UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-K
__________________________
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
For the transition period from to
Commission File Number 001-16441
__________________________
CROWN CASTLE INC.
(Exact name of registrant as specified in its charter)
__________________________
Delaware
(State or other jurisdiction
of incorporation or organization)
76-0470458
(I.R.S. Employer
Identification No.)
8020 Katy Freeway, Houston, Texas 77024-1908
(Address of principal executive offices) (Zip Code)
(713) 570-3000
(Registrant's telephone number, including area code)
Securities Registered Pursuant to
Section 12(b) of the Act
Common Stock, $0.01 par value
Trading Symbols
CCI
Name of Each Exchange
on Which Registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Securities Registered Pursuant to Section 12(g) of the Act: NONE.
______________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of a
"large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $49.2 billion as of June 30, 2023, the last business day of the
registrant's most recently completed second fiscal quarter, based on the New York Stock Exchange closing price on that day of $113.94 per share.
As of February 20, 2024, there were 434,215,269 shares of common stock outstanding.
Documents Incorporated by Reference
Applicable Only to Corporate Registrants
The information required to be furnished pursuant to Part III of this Form 10-K will be set forth in, and incorporated by reference from, the registrant's definitive proxy statement for the annual meeting
of stockholders ("2024 Proxy Statement"), which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended December 31, 2023.
CROWN CASTLE INC.
TABLE OF CONTENTS
PART I
PART II
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors and Executive Officers of the Registrant
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
Certain Relationships and Related Transactions
Principal Accounting Fees and Services
PART IV
Exhibits, Financial Statement Schedules
Form 10-K Summary
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Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Signatures
Cautionary Language Regarding Forward-Looking Statements
This Annual Report on Form 10-K ("2023 Form 10-K") contains forward-looking statements that are based on our management's expectations as of the
filing date of this report with the Securities and Exchange Commission ("SEC"). Statements that are not historical facts are hereby identified as forward-
looking statements. In addition, words such as "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted," "positioned,"
"continue," "target," "seek," "focus" and any variations of these words and similar expressions are intended to identify forward-looking statements.
Examples of forward-looking statements include our full year 2024 outlook and our plans, projections, expectations and estimates regarding (1) the
value of our business model and the demand for our communications infrastructure, (2) the growth potential of the U.S. market for shared communications
infrastructure, (3) growth in the communications infrastructure industry, (4) demand for data and factors driving such demand, (5) the duration of our
construction projects, (6) tenants' investment in wireless networks, (7) use of high-bandwidth applications, (8) our ability to service our debt and comply
with debt covenants, (9) the level of commitment under our debt instruments, (10) our ability to remain qualified as a real estate investment trust ("REIT"),
(11) site rental revenues, including the growth thereof, (12) sources and uses of liquidity, (13) impact from the T-Mobile and Sprint network consolidation,
(14) drivers of cash flow growth, (15) our competitive advantage, (16) our dividends, including timing, amount, payment or tax characterization, (17) the
timing of small cell deployments, (18) discretionary and sustaining capital expenditures and expansion of our business, (19) impact of elevated
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interest rates, (20) the growth in our business and its driving factors, (21) our ESG (as defined below) goals, including carbon neutrality, (22) non-renewals,
(23) restructuring activities and the cost reductions, charges, scope, actions and savings associated therewith, including timing, amounts, impact and
recurrence, (24) strategic review and (25) actions by activist stockholders and the impact therefrom. All future dividends are subject to declaration by our
board of directors.
Such forward-looking statements should, therefore, be considered in light of various risks, uncertainties and assumptions, including prevailing market
conditions, risk factors described under "Item 1A. Risk Factors" herein and other factors. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary materially from those expected.
Our filings with the SEC are available through the SEC website at www.sec.gov or through our investor relations website at investor.crowncastle.com.
We use our investor relations website to disclose information about us that may be deemed to be material. We encourage investors, the media and others
interested in us to visit our investor relations website from time to time to review up-to-date information or to sign up for e-mail alerts to be notified when
new or updated information is posted on the site.
As used herein, the term "including," and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.
Unless this 2023 Form 10-K indicates otherwise or the context otherwise requires, the terms, "we," "our," "our company," "the company" or "us" as used in
this 2023 Form 10-K refer to Crown Castle Inc. and its predecessor (organized in 1995), as applicable, each a Delaware corporation (together, "CCI"), and
their subsidiaries. Additionally, unless the context suggests otherwise, references to "U.S." are to the United States of America and Puerto Rico, collectively.
Interpretation
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Item 1. Business
Overview
PART I
We own, operate and lease shared communications infrastructure that is geographically dispersed throughout the U.S., including (1) more than 40,000
towers and other structures, such as rooftops (collectively, "towers"), (2) approximately 115,000 small cells on air or under contract and (3) approximately
90,000 route miles of fiber primarily supporting small cells and fiber solutions. We refer to our towers, small cells and fiber assets collectively as
"communications infrastructure," and to our customers on our communications infrastructure as "tenants." Our operating segments consist of (1) Towers and
(2) Fiber, which includes both small cells and fiber solutions. Our core business is providing access, including space or capacity, to our shared
communications infrastructure via long-term contracts in various forms, including lease, license, sublease and service agreements (collectively, "tenant
contracts"). We seek to increase our site rental revenues by adding more tenants on our shared communications infrastructure, which we expect to result in
significant incremental cash flows due to our low incremental operating costs. We operate as a REIT for U.S. federal income tax purposes. See "Item 1.
Business—REIT Status" and notes 2 and 9 to our consolidated financial statements.
Over nearly three decades, we have assembled a leading portfolio of towers predominately through acquisitions from large wireless carriers or their
predecessors. More recently, we have extended our communications infrastructure presence by investing significantly in our Fiber segment. Through our
product offerings of towers and small cells, we seek to provide a comprehensive solution to enable our wireless tenants to expand coverage and capacity for
their wireless networks. Furthermore, within our Fiber segment, we seek to generate cash flow growth and stockholder return by deploying our fiber for both
small cells' and fiber solutions' tenants.
Approximately 56% and 71% of our towers are located in the 50 and 100 largest U.S. basic trading areas ("BTAs"), respectively. Our towers have a
significant presence in each of the top 100 BTAs. We derive approximately 40% of our towers site rental gross margin from towers located on land that we
own, including through fee interests and perpetual easements, and we derive approximately 60% of our towers site rental gross margin from towers located
on land that we lease, sublease, manage or license. The contracts for the land under our towers have an average total remaining life of approximately 35
years (including all renewal terms exercisable at our option), weighted based on towers site rental gross margin. The majority of our small cells and fiber
assets are located in major metropolitan areas, including a presence within every major U.S. market. The vast majority of our fiber assets are located on
public rights-of-way.
Our largest tenants are T-Mobile, AT&T and Verizon Wireless, which collectively accounted for approximately three-fourths of our 2023 consolidated
site rental revenues. See note 14 to our consolidated financial statements for further information regarding our largest tenants. Site rental revenues
represented 94% of our 2023 consolidated net revenues, of which 66% and 34% were from our Towers segment and Fiber segment, respectively. Within our
Fiber segment, 64% and 36% of our 2023 site rental revenues related to fiber solutions and small cells, respectively. The vast majority of our site rental
revenues are of a recurring nature and are derived from long-term tenant contracts. See "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 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"). 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.
Strategy
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 existing portfolio of communications infrastructure, (2) returning a meaningful portion of our cash generated by
operating activities to our common stockholders in the form of dividends and (3) investing capital efficiently to grow cash flows and long-term dividends per
share. 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. The key elements of our strategy are to:
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•
•
•
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. Tenant additions or modifications of existing tenant equipment (collectively, "tenant additions") enable our tenants to expand
coverage and capacity in order to meet increasing demand for data while generating high incremental returns for our business. We believe our
product offerings of towers and small cells through our shared communications infrastructure model provide a comprehensive, efficient and cost-
effective solution for our wireless tenants' growing networks. Additionally, we believe our ability to share our fiber assets across multiple tenants
to both deploy small cells and offer fiber solutions allows us to generate cash flows and increase stockholder return.
Return cash generated by operating activities to common stockholders in the form of dividends. We believe that distributing a meaningful portion
of our cash generated by operating activities appropriately provides common stockholders with increased certainty for a portion of expected long-
term stockholder value while still allowing us to retain sufficient flexibility to invest in our business and deliver growth. We believe this decision
reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to common stockholders.
Invest capital efficiently to grow cash flows and long-term dividends per share. In addition to adding tenants to existing communications
infrastructure, we seek to invest our available capital, including the net cash generated by our operating activities and external financing sources,
in a manner that will increase long-term stockholder value on a risk-adjusted basis. These investments include constructing and acquiring new
communications infrastructure that we expect will generate future cash flow growth and attractive long-term returns by adding tenants to those
assets over time. Our historical investments have included the following (in no particular order):
◦
◦
◦
◦
◦
◦
construction of towers, fiber and small cells;
acquisitions of towers, fiber and small cells;
acquisitions of land interests (which primarily relate to land assets under towers);
improvements and structural enhancements to our existing communications infrastructure;
purchases of shares of our common stock from time to time; and
purchases, repayments or redemptions of our debt.
Our strategy to create long-term stockholder value is based on our belief that there will be considerable future demand for our communications
infrastructure based on the location of our assets and the rapid and continuing growth in the demand for data. We believe that such demand for our
communications infrastructure will continue, will result in growth of our cash flows due to tenant additions on our existing communications infrastructure,
and will create other growth opportunities for us, such as demand for newly constructed or acquired communications infrastructure, as described above.
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. As a REIT, we are generally entitled to a deduction for dividends that we pay and,
therefore, are not subject to U.S. federal corporate income tax on our net taxable income that is currently distributed to our stockholders. We may be subject
to certain federal, state, local and foreign taxes on our income or assets, including (1) taxes on any undistributed income, (2) taxes related to our taxable
REIT subsidiaries ("TRSs"), (3) franchise taxes, (4) property taxes and (5) transfer taxes. In addition, we could, under certain circumstances, be required to
pay an excise or penalty tax, which could be significant in amount, in order to utilize one or more relief provisions under the Internal Revenue Code of 1986,
as amended ("Code"), to maintain qualification for taxation as a REIT. For taxable years beginning before 2026, qualified REIT dividends (within the
meaning of Section 199A(e)(3) of the Code) constitute a part of a non-corporate taxpayer's "qualified business income amount" and thus our non-corporate
U.S. stockholders may be eligible to take a qualified business income deduction in an amount equal to 20% of such dividends received from us. Without
further legislative action, the 20% deduction applicable to qualified REIT dividends will expire on January 1, 2026.
The vast majority of our assets and revenues are in the REIT. See notes 2 and 9 to our consolidated financial statements. Additionally, we have
included in TRSs certain other assets and operations. Those TRS assets and operations will continue to be subject, as applicable, to federal and state
corporate income taxes or to foreign taxes in the jurisdictions in which such assets and operations are located.
Our foreign assets and operations (including our tower operations in Puerto Rico) most likely will be subject to foreign income taxes in the
jurisdictions in which such assets and operations are located, regardless of whether or not they are included in a TRS.
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To remain qualified and be taxed as a REIT, we will generally be required to annually distribute to our stockholders at least 90% of our REIT taxable
income, after the utilization of our NOLs (determined without regard to the dividends paid deduction and excluding net capital gain) (see notes 2 and 9 to our
consolidated financial statements). Our quarterly common stock dividend will delay the utilization of our NOLs and may cause certain of the NOLs to expire
without utilization. See "Item 1A. Risk Factors" for risks associated with our REIT status.
Industry Overview
Consumer demand for data continues to grow due to increases in data consumption and increased penetration of bandwidth-intensive devices. 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 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.
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.
The Company
Virtually all of our operations in both our Towers and Fiber operating segments are located in the U.S. For more information about our operating
segments, see "Item 7. MD&A—Results of Operations" and note 14 to our consolidated financial statements. Our core business is providing access, including
space or capacity, to our shared communications infrastructure via long-term tenant contracts in the U.S. We believe our communications infrastructure is
integral to our tenants' networks and organizations. See "Item 1. Business—Strategy."
Towers Segment. We believe towers are the most efficient and cost-effective solution for providing coverage and capacity for wireless carrier network
deployments. We acquired ownership interests or exclusive rights to the majority of our towers directly or indirectly from the largest U.S. wireless carriers
(or their predecessors) through transactions consummated since 1999, including towers from (1) AT&T in 2013, (2) T-Mobile in 2012, (3) companies now
part of T-Mobile in 2007, (4) companies now part of Verizon Wireless in 1999 and 2000 and (5) companies now part of AT&T in 1999 and 2000.
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. We strive to negotiate with our existing
tenant base for longer contractual terms, which often contain fixed escalation rates.
Our Towers tenant contracts, while amended and re-negotiated over time, have historically led to a long-term relationship with tenants on our towers,
resulting in a retention rate generally between 98% and 99% each year. In general, each renewable tenant contract automatically renews at the end of its term
unless (1) the tenant provides prior notice of its intent not to renew or (2) the contract is amended or re-negotiated. See "Item 1A. 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. See
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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.
The average monthly rental payment from a new tenant added to towers can vary based on (1) aggregate tenant volume, (2) the location of the tower, or
(3) the amount of tower and ground space leased to a tenant, which can be influenced by the quantity, size, and weight of the tenant's antenna installation or
related equipment. When possible, we seek to receive rental payment increases in connection with tenant contract amendments, pursuant to which our
tenants add antennas or other equipment to our towers or ground space on which they already have equipment pursuant to preexisting tenant contracts. 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. 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. Our fiber solutions provide
essential connectivity resources needed to create integrated networks and support organizations.
Most of our fiber assets were acquired through transactions dating back to 2012, with the largest transactions occurring 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 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 the competition thereof and (5) any upfront payment received.
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.
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. Assuming current leasing activity levels, our cash operating expenses generally tend to escalate at
approximately the rate of inflation. We seek to add tenants to our existing communications infrastructure at a low incremental operating cost, delivering high
incremental returns to our business. Once constructed, our communications infrastructure requires minimal sustaining capital expenditures, including
maintenance or other non-discretionary capital expenditures, which are typically between 1% and 2% of net revenues. See note 13 to our consolidated
financial statements for a tabular presentation of the rental payments we owe to landlords pursuant to our operating lease agreements.
Services. As 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. In 2023, approximately 51% of our
services and other revenues related to installation services, and the remainder predominately related to site development services. We seek to grow our
services revenues by capitalizing on (1) increased leasing volumes that may result from carrier network upgrades, (2) promoting site development services,
(3) expanding the scope of our services, and (4) focusing on tenant service and deployment speed. 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. Our Towers customers are primarily comprised of large wireless carriers that operate national networks.
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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. 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. Our sales organization markets our communications infrastructure with the objective of contracting access with tenants to
existing communications infrastructure or to new communications infrastructure prior to construction. 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.
Our sales team is organized based on a variety of factors, including tenant type (such as large wireless carriers, vertical customers and organizations),
product offering and geography. A team of national account directors maintains our relationships with our largest tenants. These directors work to develop
new business opportunities, as well as to ensure that tenants' communications infrastructure needs are efficiently translated into new contracts for our
communications infrastructure. Sales personnel in our local offices develop and maintain relationships with our tenants that are expanding their networks,
entering new markets, seeking new or additional communication infrastructure offerings, bringing new technologies to market or requiring maintenance or
add-on business. In addition to our full-time sales or marketing staff, a number of senior-level employees spend a significant portion of their time on sales
and marketing activities and call on existing or prospective tenants.
Competition. We face competition for site rental tenants from various sources, including (1) other independent communications infrastructure owners
or operators, including competitors that own, operate, or manage towers, rooftops, broadcast or transmission towers, utility poles, fiber (including non-
traditional competitors, such as cable providers) or small cells, (2) tenants who elect to self-perform or (3) new alternative deployment methods for
communications infrastructure.
Some of our largest competitors in the Towers segment are American Tower Corporation and SBA Communications Corporation. Our Fiber segment
business competitors can vary significantly based on geography. Some of the larger competitors in the Fiber segment include other owners of fiber, tenants
who elect to self-perform and recent and potential entrants into small cells and the fiber solutions business. We believe that location, existing
communications infrastructure footprint, deployment speed, quality of service, expertise, reputation, capacity and price have been and will continue to be the
most significant competitive factors affecting our businesses. See "Item 1A. Risk Factors" for a discussion of competition in our industry.
Competitors to our services offering can include site acquisition consultants, zoning consultants, real estate firms, right-of-way consulting firms,
construction companies, tower owners or managers, radio frequency engineering consultants, our tenants' internal staff or contractors, or telecommunications
equipment vendors who can provide turnkey site development services through multiple subcontractors. We believe that our tenants base their decisions on
the outsourcing of services on criteria such as a company's experience, record of accomplishment, reputation, price and time for completion of a project.
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Environmental, Social and Governance ("ESG")
Our shared communications infrastructure model results in the use of fewer resources, including water, energy, metals and other materials, than would
otherwise be needed to construct and maintain communications infrastructure. We are committed to operating responsibly and ethically and considering
social and environmental impacts as we make business decisions. We maintain annual sustainability targets in our senior unsecured credit facility. Further,
we have a goal to be carbon neutral by 2025 in Scope 1 and 2 emissions by continuing to invest in energy reduction initiatives, sourcing renewable energy,
and, to a lesser extent, utilizing carbon credits or offsets. We plan to continue investing in projects that are both good for our business and good for the
environment.
The Nominating, Environmental, Social and Governance Committee assists the board of directors with ESG oversight. Our executive management
team and senior management keep our board of directors apprised of our ESG priorities, goals and initiatives. Together, our board of directors and executive
management team define our strategic approach to managing actual and potential impacts of significant ESG risks and opportunities.
Additional information regarding our sustainability initiatives and progress is also available through the Investors section of our website at
https://investor.crowncastle.com. 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. 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. 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. 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. We offer a competitive total
rewards package which includes market-based pay, performance-based annual incentive awards, healthcare and retirement benefits, mental health benefits,
parental and family leave, holiday and paid time off and tuition assistance. 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. 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%.
Regulatory and Environmental Matters
We are required to comply with a variety of federal, state and local regulations and laws in the U.S., including FCC and Federal Aviation
Administration ("FAA") regulations and those discussed under "—Environmental" below. To date, we have not incurred any material fines or penalties or
experienced any material adverse effects to our business as a result of any domestic or international regulations, including any environmental regulations.
The summary below is based on regulations currently in effect, and such regulations are subject to review or modification by the applicable governmental
authority from time to time. If we fail to comply with applicable laws and regulations, we may be fined or lose our rights to conduct some of our business.
Federal Regulations. Both the FCC and the FAA regulate towers used for wireless communications, radio, or television broadcasting. Such regulations
control the siting, construction, modification, lighting, and marking of towers and may, depending on the characteristics of particular towers, require the
registration of tower facilities with the FCC and the issuance of determinations confirming no hazard to air traffic. Wireless communications devices
operating on towers are separately regulated and independently licensed based upon the particular frequency used. In addition, the FCC and the FAA have
developed standards to consider proposals for new or modified tower or antenna structures based upon the height or location, including proximity to airports.
Proposals to construct or to modify existing tower or antenna structures above certain heights
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are reviewed by the FAA to ensure the structure will not present a hazard to aviation, which determination may be conditioned upon compliance with
lighting or marking requirements. The FCC requires its licensees to operate communications devices only on towers that comply with FAA rules and are
registered with the FCC, if required by its regulations. Where tower lighting is required by FAA regulation, tower owners bear the responsibility of notifying
the FAA of any tower lighting outage and ensuring the timely restoration of such outages.
State and Local Regulations. The U.S. Telecommunications Act of 1996 amended the Communications Act of 1934 to preserve state and local zoning
authorities' jurisdiction over the siting of communications towers and small cells. The law, however, limits state and local zoning authority by prohibiting
actions by such authorities that discriminate between different service providers of wireless communications or prohibit altogether (actually or effectively)
the provision of wireless communications. Additionally, the law prohibits state and local restrictions based on the environmental effects of radio frequency
emissions to the extent the facilities comply with FCC regulations.
Local regulations include city and other local ordinances (including subdivision and zoning ordinances), approvals for construction, modification and
removal of towers and small cells, and restrictive covenants imposed by community developers. These regulations vary greatly, but typically require us to
obtain prior approval from local officials. Local zoning authorities may render decisions that prevent the construction or modification of towers or small
cells, or place conditions on such construction or modifications that are responsive to community residents' concerns regarding the height, visibility, or other
characteristics of such infrastructure. 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.
Certain of our subsidiaries hold state authorizations, including authorizations to act as competitive local exchange carriers ("CLECs"), to provide
intrastate telecommunication services in addition to FCC authorization to provide domestic interstate telecommunication services. State authorizations may
help promote access to public rights-of-way, which is beneficial to the timely deployment of fiber and small cells, and often allow us to deploy such
infrastructure in locations where zoning restrictions might otherwise delay, restrict, or prevent building or expanding traditional wireless tower and rooftop
sites. See "Item 1A. Risk Factors" for additional information regarding rights to our infrastructure.
Environmental. We are required to comply with a variety of federal, state and local environmental laws and regulations protecting environmental
quality, including air and water quality, and wildlife. To date, we have not incurred any material fines or penalties or experienced any material adverse effects
to our business as a result of any domestic or international environmental regulations or matters. See "Item 1A. Risk Factors" for additional information
regarding compliance with laws and regulations.
The construction of new towers and small cells or, in some cases, their modification in the U.S. may be subject to environmental review under the
National Environmental Policy Act of 1969, as amended ("NEPA"), which requires federal agencies to evaluate the environmental impact of major federal
actions. NEPA regulations require applicants to investigate the potential environmental impact of the proposed tower or small cells construction. If the FCC
determines that the proposed tower or small cells construction or modification presents a significant environmental impact, the FCC is required to prepare an
environmental impact statement, which is subject to public comment. Such determination could significantly delay the FCC's approval of the construction or
modification.
Our operations are also subject to federal, state and local laws and regulations relating to the management, use, storage, disposal, emission, or
remediation of, or exposure to, hazardous or non-hazardous substances, materials, or wastes. As an owner, lessee, or operator of real property, we are subject
to certain environmental laws that impose strict, joint-and-several liability for the cleanup of on-site or off-site contamination relating to existing or historical
operations; or we could also be subject to personal injury or property damage claims relating to such contamination. In general, our tenant contracts prohibit
our tenants from using or storing any hazardous substances on our communications infrastructure sites in violation of applicable environmental laws and
require our tenants to provide notice of certain environmental conditions caused by them.
We are subject to Occupational Safety and Health Administration and similar guidelines regarding employee protection from radio frequency exposure.
In recent years, the scientific community has extensively studied low-level radio frequency emissions to determine whether they have any connection to
certain negative health effects, such as cancer.
We have compliance programs and monitoring projects designed to promote compliance with applicable environmental laws and regulations.
Nevertheless, there can be no assurance that the costs of compliance with existing or future environmental laws will not have a material adverse effect on us.
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Available Information
We maintain a website at www.crowncastle.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K (and
any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange
Act")), proxy statements and other information about us are made available, free of charge, through the Investors section of our website at
https://investor.crowncastle.com and at the SEC's website at http://sec.gov as soon as reasonably practicable after we electronically file such material with, or
furnish it to, the SEC.
