $2.88, from $2.79 to $2.97.

The outlook for site rental revenue was lower, at between $6.32 billion and $6.36 billion from between $6.35 billion and $6.39 billion.

But for adjusted funds from operations per share, the company raised its full-year outlook to between $6.91 and $7.02 from $6.85 to $6.97, which compares favorably with the current FactSet consensus of $6.91.

The stock has dropped 13.3% year to date through Monday, while the Real Estate Select Sector SPDR ETF XLRE has slipped 4.7% and the S&P 500 index SPX has gained 12.4%.

With a dividend yield of 6.27% as of Monday's close, the stock is the fifth-highest-yielding component of the S&P 500.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-11-24 0916ET

Copyright (c) 2024 Dow Jones & Company, Inc.