In addition, our Corporate Governance Guidelines, Proper Business Practices and Ethics Policy, Financial Code of Ethics, and the charters of our Audit
Committee, Compensation Committee and Nominating, Environmental, Social and Governance Committee are available through the Investors section of our
website at https://investor.crowncastle.com, and such information is also available in print to any stockholder who requests it. We intend to post to our
website any amendments to or waivers from each of the Business Practices and Ethics Policy and Financial Code of Ethics applicable to our Chief Executive
Officer, Chief Financial Officer and Controller that are required to be disclosed.
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Item 1A. Risk Factors
You should carefully consider all of the risks described below, as well as the other information contained in this document, when evaluating your
investment in our securities.
Risks Relating to Our Business and Industry
Our business depends on the demand for our communications infrastructure (including towers, small cells and fiber), driven primarily by demand for
data, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in the amount or change in the mix of network
investment by our tenants may materially and adversely affect our business (including reducing demand for our communications infrastructure or
services).
Tenant demand for our communications infrastructure depends on consumers' and organizations' demand for data. Additionally, the willingness of our
tenants to utilize our communications infrastructure, or renew or extend existing tenant contracts on our communications infrastructure, is affected by
numerous factors, including:
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availability or capacity of our communications infrastructure or associated land interests;
location of our communications infrastructure;
financial condition of our tenants, including their profitability and availability or cost of capital, including through government funding;
willingness of our tenants to maintain or increase their network investment or changes in their capital allocation strategy;
need for integrated networks and organizations;
availability and cost of spectrum for commercial use;
increased use of network sharing, roaming, joint development, or resale agreements by our tenants;
mergers or consolidations by and among our tenants;
changes in, or success of, our tenants' business models;
governmental regulations and initiatives, including local or state restrictions on the proliferation of communications infrastructure;
cost of constructing communications infrastructure;
our market competition, including tenants that may elect to self-perform;
technological changes, including those (1) affecting the number or type of communications infrastructure needed to provide data to a given
geographic area or which may otherwise serve as a substitute or alternative to our communications infrastructure or (2) resulting in the
obsolescence or decommissioning of certain existing wireless networks; and
our ability to efficiently satisfy our tenants' service requirements.
A slowdown in demand for data or our communications infrastructure may negatively impact our growth or otherwise have a material adverse effect on
us. If our current or potential tenants are unable to raise adequate capital to fund their business plans, as a result of disruptions in the financial and credit
markets or otherwise, they may reduce their spending, which could adversely affect our anticipated growth or the demand for our communications
infrastructure or services.
The amount, timing, and mix of our tenants' network investment is variable and can be significantly impacted by the various matters described in these
risk factors. Changes in tenant network investment typically impact the 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. Furthermore, the industries in which our tenants operate
(particularly those in the wireless industry) could experience a slowdown or slowing growth rates as a result of numerous factors, including a reduction in
consumer demand for data or general economic conditions. There can be no assurances that weakness or uncertainty in the economic environment will not
adversely impact our tenants or their industries, which may materially and adversely affect our business, including by reducing demand for our
communications infrastructure or services. In addition, a slowdown may increase competition for site rental tenants or services. Such an industry slowdown
or a reduction in tenant network investment may materially and adversely affect our business.
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A substantial portion of our revenues is derived from a small number of tenants, and the loss, consolidation or financial instability of any of such
tenants may materially decrease revenues, reduce demand for our communications infrastructure and services and impact our dividend per share
growth.
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"). 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. 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.
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. 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. Such consolidation (or potential
consolidation) may result in a reduction or slowdown in such tenants' network investment in the aggregate because their expansion plans may be similar.
Tenant consolidation could decrease the demand for our communications infrastructure and services, which in turn may result in a reduction in our revenues
or cash flows and may trigger a review for impairment of certain long-lived assets.
On January 6, 2022, we entered into an agreement with T-Mobile that contemplates T-Mobile and Sprint network consolidation. 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. 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.
Due to network consolidation non-renewals and interest rate increases discussed in "—Risks Related to Our Debt and Equity," we expect our annual
dividend per share growth through 2025 to be below our long-term annual target.
See "Item 1. Business—The Company" and note 14 to our consolidated financial statements for further information regarding our largest tenants.
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. In the
ordinary course of our business, we review, analyze and evaluate various potential transactions or other activities in which we may engage. Such transactions
or activities could be complex, costly and time-consuming, or cause disruptions in, increase risk to or otherwise negatively impact our business. Among
other things, such transactions and activities may:
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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.
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Our Fiber segment has expanded, 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.
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 34% and 31% of our site rental revenues for the years ended December 31, 2023 and 2022, respectively.
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.
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:
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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.
In addition, the rate at which tenants adopt or prioritize small cells and fiber solutions may be lower or slower than we anticipate or may cease to exist
altogether. For example, our tenants have initially focused on utilizing towers in the first phase of deploying their 5G networks, which has led to delays in
some of our small cell deployments. We anticipate that these delays will be temporary, as our tenants plan for the next phase of their 5G network deployment
which we believe will require small cells at scale. Our Fiber operations also expose us to different safety or liability risks or hazards than our Towers
business as a result of numerous factors, including those stemming from the deployment, location or nature of the assets involved. 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.
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.
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. 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. 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.
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. 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
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than that reflected in the current price of our common stock. 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.
Our construction projects and related contracts can be long-term, complex in nature, dangerous, costly and challenging to execute. The quality of our
performance on such construction projects depends in large part upon our ability to manage (1) the associated tenant relationship and (2) the project itself by
timely deploying and properly managing appropriate internal and external project resources. In connection with our construction projects, we generally bear
the risk of cost over-runs, labor availability and productivity, and contractor pricing and performance.
In addition, the construction projects (including modifications of existing communications infrastructure) can pose certain safety risks, including:
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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.
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. See "—Our business
may be adversely impacted by climate-related events, natural disasters, including wildfires, and other unforeseen events" below for additional information
regarding potential adverse impacts to our business which may result from wildfires and other climate-related events.
Further, investments in newly constructed communications infrastructure may result in lower initial returns compared to returns on our existing
communications infrastructure or us not being able to realize future tenant additions at anticipated levels. Additionally, contracts with our tenants for these
projects typically specify delivery dates, performance criteria and penalties for our failure to perform. 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. We may also
experience unforeseen delays and increased project costs as a result of supply chain disruptions and labor shortages, which may impact the availability of
equipment and materials needed for, and availability of contractors to work on, our construction projects. Our failure to manage such tenant relationships,
project resources, and project milestones in a timely and efficient manner and appropriately manage safety risks could have a material adverse effect on our
business.
New technologies may reduce demand for our communications infrastructure or negatively impact our revenues.
Improvements in the efficiency, architecture, and design of communication networks may reduce the demand for our communications infrastructure.
For example, new technologies and spectrum that may promote network sharing, joint development, backhaul and fronthaul efficiency or resale agreements
by our tenants, such as signal combining technologies or network virtualization, may reduce the need for our communications infrastructure. In addition,
other technologies, such as WiFi, blimps, satellite (such as low earth orbiting) and mesh transmission systems may, in the future, serve as substitutes for, or
alternatives to, leasing on communications infrastructure that might otherwise be anticipated or expected had such technologies not existed. In addition, new
technologies that enhance the range, efficiency and capacity of communication equipment could reduce demand for our communications infrastructure. Any
significant reduction in demand for our communications infrastructure resulting from the new technologies may negatively impact our revenues or otherwise
have a material adverse effect on us.
If we fail to retain rights to our communications infrastructure, including the rights to land under our towers and the right-of-way and other agreements
related to our small cells and fiber, our business may be adversely affected.
The property interests and other rights to our communications infrastructure, including the land under our towers, are derived from leasehold and sub-
leasehold interests, fee interests, easements, licenses, rights-of-way, and franchise and other agreements. A loss of these interests and other rights may
interfere with our ability to conduct our business or generate revenues. 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.
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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. 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.
If we are unable to retain rights to the property on which our communications infrastructure is located, our business may be adversely affected.
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. We have no obligation to exercise such purchase options. We may not have the required available capital to exercise
our right to purchase some or all of these towers at the time these options are exercisable. Even if we do have available capital, we may choose not to
exercise our right to purchase these towers or some or all of the T-Mobile or AT&T towers for business or other reasons. In the event that we do not exercise
these purchase rights, or are otherwise unable to acquire an interest that would allow us to continue to operate these towers after the applicable period, we
will lose the cash flows derived from such towers, which may have a material adverse effect on our business. In the event that we decide to exercise these
purchase rights, the benefits of the acquisition of these towers may not exceed the costs, which could adversely affect our business. Additional information
concerning these towers and the applicable purchase options as of December 31, 2023 is as follows:
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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. 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). Approximately half of such towers have an initial term of 32 years (through May
2037), and we have the option to purchase in 2037 all (but not less than all) of such leased and subleased towers from T-Mobile for approximately
$2.3 billion. The remainder of such towers have a weighted-average initial term of approximately 28 years, weighted based on towers site rental
gross margin. We have the option to purchase such towers from T-Mobile at the end of the respective terms for aggregate option payments of
approximately $2.0 billion, which payments, if such option is exercised, would be due between 2035 and 2049. In addition, another 1% of our
towers under master leases, subleases, and other agreements with T-Mobile are subject to a lease and sublease or other related arrangements with
AT&T. 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).
Under master lease or master prepaid lease arrangements we have with AT&T and T-Mobile (including those which T-Mobile assumed in its merger
with Sprint), certain of our subsidiaries lease or sublease, or are otherwise granted the right to operate and manage, towers from bankruptcy remote
subsidiaries of such carriers. If one of these bankruptcy remote subsidiaries should become a debtor in a bankruptcy proceeding and is permitted to reject the
underlying ground lease, our subsidiaries could lose their interest in the applicable sites. If our subsidiaries were to lose their interest in the applicable sites or
if the applicable ground leases were to be terminated, we would lose the cash flow derived from the towers on those sites, which may have a material adverse
effect on our business. We have similar bankruptcy risks with respect to sites that we operate under management agreements.
For our small cells and fiber, we must maintain rights-of-way, franchise, pole attachment, conduit use, fiber use and other agreements to operate our
assets. For various reasons, we may not always have the ability to maintain these agreements or obtain future agreements to construct, maintain and operate
our fiber assets. Access to rights-of-way may depend on our CLEC status, and we cannot be certain that jurisdictions will (1) recognize such CLEC status or
(2) not change their laws concerning CLEC access to rights-of-way. If a material portion of these agreements are terminated or are not renewed, we might be
forced to abandon our assets, which may adversely impact our business. In order to operate our assets, we must also maintain fiber agreements that we have
with public and private entities. There is no assurance that we will be able to renew these agreements on favorable terms, or at all. If we are unable to renew
these agreements on favorable terms, we may face increased costs or reduced revenues.
Additionally, in order to expand our communications infrastructure footprint to new locations, we often need to obtain new or additional rights-of-way
and other agreements. 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.
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Our services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
The operating results of our services business for any particular period may experience significant fluctuations given its non-recurring nature and
should not necessarily be considered indicative of longer-term results for this activity. Our services business is generally driven by demand for our
communications infrastructure and may be adversely impacted by various factors, including:
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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.
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. 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.
The potential connection between radio frequency emissions and certain negative health effects, including some forms of cancer, has been the subject
of substantial study by the scientific community in recent years. We cannot guarantee that claims relating to radio frequency emissions will not arise in the
future or that the results of such studies will not be adverse to us.
Public perception of possible health risks associated with cellular or other wireless connectivity services and wireless technologies (such as 5G) may
slow or diminish the growth of wireless companies and deployment of new wireless technologies, which may in turn slow or diminish our growth. In
particular, negative public perception of, and regulations regarding, these perceived health risks may slow or diminish the market acceptance of wireless
services and technologies. If a connection between radio frequency emissions and possible negative health effects were established, our operations, costs, or
revenues may be materially and adversely affected. We currently do not maintain any significant insurance with respect to these matters.
Cybersecurity breaches or other information technology disruptions could adversely affect our operations, business, and reputation.
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. An
attack attempt or security breach, such as a distributed denial of service attack, could potentially result in (1) interruption or cessation of certain of our
services to our tenants or access by our tenants to certain of our information technology systems, (2) our inability to meet expected levels of service to our
tenants, (3) data transmitted over our tenants' networks being compromised or misappropriated, or (4) business or other sensitive data being compromised,
misappropriated or lost. Although we believe we have a comprehensive incident response plan and other cybersecurity measures and policies in place, we
cannot guarantee that our security measures will not be circumvented, resulting in tenant network failures or interruptions that could impact our tenants'
network availability and have a material adverse effect on our business, financial condition, or operational results.
Additionally, security incidents impacting our tenants, vendors and business partners could result in a material adverse effect on our business. We may
be required to expend significant resources to protect against or recover from such threats. If an actual or perceived breach of our cybersecurity or
information technology, or that of our cloud- or internet-based service providers, occurs, the market perception of the effectiveness of our security measures
could be harmed, and we could lose tenants. Further, the perpetrators of cyber-attacks are not restricted to particular groups or persons. These attacks may be
committed by our employees or external actors operating in any geography. In addition, our acquisitions, both past and future, may alter our potential
exposure to the risks described above. While we maintain insurance that includes coverage in the event
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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.
We could be negatively impacted by other unforeseen events, such as extreme weather events or natural disasters (including as a result of any potential
effects of climate change), or acts of vandalism. There is increasing concern that global climate change is occurring and could result in increased frequency
of certain types of natural disasters and extreme weather events. Although we have implemented a wildfire risk mitigation program, the effects of climate
change have increased the risk and extent of wildfires that could potentially result from certain of our construction and maintenance projects and other
operating activities. We cannot predict with certainty the rate at which climate change is occurring or the potential direct or indirect impacts of climate
change to our business. Any such unforeseen events could, among other things, damage or delay deployment of our communications infrastructure, interrupt
or delay service to our tenants or could result in legal claims or penalties, disruption in operations, damage to our reputation, negative market perception, or
costly response measures, which could adversely affect our business.
While we currently maintain insurance policies that include coverage in the event of natural disasters and other unforeseen events, including possible
incidents in which our actions (or the actions of those acting on our behalf) contribute to such events, there can be no assurances that such coverage will be
adequate to cover exposure from such events. 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.
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.
Our growth is dependent on our entering into new tenant contracts (including amendments to tenant contracts upon modification of existing towers,
small cells or fiber), as well as renewing or renegotiating tenant contracts when existing tenant contracts terminate. Competition in our industry may make it
more difficult for us to attract new tenants, maintain or increase our gross margins, or maintain or increase our market share. In addition, competition
(primarily in our fiber solutions business) may, in certain circumstances, cause us to renegotiate certain existing tenant contracts to avoid early contract
terminations. We face competition for site rental tenants and associated contractual rates from various sources, including (1) other independent
communications infrastructure owners or operators, including those that own, operate, or manage towers, rooftops, broadcast or transmission towers, utility
poles, fiber (including non-traditional competitors such as cable providers) or small cells, or (2) new alternative deployment methods for communications
infrastructure.
Our Fiber business generally has different competitors than those in our Towers business, including other owners of fiber, as well as new entrants into
small cells and fiber solutions, some of which may have larger networks, greater financial resources or more experience in managing such assets than we
have.
New wireless technologies may not deploy or be adopted by tenants as rapidly or in the manner projected.
There can be no assurances that new wireless services or technologies, which may drive demand for our communications infrastructure, will be
introduced or deployed as rapidly or in the manner projected by the wireless carriers. In addition, demand or tenant adoption rates for such new technologies
may be lower or slower than anticipated for numerous reasons. As a result, growth opportunities or demand for our communications infrastructure arising
from such technologies may not be realized at the times or to the extent anticipated.
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. In
response, we have published ESG reports and related materials and made other public announcements regarding our ESG position, initiatives and goals. Our
ESG metrics, initiatives and goals, and progress against those goals, may be based on standards that are still developing and that may not be uniformly
adopted or applied by other companies, processes and internal controls that continue to evolve, potentially missing or deficient third-party data, wide range
of acceptable estimation techniques, and estimates and assumptions that are subject to a greater degree of uncertainty and may change more frequently than
those underlying our financial metrics. 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. In addition, a number of governmental and self-
regulatory organizations have
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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.
Any failure, or perceived failure, by us to achieve our goals, further our initiatives, accurately report our metrics or adhere to public statements exposes
us to potential litigation, which may materially adversely affect our business, results of operations, financial condition and stock price.
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. 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. 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.
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. 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.
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. 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. 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.
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. 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. 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.
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. 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. 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. 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.
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. We have made certain assumptions in estimating the
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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. 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. 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.
Furthermore, the Plan may result in unintended consequences, including:
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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.
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.
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. 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"). 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. 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.
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. Nonetheless, we may not be successful in engaging constructively with one or more stockholders,
and any resulting activist campaign that contests, or seeks to change, our strategic direction or business mix could have an adverse effect on us because: (1)
responding to actions by activist stockholders could disrupt our business and operations, be costly or time-consuming, or divert the attention of our board of
directors or management from the pursuit of business strategies, which could adversely affect our results of operations or financial condition; (2) perceived
uncertainties as to our future direction may lead to the perception of a change in the direction of the business, instability, or lack of continuity, any of which
may be exploited by our competitors, cause concern to our current or potential customers, cause concern in the minds of our employees and make it more
difficult to attract and retain qualified personnel; and (3) these types of actions could cause significant fluctuations in our share price based on temporary or
speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
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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. 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. As a result of our substantial indebtedness:
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we may be more vulnerable to general adverse economic or industry conditions;
we may find it more difficult to obtain additional financing to fund discretionary investments or other general corporate requirements or to
refinance our existing indebtedness;
we are or will be required to dedicate a substantial portion of our cash flows from operations to the payment of principal or interest on our debt,
thereby reducing the available cash flows to fund other projects, including the discretionary investments discussed in "Item 1. Business" and "Item
7. MD&A—Liquidity and Capital Resources";
we may have limited flexibility in planning for, or reacting to, changes in our business or in the industry;
we may have a competitive disadvantage relative to other companies in our industry with less debt;
we may be adversely impacted by changes in interest rates (see below);
we may be adversely impacted by changes to credit ratings related to our debt instruments;
we may be required to issue equity securities or securities convertible into equity securities or sell some of our assets, possibly on unfavorable
terms, in order to meet our debt payment obligations;
we may be limited in our ability to take advantage of strategic business opportunities, including communications infrastructure development or
mergers and acquisitions; and
we could fail to remain qualified for taxation as a REIT due to limitations on our ability to declare and pay dividends to stockholders as a result of
restrictive covenants in our debt instruments.
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. Such variable interest debt had a weighted average rate of 6.3% as of February 20, 2024, compared to 5.4% and 1.1% as
of December 31, 2022 and 2021, respectively. 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 "Item 7A. Quantitative and Qualitative Disclosures about Market Risk" for a further discussion of our interest rate risk.
Currently, we have debt instruments in place that limit, in certain circumstances, our ability to incur additional indebtedness, pay dividends, create
liens, sell assets, or engage in certain mergers and acquisitions, among other things. In addition, the credit agreement governing our senior unsecured credit
facility ("2016 Credit Agreement"), which consists of our senior unsecured term loan A facility and senior unsecured revolving credit facility (collectively,
"2016 Credit Facility"), contains financial maintenance covenants. Our ability to comply with these covenants or to satisfy our debt obligations will depend
on our future operating performance. If we violate the restrictions in our debt instruments or fail to comply with our financial maintenance covenants, we
will be in default under those instruments, which in some cases would cause the maturity of a substantial portion of our long-term indebtedness to be
accelerated. Furthermore, if the limits on our ability to pay dividends prevent us from satisfying our REIT distribution requirements, we could fail to remain
qualified for taxation as a REIT. If these limits do not jeopardize our qualification for taxation as a REIT but nevertheless prevent us from distributing 100%
of our REIT taxable income, we will be subject to federal and state corporate income taxes, and potentially a nondeductible excise tax, on our undistributed
taxable income. If our operating subsidiaries were to default on their debt, the trustee could seek to foreclose the collateral securing such debt, in which case
we could lose the communications infrastructure and the associated revenues. See "Item 7. MD&A—Liquidity and Capital Resources—Debt Covenants" for
a further discussion of our debt covenants.
CCI is a holding company that conducts all of its operations through its subsidiaries. Accordingly, CCI's sources of cash to pay interest or principal on
its outstanding indebtedness are distributions relating to its respective ownership interests in its subsidiaries from the net earnings and cash flows generated
by such subsidiaries or from proceeds of debt or equity offerings. Earnings and cash flows generated by CCI's subsidiaries are first applied by such
subsidiaries to conduct their operations, including servicing their respective debt obligations, after which any excess cash flows generally may be paid to
CCI, in the absence of any special conditions, such as a continuing event of default. 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.
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We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues
and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets, possibly on unfavorable terms,
to meet our debt payment obligations.
We have a substantial amount of indebtedness, which, upon final maturity, we will need to refinance or repay. See "Item 7. MD&A—Liquidity and
Capital Resources" for a tabular presentation of our contractual debt maturities. There can be no assurances we will be able to refinance our indebtedness (1)
on commercially reasonable terms, (2) on terms, including with respect to interest rates, as favorable as our current debt, or (3) at all. 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. If interest
rates remain elevated or continue to increase, we may have to (1) refinance our maturing fixed rate debt at interest rates that exceed the current interest rates
on such debt or (2) use our variable interest rate debt to repay such fixed rate debt, thereby increasing our exposure to interest rate fluctuations.
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.
If we are unable to repay or refinance our debt, we cannot guarantee that we will be able to generate enough cash flows from operations or that we will
be able to obtain enough capital to service our debt, fund our planned capital expenditures or pay future dividends. In such an event, we could face
substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets, possibly
on unfavorable terms, to meet our debt payment obligations. Failure to repay or refinance indebtedness when required could result in a default under such
indebtedness. If we incur additional indebtedness, any such indebtedness could exacerbate the risks described above.
Sales or issuances of a substantial number of shares of our common stock or securities convertible into shares of our common stock may adversely affect
the market price of our 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 strategic initiatives or repay debt. Our business strategy contemplates access to
external financing to fund certain discretionary investments, which may include issuances of common stock or other equity related securities. We maintain
an "at-the-market" stock offering program ("2021 ATM Program") through which we may, from time to time, issue and sell shares of our common stock
having an aggregate gross sales price of up to $750 million to or through sales agents. 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 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. If any one of these common
stockholders, or any group of our common stockholders, sells a large quantity of shares of our common stock, or the public market perceives that existing
common stockholders might sell a large quantity of shares of our common stock, the market price of our common stock may significantly decline.
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.
We have a number of anti-takeover devices in place that will hinder takeover attempts or may reduce the market value of our common stock. Our anti-
takeover provisions include:
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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
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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”). Since the Securities Act provides that federal and state courts have concurrent jurisdiction over lawsuits
brought pursuant to the Securities Act, there may be uncertainty as to whether a court would enforce such a provision. Stockholders will not be
deemed to have waived compliance with the federal securities laws, and this provision does not apply to claims for which the federal courts have
exclusive jurisdiction (such as under the Exchange Act).
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. Such provisions, as well as the provisions of Section 203 of the Delaware General Corporation Law, may impede a merger,
consolidation, takeover, or other business combination or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain
control of us.
In addition, domestic or international competition laws may prevent or discourage us from acquiring communications infrastructure in certain
geographical areas or impede a merger, consolidation, takeover, or other business combination or discourage a potential acquirer from making a tender offer
or otherwise attempting to obtain control of us.
Risks Relating to Corporate Compliance
If we fail to comply with laws or regulations which regulate our business and which may change at any time, we may be fined or even lose our right to
conduct some of our business.
A variety of federal, state, local, and foreign laws and regulations apply to our business, including those discussed in "Item 1. Business." Failure to
comply with applicable requirements may lead to civil or criminal penalties, require us to assume indemnification obligations or breach contractual
provisions. We cannot guarantee that existing or future laws or regulations, including federal, state, local, or foreign tax laws, will not adversely affect our
business (including our REIT status), increase delays or result in additional costs. We also may incur additional costs as a result of liabilities under applicable
laws and regulations, such as those governing environmental and safety matters. These factors may have a material adverse effect on us.
Risks Relating to Our REIT Status
Future dividend payments to our stockholders will reduce the availability of our cash on hand available to fund future discretionary investments, and
may result in a need to incur indebtedness or issue equity securities to fund growth opportunities. 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 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. 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. See notes 10
and 17 to our consolidated financial statements.
We operate as a REIT for U.S. federal income tax purposes. To remain qualified and be taxed as a REIT, we will generally be required to annually
distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction, excluding net capital gain and after the
utilization of any available NOLs) to our stockholders. Our quarterly cash common stock dividend will delay the utilization of our NOLs and may cause
certain of the NOLs to expire without utilization. See also "Item 1. Business—REIT Status" and "Item 7. MD&A—General Overview—Common Stock
Dividend."
As discussed in "Item 1. Business—Strategy," we seek to invest our available capital, including the net cash generated by our operating activities and
external financing sources, in a manner that we believe will increase long-term stockholder value on a risk-adjusted basis. Our historical discretionary
investments have included the following (in no particular order): construction of communications infrastructure; acquisitions of communications
infrastructure; acquisitions of land interests (which primarily relate to land assets under towers); improvements and structural enhancements to our existing
communications infrastructure; purchases of shares of our common stock from time to time; and purchases, repayments or redemptions of our debt. External
financing, including debt, equity, and equity-related issuances to fund future discretionary investments either (1) may not be available to us or (2) may not be
accessible by us at terms that would result in the investment of the net proceeds raised yielding incremental growth in our per share operating results. 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.
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Remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the Code. Failure to remain qualified as a REIT would
result in our inability to deduct dividends to stockholders when computing our taxable income, thereby increasing our tax obligations and reducing our
available cash.
As a REIT, we are generally entitled to a deduction for dividends that we pay and therefore are not subject to U.S. federal corporate income tax on our
net taxable income that is currently distributed to our common stockholders.
While we intend to operate so that we remain qualified as a REIT, given the highly complex nature of the rules governing REITs, the importance of
ongoing factual determinations, the possibility of future changes in our circumstances, and the potential impact of future changes to laws and regulations
impacting REITs, no assurance can be given that we will qualify as a REIT for any particular year.
In addition, the present U.S. federal tax treatment of REITs is subject to change, possibly with retroactive effect, by legislative, judicial or
administrative action at any time, and any such change might adversely affect our REIT status or benefits. We cannot predict the impact, if any, that such
changes, if enacted, might have on our business. However, it is possible that such changes could adversely affect our business, including our REIT status.
If, in any taxable year, we fail to qualify for taxation as a REIT and are not entitled to relief under certain provisions of the Code, then:
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we will not be allowed a deduction for dividends paid to stockholders in computing our taxable income;
we will be subject to federal and state income tax on our taxable income at regular corporate tax rates and, for years beginning before January 1,
2018, any applicable alternative minimum tax; and
we would be disqualified from re-electing REIT status for the four taxable years following the year during which we were so disqualified.
Although we may have federal NOLs available to reduce any taxable income, to the extent our federal NOLs have been utilized or are otherwise
unavailable, any such corporate tax liability could be substantial, would reduce the amount of cash available for other purposes and might necessitate the
borrowing of additional funds or the liquidation of some investments to pay any additional tax liability. Accordingly, funds available for investment would be
reduced.
Under the Code, for taxable years beginning in or after 2018, no more than 20% of the value of the assets of a REIT may be represented by securities
of one or more TRSs. These limitations may affect our ability to make additional investments in non-REIT qualifying operations or assets, or in any
operations held through TRSs. The net income of our TRSs is not required to be distributed to us, and income that is not distributed to us generally will not
be subject to the REIT income distribution requirement. However, there may be limitations on our ability to accumulate earnings in our TRSs and the
accumulation or reinvestment of significant earnings in our TRSs could result in adverse tax treatment. In particular, if the accumulation of cash in our TRSs
causes the fair market value of our securities in our TRSs to exceed current or future limitations of the fair market value of our assets at the end of any
quarter, then we may fail to remain qualified as a REIT.
Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive
opportunities, including certain discretionary investments and potential financing alternatives.
To remain qualified and be taxed as a REIT, we are required to satisfy the 90% distribution requirement as described above. We commenced declaring
regular quarterly dividends to our common stockholders beginning with the first quarter of 2014. See notes 10 and 17 to our consolidated financial
statements. Any such dividends, however, are subject to the determination of and declaration by our board of directors based on then-current and anticipated
future conditions, including our earnings, net cash generated by operating activities, capital requirements, financial condition, our relative market
capitalization, our existing federal NOLs of approximately $1.5 billion or other factors deemed relevant by our board of directors.
To the extent that we satisfy the 90% distribution requirement but distribute less than 100% of our REIT taxable income (determined without regard to
the dividends paid deduction, excluding net capital gain and after the utilization of any available NOLs), we will be subject to federal corporate income tax
on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders for
a calendar year is less than a minimum amount specified under the Code.
From time to time, we may generate REIT taxable income greater than our cash flow as a result of differences in timing between the recognition of
taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves or required debt or amortization
payments. 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. These alternatives could increase our costs or reduce our
equity. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our common stock.
Furthermore, the REIT dividend requirements may increase the financing we need to fund capital expenditures, future growth, or expansion initiatives,
which would increase our total leverage.
In addition to satisfying the 90% distribution requirement, to remain qualified as a REIT for tax purposes, we are required to continually satisfy tests
concerning, among other things, the sources of our income, the nature and diversification of our assets and the ownership of our capital stock. Compliance
with these tests will require us to refrain from certain activities and may hinder our ability to make certain attractive investments, including the purchase of
non-qualifying assets, the expansion of non-real estate activities, or investments in the businesses to be conducted by our TRSs, and to that extent, limit our
opportunities and our flexibility to change our business strategy. Furthermore, acquisition opportunities in domestic or international markets may be
adversely affected if we need or require the target company to comply with some REIT requirements prior to completing any such acquisition. In addition,
our status as a REIT may result in investor pressures not to pursue growth opportunities that are not immediately accretive.
Moreover, if we fail to comply with certain asset ownership tests, at the end of any calendar quarter, we must correct the failure within 30 days after the
end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to
liquidate assets in adverse market conditions or forgo otherwise attractive investments. These actions may reduce our income and amounts available for
distribution to our stockholders.
REIT related ownership limitations and transfer restrictions may prevent or restrict certain transfers of our capital stock.
In order for us to continue to satisfy the requirements for REIT qualification, our capital stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the
outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer "individuals" (as defined in the Code to include certain entities
such as private foundations) during the last half of a taxable year. In order to facilitate compliance with the REIT rules, our Charter includes provisions
regarding REIT-related ownership limitations and transfer restrictions that generally prohibit any "person" (as defined in our Charter) from beneficially or
constructively owning, or being deemed to beneficially or constructively own by virtue of the attribution provisions of the Code, more than (1) 9.8%, by
value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock, or (2) 9.8% in aggregate value of the outstanding
shares of all classes and series of our capital stock. In addition, our Charter provides for certain other ownership limitations and transfer restrictions. Under
applicable constructive ownership rules, any shares of capital stock owned by certain affiliated owners generally would be added together for purposes of the
ownership limitations. These ownership limitations and transfer restrictions could have the effect of delaying, deferring or preventing a transaction or a
change in control of our company that might involve a premium price for our capital stock or otherwise might be in the best interest of our stockholders.
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. 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.
Item 1C. Cybersecurity
Our company maintains a comprehensive Information Security Program ("IS Program") focused on detection, assessment and mitigation of
cybersecurity risks. Our dedicated enterprise security team, led by our Chief Information Security Officer ("CISO"), administers the IS Program and is
responsible for identification, investigation and response to cyber threats and vulnerabilities. The enterprise security team also implements, manages, and
assesses our company's cyber policies, standards and procedures, which leverage our team's expertise and the National Institute of Standards and Technology
Cybersecurity Framework. We have developed an incident response plan to handle suspected loss of, or unauthorized access to, information. We regularly
conduct tabletop exercises, red team exercises, simulations, and other exercises to evaluate the effectiveness of our IS Program and to position our company
for a coordinated, strategic response in the event of an actual security incident. All employees are required to complete cybersecurity trainings and
employees in higher-risk roles are required to complete additional customized training tailored to address their specific risk exposure. Our Security
Operations Center ("SOC"), which operates 24 hours a day, 365 days a year, is designed to provide visibility of security events across the company and a
mechanism for swiftly addressing cyber threats before they compromise data security. Through a combination of a threat management platform and our team
of cybersecurity specialists, our SOC continuously monitors and proactively isolates and analyzes cybersecurity alerts to help us address cybersecurity risks.
The identification, assessment and management of cybersecurity risks are integrated into our existing enterprise risk management ("ERM") framework.
Cybersecurity related risks are included in the risk universe that the ERM function evaluates to assess top risks to the enterprise on an annual basis, which
are presented to and reviewed by the Audit Committee.
We engage third-party providers to conduct evaluations of our security controls, including through vulnerability assessments and penetration testing,
independent audits or consulting on best practices. These evaluations include testing both the design and operational effectiveness of security controls.
Additionally, our internal audit team regularly evaluates the effectiveness of the IS Program, with results reported to the board of directors.
We also have policies and procedures in place to manage cybersecurity risks associated with third-party service providers. We impose security
requirements on our suppliers, which include maintaining a security management program, complying with information handling requirements, and
notifying us in the event of any known or suspected cyber incident. Where appropriate, we assess third-party cybersecurity controls and include security and
privacy addenda to our vendor contracts.
Our CISO reports directly to our Executive Vice President and Chief Information Officer ("CIO"), who reports to our CEO. Our CISO is informed
about and monitors prevention, detection, mitigation, and remediation efforts through regular communication with and reporting from the enterprise security
team, many of whom hold cybersecurity certifications, and through the use of technological tools and software and results from third-party assessments. Our
CISO and CIO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk. Our CISO has 25 years of cybersecurity
experience, including having served as Chief Technology Officer/CISO and co-founder of two cybersecurity companies, during which time he provided
cybersecurity consulting services to Fortune 500 companies and taught digital and network forensics course at the National Computer Forensics Institute.
Prior to joining our company, our CISO served as the Director of Security Services for a large network infrastructure company and our CIO was responsible
for network security policies, technology, and operations, including intrusion detection systems and conduct penetration testing, at another large public
company. The CIO (and previously, Vice President, Audit and Security) periodically reports to the Audit Committee regarding cybersecurity risk exposure
and risk mitigation strategies. The board of directors also may review and assess cybersecurity risks in connection with its review of our company's mission
critical risks.
While we have not, as of the date of this 2023 10-K, experienced a cybersecurity threat or incident that resulted in a material adverse impact to our
business or operations, there can be no guarantee that we will not experience such an incident in the future. See "Risk Factors" for more information on our
cybersecurity risks.
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,
26
building rooftops and other structures. 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 90,000 route miles of fiber primarily supporting our (1) approximately 115,000 small cells on air or under
contract and (2) fiber solutions. The majority of our fiber assets are located in major metropolitan areas, including a presence within every major U.S.
market. 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. 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.
Approximately 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. 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. 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.
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. We believe that our facilities are suitable and adequate to meet our anticipated needs.
Item 3. Legal Proceedings
We are periodically involved in legal proceedings that arise in the ordinary course of business. Most of these proceedings arising in the ordinary course
of business involve disputes with landlords, vendors, collection matters involving bankrupt tenants, zoning or siting matters, construction, condemnation,
tax, employment, or wrongful termination matters. While 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, 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.
Dividend Policy
We operate as a REIT for U.S. federal income tax purposes. To remain qualified and be taxed as a REIT, we will generally be required to annually
distribute to our stockholders at least 90% of our REIT taxable income after the utilization of any available NOLs (determined without regard to the
dividends paid deduction and excluding net capital gain). See also "Item 1. Business—REIT Status," "Item 1A. Risk Factors," "Item 7. 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. The declaration amount and payment of any future dividends, however,
are subject to the determination and approval of our board of directors based on then-current or anticipated future conditions, including our earnings, net cash
generated by operating activities, capital requirements, financial condition, our relative market capitalization, our existing NOLs, or other factors deemed
relevant by our board of directors. 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. The performance graph assumes an initial investment of $100.00 and the reinvestment of all dividends in our common stock and in each
of the indices. The performance graph and related text are based on historical data and are not necessarily indicative of future performance.
Company/Market/Index
Crown Castle Inc.
S&P 500 Market Index
FTSE NAREIT All Equity REITs Index
Years Ended December 31,
2018
2019
2020
2021
2022
2023
$
100.00 $
100.00
100.00
135.46 $
131.49
128.66
156.61 $
155.68
122.07
211.54 $
200.37
172.49
142.76 $
164.08
129.45
128.06
207.21
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]
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
General Overview
Overview
We own, operate and lease shared communications infrastructure. See "Item 1. Business" for a further discussion of our business, including our long-
term strategy, our REIT status, certain key terms of our tenant contracts and growth trends in the demand for data. 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. Business—REIT Status" and notes 2 and 9 to our consolidated financial
statements)
Potential growth resulting from the increasing demand for data
◦ We expect existing and potential new tenant demand for our communications infrastructure will result from (1) new technologies, (2)
increased usage of mobile entertainment, mobile internet, and machine-to-machine applications, (3) adoption of other emerging and
embedded wireless devices (including smartphones, laptops, tablets, wearables and other devices), (4) increasing smartphone penetration, (5)
wireless carrier focus on expanding both network quality and capacity, including the use of both towers and small cells, (6) the adoption of
other bandwidth-intensive applications (such as cloud services and video communications), (7) the availability of additional spectrum and (8)
increased government initiatives to support connectivity throughout the U.S.
◦ We expect U.S. wireless carriers will continue to focus on improving network quality and expanding capacity (including through 5G
initiatives) by utilizing a combination of towers and small cells. We believe our product offerings of towers and small cells provide a
comprehensive solution to our wireless tenants' growing communications infrastructure needs.
◦ We expect organizations will continue to increase the usage of high-bandwidth applications that will require the utilization of more fiber
infrastructure and fiber solutions, such as those we provide.
◦ Within our Fiber segment, we are able to generate growth and returns for our stockholders by deploying our fiber for both small cells and
◦
fiber solutions tenants.
Tenant additions on our existing communications infrastructure are achieved at a low incremental operating cost, delivering high incremental
returns.
◦
Substantially all of our communications infrastructure can accommodate additional tenancy, either as currently constructed or with
appropriate modifications.
Returning cash flows provided by operations to stockholders in the form of dividends (see also "Item 1. 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. See "Item 1A. 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. 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.
For the year ended December 31, 2023, sustaining capital expenditures represented approximately 1% of net revenues.
Majority of our fiber assets are located in major metropolitan areas and are on public rights-of-way
Minimal sustaining capital expenditure requirements
◦
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. Quantitative 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. 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.
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. 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. 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. 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 "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.
◦
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. 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. See notes 10 and 17 to our consolidated financial statements.
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. 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. 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. 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.
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. 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.
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. 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).
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.
Highlights of our results of operations for 2023, 2022 and 2021 are depicted below:
(In millions of dollars)
Site rental revenues:
Towers site rental revenues
Fiber site rental revenues
Total site rental revenues
(a)
Site rental gross margin :
Towers site rental gross margin
Fiber site rental gross margin
(a)
Services and other gross margin :
Towers services and other gross margin
Fiber services and other gross margin
Segment operating profit (loss)
(a)
:
Towers operating profit (loss)
Fiber operating profit (loss)
Income (loss) from continuing operations
Net income (loss)
Adjusted EBITDA
(b)
Years Ended December 31,
Percent Change
2023
2022
2021
2023 vs. 2022
2022 vs. 2021
$
$
4,313
2,219
6,532
3,370
1,533
127
16
3,393
1,355
1,502
1,502
4,415
$
4,322
1,967
6,289
3,404
1,317
238
3
3,527
1,130
1,675
1,675
4,340
3,804
1,915
5,719
2,915
1,282
187
3
2,995
1,111
1,158
1,096
3,816
— %
13 %
4 %
(1)%
16 %
(47)%
433 %
(4)%
20 %
(10)%
(10)%
2 %
14 %
3 %
10 %
17 %
3 %
27 %
— %
18 %
2 %
45 %
53 %
14 %
(a)
See "Item 7. 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. 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. 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.
(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.
(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. 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. 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.
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. 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.
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. 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.
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. 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.
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. 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.
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. 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. 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. 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. 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. 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. 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. 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. MD&A—General
Overview—Overview") from (1) the largest U.S. wireless carriers and (2) other towers and fiber solutions tenants. 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. 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.
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. 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. 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. 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.
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. 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. 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. 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. 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.
(In millions of dollars)
Cash and cash equivalents and restricted cash and cash equivalents
Undrawn 2016 Revolver availability
Total debt and other obligations (current and non-current)
Total equity
(b)
(a)
$
281
6,291
22,921
6,381
Inclusive of $5 million included within "Other assets, net" on our consolidated balance sheet.
(a)
(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. 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. 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. 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. 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. 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. 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.
Summary Cash Flows Information
(In millions of dollars)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents
Operating activities
Investing activities
Financing activities
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents - continuing operations
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents- continuing operations
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents - discontinued
operations
(a)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents
(a)
See note 9 to our consolidated financial statements for further information.
Operating Activities
Years Ended December 31,
2023
2022
2021
$
$
3,126 $
(1,519)
(1,654)
(47)
1
(46)
—
(46) $
2,878 $
(1,352)
(1,665)
(139)
—
(139)
—
(139) $
2,789
(1,332)
(1,310)
147
—
147
(62)
85
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. 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
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.
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. 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. 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. 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. 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). 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.
A summary of our capital expenditures for the last three years is as follows:
(In millions of dollars)
Discretionary:
Communications infrastructure
improvements and other capital
projects
(a)
Purchases of land interests
Sustaining
Total
December 31, 2023
For the Years Ended
December 31, 2022
December 31, 2021
Towers
Fiber
Other
Total
Towers
Fiber
Other
Total
Towers
Fiber
Other
Total
$
$
122 $
64
8
194 $
1,131 $
—
44
1,175 $
24 $
—
31
55 $
1,277 $
64
83
1,424 $
121 $
53
11
185 $
1,017 $
—
41
1,058 $
24 $
—
43
67 $
1,162 $
53
95
1,310 $
138 $
64
19
221 $
905 $
2
49
956 $
33 $
—
19
52 $
1,076
66
87
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.
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.
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. 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.
In 2023, our financing activities predominately related to the following:
• paying an aggregate of $2.7 billion in dividends on our common stock;
•
issuing $1.5 billion aggregate principal amount of senior unsecured notes in December 2023, 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;
repaying in full the previously outstanding 3.150% Senior Notes on the contractual maturity date in July 2023;
issuing $1.35 billion aggregate principal amount of senior unsecured notes in April 2023, the net proceeds of which were used to repay a portion of
the outstanding indebtedness under the Revolver and pay related fees and expenses; and
issuing $1.0 billion aggregate principal amount of senior unsecured notes in January 2023, the net proceeds of which were used to repay a portion
of the outstanding indebtedness under the Revolver and pay related fees and expenses.
•
•
•
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 in March 2022, 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 in March 2022;
•
•
redeeming in full the previously outstanding 3.849% Secured Notes in March 2022;
entering into an amendment to the 2016 Credit Facility in July 2022 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 in March 2022 to permit the issuance of Commercial Paper Notes in an aggregate principal amount not to
exceed $2.0 billion at any time outstanding.
•
38
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.
Common Stock. 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. Sales under the 2021 ATM Program, or any similar successor program, may be made by means of ordinary
brokers' transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or, subject to our
specific instructions, at negotiated prices. We intend to use the net proceeds from any sales under the 2021 ATM Program, or any similar successor program,
for general corporate purposes, which may include (1) the funding of future acquisitions or investments or (2) the repayment or repurchase of any
outstanding indebtedness. See also note 10 to our consolidated financial statements. As of February 20, 2024, we had $750 million of gross sales of common
stock availability remaining on our 2021 ATM Program.
Credit Facility. See note 7 to our consolidated financial statements for further information regarding our 2016 Credit Facility. As of February 20, 2024,
we did not have an outstanding balance under our 2016 Revolver and maintained $7.0 billion in undrawn availability. The proceeds from our 2016 Revolver
may be used for general corporate purposes, which may include the financing of capital expenditures, acquisitions, the repayment or repurchase of any
outstanding indebtedness and purchases of our common stock.
Commercial Paper Program. See note 7 to our consolidated financial statements for further information regarding our CP Program. As of February 20,
2024, there was $578 million outstanding under our CP Program. The proceeds from our Commercial Paper Notes may be used for general corporate
purposes, which may include the financing of capital expenditures, acquisitions, the repayment or repurchase of any outstanding indebtedness and purchases
of our common stock.
Restricted Cash and Cash Equivalents. Pursuant to the indentures governing certain of our operating companies' debt securities, all rental cash receipts
of the issuers of these debt instruments and their subsidiaries are restricted and held by an indenture trustee. The restricted cash and cash equivalents in
excess of required reserve balances is subsequently released to us in accordance with the terms of the indentures. See also note 2 to our consolidated
financial statements.
39
Material Cash Requirements
The following table summarizes our material cash requirements as of December 31, 2023. These material cash requirements relate primarily to our
outstanding borrowings or lease obligations for land interests under our towers. The debt maturities reflect contractual maturity dates and do not consider the
impact of the principal payments that will commence following the anticipated repayment dates of certain debt (see footnote (b)).
(In millions of dollars)
Material Cash Requirements
Debt and other long-term obligations
(a)
Interest payments on debt and other long-term obligations
Lease obligations
Total material cash requirements
(d)
(b)(c)
Years Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Totals
$
$
835 $
873
570
599 $
850
557
2,278 $
2,006 $
2,777 $
815
548
4,140 $
3,918 $
705
542
5,165 $
2,628 $
581
540
3,749 $
12,335 $
5,642
5,472
23,449 $
23,092
9,466
8,229
40,787
(b)
(a) The impact of principal payments that will commence following the anticipated repayment dates of our Tower Revenue Notes, Series 2015-2 and 2018-2 (collectively, "Tower Revenue
Notes") is not considered. The Tower Revenue Notes, Series 2015-2 and 2018-2 have principal amounts of $700 million and $750 million, with anticipated repayment dates in 2025 and 2028,
respectively. See note 7 to our consolidated financial statements for our definition of and additional information regarding the Tower Revenue Notes.
If the Tower Revenue Notes are not repaid in full by the applicable anticipated repayment dates, the applicable interest rate increases by approximately 5% per annum and monthly principal
payments commence using the Excess Cash Flow (as defined in the indenture governing the applicable Tower Revenue Notes) of the issuers of the Tower Revenue Notes. The Tower Revenue
Notes are presented based on their contractual maturity dates ranging from 2045 to 2048 and include the impact of an assumed 5% increase in interest rate that would occur following the
anticipated repayment dates but exclude the impact of monthly principal payments that would commence using Excess Cash Flow of the issuers of the Tower Revenue Notes. The full year
2023 Excess Cash Flow of the issuers of the Tower Revenue Notes was approximately $993 million. We currently expect to refinance these notes on or prior to the respective anticipated
repayment dates.
Includes the unused commitment fees on our 2016 Credit Facility. Interest payments on the variable rate debt are based on estimated rates currently in effect. See note 7 to our consolidated
financial statements for information regarding potential upward or downward adjustments to the interest rate spread and unused commitment fee percentage on our 2016 Credit Facility if we
achieve specified annual sustainability targets or fail to meet annual sustainability thresholds. Each annual period presented assumes the downward adjustments in the interest rate spread and
unused commitment fee percentage on our 2016 Credit Facility. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" for a discussion of our interest rate risk.
(c)
(d) Amounts relate primarily to lease obligations for the land on which our towers are located and are based on the assumption that payments will be made for certain renewal periods exercisable
at our option that are reasonably certain to be exercised and excludes our contingent payments for operating leases (such as payments based on revenues derived from the communications
infrastructure located on the leased asset) as such arrangements are excluded from our operating lease liability. See note 13 to our consolidated financial statements for further discussion of
our operating lease obligations. See also the table below summarizing remaining terms to expiration.
40
The following chart summarizes our rights to the land interests under our towers, including renewal terms exercisable at our option, as of December 31,
2023. As of December 31, 2023, the leases for land interests under our towers had an average remaining life of approximately 35 years, weighted based on
towers site rental gross margin. See "Item 1A. Risk Factors" for a discussion of retaining the rights to land under our towers.
Inclusive of land owned through fee interests and perpetual easements.
(a)
(b) For the three months ended December 31, 2023, without consideration of the term of the tenant contract.
Debt Covenants
Our 2016 Credit Agreement contains financial maintenance covenants. We are currently in compliance with these financial maintenance covenants and,
based upon our current expectations, we believe we will continue to comply with our financial maintenance covenants. In addition, certain of our debt
agreements contain restrictive covenants that place restrictions on us and may limit our ability to, among other things, incur additional debt and liens,
purchase our securities, make capital expenditures, dispose of assets, undertake transactions with affiliates, make other investments, pay dividends or
distribute excess cash flow. See note 7 to our consolidated financial statements for further discussion of our debt covenants. See also "Item 1A. Risk Factors"
for a discussion of compliance with our debt covenants. The following are ratios applicable to the financial maintenance covenants under the 2016 Credit
Agreement as of December 31, 2023.
Borrower / Issuer
CCI
CCI
Financial Maintenance Covenant
(a)(b)
Total Net Leverage Ratio
Total Senior Secured Leverage Ratio
CCI
Consolidated Interest Coverage Ratio
(c)
Covenant Level
Requirement
≤ 6.50x
≤ 3.50x
N/A
As of December 31, 2023
5.2x
0.3x
N/A
Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the 2016 Credit Agreement.
(a)
(b) As defined in the 2016 Credit Agreement.
(c) Applicable solely to the extent that the senior unsecured debt rating by any two of S&P, Moody's and Fitch is lower than BBB-, Baa3 or BBB-, respectively. If applicable, the consolidated
interest coverage ratio must be greater than or equal to 2.50.
41
Accounting and Reporting Matters
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are those that we believe (1) are most important to the portrayal of our financial condition and results of
operations or (2) require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that
are inherently uncertain. In many cases, the accounting treatment of a particular transaction is specifically prescribed by GAAP. In other cases, management
is required to exercise judgment in the application of accounting principles with respect to particular transactions. Accordingly, actual results could differ
materially from our estimates. The critical accounting policies and estimates for 2023 are not intended to be a comprehensive list of our accounting policies
and estimates. See note 2 to our consolidated financial statements for a summary of our significant accounting policies.
Lease Accounting—Lessee. For our Towers segment, our lessee arrangements primarily consist of ground leases for land under our towers and are for
an initial term generally between five to 15 years. We also enter into ground leases, such as term easements, in which we prepay the entire term. For our
Fiber segment, our lessee arrangements primarily include leases of fiber assets to facilitate our small cells and fiber solutions. The majority of our lease
agreements have certain termination rights that provide for cancellation after a notice period and multiple renewal options exercisable at our option. We
include certain renewal option periods in the lease term when we determine that the options are reasonably certain to be exercised.
For both our Towers and Fiber segments, operating lease expense is recognized on a ratable basis, regardless of whether the payment terms require us
to make payments annually, semi-annually, quarterly, monthly, or for the entire term in advance. Certain of our ground lease and fiber access agreements
contain fixed escalation clauses (such as fixed dollar or fixed percentage increases) or inflation-based escalation clauses (such as those tied to the change in
consumer price index ("CPI")). If the payment terms include fixed escalators, upfront payments, or rent-free periods, the effect of such increases is
recognized on a straight-line basis. When calculating straight-line ground lease and fiber access expenses, we consider all fixed elements of contractual
escalation provisions, even if such escalation provisions contain a variable element in addition to a minimum. We calculate the straight-line expense over the
contract's estimated lease term, including any renewal option periods that we deem reasonably certain to be exercised.
We recognize a right-of-use ("ROU") asset (and, as applicable, a corresponding lease liability) for each of our operating leases. ROU assets represent
our right to use an underlying asset for the estimated lease term, and lease liabilities represent the present value of our future lease payments. In assessing our
leases and determining our lease liability at lease commencement or upon modification, we are not able to readily determine the rate implicit for our lessee
arrangements and thus use our incremental borrowing rate on a collateralized basis to determine the present value of our lease payments. Our ROU assets are
measured as the balance of the lease liability plus any prepaid or accrued lease payments and any unamortized initial direct costs.
We review the carrying value of our ROU assets for impairment, similar to our other long-lived assets, whenever events or changes in circumstances
indicate that the carrying amounts may not be recoverable. We could record impairments in the future if there are changes in (1) long-term market
conditions, (2) expected future operating results or (3) the utility of the assets that negatively impact the fair value of our ROU assets.
Revenue Recognition. 94% of our total revenue for 2023 consisted of site rental revenues, which are recognized on a ratable basis over the fixed, non-
cancelable term of the relevant tenant contract, generally between five to 15 years for site rental revenues derived from wireless tenants and generally
between one to 20 years for site rental revenues derived from fiber solutions tenants, regardless of whether the payments from the tenant are received in
equal monthly amounts during the life of a tenant contract. Certain of our tenant contracts contain (1) fixed escalation clauses (such as fixed-dollar or fixed-
percentage increases) or inflation-based escalation clauses (such as those tied to the change in CPI), (2) multiple renewal periods exercisable at the tenant's
option and (3) only limited termination rights at the applicable tenant's option through the current term. If the payment terms call for fixed escalators, upfront
payments, or rent-free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the tenant contract. When calculating
our straight-line rental revenues, we consider all fixed elements of tenant contractual escalation provisions, even if such escalation provisions contain a
variable element (such as an escalator tied to an inflation-based index) in addition to a minimum. To the extent we acquire below-market tenant leases for
contractual interests with tenants on the acquired communications infrastructure (for example with respect to small cells and fiber), we record the fair value
as deferred credits and amortize such deferred credits to site rental revenues over their estimated lease term. Since we recognize revenue on a straight-line
basis, a portion of the site rental revenues in a given period represents cash collected or contractually collectible in other periods. Our assets related to
straight-line site rental revenues are recorded within "Current portion of deferred site rental receivables" and "Deferred site rental receivables" on the
consolidated balance sheet. Amounts billed or received prior to being earned are deferred and reflected in "Deferred revenues"
42
and "Other long-term liabilities" on the consolidated balance sheet. Amounts to which we have an unconditional right to payment, which are related to both
satisfied or partially satisfied performance obligations, are recorded within "Receivables, net" on the consolidated balance sheet.
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, which represented 6% of our total revenues for 2023. For the periods presented, services and other revenues
consists predominately 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"). 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. Our services generally have a duration of one year or less. Upon contract
commencement, we assess our services to tenants and identify performance obligations for each promise to provide a distinct service.
We may have multiple performance obligations for site development services, which primarily include: structural analysis, zoning, permitting and
construction drawings. For each of the above performance obligations, services revenues are recognized at completion of the applicable performance
obligation, which represents the point at which we believe we have transferred goods or services to the tenant. The revenue recognized is based on an
allocation of the transaction price among the performance obligations in a respective contract based on estimated standalone selling price.
The transaction price for tower installation services consists of amounts for (1) permanent improvements to our towers that represent a lease
component and (2) the performance of the service. Amounts under our tower installation services agreements that represent a lease component are
recognized as site rental revenues on a ratable basis over the length of the associated estimated lease term. For the performance of the tower installation
service, we have one performance obligation, which is satisfied at the time of the applicable installation or augmentation and recognized as services and
other revenues.
Since performance obligations are typically satisfied prior to receiving payment from tenants, the unconditional right to payment is recorded within
"Receivables, net" on our consolidated balance sheet.
Accounting for Acquisitions—General. The majority of our towers have been acquired directly or indirectly from the three largest wireless carriers (or
their predecessors) through transactions consummated since 1999 while most of our fiber assets were acquired through transactions dating back to 2012,
with the largest transactions occurring in 2017. We evaluate each of our acquisitions to determine if it should be accounted for as a business combination or
as an acquisition of assets. For our business combinations, we allocate the purchase price to the assets acquired and liabilities assumed based on their
estimated fair value at the date of acquisition. Any purchase price in excess of the net fair value of the assets acquired and liabilities assumed is allocated to
goodwill. See "Item 7. MD&A—Accounting and Reporting Matters—Accounting for Acquisitions—Valuation" below.
The determination of the final purchase price allocation could extend over several quarters resulting in the use of preliminary estimates that are subject
to adjustment until finalized. Such changes could have a significant impact on our consolidated financial statements.
Accounting for Acquisitions—Leases. With 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. The evaluation of such agreements for finance or operating lease treatment previously included consideration of
each of the lease classification criteria under ASC 840-10-25, namely (1) the transfer of ownership provisions, (2) the existence of bargain purchase options,
(3) the length of the remaining lease term, and (4) the present value of the minimum lease payments. With respect to the AT&T and T-Mobile leased and
subleased towers (including those which T-Mobile assumed in its merger with Sprint), we determined that the tower leases were finance leases and the
underlying land leases were operating leases based upon the lease term criterion, after considering the fragmentation criteria applicable under ASC 840-10-
25 to leases involving both land and buildings (i.e., towers). We determined that the fragmentation criteria was met, and the tower leases could be accounted
for as finance leases apart from the land leases, which are accounted for as operating leases, since (1) the fair value of the land in the aforementioned
business combinations was greater than 25% of the total fair value of the leased property at inception and (2) the tower lease expirations occur beyond 75%
of the estimated economic life of the tower assets.
Accounting for Acquisitions—Valuation. As of December 31, 2023, our largest asset was property and equipment (which primarily consists of
communications infrastructure) followed by goodwill, operating lease ROU assets and intangible assets. Our identifiable intangible assets predominately
relate to the site rental contracts and tenant relationships intangible assets.
43
The fair value of the vast majority of our assets and liabilities is determined by using either:
(1)
(2)
discounted cash flow valuation methods (for estimating identifiable intangibles such as site rental contracts and tenant relationships or operating
lease right-of-use assets and lease liabilities acquired); or
estimates of replacement costs (for tangible fixed assets such as communications infrastructure).
The purchase price allocation requires subjective estimates that, if incorrectly estimated, could be material to our consolidated financial statements,
including the amount of depreciation, amortization and accretion expense. The most important estimates for measurement of tangible fixed assets are (1) the
cost to replace the asset with a new asset and (2) the economic useful life after giving effect to age, quality, and condition. The most important estimates for
measurement of intangible assets are (1) discount rates and (2) timing and amount of cash flows including estimates regarding tenant renewals and
cancellations. The most important estimates for measurement of operating lease ROU assets and lease liabilities acquired are (1) present value of our future
lease payments, including whether renewals or extensions should be measured, and (2) favorability or unfavorability to the current market terms. With
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.
We record the fair value of obligations to perform certain asset retirement activities, including requirements, pursuant to our ground leases, leased
facility and certain pole attachment agreements, to remove communications infrastructure or remediate the space upon which certain of our communications
infrastructure resides. In determining the fair value of these asset retirement obligations we must make several subjective and highly judgmental estimates
such as those related to: (1) timing of cash flows, (2) future costs, (3) discount rates and (4) the probability of enforcement to remove the towers or small
cells or remediate the land. We do not record an obligation for asset retirement activities related to our fiber, as a settlement date is indeterminable and
therefore a reasonable estimation of fair value cannot be made.
Accounting for Long-Lived Assets—Useful Lives. We are required to make subjective assessments as to the useful lives of our tangible and intangible
assets for purposes of determining depreciation, amortization and accretion expense that, if incorrectly estimated, could be material to our consolidated
financial statements. Depreciation expense for our property and equipment is computed using the straight-line method over the estimated useful lives of our
various classes of tangible assets. A substantial portion of our property and equipment represents the cost of our communications infrastructure, the majority
of which is depreciated with an estimated useful life equal to the shorter of 20 years or the term of the underlying ground lease (where applicable and
including optional renewals).
The useful lives of our intangible assets are estimated based on the period over which the intangible asset is expected to benefit us and gives
consideration to the expected useful life of other assets to which the useful life may relate. We review the expected useful lives of our intangible assets on an
ongoing basis and adjust if necessary. Amortization expense for intangible assets is computed using the straight-line method over the estimated useful life of
each of the intangible assets. The useful lives of site rental contracts and tenant relationships intangible assets are limited by the maximum depreciable life of
the communications infrastructure (20 years), as a result of the interdependency of the communications infrastructure and the site rental contracts and tenant
relationships. In contrast, the site rental contracts and tenant relationships are estimated to provide economic benefits for several decades because of the low
rate of tenant cancellations and high rate of tenant retention experienced to date. Thus, while site rental contracts and tenant relationships intangible assets
are valued based upon the fair value of the site rental contracts and tenant relationships which includes assumptions regarding both (1) tenants' exercise of
optional renewals contained in the acquired leases and (2) renewals of the acquired leases past the contractual term including exercisable options, site rental
contracts and tenant relationships intangible assets are amortized over a period not to exceed 20 years as a result of the useful life being limited by the
depreciable life of the communications infrastructure.
Accounting for Long-Lived Assets—Impairment Evaluation. We review the carrying values of property and equipment, intangible assets, or other long-
lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
For purposes of our Towers segment, we utilize the following dual grouping policy for purposes of determining the unit of account for testing
impairment of site rental contracts and tenant relationships intangible assets:
(1) we pool site rental contracts and tenant relationships intangible assets and property and equipment into portfolio groups; and
(2) we separately pool the site rental contracts and tenant relationships by significant tenant or by tenant grouping for individually insignificant
tenants, as appropriate.
44
We first pool site rental contracts and tenant relationships intangible assets and property and equipment into portfolio groups for purposes of
determining the unit of account for impairment testing, because we view communications infrastructure as portfolios and communications infrastructure in a
given portfolio and its related tenant contracts are not largely independent of the other communications infrastructure in the portfolio. We re-evaluate the
appropriateness of the pooled groups at least annually. This use of grouping is based in part on (1) our limitations regarding disposal of communications
infrastructure, (2) the interdependencies of communications infrastructure portfolios, and (3) the manner in which communications infrastructure is traded in
the marketplace. The vast majority of our site rental contracts and tenant relationships intangible assets and property and equipment are pooled into the U.S.
owned communications infrastructure group. Secondly, and separately, we pool the site rental contracts and tenant relationships by significant tenant or by
tenant grouping for individually insignificant tenants, as appropriate, for purposes of determining the unit of account for impairment testing because we
associate the value ascribed to site rental contracts and tenant relationships intangible assets to the underlying contracts and related tenant relationships
acquired.
For purposes of our Fiber segment, we consider major U.S. markets where we have made significant investments to be the most appropriate level for
purposes of grouping our long-lived assets for potential impairment evaluation.
Our determination that an adverse event or change in circumstance has occurred that indicates that the carrying amounts may not be recoverable will
generally involve (1) a deterioration in an asset's financial performance compared to historical results, (2) a shortfall in an asset's financial performance
compared to forecasted results, or (3) changes affecting the utility and estimated future demands for the asset. When considering the utility of our assets, we
consider events that would meaningfully impact (1) our communications infrastructure or (2) our tenant relationships. For example, consideration would be
given to events that impact (1) the structural integrity and longevity of our communications infrastructure or (2) our ability to derive benefit from our
existing tenant relationships, including events such as tenant's bankruptcy or insolvency or loss of a significant tenant. During 2023, there were no events or
circumstances that caused us to review the carrying value of our intangible assets or property and equipment due in part to our assets performing consistently
with or better than our expectations.
If the sum of the associated estimated future cash flows (undiscounted) from an asset group is less than its carrying amount, an impairment loss may be
recognized. If the carrying value were to exceed the undiscounted cash flows, measurement of an impairment loss would be based on the fair value of the
asset, which is based on an estimate of discounted future cash flows. The most important estimates for such calculations of undiscounted cash flows are
(1) the expected additions of new tenants and equipment on our communications infrastructure and (2) estimates regarding tenant cancellations and renewals
of tenant contracts. We could record impairments in the future if changes in long-term market conditions, expected future operating results or the utility of
the assets results in changes for our impairment test calculations which negatively impact the fair value of our property and equipment and intangible assets,
or if we changed our unit of account in the future.
Approximately 2% of our total towers currently have no tenants. We continue to pay operating expenses on these towers in anticipation of obtaining
tenants on these towers in the future, primarily because of the demographics and continuing increase in demand for data in the areas around these individual
towers. We estimate, based on current visibility, potential tenants on a majority of these towers. To the extent we do not believe there are long-term prospects
of obtaining tenants on an individual asset and all other possible avenues for recovering the carrying value have been exhausted, including sale of the asset,
we appropriately reduce the carrying value of such assets to fair value.
Accounting for Goodwill—Impairment Evaluation. We test goodwill for impairment on an annual basis, regardless of whether adverse events or
changes in circumstances have occurred. The annual test begins with goodwill and all intangible assets being allocated to applicable reporting units. We then
perform a qualitative assessment to determine whether it is "more likely than not" that the fair value of the reporting unit is less than its carrying amount. If
we conclude that it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount, we would be required to perform a
quantitative goodwill impairment test. The quantitative goodwill impairment test compares the estimated fair value of the reporting unit and the carrying
value of the reporting unit. If the carrying amount of a reporting unit is greater than its fair value, an impairment loss shall be recognized in an amount equal
to such excess, limited to the total amount of goodwill allocated to the reporting unit. Our reporting units are the same as our operating segments (Towers
and Fiber). See note 14 to our consolidated financial statements. We performed our most recent annual goodwill impairment test as of October 1, 2023,
which resulted in no impairments.
Deferred Income Taxes. We operate as a REIT for U.S. federal income tax purposes. Our REIT taxable income is generally not subject to federal and
state income taxes as a result of the deduction for dividends paid and any usage of our remaining NOLs. Accordingly, the only provision or benefit for
federal income taxes for the year ended December 31, 2023 relates to TRSs. Furthermore, as a result of the deduction for dividends paid, some or all of our
NOLs related to our REIT may expire without utilization. See "Item 1. Business—REIT Status" for a discussion of the impact of our REIT status.
45
Our TRSs will continue to be subject, as applicable, to federal and state income taxes and foreign taxes in the jurisdictions in which such assets and
operations are located. Our ability to utilize our NOLs is dependent, in part, upon us having sufficient future earnings to utilize our NOLs before they expire.
If market conditions change materially and we determine that we will be unable to generate sufficient taxable income in the future to utilize our NOLs, we
would be required to record an additional valuation allowance, which would reduce our earnings. Such adjustments could cause a material effect on our
results of operations for the period of the adjustment. The change in our valuation allowance has no effect on our cash flows. For a further discussion of our
benefit (provision) for income taxes, see "Item 7. MD&A—Results of Operations" and note 9 to our consolidated financial statements.
Accounting Pronouncements
Recently Adopted Accounting Pronouncements. See note 2 to our consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted. See note 2 to our consolidated financial statements.
Non-GAAP and Segment Financial Measures
In addition to the non-GAAP measures used herein and as discussed in note 14 to our consolidated financial statements, we also provide (1) segment
site rental gross margin, (2) segment services and other gross margin, and (3) segment operating profit (loss), which are key measures used by management
to evaluate the performance of our operating segments. These segment measures are provided pursuant to GAAP requirements related to segment reporting.
We define segment site rental gross margin as segment site rental revenues less segment site rental costs of operations, excluding stock-based
compensation expense, net and amortization of prepaid lease purchase price adjustments recorded in consolidated site rental costs of operations. We define
segment services and other gross margin as segment services and other revenues less segment services and other costs of operations, excluding stock-based
compensation expense, net recorded in consolidated services and other costs of operations. We define segment operating profit (loss) as segment site rental
gross margin plus segment services and other gross margin, and segment other operating (income) expense, less segment selling, general and administrative
expenses. All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately. Additionally,
certain costs are shared across segments and are reflected in our segment measures through allocations that management believes to be reasonable.
We use earnings before interest, taxes, depreciation, amortization and accretion, as adjusted ("Adjusted EBITDA"), which is a non-GAAP financial
measure, as an indicator of consolidated financial performance. Our measure of Adjusted EBITDA may not be comparable to similarly titled measures of
other companies, including companies in the communications infrastructure sector or other REITs, and is not a measure of performance calculated in
accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income (loss), net income (loss), net cash
provided by (used for) operating, investing and financing activities or other income statement or cash flow statement data prepared in accordance with
GAAP and should be considered only as a supplement to net income (loss) computed in accordance with GAAP as a measure of our performance. There are
material limitations to using a measure such as Adjusted EBITDA, including the difficulty associated with comparing results among more than one company,
including our competitors, and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net
income (loss). Management compensates for these limitations by considering the economic effect of the excluded expense items independently as well as in
connection with their analysis of net income (loss).
46
We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs,
depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing
costs, net, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, impairment
of available-for-sale securities, interest income, other (income) expense, (benefit) provision for income taxes, net (income) loss from discontinued
operations, (gain) loss on sale of discontinued operations, cumulative effect of a change in accounting principle, stock-based compensation expense, net and
net (gain) loss from disposal of discontinued operations, net of tax. The reconciliation of Adjusted EBITDA to our net income (loss) is set forth below:
(In millions of dollars)
Net income (loss)
Adjustments to increase (decrease) net income (loss):
Asset write-down charges
Acquisition and integration costs
Depreciation, amortization and accretion
Restructuring charges
Amortization of prepaid lease purchase price adjustments
Interest expense and amortization of deferred financing costs, net
(Gains) losses on retirement of long-term obligations
Interest income
Other (income) expense
(Benefit) provision for income taxes
Stock-based compensation expense, net
Net (gain) loss from disposal of discontinued operations, net of tax
Adjusted EBITDA
(a)
Years Ended December 31,
2023
2022
2021
$
1,502 $
1,675 $
33
1
1,754
85
16
850
—
(15)
6
26
157
—
4,415 $
34
2
1,707
—
16
699
28
(3)
10
16
156
—
4,340 $
$
1,096
21
1
1,644
—
18
657
145
(1)
21
21
131
62
3,816
(a) The above reconciliation excludes the items included in our Adjusted EBITDA definition which are not applicable to the periods shown.
We believe Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance because:
•
•
•
•
it is the primary measure used by our management (1) to evaluate the economic productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the performance of, our operations;
although specific definitions may vary, it is widely used by investors or other interested parties in evaluation of the communications infrastructure
sector and other REITs to measure financial performance without regard to items such as depreciation, amortization and accretion, which can vary
depending upon accounting methods and the book value of assets;
we believe it helps investors and other interested parties meaningfully evaluate and compare the results of our operations (1) from period to
period and (2) to our competitors by removing the impact of our capital structure (primarily interest charges from our outstanding debt) and asset
base (primarily depreciation, amortization and accretion) from our financial results; and
it is similar to the measure of current financial performance generally used in our debt covenant calculations.
Our management uses Adjusted EBITDA:
•
•
•
•
•
•
•
as a performance goal in employee annual incentive compensation;
as a measurement of financial performance because it assists us in comparing our financial performance on a consistent basis as it removes the
impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and
accretion) from our operating results;
in presentations to our board of directors to enable it to have the same measurement of financial performance used by management;
for planning purposes, including preparation of our annual operating budget;
as a valuation measure in strategic analyses in connection with the purchase and sale of assets;
in determining self-imposed limits on our debt levels, including the evaluation of our leverage ratio; and
with respect to compliance with our debt covenants, which require us to maintain certain financial ratios that incorporate concepts such as, or
similar to, Adjusted EBITDA.
47
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our primary exposures to market risks are related to changes in interest rates, which may adversely affect our results of operations and financial
position. We seek to manage exposure to changes in interest rates where economically prudent to do so by utilizing fixed rate debt. As of December 31, 2023
and December 31, 2022 we had no interest rate swaps.
Interest Rate Risk
Our interest rate risk as of December 31, 2023 relates primarily to the impact of interest rate movements on the following:
•
•
•
the potential refinancing of our $22.9 billion in existing debt, compared to $21.7 billion in the prior year;
our $1.8 billion of floating rate debt, compared to $3.7 billion in the prior year, representing approximately 8% and 17% of total debt
respectively; potential future borrowings of incremental debt, including borrowings under our 2016 Credit Facility and issuances under our CP
Program; and
potential future borrowings of incremental debt, including borrowings under our 2016 Credit Facility and issuances under our CP Program.
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. Any prolonged period of elevated interest rates or further increases to interest rates
could increase our costs of borrowing. See also "Item 1a. Risk Factors" for a further discussion of risks stemming from interest rate increases.
Sensitivity Analysis. We manage our exposure to market interest rates on our existing debt by controlling the mix of fixed and floating rate debt. As of
December 31, 2023, we had $1.8 billion of floating rate debt. A hypothetical unfavorable fluctuation in market interest rates on our existing floating rate debt
of 1/4 of a percent point over a 12-month period would increase our interest expense by approximately $5 million.
Potential Future Borrowings of Incremental Debt. We typically do not hedge our exposure to interest rates on potential future borrowings of
incremental debt for a substantial period prior to issuance. See "Item 7. MD&A—Liquidity and Capital Resources" regarding our liquidity strategy.
Potential Refinancing of Existing Debt. Our contractual debt maturities over the next 12 months consist of Commercial Paper Notes that may be
outstanding from time to time, the 3.200% Senior Notes and principal payments on certain outstanding debt. See below for a tabular presentation of our
scheduled contractual debt maturities as of December 31, 2023.
48
Future Principal Payments and Interest Rates
The following table provides information about our market risk related to changes in interest rates. The future principal payments and weighted-
average interest rates are presented as of December 31, 2023. These debt maturities reflect final maturity dates, and do not consider the impact of the
principal payments that will commence following the anticipated repayment dates of certain debt (see footnotes (b) and (d)). The information presented
below regarding the variable rate debt is supplementary to our sensitivity analysis regarding the impact of changes in the interest rates. See note 7 to our
consolidated financial statements for additional information regarding our debt.
Future Principal Payments and Interest Rates by the Debt Instruments' Contractual Year of Maturity
(In millions of dollars)
2024
2025
(b)
Fixed rate debt
Average interest rate
(e)
Variable rate debt
Average interest rate
(e)
(b)(c)(d)
$
$
791
3.3 %
45
5.9 %
$
$
$
$
539
1.6 %
60
4.7 %
2026
2,686
3.0 %
91
4.4 %
$
$
2027
2,282
3.5 %
1,636
4.5 %
$
$
2028
2,628
4.5 %
—
— %
$
$
Thereafter
12,334
3.6 %
—
— %
$
$
Total
21,260
3.6 %
1,832
4.5 %
$
$
Fair Value
(a)
19,369
1,832
(a) The fair value of our debt is based on indicative quotes, non-binding quotes from brokers that require judgment to interpret market information, including implied credit spreads for similar
borrowings on recent trades or bid/ask offers. These fair values are not necessarily indicative of the amount, which could be realized in a current market exchange.
(b) The impact of principal payments that will commence following the anticipated repayment dates is not considered (see footnote (d) below). The Tower Revenue Notes, Series 2015-2 and
Series 2018-2 have principal amounts of $700 million and $750 million, with anticipated repayment dates in 2025 and 2028, respectively.
(c) The average interest rate represents the weighted-average stated coupon rate (see also footnote (d)).
(d) If the Tower Revenue Notes are not repaid in full by the applicable anticipated repayment dates, the applicable interest rate increases by approximately 5% per annum and monthly principal
payments commence using the Excess Cash Flow (as defined in the indenture governing the applicable Tower Revenue Notes) of the issuers of the Tower Revenue Notes. The Tower Revenue
Notes are presented based on their contractual maturity dates ranging from 2045 to 2048 and include the impact of an assumed 5% increase in interest rate that would occur following the
anticipated repayment dates but exclude the impact of monthly principal payments that would commence using Excess Cash Flow of the issuers of the Tower Revenue Notes. The full year
2023 Excess Cash Flow of the issuers of the Tower Revenue Notes was approximately $993 million. We currently expect to refinance these notes on or prior to the respective anticipated
repayment dates.
(e) Predominately consists of our senior unsecured term loan A facility ("2016 Term Loan A") and our 2016 Revolver borrowings, each of which matures in 2027. Additionally, see note 7 to our
consolidated financial statements for information regarding potential upward or downward adjustments to the interest rate spread and unused commitment fee percentage on our 2016 Credit
Facility if we achieve specified annual sustainability targets or fail to meet annual sustainability thresholds. Each annual period presented assumes the downward adjustments in the interest
rate spread and unused commitment fee percentage on our 2016 Credit Facility.
49
Item 8. Financial Statements and Supplementary Data
Crown Castle Inc. and Subsidiaries
Index to Consolidated Financial Statements and Financial Statement Schedules
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheet as of December 31, 2023 and 2022
Consolidated Statement of Operations and Comprehensive Income (Loss) for each of the three years in the period ended December 31, 2023
Consolidated Statement of Cash Flows for each of the three years in the period ended December 31, 2023
Consolidated Statement of Equity for each of the three years in the period ended December 31, 2023
Notes to Consolidated Financial Statements
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021
Schedule III - Schedule of Real Estate and Accumulated Depreciation for the years ended December 31, 2023 and 2022
Page
51
53
54
55
56
57
98
99
50
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Crown Castle Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of Crown Castle Inc. and its subsidiaries (the "Company") as of December 31, 2023 and
2022, and the related consolidated statements of operations and comprehensive income (loss), of equity and of cash flows for each of the three years in the
period ended December 31, 2023, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively
referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31,
2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
51
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - Towers Segment - Site Rental Revenues
As described in Notes 2 and 14 to the consolidated financial statements, the Company recognized $4,313 million in site rental revenues from the Towers
segment for the year ended December 31, 2023. The Company generates site rental revenues from its core business by providing tenants with access to its
shared communications infrastructure via long-term tenant contracts in various forms, including lease, license, sublease and service agreements. Providing
such access over the length of the tenant contract term represents the Company’s sole performance obligation under its tenant contracts. Site rental revenues
from the Company's tenant contracts are recognized on a straight-line, ratable basis over the fixed, non-cancelable term of the relevant tenant contract.
The principal considerations for our determination that performing procedures relating to revenue recognition for the site rental revenues from the Towers
segment is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to revenue recognition for
the site rental revenues from the Towers segment.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to revenue recognition for the site rental revenues from the
Towers segment. These procedures also included, among others (i) testing the completeness and accuracy of management’s identification of the contractual
terms by examining tenant contracts on a test basis and (ii) testing the appropriateness of the amount of revenue recognized based on contractual terms for
the selected tenant contracts.
/s/ PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 23, 2024
We have served as the Company’s auditor since 2011.
52
CROWN CASTLE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In millions of dollars, except par values)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Receivables, net of allowance of $19 and $19, respectively
Prepaid expenses
Current portion of deferred site rental receivables
Other current assets
Total current assets
Deferred site rental receivables
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Site rental contracts and tenant relationships, net
Other intangible assets, net
Other assets, net
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Accrued interest
Deferred revenues
Other accrued liabilities
Current maturities of debt and other obligations
Current portion of operating lease liabilities
Total current liabilities
Debt and other long-term obligations
Operating lease liabilities
Other long-term liabilities
Total liabilities
Commitments and contingencies (see note 12)
CCI stockholders' equity:
Common stock, $0.01 par value; 1,200 shares authorized; shares issued and outstanding: December 31, 2023—434 and
December 31, 2022—433
Additional paid-in capital
Accumulated other comprehensive income (loss)
Dividends/distributions in excess of earnings
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
53
December 31,
2023
2022
105 $
171
481
103
116
56
1,032
2,239
15,666
6,187
10,085
3,122
57
139
38,527 $
252 $
219
605
342
835
332
2,585
22,086
5,561
1,914
32,146
4
18,270
(4)
(11,889)
6,381
38,527 $
156
166
593
102
127
73
1,217
1,954
15,407
6,526
10,085
3,535
61
136
38,921
236
183
736
407
819
350
2,731
20,910
5,881
1,950
31,472
4
18,116
(5)
(10,666)
7,449
38,921
$
$
$
$
CROWN CASTLE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In millions of dollars, except per share amounts)
Net revenues:
Site rental
Services and other
Net revenues
Operating expenses:
(a)
Costs of operations:
Site rental
Services and other
Selling, general and administrative
Asset write-down charges
Acquisition and integration costs
Depreciation, amortization and accretion
Restructuring charges
Total operating expenses
Operating income (loss)
Interest expense and amortization of deferred financing costs, net
Gains (losses) on retirement of long-term obligations
Interest income
Other income (expense)
Income (loss) from continuing operations before income taxes
Benefit (provision) for income taxes
Income (loss) from continuing operations
Discontinued operations (see note 9):
Net gain (loss) from disposal of discontinued operations, net of tax
Income (loss) from discontinued operations, net of tax
Net income (loss)
Other comprehensive income (loss):
Foreign currency translation adjustments
Total other comprehensive income (loss)
Comprehensive income (loss)
Net income (loss), per common share:
Income (loss) from continuing operations, basic
Income (loss) from discontinued operations, basic
Net income (loss)—basic
Income (loss) from continuing operations, diluted
Income (loss) from discontinued operations, diluted
Net income (loss)—diluted
Weighted-average common shares outstanding:
Basic
Diluted
(a) Exclusive of depreciation, amortization and accretion shown separately.
$
$
$
$
$
$
$
Years Ended December 31,
2023
2022
2021
6,532 $
449
6,981
6,289 $
697
6,986
1,664
316
759
33
1
1,754
85
4,612
2,369
(850)
—
15
(6)
1,528
(26)
1,502
—
—
1,502 $
1
1
1,503 $
3.46 $
—
3.46 $
3.46 $
—
3.46 $
434
434
1,602
466
750
34
2
1,707
—
4,561
2,425
(699)
(28)
3
(10)
1,691
(16)
1,675
—
—
1,675 $
(1)
(1)
1,674 $
3.87 $
—
3.87 $
3.86 $
—
3.86 $
433
434
5,719
621
6,340
1,554
439
680
21
1
1,644
—
4,339
2,001
(657)
(145)
1
(21)
1,179
(21)
1,158
(62)
(62)
1,096
—
—
1,096
2.68
(0.14)
2.54
2.67
(0.14)
2.53
432
434
See accompanying notes to consolidated financial statements.
54
CROWN CASTLE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions of dollars)
Cash flows from operating activities:
Income (loss) from continuing operations
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used for)
operating activities:
Years Ended December 31,
2023
2022
2021
$
1,502 $
1,675 $
1,158
Depreciation, amortization and accretion
(Gains) losses on retirement of long-term obligations
Amortization of deferred financing costs and other non-cash interest
Stock-based compensation expense, net
Asset write-down charges
Deferred income tax (benefit) provision
Other non-cash adjustments, net
Changes in assets and liabilities, excluding the effects of acquisitions:
Increase (decrease) in accrued interest
Increase (decrease) in accounts payable
Increase (decrease) in other liabilities
Decrease (increase) in receivables
Decrease (increase) in other assets
Net cash provided by (used for) operating activities
Cash flows from investing activities:
Capital expenditures
Payments for acquisitions, net of cash acquired
Other investing activities, net
Net cash provided by (used for) investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Principal payments on debt and other long-term obligations
Purchases and redemptions of long-term debt
Borrowings under revolving credit facility
Payments under revolving credit facility
Net issuances (repayments) under commercial paper program
Payments for financing costs
Purchases of common stock
Dividends/distributions paid on common stock
Net cash provided by (used for) financing activities
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents -
continuing operations
Discontinued operations (see note 9):
Net cash provided by (used for) operating activities
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents -
discontinued operations
Effect of exchange rate changes on cash
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period
Cash and cash equivalents and restricted cash and cash equivalents at end of period
$
See accompanying notes to consolidated financial statements.
55
1,754
—
29
157
33
8
14
36
(14)
(265)
115
(243)
3,126
(1,424)
(96)
1
(1,519)
3,843
(79)
(750)
3,613
(4,248)
(1,241)
(39)
(30)
(2,723)
(1,654)
(47)
—
—
1
327
281 $
1,707
28
17
156
34
3
5
—
(5)
(281)
(49)
(412)
2,878
(1,310)
(35)
(7)
(1,352)
748
(74)
(1,274)
3,495
(2,855)
976
(14)
(65)
(2,602)
(1,665)
(139)
—
—
—
466
327 $
1,644
145
13
129
21
4
21
(17)
15
(118)
(113)
(113)
2,789
(1,229)
(111)
8
(1,332)
3,985
(1,076)
(2,089)
1,245
(870)
(20)
(42)
(70)
(2,373)
(1,310)
147
(62)
(62)
—
381
466
CROWN CASTLE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
(Amounts in millions)
Balance, December 31, 2020
Stock-based compensation related activity, net of forfeitures
Purchases and retirement of common stock
Common stock dividends/distributions
Net income (loss)
Balance, December 31, 2021
Stock-based compensation related activity, net of forfeitures
Purchases and retirement of common stock
Other comprehensive income (loss)
Common stock dividends/distributions
Net income (loss)
Balance, December 31, 2022
Stock-based compensation related activity, net of forfeitures
Purchases and retirement of common stock
Other comprehensive income (loss)
Common stock dividends/distributions
Net income (loss)
Balance, December 31, 2023
(a)
(a)
Common Stock
Shares
($0.01 Par)
Additional
Paid-In Capital
Accumulated Other
Comprehensive
Income (Loss)
("AOCI")
Dividends/Distributions
in Excess of Earnings
Total
431 $
1
—
—
—
432
1
—
—
—
—
433
1
—
—
—
—
434 $
4 $
—
—
—
—
4
—
—
—
—
—
4
—
—
—
—
—
4 $
17,933 $
148
(70)
—
—
18,011
170
(65)
—
—
—
18,116
184
(30)
—
—
—
18,270 $
(4) $
—
—
—
—
(4)
—
—
(1)
—
—
(5)
—
—
1
—
—
(4) $
(8,472) $
—
—
(2,377)
1,096
(9,753)
—
—
—
(2,588)
1,675
(10,666)
—
—
—
(2,725)
1,502
(11,889) $
9,461
148
(70)
(2,377)
1,096
8,258
170
(65)
(1)
(2,588)
1,675
7,449
184
(30)
1
(2,725)
1,502
6,381
(a)
See the consolidated statement of operations and comprehensive income (loss) for the components of "total other comprehensive income (loss)."
See accompanying notes to consolidated financial statements.
56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share amounts)
1. Basis of Presentation
The consolidated financial statements include the accounts of Crown Castle Inc. and its predecessor, as applicable (together, "CCI"), and their
subsidiaries, collectively referred to herein as the "Company." All significant intercompany balances and transactions have been eliminated in consolidation.
As used herein, the term "including," and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.
Unless the context suggests otherwise, references to "U.S." are to the United States of America and Puerto Rico, collectively.
The Company owns, operates and leases shared communications infrastructure that is geographically dispersed throughout the U.S., including (1)
towers and other structures, such as rooftops (collectively, "towers"), and (2) fiber primarily supporting small cell networks ("small cells") and fiber
solutions. The Company's towers, small cells and fiber assets are collectively referred to herein as "communications infrastructure," and the Company's
customers on its communications infrastructure are referred to herein as "tenants."
The Company's core business is providing access, including space or capacity, to its shared communications infrastructure via long-term contracts in
various forms, including lease, license, sublease and service agreements (collectively, "tenant contracts").
The Company's operating segments consist of (1) Towers and (2) Fiber. See note 14.
Approximately 53% of the Company's towers are leased or subleased or operated and managed under master leases, subleases, and other agreements
with AT&T and T-Mobile (including those which T-Mobile assumed in its merger with Sprint). The Company has the option to purchase these towers at the
end of their respective lease terms. The Company has no obligation to exercise such purchase options. See notes 4 and 13.
As part of the Company's effort to provide comprehensive communications infrastructure solutions, as an ancillary business, the Company also offers
certain services primarily relating to its Towers segment. For the periods presented, such services predominately consisted 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"). 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 Company operates as a REIT for U.S. federal income tax purposes. In addition, the Company has certain taxable REIT subsidiaries ("TRSs"). See
note 9.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents represents (1) the cash held in reserve by the indenture trustees pursuant to the indenture governing certain of the
Company's debt instruments, (2) cash securing performance obligations such as letters of credit and (3) any other cash whose use is limited by contractual
provisions. The restriction of rental cash receipts is a critical feature of certain of the Company's debt instruments due to the applicable indenture trustee's
ability to utilize the restricted cash for the payment of (1) debt service costs, (2) ground rents, (3) real estate or personal property taxes, (4) insurance
premiums related to towers, (5) other assessments by governmental authorities and potential environmental remediation costs or (6) a portion of advance
rents from tenants. The restricted cash in excess of required reserve balances is subsequently released to the Company in accordance with the terms of the
indentures. See note 15 for a reconciliation of cash and cash equivalents and restricted cash and cash equivalents.
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Receivables Allowance
An allowance for credit losses is recorded as an offset to accounts receivable. The Company uses judgment in estimating this allowance and considers
historical collections, current credit status, or contractual provisions. Additions to the allowance for credit losses are charged either to "Site rental costs of
operations" or to "Services and other costs of operations," as appropriate, and deductions from the allowance are recorded when specific accounts receivable
are written off as uncollectible.
Lease Accounting
General. The Company evaluates whether a contract meets the definition of a lease whenever a contract grants a party the right to control the use of an
identified asset for a period of time in exchange for consideration. To the extent the identified asset is able to be shared among multiple parties, the Company
has determined that one party does not have control of the identified asset and the contract is not considered a lease. The Company accounts for contracts
that do not meet the definition of a lease under other relevant accounting guidance (such as ASC 606 for revenue from contracts with customers).
Lessee. For its Tower segment, the Company's lessee arrangements primarily consist of ground leases for land under towers. Ground leases for land are
specific to each site, generally contain an initial term between five to 15 years and are renewable (and cancellable after a notice period) at the Company's
option. The Company also enters into term ground leases, such as term easements, in which it prepays the entire term. For its Fiber segment, the Company's
lessee arrangements primarily include leases of fiber assets to support the Company's small cells and fiber solutions.
The majority of the Company's lease agreements have certain termination rights that provide for cancellation after a notice period and multiple renewal
options exercisable at the Company's option. The Company includes renewal option periods in its calculation of the estimated lease term when it determines
the options are reasonably certain to be exercised. When such renewal options are deemed to be reasonably certain, the estimated lease term determined
under ASC 842 will be greater than the non-cancelable term of the contractual arrangement. Although certain renewal periods are included in the estimated
lease term, the Company would have the ability to terminate or elect to not renew a particular lease if business conditions warrant such a decision.
The Company classifies its lessee arrangements at inception as either operating leases or finance leases. A lease is classified as a finance lease if at least
one of the following criteria is met: (1) the lease transfers ownership of the underlying asset to the lessee, (2) the lease grants the lessee an option to purchase
the underlying asset that the lessee is reasonably certain to exercise, (3) the lease term is for a major part of the remaining economic life of the underlying
asset, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the underlying asset, or (5) the underlying
asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease is classified as an operating
lease if none of the five criteria described above for finance lease classification is met.
Right-of-use ("ROU") assets associated with operating leases are included in "Operating lease right-of-use assets" on the Company's consolidated
balance sheet. Current and long-term portions of lease liabilities related to operating leases are included in "Current portion of operating lease liabilities" and
"Operating lease liabilities" on the Company's consolidated balance sheet, respectively. ROU assets represent the Company's right to use an underlying asset
for the estimated lease term and lease liabilities represent the Company's present value of its future lease payments. In assessing its leases and determining its
lease liability at lease commencement or upon modification, the Company is not able to readily determine the rate implicit for its lessee arrangements, and
thus uses its incremental borrowing rate on a collateralized basis to determine the present value of the lease payments. The Company's ROU assets are
measured as the balance of the lease liability plus any prepaid or accrued lease payments and any unamortized initial direct costs. For both the Towers and
Fiber segments, operating lease expenses are recognized on a ratable basis, regardless of whether the payment terms require the Company to make payments
annually, semi-annually, quarterly, monthly, or for the entire term in advance. Certain of the Company's ground lease and fiber lease agreements contain
fixed escalation clauses (such as fixed dollar or fixed percentage increases) or inflation-based escalation clauses (such as those tied to the change in
consumer price index ("CPI")). If the payment terms include fixed escalators, upfront payments, or rent-free periods, the effect of such increases is
recognized on a straight-line basis. The Company calculates the straight-line expense over the contract's estimated lease term, including any renewal option
periods that the Company deems reasonably certain to be exercised.
Lease agreements may also contain provisions for a contingent payment based on (1) the revenues derived from the communications infrastructure
located on the leased asset, (2) the change in CPI or (3) the usage of the leased asset. The Company's contingent payments are considered variable lease
payments and are (1) not included in the initial measurement of the ROU asset or lease liability due to the uncertainty of the payment amount and (2)
recorded as expense in the period such contingencies are resolved.
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
ROU assets associated with finance leases are included in "Property and equipment, net" on the Company's consolidated balance sheet. Lease liabilities
associated with finance leases are included in "Current maturities of debt and other obligations" and "Debt and other long-term obligations" on the
Company's consolidated balance sheet. For both its Towers and Fiber segments, the Company measures the lease liability for finance leases using the
effective interest method. The initial lease liability is increased to reflect interest on the liability and decreased to reflect payments made during the period.
Interest on the lease liability is determined each period during the lease term as the amount that results in a constant periodic discount rate on the remaining
balance of the liability. The Company depreciates ROU assets for finance leases on a ratable basis over the applicable lease term.
The Company reviews the carrying value of its ROU assets for impairment, similar to its other long-lived assets, whenever events or changes in
circumstances indicate that the carrying amounts may not be recoverable. The Company could record impairments in the future if there are changes in (1)
long-term market conditions, (2) expected future operating results or (3) the utility of the assets that negatively impact the fair value of its ROU assets.
Lessor. The Company's lessor arrangements primarily include tenant contracts for dedicated space (including dedicated fiber) on its shared
communications infrastructure. The Company classifies its leases at inception as operating, direct financing or sales-type leases. A lease is classified as a
sales-type lease if at least one of the following criteria is met: (1) the lease transfers ownership of the underlying asset to the lessee, (2) the lease grants the
lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (3) the lease term is for a major part of the remaining
economic life of the underlying asset, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the
underlying assets or (5) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease
term. Furthermore, when none of the above criteria is met, a lease is classified as a direct financing lease if both of the following criteria are met: (1) the
present value of the of the sum of the lease payments and any residual value guaranteed by the lessee, that is not already reflected in the lease payments,
equals or exceeds the fair value of the underlying asset and (2) it is probable that the lessor will collect the lease payments plus any amount necessary to
satisfy a residual value guarantee. A lease is classified as an operating lease if it does not qualify as a sales-type or direct financing lease. Currently, the
Company classifies all of its lessor arrangements as operating leases.
Site rental revenues from the Company’s lessor arrangements are recognized on a straight-line, ratable basis over the fixed, non-cancelable term of the
relevant tenant contract, regardless of whether the payments from the tenant are received in equal monthly amounts during the life of a tenant contract.
Certain of the Company's tenant contracts contain fixed escalation clauses (such as fixed-dollar or fixed-percentage increases) or inflation-based escalation
clauses (such as those tied to the change in CPI). If the payment terms call for fixed escalators, upfront payments, or rent-free periods, the rental revenue is
recognized on a straight-line basis over the fixed, non-cancelable term of the agreement. When calculating straight-line site rental revenues, the Company
considers all fixed elements of tenant contractual escalation provisions.
Certain of the Company's arrangements with tenants in its Fiber segment contain both lease and non-lease components. In such circumstances, the
Company has determined (1) the timing and pattern of transfer for the lease and non-lease component are the same and (2) the stand-alone lease component
would be classified as an operating lease. As such, the Company has aggregated certain non-lease components with lease components and has determined
that the lease components (generally dedicated fiber) represent the predominant component of the arrangement.
Property and Equipment
Property and equipment is stated at cost, net of accumulated depreciation. Property and equipment includes land owned through fee interests and
perpetual easements, which have no definite life. Depreciation is computed utilizing the straight-line method at rates based upon the estimated useful lives of
the various classes of assets. Depreciation for the majority of communications infrastructure is computed with a useful life equal to the shorter of 20 years or
the term of the underlying ground lease (where applicable and including optional renewal periods). Additions and permanent improvements to the
Company's communications infrastructure are capitalized, while maintenance and repairs are expensed.
Labor and interest costs incurred directly related to the construction of certain property and equipment are capitalized during the construction phase of
projects. For the years ended December 31, 2023, 2022 and 2021, the Company recorded $299 million, $265 million and $238 million in capitalized labor
costs, respectively. The carrying value of property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable.
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Abandonments and write-offs of property and equipment are recorded to "Asset write-down charges" on the Company's consolidated statement of
operations and comprehensive income (loss) and were $40 million, $39 million and $19 million for the years ended December 31, 2023, 2022 and 2021,
respectively.
Asset Retirement Obligations
Pursuant to its ground lease, leased facility and certain pole attachment agreements, the Company records obligations to perform asset retirement
activities, including requirements to remove communications infrastructure or remediate the space on which certain of its communications infrastructure is
located. The Company does not record an obligation for asset retirement activities related to its fiber, as a settlement date is indeterminable and therefore a
reasonable estimation of fair value cannot be made. Asset retirement obligations are included in "Other long-term liabilities" on the Company's consolidated
balance sheet. The liability accretes as a result of the passage of time and the related accretion expense is included in "Depreciation, amortization and
accretion" on the Company's consolidated statement of operations and comprehensive income (loss). The associated asset retirement costs are capitalized as
an additional carrying amount of the related long-lived asset and depreciated over the useful life of such asset.
Goodwill
Goodwill represents the excess of the purchase price for an acquired business over the allocated value of the related net assets. The Company tests
goodwill for impairment on an annual basis, regardless of whether adverse events or changes in circumstances have occurred. The annual test begins with
goodwill and all intangible assets being allocated to applicable reporting units. The Company's reporting units are the same as its operating segments
(Towers and Fiber). The Company then performs a qualitative assessment to determine whether it is "more likely than not" that the fair value of the reporting
unit is less than its carrying amount. If the Company concludes it is "more likely than not" that the fair value of a reporting unit is less than its carrying
amount, it is necessary to perform a quantitative goodwill impairment test. The quantitative goodwill impairment test compares the estimated fair value of
the reporting unit and the carrying value of the reporting unit. If the carrying amount of a reporting unit is greater than its fair value, an impairment loss shall
be recognized in an amount equal to such excess, limited to the total amount of goodwill allocated to the reporting unit. The Company performed its most
recent annual goodwill impairment test as of October 1, 2023, which resulted in no impairments.
Intangible Assets
Intangible assets are included in "Site rental contracts and tenant relationships, net" and "Other intangible assets, net" on the Company's consolidated
balance sheet and predominately consist of the estimated fair value of site rental contracts and tenant relationships or other contractual rights, such as
trademarks, that are recorded in conjunction with acquisitions. Site rental contracts and tenant relationships intangible assets are comprised of (1) the current
term of the existing leases, (2) the high rate of tenant retention, and (3) any associated relationships that are expected to generate value following the
expiration of all renewal periods under existing leases.
The useful lives of intangible assets are estimated based on the period over which the intangible asset is expected to benefit the Company and gives
consideration to the expected useful life of other assets to which the useful life may relate. Amortization expense for intangible assets is computed using the
straight-line method over the estimated useful life of each of the intangible assets. The useful lives of site rental contracts and tenant relationships intangible
assets are limited by the maximum depreciable life of the communications infrastructure (20 years), as a result of the interdependency of the communications
infrastructure and the site rental contracts and tenant relationships. In contrast, the site rental contracts and tenant relationships are estimated to provide
economic benefits for several decades because of the low rate of tenant cancellations and high rate of tenant retention experienced to date. Thus, while site
rental contracts and tenant relationships intangible assets are valued based upon the fair value of the site rental contracts and tenant relationships, which
includes assumptions regarding both (1) tenants' exercise of optional renewals contained in the acquired leases and (2) renewals of the acquired leases past
the contractual term including exercisable options, site rental contracts and tenant relationships intangible assets are amortized over a period not to exceed 20
years.
The carrying value of other intangible assets with finite useful lives will be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. The Company has a dual grouping policy for purposes of determining the unit of
account for testing impairment of site rental contracts and tenant relationships intangible assets. First, the Company pools site rental contracts and tenant
relationships intangible assets with the related communications infrastructure assets into portfolio groups for purposes of determining the unit of account for
impairment testing. Second and separately, the Company pools the site rental contracts and tenant relationships by significant tenant or by tenant grouping
for individually insignificant tenants, as appropriate. If the sum of the associated estimated future
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
cash flows (undiscounted) from an asset is less than its carrying amount, an impairment loss may be recognized. Measurement of an impairment loss would
be based on the fair value of the asset.
Deferred Credits
Deferred credits are included in "Deferred revenues" and "Other long-term liabilities" on the Company's consolidated balance sheet and consist of the
estimated fair value of below-market tenant leases for contractual interests with tenants on acquired communications infrastructure that are amortized to site
rental revenues.
Fair value for these deferred credits represents the difference between (1) the stated contractual payments to be made pursuant to the in-place lease and
(2) management's estimate of fair market lease rates for each corresponding lease. Deferred credits are measured over a period equal to the estimated
remaining economic lease term considering renewal provisions or economics associated with those renewal provisions, to the extent applicable. Deferred
credits are amortized over their respected estimated lease terms at the time of acquisition.
Deferred Financing Costs
Third-party costs incurred to obtain financing, with the exception of costs incurred related to revolving lines of credit, are deferred and are included as
a direct deduction from the carrying amount of the related debt liability in "Debt and other long-term obligations" on the Company's consolidated balance
sheet and are amortized using the effective interest yield methodology to "Interest expense and amortization of deferred financing costs, net" on the
Company's consolidated statement of operations and comprehensive income (loss) over the term of the related debt liability. Third party costs incurred to
obtain financing through a revolving line of credit are deferred and are included in "Other assets, net" on the Company's consolidated balance sheet and are
amortized using the effective interest yield methodology to "Interest expense and amortization of deferred financing costs, net" on the Company's
consolidated statement of operations and comprehensive income (loss) over the term of the 2016 Credit Agreement (as defined in note 7).
Revenue Recognition
The Company generates site rental revenues from its core business by providing tenants with access, including space or capacity, to its shared
communications infrastructure via long-term tenant contracts in various forms, including lease, license, sublease and service agreements. Typically,
providing such access over the length of the tenant contract term represents the Company’s sole performance obligation under its tenant contracts.
Site Rental Revenues. Site rental revenues from the Company's tenant contracts are recognized on a straight-line, ratable basis over the fixed, non-
cancelable term of the relevant tenant contract, which generally ranges between five to 15 years for wireless tenants and between one to 20 years for fiber
solutions tenants (including from organizations with high-bandwidth and multi-location demands), regardless of whether the payments from the tenant are
received in equal monthly amounts during the life of the tenant contract. Certain of the Company's tenant contracts contain (1) fixed escalation clauses (such
as fixed dollar or fixed percentage increases) or inflation-based escalation clauses (such as those tied to the CPI), (2) multiple renewal periods exercisable at
the tenant's option and (3) only limited termination rights at the applicable tenant's option through the current term. If the payment terms call for fixed
escalators, upfront payments, or rent-free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the tenant
contract. When calculating straight-line rental revenues, the Company considers all fixed elements of tenant contractual escalation provisions, even if such
escalation provisions contain a variable element in addition to a minimum. The Company's assets related to straight-line site rental revenues are recorded
within "Current portion of deferred site rental receivables" and "Deferred site rental receivables" on the Company's consolidated balance sheet. Amounts
billed or received prior to being earned are deferred and reflected in "Deferred revenues" and "Other long-term liabilities" on the Company's consolidated
balance sheet. Amounts to which the Company has an unconditional right to payment, which are related to both satisfied or partially satisfied performance
obligations, are recorded within "Receivables, net" on the Company's consolidated balance sheet.
Sprint Cancellation Payments. For the year ended December 31, 2023, site rental revenues include $170 million of payments in the Company's Fiber
segment to satisfy the remaining rental obligations of certain canceled Sprint leases as a result of the T-Mobile US, Inc. and Sprint network consolidation. In
connection with such canceled Sprint leases, the Company also recognized $59 million of accelerated prepaid rent amortization in the Company's Fiber
segment for the year ended December 31, 2023.
Services and Other Revenues. As part of the Company’s effort to provide comprehensive communications infrastructure solutions, as an ancillary
business, the Company offers certain services primarily relating to its Towers segment, predominately
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
consisting of (1) site development services and (2) installation services. 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. Upon contract commencement, the
Company assesses its services to tenants and identifies performance obligations for each promise to provide a distinct service.
The Company may have multiple performance obligations for site development services, which primarily include: structural analysis, zoning,
permitting and construction drawings. For each of these performance obligations, services revenues are recognized at completion of the applicable
performance obligation, which represents the point at which the Company believes it has transferred goods or services to the tenant. The services revenue
recognized is based on an allocation of the transaction price among the performance obligations in a respective tenant contract based on estimated standalone
selling price. The volume and mix of site development services may vary among tenant contracts and may include a combination of some or all of the above
performance obligations. Amounts are billed per contractual milestones, with payments generally due within 45 to 90 days, and generally do not contain
variable-consideration provisions.
The transaction price for the Company's tower installation services consists of amounts for (1) permanent improvements to the Company's towers that
represent a lease component and (2) the performance of the service. Amounts under the Company's tower installation service agreements that represent a
lease component are recognized as site rental revenues on a straight-line basis over the length of the associated estimated lease term. For the performance of
the installation service, the Company has one performance obligation, which is satisfied at the time of the applicable installation or augmentation and
recognized as services and other revenues on the Company's consolidated statement of operations and comprehensive income (loss). Since performance
obligations are typically satisfied prior to receiving payment from tenants, the unconditional right to payment is recorded within "Receivables, net" on the
Company’s consolidated balance sheet. Generally, the services the Company provides to its tenants have a duration of one year or less.
Additional Information on Revenues. As of January 1, 2023 and December 31, 2023, $2.3 billion and $2.1 billion of unrecognized revenues,
respectively, were reported in "Deferred revenues" and "Other long-term liabilities" on the Company's consolidated balance sheet. During the year
ended December 31, 2023, approximately $631 million of the January 1, 2023 unrecognized revenues balance was recognized as revenues. As of January 1,
2022, $2.6 billion of unrecognized revenues were reported in "Deferred revenues" and "Other long-term liabilities" on the Company's consolidated balance
sheet. During the year ended December 31, 2022, approximately $668 million of the January 1, 2022 unrecognized revenues balance was recognized as
revenues.
See note 3 for further discussion regarding the Company’s revenues.
Costs of Operations
Nearly half of the Company's site rental costs of operations expenses consist of Towers ground lease expenses, and the remainder includes fiber access
expenses, repairs and maintenance expenses, employee compensation or related benefit costs, property taxes, or utilities. Generally, the ground leases for
land are specific to each site and are for an initial term of between five to 15 years and are renewable for pre-determined periods. The Company also enters
into ground leases, such as term easements, in which it prepays the entire term in advance. Fiber access expenses primarily consist of leases of fiber assets
and other access agreements to facilitate the Company's communications infrastructure.
Ground lease and fiber access expenses are recognized on a ratable basis, regardless of whether the payment terms require the Company to make
payments annually, semi-annually, quarterly, monthly, or for the entire term in advance. Certain of the Company's ground lease and fiber access agreements
contain fixed escalation clauses (such as fixed dollar or fixed percentage increases) or inflation-based escalation clauses (such as those tied to the change in
CPI). If the payment terms include fixed escalators, upfront payments, or rent-free periods, the effect of such increases is recognized on a straight-line basis.
When calculating straight-line ground lease and fiber access expenses, the Company considers all fixed elements of contractual escalation provisions, even if
such escalation provisions contain a variable element in addition to a minimum. The Company's liability related to straight-line expense is included in
"Operating lease right-of-use assets" on the Company's consolidated balance sheet. The Company's assets related to prepaid agreements is included in
"Prepaid expenses" and "Operating lease right-of-use assets" on the Company's consolidated balance sheet.
Services and other costs of operations predominately consist of third-party service providers such as contractors and professional services firms and, to
a lesser extent, internal labor costs, associated with the Company's site development and installation services. 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 Company's costs
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
incurred prior to the satisfaction of associated performance obligations of $44 million and $43 million as of December 31, 2023 and 2022, respectively, are
included in "Other current assets" on the Company's consolidated balance sheet.
Acquisitions and Integration Costs
Direct or incremental costs related to a potential or completed business combination transaction are expensed as incurred. Such costs are predominately
comprised of severance, retention bonuses payable to employees of an acquired enterprise, temporary employees to assist with the integration of the acquired
operations, fees paid for services (such as consulting, accounting, legal, or engineering reviews), and any other costs directly associated with the transaction.
These business combination costs are included in "Acquisition and integration costs" on the Company's consolidated statement of operations and
comprehensive income (loss). For those transactions accounted for as asset acquisitions, these costs are capitalized as part of the purchase price.
Stock-based Compensation Expense, Net
Restricted Stock Units. The Company records stock-based compensation expense for unvested restricted stock units ("RSUs") for which the requisite
service is expected to be rendered. The cumulative effect of a change in the estimated number of RSUs for which the requisite service is expected to be or
has been rendered is recognized in the period of the change in the estimate. To the extent that the requisite service is rendered, compensation cost for
accounting purposes is not reversed; rather, it is recognized regardless of whether or not the awards vest. A discussion of the Company's valuation techniques
and related assumptions and estimates used to measure the Company's stock-based compensation expense is as follows:
Valuation. The fair value of RSUs without market conditions is determined based on the number of shares relating to such RSUs and the quoted price
of the Company's common stock at the date of grant. The Company estimates the fair value of RSUs with market conditions granted using a Monte Carlo
simulation. The Company's determination of the fair value of RSUs with market conditions on the date of grant is affected by its common stock price as well
as assumptions regarding a number of highly complex or subjective variables. The determination of fair value using a Monte Carlo simulation requires the
input of subjective assumptions, and other reasonable assumptions could provide differing results.
Amortization Method. The Company amortizes the fair value of all RSUs on a straight-line basis for each separately vesting tranche of the award
(graded vesting schedule) over the requisite service periods.
Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common
stock.
Expected Dividend Rate. The expected dividend rate at the date of grant is based on the then-current dividend yield.
Risk-Free Rate. The Company bases the risk-free rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining
term equal to the expected life of the award.
Forfeitures. The Company uses historical award forfeiture data and management's judgment about the future employee turnover rates to estimate the
number of shares for which the requisite service period will not be rendered.
Interest Expense and Amortization of Deferred Financing Costs, Net
The components of interest expense and amortization of deferred financing costs, net are as follows:
Interest expense on debt obligations
Amortization of deferred financing costs and adjustments on long-term debt
Capitalized interest
Total
Years Ended December 31,
2023
2022
2021
$
$
836 $
29
(15)
850 $
685 $
26
(12)
699 $
644
25
(12)
657
The Company amortizes deferred financing costs, discounts and premiums over the estimated term of the related borrowing using the effective interest
yield method. Deferred financing costs and discounts are generally presented as a direct reduction to the related debt obligation on the Company's
consolidated balance sheet.
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Income Taxes
The Company operates as a REIT for U.S. federal income tax purposes. As a REIT, the Company is generally entitled to a deduction for dividends that
it pays and therefore is not subject to U.S. federal corporate income tax on its net taxable income that is currently distributed to its stockholders. The
Company may be subject to certain federal, state, local and foreign taxes on its income, including (1) taxes on any undistributed income and (2) taxes related
to the TRSs. In addition, the Company could, under certain circumstances, be required to pay an excise or penalty tax, which could be significant in amount,
in order to utilize one or more relief provisions under the Internal Revenue Code of 1986, as amended ("Code"), to maintain qualification for taxation as a
REIT.
Additionally, the Company has included in TRSs certain other assets and operations. Those TRS assets and operations will continue to be subject, as
applicable, to federal and state corporate income taxes or to foreign taxes in the jurisdictions in which such assets and operations are located. The Company's
foreign assets and operations (including its tower operations in Puerto Rico) are subject to foreign income taxes in the jurisdictions in which such assets and
operations are located, regardless of whether they are included in a TRS or not. For its REIT conversion and certain subsequent acquisitions into the REIT,
the Company will be subject to a federal corporate level tax rate (currently 21%) on any gain recognized from the sale of assets occurring within a specified
period (generally 5 years) after the transfer date up to the amount of the built in gain that existed on the transfer date, which is based upon the fair market
value of those assets in excess of the Company's tax basis on the transfer date. This gain can be offset by any remaining federal net operating loss
carryforwards ("NOLs").
For the Company's TRSs, the Company accounts for income taxes using an asset and liability approach, which requires the recognition of deferred
income tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax
returns. Deferred income tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets
and liabilities using enacted tax rates. A valuation allowance is provided on deferred tax assets if it is determined that it is "more likely than not" that the
asset will not be realized. The Company records a valuation allowance against deferred tax assets when it is "more likely than not" that some portion or all of
the deferred tax asset will not be realized. The Company reviews the recoverability of deferred tax assets each quarter and based upon projections of future
taxable income, reversing deferred tax liabilities or other known events that are expected to affect future taxable income, records a valuation allowance for
assets that do not meet the "more likely than not" realization threshold. Valuation allowances may be reversed if related deferred tax assets are deemed
realizable based upon changes in facts and circumstances that impact the recoverability of the asset.
The Company recognizes a tax position if it is "more likely than not" that it will be sustained upon examination. The tax position is measured at the
largest amount that is greater than 50 percent likely of being realized upon ultimate settlement. The Company reports penalties and tax-related interest
expense as a component of the benefit (provision) for income taxes. As of December 31, 2023 and 2022, the Company has not recorded any material
penalties related to its income tax positions. See note 9.
Per Share Information
Basic net income (loss), per common share, excludes dilution and is computed by dividing net income (loss) by the weighted-average number of
common shares outstanding during the period. For the years ended December 31, 2023, 2022 and 2021, diluted net income (loss), per common share, is
computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period, plus any potential dilutive
common share equivalents, including shares issuable upon the vesting of RSUs as determined under the treasury stock method.
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
A reconciliation of the numerators and denominators of the basic and diluted per share computations is shown in the table below.
Income (loss) from continuing operations attributable to CCI common stockholders for basic and
diluted computations
Income (loss) from discontinued operations, net of tax
Net income (loss) attributable to CCI common stockholders
Weighted-average number of common shares outstanding (in millions):
Basic weighted-average number of common stock outstanding
Effect of assumed dilution from potential issuance of common shares relating to RSUs
Diluted weighted-average number of common shares outstanding
Net income (loss) attributable to CCI common stockholders, per common share:
Income (loss) from continuing operations, basic
Income (loss) from discontinued operations, basic
Net income (loss) attributable to CCI common stockholders—basic
Income (loss) from continuing operations, diluted
Income (loss) from discontinued operations, diluted
Net income (loss)—diluted
Dividends/distributions declared per share of common stock
Fair Values
$
$
$
$
$
$
$
Years Ended December 31,
2023
2022
2021
1,502 $
1,675 $
—
1,502 $
—
1,675 $
434
—
434
3.46 $
—
3.46 $
3.46 $
—
3.46 $
6.26 $
433
1
434
3.87 $
—
3.87 $
3.86 $
—
3.86 $
5.98 $
1,158
(62)
1,096
432
2
434
2.68
(0.14)
2.54
2.67
(0.14)
2.53
5.46
The Company's assets and liabilities recorded at fair value are categorized based upon a fair value hierarchy that ranks the quality and reliability of the
information used to determine fair value. The three levels of the fair value hierarchy are (1) Level 1 — quoted prices (unadjusted) in active and accessible
markets, (2) Level 2 — observable prices that are based on inputs not quoted in active markets but corroborated by market data, and (3) Level 3 —
unobservable inputs and are not corroborated by market data. The Company evaluates fair value hierarchy level classifications quarterly, and transfers
between levels are effective at the end of the quarterly period.
The fair values of cash and cash equivalents and restricted cash and cash equivalents approximate the carrying values. The Company determines the
fair value of its debt securities based on indicative, non-binding quotes from brokers. Quotes from brokers require judgment and are based on the brokers'
interpretation of market information, including implied credit spreads for similar borrowings on recent trades or bid/ask prices or quotes from active markets
if available. There were no changes since December 31, 2022 in the Company's valuation techniques used to measure fair values. See note 8 for a further
discussion of fair values.
Recently Adopted Accounting Pronouncements
No accounting pronouncements adopted during the year ended December 31, 2023 had a material impact on the Company's consolidated financial
statements.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued new guidance that is designed to improve reportable segment disclosure requirements, primarily through
enhanced disclosure of significant segment expenses. The new guidance also expands interim segment disclosure requirements and requires disclosure of the
position and title of the Company's chief operating decision-maker. The guidance will be effective for the Company's fiscal year ending December 31, 2024
and for interim periods starting in the first quarter of fiscal year 2025 with early adoption permitted. The guidance is required to be applied retrospectively to
each prior reporting period presented. The Company is currently evaluating the effect of the guidance, including the impact on its consolidated financial
statements and related disclosures.
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
In December 2023, the FASB issued new guidance that enhances the transparency and decision usefulness of income tax disclosures, primarily through
changes to the rate reconciliation and income taxes paid disclosures. The guidance will be effective for the Company's fiscal year ending December 31,
2025, and can be applied prospectively or retrospectively, with early adoption permitted. The Company is currently evaluating the effect of the guidance,
including the impact on its consolidated financial statements and related disclosures.
3.
Revenues
The following table is a summary of the contracted amounts owed to the Company by tenants pursuant to tenant contracts in effect as of December 31,
2023. As of December 31, 2023, the weighted-average remaining term of tenant contracts was approximately six years, exclusive of renewals exercisable at
the tenant's option.
Contracted amounts
(a)
$
5,020 $
4,668 $
4,523 $
4,440 $
4,225 $
15,778 $
38,654
2024
2025
2026
2027
2028
Thereafter
Total
(a) Based on the nature of the contract, tenant contracts are accounted for pursuant to relevant lease accounting (ASC 842) or revenue accounting (ASC 606) guidance. Excludes amounts related
to services, as those contracts generally have a duration of one year or less.
Years Ending December 31,
See notes 2 and 13 for further discussion regarding the Company's lessor arrangements and note 14 for further information regarding the Company's
operating segments.
4.
Property and Equipment
The major classes of property and equipment are summarized in the table below.
(a)
Land
Buildings
Communications infrastructure assets
Information technology assets and other
Construction in process
Total gross property and equipment
Less: accumulated depreciation
Total property and equipment, net
Estimated Useful Lives
2023
2022
As of December 31,
—
40 years
1-20 years
2-7 years
—
$
$
2,442 $
209
25,479
681
1,134
29,945
(14,279)
15,666 $
2,339
221
24,353
652
913
28,478
(13,071
15,407
(a)
Includes land owned through fee interests and perpetual easements.
Depreciation expense for the year ended December 31, 2023 was $1.3 billion, and for each of the years ended December 31, 2022 and December 31,
2021, depreciation expense was $1.2 billion.
22% of the Company's 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 Company has 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.
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
31% of the Company's 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). Approximately half of such towers have an initial term of 32 years (through May 2037),
and the Company has the option to purchase in 2037 all (but not less than all) of such leased and subleased towers from T-Mobile for approximately $2.3
billion. The remainder of such towers have a weighted-average initial term of approximately 28 years, weighted based on towers site rental gross margin, and
the Company has the option to purchase such towers from T-Mobile at the end of the respective terms for aggregate option payments of approximately $2.0
billion, which payments, if such option is exercised, would be due between 2035 and 2049. In addition, another 1% of the Company's towers under master
leases, subleases, or other agreements with T-Mobile are subject to a lease and sublease or other related arrangements with AT&T. The Company has 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 as
of December 31, 2023, which payments, if such option is exercised, would be due prior to 2032 (less than $15 million would be due before 2029).
See note 13 for further discussion of finance leases recorded as "Property and equipment, net" on the Company's consolidated balance sheet.
5. Goodwill and Intangible Assets
Goodwill
The carrying value of goodwill was $10.1 billion for each of the years ended December 31, 2023 and 2022. For the year ended December 31, 2022,
additions due to acquisitions were $7 million. There were no additions during the year ended December 31, 2023.
Intangible Assets
The following is a summary of the Company's intangible assets.
As of December 31, 2023
As of December 31, 2022
Gross Carrying
Value
Accumulated
Amortization
Net Book Value
Gross Carrying
Value
Accumulated
Amortization
Net Book Value
Site rental contracts and tenant relationships
Other intangible assets
Total
$
$
7,880 $
113
7,993 $
(4,758) $
(56)
(4,814) $
3,122 $
57
3,179 $
7,850 $
143
7,993 $
(4,315) $
(82)
(4,397) $
3,535
61
3,596
Amortization expense related to intangible assets is classified as "Depreciation, amortization and accretion" on the Company's consolidated statement
of operations and comprehensive income (loss) and was $447 million, $446 million, and $444 million for the years ended December 31, 2023, 2022 and
2021, respectively.
The estimated annual amortization expense related to intangible assets for the years ending December 31, 2024 to 2028 is as follows:
Estimated annual amortization
$
398 $
376 $
372 $
288 $
284
2024
2025
2026
2027
2028
Years Ending December 31,
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
6. Other Liabilities
Other long-term liabilities
The following is a summary of the components of "Other long-term liabilities" as presented on the Company's consolidated balance sheet. See also
note 2.
Deferred rental revenues
Deferred credits, net
Asset retirement obligation
Deferred income tax liabilities
Other long-term liabilities
Total
As of December 31,
2023
2022
$
$
1,310 $
216
355
26
7
1,914 $
1,337
261
327
18
7
1,950
Pursuant to its ground lease, leased facility, and certain pole attachment agreements, the Company has the obligation to perform certain asset retirement
activities, including requirements upon contract termination to remove communications infrastructure or remediate the space on which its communications
infrastructure is located. The changes in the carrying amount of the Company's asset retirement obligations were as follows:
Balance, January 1
Additions
Accretion expense
Revision in estimates
Settlements
Balance, December 31
Years Ending December 31,
2023
2022
327 $
6
24
—
(2)
355 $
269
4
20
37
(3)
327
(a)
$
$
(a)
Primarily relates to (1) increases in estimated undiscounted cash flows and (2) adjustments to estimated settlement dates for the year ended December 31, 2022, for certain asset retirement
obligations and is offset against the associated asset retirement costs recorded within "Property and equipment, net" on the Company's consolidated balance sheet.
As of December 31, 2023, the estimated undiscounted future cash outlay for asset retirement obligations was approximately $1.2 billion. See note 2.
For the years ended December 31, 2023, 2022 and 2021, the Company recognized $45 million, $49 million and $54 million, respectively, in "Site
rental revenues" related to the amortization of below-market tenant leases. The estimated annual amounts related to below-market tenant leases expected to
be amortized into site rental revenues for the years ending December 31, 2024 to 2028 are as follows:
Below-market tenant leases
$
41 $
33 $
25 $
20 $
18
2024
2025
2026
2027
2028
Years Ending December 31,
Other accrued liabilities
Other accrued liabilities included accrued payroll and other accrued compensation of $140 million and $210 million as of December 31, 2023 and
2022, respectively.
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
7.
Debt and Other Obligations
The table below sets forth the Company's debt and other obligations as of December 31, 2023.
Secured Notes, Series 2009-1, Class A-2
Tower Revenue Notes, Series 2015-2
Tower Revenue Notes, Series 2018-2
Finance leases and other obligations
Total secured debt
2016 Revolver
2016 Term Loan A
Commercial Paper Notes
3.150% Senior Notes
3.200% Senior Notes
1.350% Senior Notes
4.450% Senior Notes
3.700% Senior Notes
1.050% Senior Notes
4.000% Senior Notes
2.900% Senior Notes
3.650% Senior Notes
5.000% Senior Notes
3.800% Senior Notes
4.800% Senior Notes
4.300% Senior Notes
5.600% Senior Notes
3.100% Senior Notes
3.300% Senior Notes
2.250% Senior Notes
2.100% Senior Notes
2.500% Senior Notes
5.100% Senior Notes
5.800% Senior Notes
2.900% Senior Notes
4.750% Senior Notes
5.200% Senior Notes
4.000% Senior Notes
4.150% Senior Notes
3.250% Senior Notes
Total unsecured debt
(c)
(f)
(h)
(h)
(h)
(h)
(h)
Original
Issue Date
July 2009
May 2015
July 2018
Various
Jan. 2016
Jan. 2016
N/A
Jan. 2018
Aug. 2017
June 2020
Feb. 2016
May 2016
Feb. 2021
Feb. 2017
Mar. 2022
Aug. 2017
Jan. 2023
Jan. 2018
Apr. 2023
Feb. 2019
Dec. 2023
Aug. 2019
Apr. 2020
June 2020
Feb. 2021
June 2021
Apr. 2023
Dec. 2023
Feb. 2021
May 2017
Feb. 2019
Aug. 2019
Apr. 2020
June 2020
(b)
(b)
(c)
(f)
(h)
(h)
(h)
(h)
(h)
Contractual
Maturity Date
Aug. 2029
May 2045
July 2048
Various
July 2027
July 2027
N/A
July 2023
Sept. 2024
July 2025
Feb. 2026
June 2026
July 2026
Mar. 2027
Mar. 2027
Sept. 2027
Jan. 2028
Feb. 2028
Sept. 2028
Feb. 2029
June 2029
Nov. 2029
July 2030
Jan. 2031
Apr. 2031
July 2031
May 2033
Mar. 2034
Apr. 2041
May 2047
Feb. 2049
Nov. 2049
July 2050
Jan. 2051
Total debt and other obligations
Less: current maturities of debt and other obligations
Non-current portion of debt and other long-term obligations
$
(a)
(c)
(e)
(e)
Outstanding Balance as of December 31,
Stated Interest Rate
as of
December 31,
2023
2022
2023
(d)
(g)
40
698
746
270
1,754
670
1,162
—
—
749
498
898
748
994
498
744
997
991
995
594
595
740
546
741
1,091
990
743
743
740
1,234
344
396
346
490
890
21,167
22,921
835
22,086
$
47
698
745
246
1,736
1,305
1,192
1,241
749
748
497
896
747
992
497
742
996
—
993
—
594
—
545
739
1,090
989
742
—
—
1,233
344
396
346
490
890
19,993
21,729
819
20,910
9.0 %
3.7 %
4.2 %
Various
6.5 %
6.5 %
N/A
N/A
3.2 %
1.4 %
4.5 %
3.7 %
1.1 %
4.0 %
2.9 %
3.7 %
5.0 %
3.8 %
4.8 %
4.3 %
5.6 %
3.1 %
3.3 %
2.3 %
2.1 %
2.5 %
5.1 %
5.8 %
2.9 %
4.8 %
5.2 %
4.0 %
4.2 %
3.3 %
(a) Represents the weighted-average stated interest rate, as applicable.
(b)
If the Tower Revenue Notes, Series 2015-2 and Series 2018-2 (collectively, "Tower Revenue Notes") are not paid in full on or prior to an applicable anticipated repayment date, then Excess
Cash Flow (as defined in the indenture governing the terms of such notes) of the issuers of such notes will be used to repay principal of the applicable series and class of the Tower Revenue
Notes, and additional interest (of an additional approximately 5% per annum) will accrue on the respective Tower Revenue Notes. As of December 31, 2023, the Tower Revenue Notes, Series
2015-2 and 2018-2 have principal amounts of $700 million and $750 million, with anticipated repayment dates in 2025 and 2028, respectively.
(c) The Company's finance leases and other obligations relate to land, fiber, vehicles, and other assets and bear interest rates up to 10% and mature in periods ranging from less than one year to
approximately 25 years.
(d) As of December 31, 2023, the undrawn availability under the senior unsecured revolving credit facility ("2016 Revolver") was $6.3 billion.
(e) Both the 2016 Revolver and senior unsecured term loan A facility ("2016 Term Loan A" and, collectively, "2016 Credit Facility") bear interest, at the Company's option, at either (1) Term
SOFR plus (i) a credit spread adjustment of 0.10% per annum and (ii) a credit spread ranging from 0.875% to 1.750% per annum or (2) an alternate base rate plus a credit spread ranging from
0.000% to 0.750% per annum, in each case, with the applicable credit spread based on the Company's senior unsecured debt rating. The Company pays a commitment fee ranging from
0.080% to 0.300%, based on the Company's senior unsecured debt rating, per annum on the undrawn available amount under the 2016 Revolver. See further discussion below regarding
potential adjustments to such percentages.
(f) The maturities of the Commercial Paper Notes, as defined below, when outstanding, may vary but may not exceed 397 days from the date of issuance.
(g)
In July 2023, the Company repaid in full the 3.150% Senior Notes on the contractual maturity date.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
(h) See "Bonds—Senior Notes" below for further discussion of senior unsecured notes issued during 2023.
The credit agreement governing the Company's 2016 Credit Facility ("2016 Credit Agreement") contains financial maintenance covenants. The
Company is currently in compliance with these financial maintenance covenants. In addition, certain of the Company's debt agreements also contain
restrictive covenants that place restrictions on CCI or its subsidiaries and may limit the Company's ability to, among other things, incur additional debt and
liens, purchase the Company's securities, make capital expenditures, dispose of assets, undertake transactions with affiliates, make other investments, pay
dividends or distribute excess cash flow.
Bank Debt
2016 Credit Facility. In January 2016, the Company established the 2016 Credit Facility, which was originally comprised of (1) a $2.5 billion 2016
Revolver maturing in January 2021, (2) a $2.0 billion 2016 Term Loan A maturing in January 2021 and (3) a $1.0 billion senior unsecured 364-day
revolving credit facility ("364-Day Facility") maturing in January 2017. The Company used the net proceeds from the 2016 Credit Facility (1) to repay the
then outstanding senior credit facility originally established in January 2012 and (2) for general corporate purposes. In February 2016, the Company used a
portion of the net proceeds from the February 2016 Senior Notes (as defined below) offering to repay in full all outstanding borrowings under the then
outstanding 364-Day Facility.
In February 2017, the Company entered into an amendment to the 2016 Credit Facility to (1) incur additional term loans in an aggregate principal
amount of $500 million and (2) extend the maturity of both the 2016 Term Loan A and the 2016 Revolver to January 2022.
In August 2017, the Company entered into an amendment to the 2016 Credit Facility to (1) increase commitments on the 2016 Revolver to $3.5 billion,
and (2) extend the maturity of the 2016 Credit Facility to August 2022.
In June 2018, the Company entered into an amendment to the 2016 Credit Facility to (1) increase commitments on the 2016 Revolver to $4.25 billion,
and (2) extend the maturity of the 2016 Credit Facility to June 2023.
In June 2019, the Company entered into an amendment to the 2016 Credit Facility to (1) increase commitments on the 2016 Revolver to $5.0 billion,
and (2) extend the maturity of the 2016 Credit Facility to June 2024.
In June 2021, the Company entered into an amendment to the 2016 Credit Agreement that provided for, among other things, (1) the extension of the
maturity date of the 2016 Credit Facility to June 2026, (2) reductions to the interest rate spread ("Spread") and unused commitment fee ("Commitment Fee")
percentage upon meeting specified annual sustainability targets ("Targets") and increases to the Spread and Commitment Fee percentage upon the failure to
meet specified annual sustainability thresholds ("Thresholds") and (3) the inclusion of "hardwired" LIBOR transition provisions consistent with those
published by the Alternative Reference Rate Committee. The Spread and Commitment Fee are subject to an upward adjustment of up to 0.05% and 0.01%,
respectively, if the Company fails to achieve the Thresholds. The Spread and Commitment Fee are subject to a downward adjustment of up to 0.05% and
0.01%, respectively, if the Company achieves the Targets. In January 2022, January 2023 and January 2024, the Company submitted the required
documentation and received confirmation from its administrative agent that all Targets were met as of the respective prior fiscal year ends, and, as such, the
Spread and Commitment Fee percentage reductions were applied in January 2022 and maintained for both 2023 and 2024.
In July 2022, the Company entered into an amendment to the 2016 Credit Agreement that provided for, among other things, (1) the extension of the
maturity date of the 2016 Credit Facility to July 2027, (2) an increase to the commitments on the 2016 Revolver to $7.0 billion, (3) certain modifications to
the specified sustainability metric and (4) the replacement of the LIBOR pricing benchmark with a Term SOFR pricing benchmark.
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Commercial Paper Program. In April 2019, the Company established a commercial paper program ("CP Program"), pursuant to which the Company
may issue short-term, unsecured commercial paper notes ("Commercial Paper Notes"). Commercial Paper Notes may be issued, repaid and re-issued from
time to time, with an aggregate principal amount of Commercial Paper Notes outstanding under the CP Program at any time originally not to exceed $1.0
billion. The net proceeds of the Commercial Paper Notes are expected to be used for general corporate purposes. The maturities of the Commercial Paper
Notes, when outstanding, may vary but may not exceed 397 days from the date of issue. The Commercial Paper Notes are issued under customary terms in
the commercial paper market and are issued at a discount from par or, alternatively, can be issued at par and bear varying interest rates on a fixed or floating
basis. At any point in time, the Company intends to maintain available commitments under its 2016 Revolver in an amount at least equal to the amount of
Commercial Paper Notes outstanding. While any outstanding commercial paper issuances generally have short-term maturities, the Company classifies the
outstanding issuances as long-term based on its ability and intent to refinance the outstanding issuances on a long-term basis.
In March 2022, the Company increased the size of the 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. As of December 31, 2023, the Company had no net issuances under the CP Program.
Securitized Debt
The Tower Revenue Notes and the Secured Notes, Series 2009-1, Class A-2 ("2009 Securitized Notes") (collectively, "Securitized Debt") are
obligations of special purpose entities and their direct and indirect subsidiaries (each an "issuer"), all of which are wholly-owned, indirect subsidiaries of
CCI. The Tower Revenue Notes and 2009 Securitized Notes are governed by separate indentures. The 2015 Tower Revenue Notes and 2018 Tower Revenue
Notes (each as defined below) are governed by one indenture and consist of multiple series of notes, each with its own anticipated repayment date.
In May 2015, the Company issued $1.0 billion aggregate principal amount of Senior Secured Tower Revenue Notes ("2015 Tower Revenue Notes"),
which were issued pursuant to the existing indenture and have similar terms and security as the Company's then outstanding Tower Revenue Notes. The
2015 Tower Revenue Notes originally consisted of (1) $300 million aggregate principal amount of 3.222% senior secured tower revenue notes with an
anticipated repayment date of May 2022 and a final maturity date of May 2042 ("Series 2015-1 Notes") and (2) $700 million aggregate principal amount of
3.663% senior secured tower revenue notes with an anticipated repayment date of May 2025 and a final maturity date of May 2045 ("Series 2015-2 Notes").
The Company primarily used the net proceeds of the 2015 Tower Revenue Notes, together with proceeds received from the Company's sale of the formerly
77.6% owned subsidiary that operated towers in Australia ("CCAL"), to (1) repay $250 million aggregate principal amount of previously outstanding August
2010 Tower Revenue Notes, (2) repay all of the then outstanding WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 ("WCP Securitized
Notes"), (3) repay portions of outstanding borrowings under the 2012 Credit Facility and (4) pay related fees and expenses. In June 2021, the Company used
a portion of the net proceeds from the June 2021 Senior Notes (as defined below) offering to repay in whole the Series 2015-1 Notes.
In July 2018, the Company issued $1.0 billion aggregate principal amount of Senior Secured Tower Revenue Notes ("2018 Tower Revenue Notes"),
which were issued pursuant to the existing indenture and have similar terms and security as the Company's existing Tower Revenue Notes. The 2018 Tower
Revenue Notes originally consisted of (1) $250 million aggregate principal amount of 3.720% senior secured tower revenue notes with an anticipated
repayment date of July 2023 and a final maturity of July 2043 ("Series 2018-1 Notes") and (2) $750 million aggregate principal amount of 4.241% senior
secured tower revenue notes with an anticipated repayment date of July 2028 and a final maturity of July 2048 ("Series 2018-2 Notes"). The Company used
the net proceeds of the 2018 Tower Revenue Notes, together with cash on hand, to repay all of the previously outstanding Tower Revenue Notes, Series
2010-6 and to pay related fees and expenses. In addition to the 2018 Tower Revenue Notes described above, in connection with Exchange Act risk retention
requirements ("Risk Retention Rules"), an indirect subsidiary of the Company issued and a majority-owned affiliate of the Company purchased
approximately $53 million of the Senior Secured Tower Revenue Notes, Series 2018-1, Class R-2028 to retain an eligible horizontal residual interest (as
defined in the Risk Retention Rules) in an amount equal to at least 5% of the fair value of the 2018 Tower Revenue Notes. In March 2022, the Company
prepaid the Series 2018-1 Notes.
The Securitized Debt is paid solely from the cash flows generated by the operation of the towers held directly and indirectly by the issuers of the
respective Securitized Debt. The Securitized Debt is secured by, among other things, (1) a security interest in substantially all of the applicable issuers'
assignable personal property, (2) a pledge of the equity interests in each applicable issuer and (3) a security interest in the applicable issuers' leases with
tenants to lease tower space (space licenses). The governing instruments of two indirect subsidiaries ("Crown Atlantic" and "Crown GT") of the issuers of
the
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Tower Revenue Notes generally prevent them from issuing debt and granting liens on their assets without the approval of a subsidiary of Verizon
Communications. Consequently, while distributions paid by Crown Atlantic and Crown GT will service the Tower Revenue Notes, the Tower Revenue Notes
are not obligations of, nor are the Tower Revenue Notes secured by the cash flows or any other assets of, Crown Atlantic and Crown GT. As of
December 31, 2023, the Securitized Debt was collateralized with personal property and equipment with an aggregate net book value of approximately $731
million, exclusive of Crown Atlantic and Crown GT personal property and equipment.
The excess cash flows from the issuers of the Securitized Debt, after the payment of principal, interest, reserves, expenses and management fees, are
distributed to the Company in accordance with the terms of the indentures. If the Debt Service Coverage Ratio ("DSCR") (as defined in the applicable
governing loan agreement) as of the end of any calendar quarter falls to a certain level, then all excess cash flow of the issuers of the applicable debt
instrument will be deposited into a reserve account instead of being released to the Company. The funds in the reserve account will not be released to the
Company until the DSCR exceeds a certain level for two consecutive calendar quarters. If the DSCR falls below a certain level as of the end of any calendar
quarter, then all cash on deposit in the reserve account along with future excess cash flows of the issuers will be applied to prepay the debt with applicable
prepayment consideration.
The Company may repay the Securitized Debt in whole or in part at any time, provided in each case that such prepayment is accompanied by any
applicable prepayment consideration. The Securitized Debt has covenants and restrictions customary for rated securitizations, including provisions
prohibiting the issuers from incurring additional indebtedness or further encumbering their assets.
Bonds—Senior Notes
In December 2023, the Company issued $750 million aggregate principal amount of 5.600% senior unsecured notes due June 2029 and $750 million
aggregate principal amount of 5.800% senior unsecured notes due March 2034 (collectively, "December 2023 Senior Notes"). The Company used the net
proceeds from the December 2023 Senior Notes offering to repay a portion of the outstanding indebtedness under its commercial paper program and pay
related fees and expenses.
In April 2023, the Company issued $600 million aggregate principal amount of 4.800% senior unsecured notes due September 2028 and $750 million
aggregate principal amount of 5.100% senior unsecured notes due May 2033 (collectively, "April 2023 Senior Notes"). The Company used the net proceeds
from the April 2023 Senior Notes offering to repay a portion of the outstanding indebtedness under the 2016 Revolver and pay related fees and expenses.
In January 2023, the Company issued $1.0 billion aggregate principal amount of 5.000% senior unsecured notes due January 2028 ("January 2023
Senior Notes"). The Company used the net proceeds from the January 2023 Senior Notes offering to repay a portion of the outstanding indebtedness under
the 2016 Revolver and pay related fees and expenses.
In March 2022, the Company issued $750 million aggregate principal amount of 2.900% senior unsecured notes due March 2027 ("March 2022 Senior
Notes"). The Company used the net proceeds from the March 2022 Senior Notes offering to repay a portion of the outstanding indebtedness under the CP
Program and pay related fees and expenses.
In June 2021, the Company issued $750 million aggregate principal amount of 2.500% senior unsecured notes due July 2031 ("June 2021 Senior
Notes"). In June 2021, the Company used a portion of the net proceeds from the June 2021 Senior Notes offering (1) to repay outstanding Commercial Paper
Notes and (2) for general corporate purposes. In July 2021, the Company used a portion of the net proceeds to repay in full the previously outstanding Series
2015-1 Notes.
In February 2021, the Company issued $3.25 billion aggregate principal amount of senior unsecured notes ("February 2021 Senior Notes"), which
consisted of (1) $1.0 billion aggregate principal amount of 1.050% senior unsecured notes due July 2026, (2) $1.0 billion aggregate principal amount of
2.100% senior unsecured notes due April 2031 and (3) $1.25 billion aggregate principal amount of 2.900% senior unsecured notes due April 2041. The
Company used the net proceeds from the February 2021 Senior Notes offering 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.
In April 2020, the Company issued $1.25 billion aggregate principal amount of senior unsecured notes ("April 2020 Senior Notes"), which consisted of
(1) $750 million aggregate principal amount of 3.300% senior unsecured notes due July 2030 and (2) $500 million aggregate principal amount of 4.150%
senior unsecured notes due July 2050. The Company used the net proceeds of the April 2020 Senior Notes offering to repay outstanding borrowings under
the 2016 Revolver.
In June 2020, the Company issued $2.5 billion aggregate principal amount of senior unsecured notes ("June 2020 Senior Notes"), which consisted of
(1) $500 million aggregate principal amount of 1.350% senior unsecured notes due July 2025, (2)
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
$1.1 billion aggregate principal amount of 2.250% senior unsecured notes due January 2031 and (3) $900 million aggregate principal amount of 3.250%
senior unsecured notes due January 2051. The Company used the net proceeds of the June 2020 Senior Notes offering, together with available cash, to
redeem all of the previously outstanding 3.400% Senior Notes, 2.250% Senior Notes and 4.875% Senior Notes.
In February 2019, the Company issued $1.0 billion aggregate principal amount of senior unsecured notes ("February 2019 Senior Notes"), which
consisted of (1) $600 million aggregate principal amount of 4.300% senior unsecured notes due February 2029 and (2) $400 million aggregate principal
amount of 5.200% senior unsecured notes due February 2049. The Company used the net proceeds of the February 2019 Senior Notes offering to repay a
portion of the outstanding borrowings under the 2016 Revolver.
In August 2019, the Company issued $900 million aggregate principal amount of senior unsecured notes ("August 2019 Senior Notes"), which
consisted of (1) $550 million aggregate principal amount of 3.100% senior unsecured notes due November 2029 and (2) $350 million aggregate principal
amount of 4.000% senior unsecured notes due November 2049. The Company used the net proceeds of the August 2019 Senior Notes offering to repay
outstanding borrowings under the 2016 Revolver and the CP Program.
In January 2018, the Company issued $750 million aggregate principal amount of 3.150% senior unsecured notes due July 2023 and $1.0
billion aggregate principal amount of 3.800% senior unsecured notes due February 2028 (collectively, "January 2018 Senior Notes"). The Company used the
net proceeds of the January 2018 Senior Notes offering to repay (1) in full the previously outstanding January 2010 Tower Revenue Notes and (2) a portion
of the outstanding borrowings under the 2016 Revolver. In July 2023, the Company repaid the January 2018 Senior Notes on the contractual maturity date.
In February 2017, the Company issued $500 million aggregate principal amount of 4.000% senior unsecured notes due March 2027 ("4.000% Senior
Notes"). The Company used the net proceeds from the 4.000% Senior Notes offering to repay a portion of the outstanding borrowings under the 2016
Revolver.
In May 2017, the Company issued $350 million aggregate principal amount of 4.750% senior unsecured notes due May 2047 ("4.750% Senior Notes").
The Company used the net proceeds from the 4.750% Senior Notes offering to partially fund the 2017 acquisition of Wilcon Holdings LLC and to repay a
portion of the outstanding borrowings under the 2016 Revolver.
In August 2017, the Company issued $1.75 billion aggregate principal amount of senior unsecured notes ("August 2017 Senior Notes"), which
consisted of (1) $750 million aggregate principal amount of 3.200% senior unsecured notes due September 2024 ("3.200% Senior Notes") and (2) $1.0
billion aggregate principal amount of 3.650% senior unsecured notes due September 2027 ("3.650% Senior Notes"). The Company used the net proceeds
from the August 2017 Senior Notes offering to partially fund the 2017 acquisition of LTS Group Holdings LLC and pay related fees and expenses.
In February 2016, the Company issued $1.5 billion aggregate principal amount of senior unsecured notes ("February 2016 Senior Notes"), which
consisted of (1) the previously outstanding $600 million aggregate principal amount of 3.400% senior notes due February 2021 ("3.400% Senior Notes") and
(2) $900 million aggregate principal amount of 4.450% senior unsecured notes due February 2026 ("4.450% Senior Notes"). The Company used the net
proceeds from the February 2016 Senior Notes offering, together with cash on hand, to (1) repay in full all outstanding borrowings under the then
outstanding 364-Day Facility and (2) repay $500 million of outstanding borrowings under the 2016 Revolver.
In May 2016, the Company issued $1.0 billion aggregate principal amount of senior unsecured notes ("May 2016 Senior Notes"), which consisted of
(1) the previously outstanding $250 million aggregate principal amount of additional 3.400% Senior Notes pursuant to the same indenture as the 3.400%
Senior Notes issued in the February 2016 Senior Notes offering and (2) $750 million aggregate principal amount of 3.700% senior unsecured notes due June
2026 ("3.700% Senior Notes"). The Company used the net proceeds from the May 2016 Senior Notes offering to repay in full the previously outstanding
Tower Revenue Notes, Series 2010-2 and Series 2010-5, each issued by certain of its subsidiaries, and to repay a portion of the outstanding borrowings under
the 2016 Revolver.
Each of the 3.700% Senior Notes, 4.450% Senior Notes, August 2017 Senior Notes, 4.750% Senior Notes, 4.000% Senior Notes, January 2018 Senior
Notes, August 2019 Senior Notes, February 2019 Senior Notes, June 2020 Senior Notes, April 2020 Senior Notes, June 2021 Senior Notes, February 2021
Senior Notes, March 2022 Senior Notes, January 2023 Senior Notes, April 2023 Senior Notes, and December 2023 Senior Notes (collectively, "Senior
Notes") are senior unsecured obligations of the Company and rank equally with all of the Company's existing and future senior unsecured indebtedness,
including obligations under the 2016 Credit Facility, and senior to all of the Company's future subordinated indebtedness. The
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Senior Notes are structurally subordinated to all existing and future liabilities and obligations of the Company's subsidiaries. The Company's subsidiaries are
not guarantors of the Senior Notes.
The Company may redeem any of the Senior Notes in whole or in part at any time at a price equal to 100% of the principal amount to be redeemed,
plus a make whole premium, if applicable, and accrued and unpaid interest, if any, to the date of redemption.
Previously Outstanding Indebtedness
Bonds—Senior Notes. In July 2023, the Company repaid in full the previously outstanding 3.150% senior notes due 2023.
Scheduled Principal Payments and Final Maturities
The following are the scheduled principal payments and final maturities of the total debt and other long-term obligations of the Company outstanding
as of December 31, 2023, which do not consider the principal payments that will commence following the anticipated repayment dates on the Tower
Revenue Notes. If the Tower Revenue Notes are not paid in full on or prior to their respective anticipated repayment dates, as applicable, then the Excess
Cash Flow (as defined in the indenture) of the issuers of such notes will be used to repay principal of the applicable series and class of the Tower Revenue
Notes and additional interest (of an additional approximately 5% per annum) will accrue on the Tower Revenue Notes.
2024
2025
2026
2027
2028
Thereafter
Years Ending December 31,
Total Cash
Obligations
Unamortized
Adjustments, Net
Total Debt and
Other Obligations
Outstanding
Scheduled principal payments
and
final maturities
$
835
$
599 $
2,777 $
3,918 $
2,628 $
12,335 $
23,092 $
(171) $
22,921
Purchases and Redemptions of Long-Term Debt
The following is a summary of the purchases, payments and redemptions of long-term debt during the years ended December 31, 2023, 2022 and 2021.
Principal Amount
Cash Paid
(a)
Gains (losses)
(b)
Year Ended December 31, 2023
750
750 $
750
750 $
Year Ended December 31, 2022
250 $
1,000
—
1,250 $
252 $
1,022
—
1,274 $
Year Ended December 31, 2021
1,650 $
—
300
1,950 $
1,789 $
—
300
2,089 $
$
$
$
$
$
—
—
(3)
(23)
(2)
(28)
(143)
(1)
(1)
(145)
3.150% Secured Notes
Total
Tower Revenue Notes, Series 2018-1
3.849% Secured Notes
2016 Revolver
Total
5.250% Senior Notes
2016 Term Loan A
Tower Revenue Notes, Series 2015-1
Total
(a) Exclusive of accrued interest.
(b)
Inclusive of the write-off of the respective deferred financing costs.
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
8.
Fair Value Disclosures
The following table shows the estimated fair values of the Company's financial instruments, along with the carrying amounts of the related assets
(liabilities). See also note 2.
Level in Fair Value
Hierarchy
December 31, 2023
December 31, 2022
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Assets:
Cash and cash equivalents
Restricted cash and cash equivalents, current and
non-current
Liabilities:
Total debt and other obligations
1
1
2
9.
Income Taxes
$
105 $
176
105 $
176
156 $
171
156
171
22,921
21,201
21,729
19,554
Income (loss) from continuing operations before income taxes by geographic area is summarized in the table below.
Domestic
(a)
Foreign
Total
(a)
Inclusive of income (loss) from continuing operations before income taxes from Puerto Rico.
The benefit (provision) for income taxes consists of the following:
Current:
Federal
Foreign
State
Total current
Deferred:
Foreign
Total deferred
Total tax benefit (provision)
Years Ended December 31,
2023
2022
2021
1,499 $
29
1,528 $
1,661 $
30
1,691 $
1,144
35
1,179
Years Ended December 31,
2023
2022
2021
(7) $
(9)
(2)
(18)
(8)
(8)
(26) $
(6) $
(9)
2
(13)
(3)
(3)
(16) $
(5)
(8)
(4)
(17)
(4)
(4)
(21)
$
$
$
$
A reconciliation between the benefit (provision) for income taxes and the amount computed by applying the federal statutory income tax rate to the
income (loss) from continuing operations before income taxes is as follows:
Benefit (provision) for income taxes at statutory rate
Tax adjustment related to REIT operations
Valuation allowances
State tax (provision) benefit, net of federal
Foreign tax
Total
Years Ended December 31,
2023
2022
2021
$
$
(321) $
313
—
(2)
(16)
(26) $
(355) $
349
(1)
2
(11)
(16) $
(248)
243
—
(4)
(12)
(21)
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
The components of the net deferred income tax assets and liabilities are as follows:
Deferred income tax liabilities:
Property and equipment
Deferred site rental receivables
Site rental contracts and tenant relationships, net
Total deferred income tax liabilities
Deferred income tax assets:
(a)
Other intangible assets, net
Net operating loss carryforwards
Straight-line rent expense liability
Accrued liabilities
Other
Valuation allowances
Total deferred income tax assets, net
Net deferred income tax assets (liabilities)
December 31,
2023
2022
$
$
10 $
9
29
48
29
5
5
5
5
(2)
47
(1) $
8
9
29
46
30
12
4
6
4
(2)
54
8
(a) Balance results from the Company's foreign NOLs. Due to the Company's REIT status, no federal or state NOLs result in the Company recording a deferred income tax asset. See further
discussion surrounding the Company's NOL balances below.
The Company operates as a REIT for U.S. federal income tax purposes.
The components of the net deferred income tax assets (liabilities) are as follows:
Classification
Federal
State
Foreign
Total
December 31, 2023
Valuation
Allowance
Gross
Net
Gross
December 31, 2022
Valuation
Allowance
Net
$
$
26 $
1
(26)
1 $
(1) $
—
(1)
(2) $
25 $
1
(27)
(1) $
26 $
1
(17)
10 $
(1) $
—
(1)
(2) $
25
1
(18)
8
During 2023, the Company maintained previously recorded valuation allowances totaling $2 million related to certain deferred tax assets as
management believes that it is not "more likely than not" that the Company will realize the assets.
At December 31, 2023, the Company had U.S. federal and state NOLs of approximately $1.5 billion and $0.5 billion, respectively, which are available
to offset future taxable income. These amounts include approximately $237 million of losses related to stock-based compensation. The Company also has
foreign NOLs of $13 million. If not utilized, the Company's U.S. federal NOLs expire starting in 2025 and ending in 2036, the state NOLs started expiring in
2022 and end in 2036, and the foreign NOLs started expiring in 2023 and end in 2036. The utilization of the NOLs is subject to certain limitations. The
Company's U.S. federal and state income tax returns generally remain open to examination by taxing authorities until three years after the applicable NOLs
have been used or expired.
As of December 31, 2023, there were no unrecognized tax benefits that would impact the effective tax rate, if recognized.
From time to time, the Company is subject to examinations by various tax authorities in jurisdictions in which the Company has business operations.
At this time, the Company is not subject to an Internal Revenue Service examination.
On April 26, 2021, the Company entered into an agreement in principle with the Australian Taxation Office ("ATO") to pay A$83 million to settle the
previously disclosed outstanding audit of the Australian tax consequences of the Company's 2015 sale of Crown Castle Australia Holdings Pty Ltd
("CCAL"), formerly a 77.6% owned Australian subsidiary of the Company ("ATO Settlement"). The sale of CCAL generated approximately $1.2 billion in
net proceeds to the Company, and resulted in a gain from the disposal of discontinued operations of $979 million for the year ended December 31, 2015.
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
On June 16, 2021, the Company entered into a definitive settlement agreement with the ATO evidencing the ATO Settlement. On July 1, 2021, the
Company paid approximately $62 million (A$83 million), based on the exchange rate in effect on that date, pursuant to the ATO Settlement. The Company
recognized the ATO Settlement as a charge within discontinued operations in its consolidated statement of operations and comprehensive income (loss) for
the year ended December 31, 2021, as this amount represented a reduction to the gain from the disposal of discontinued operations previously reported
during the year ended December 31, 2015. The Company reflected the payment pursuant to the ATO Settlement within discontinued operations in the
Company's consolidated statement of cash flows for the year ended December 31, 2021.
The Company regularly assesses the likelihood of additional assessments in each of the tax jurisdictions in which it has business operations. The
Company has no uncertain tax positions as of December 31, 2023. Additionally, the Company does not believe any such additional assessments arising from
examinations or audits will have a material effect on the Company's financial statements.
As of December 31, 2023, the Company's deferred tax assets are included in "Other assets, net" and the Company's deferred tax liabilities are included
in "Other long-term liabilities" on the Company's consolidated balance sheet.
10. Equity
2021 "At-the-Market" Stock Offering Program
In March 2021, the Company established an "at-the-market" stock offering program through which it may issue and sell shares of its common stock
having an aggregate gross sales price of up to $750 million ("2021 ATM Program"). Sales under the 2021 ATM Program may be made by means of ordinary
brokers' transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or, subject to the
Company's specific instructions, at negotiated prices. The Company has not sold any shares of common stock under the 2021 ATM Program.
Declaration and Payment of Dividends
During the year ended December 31, 2023, the following dividends/distributions were declared or paid:
Equity Type
Common Stock
Common Stock
Common Stock
Common Stock
Declaration Date
February 7, 2023
May 1, 2023
July 21, 2023
October 17, 2023
Record Date
Payment Date
March 15, 2023
June 15, 2023
September 15, 2023
December 15, 2023
March 31, 2023
June 30, 2023
September 29, 2023
December 29, 2023
$
$
$
$
Dividends Per
Share
Aggregate
Payment
(a)
Amount
1.565 $
1.565 $
1.565 $
1.565 $
681
681
681
681
(a)
Inclusive of dividends accrued for holders of unvested RSUs, which will be paid when and if the RSUs vest.
See also note 17 for a discussion of the Company's common stock dividend declared in February 2024.
Tax Treatment of Dividends
The following table summarizes, for income tax purposes, the nature of dividends paid during 2023 on the Company's common stock.
Equity Type
Common Stock
Common Stock
Common Stock
Common Stock
Payment Date
March 31, 2023
June 30, 2023
September 29, 2023
December 29, 2023
Cash Distribution
(per share)
Ordinary Taxable
Dividend (per share)
Qualified Taxable
Dividend (per share)
(a)
Section 199A
Dividend (per share)
Non-Taxable
Distribution (per
share)
$
$
$
$
1.565000 $
1.565000 $
1.565000 $
1.565000 $
1.032151 $
1.032151 $
1.032151 $
1.032151 $
0.015327 $
0.015327 $
0.015327 $
0.015327 $
1.016824 $
1.016824 $
1.016824 $
1.016824 $
0.532849
0.532849
0.532849
0.532849
(a) Qualified taxable dividend and section 199A dividend amounts are included in ordinary taxable dividend amounts.
Purchases of the Company's Common Stock
During the years ended December 31, 2023, 2022 and 2021, the Company purchased 0.2 million, 0.4 million and 0.4 million shares of its common
stock, respectively, utilizing $30 million, $65 million and $70 million in cash, respectively. The
77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
shares of common stock purchased relate to shares withheld in connection with the payment of withholding taxes upon vesting of RSUs.
11. Stock-based Compensation
Stock Compensation Plans
Pursuant to stockholder approved plans, the Company has granted stock-based awards to certain employees, consultants or non-employee directors of
the Company and its subsidiaries or affiliates. Following the stockholder approval of the 2022 Long-Term Incentive Plan ("2022 LTIP"), no further awards
can be made under the 2013 Long-Term Incentive Plan ("2013 LTIP"). As of December 31, 2023, the Company had approximately 1 million shares available
for issuance under existing awards pursuant to the 2013 LTIP and approximately 1 million and 13 million shares available for issuance under existing and
future awards, respectively, pursuant to the 2022 LTIP.
Restricted Stock Units
The Company issues RSUs to certain executives and employees. Each RSU represents a contingent right to receive one share of the Company's
common stock subject to satisfaction of the applicable vesting terms. The RSUs granted to certain executives and employees include (1) annual awards that
contain only service-based conditions, (2) annual performance awards that vest subject to the achievement of certain stock performance-based metrics (as
further described below), (3) new hire, promotional or relocation awards that generally contain only service-based vesting conditions and (4) other awards
related to specific business initiatives or compensation objectives including retention and merger integration. Generally, such awards vest over periods of
approximately three years.
The following is a summary of the RSU activity during the year ended December 31, 2023.
Outstanding at the beginning of year
Granted
Vested
Forfeited
Outstanding at end of year
RSUs
(In millions)
2
2
(1)
—
3
The Company granted approximately two million RSUs to its executives and certain other employees for the year ended December 31, 2023 and
approximately one million RSUs for each of the years ended December 31, 2022 and 2021. The weighted-average grant-date fair value per share of the
grants for the years ended December 31, 2023, 2022 and 2021 was $126.56, $146.52 and $155.01 per share, respectively. The weighted-average requisite
service period for the RSUs granted during 2023 was approximately 2.2 years.
Of the approximately two million RSUs granted during the year ended December 31, 2023, (1) approximately 1.1 million and 0.1 million RSUs were
subject to time-based vesting conditions, vesting over a three-year period and a one-year period, respectively, and (2) approximately 0.3 million RSUs were
granted to the Company's executives and certain other employees and may vest on the third anniversary of the grant date based upon (a) the Company's total
stockholder returns (defined as share price appreciation plus the value of dividends paid during the performance period) and (b) the Company's total
stockholder return compared to that of the companies in the Standard & Poor's 500 Index. Certain RSU agreements contain provisions that result in forfeiture
by the employee of any unvested shares in the event that the Company's common stock does not achieve certain performance targets. To the extent that the
requisite service is rendered, compensation cost for accounting purposes is not reversed; rather, it is recognized regardless of whether or not the market
performance target is achieved.
The following table summarizes the assumptions used in the Monte Carlo simulation to determine the grant-date fair value for the RSUs with market
conditions granted during the years ended December 31, 2023, 2022 and 2021.
Risk-free rate
Expected volatility
Expected dividend rate
Years Ended December 31,
2023
2022
2021
4.5 %
27 %
4.6 %
1.7 %
31 %
3.0 %
0.2 %
30 %
3.4 %
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
The Company recognized aggregate stock-based compensation expense related to RSUs of $139 million, $134 million and $110 million for the years
ended December 31, 2023, 2022 and 2021, respectively. The aggregate unrecognized compensation (net of estimated forfeitures) related to RSUs at
December 31, 2023 is $74 million and is estimated to be recognized over a weighted-average period of less than one year.
The following table is a summary of the RSUs vested during the years ended December 31, 2023, 2022 and 2021.
Years Ended December 31,
2023
2022
2021
Total Shares
Vested
(In millions of shares)
Fair Value on
Vesting Date
1 $
1
1
Stock-based Compensation Expense, Net
The following table discloses the components of stock-based compensation expense, net.
Stock-based compensation expense, net:
Site rental costs of operations
Services and other costs of operations
Selling, general and administrative expenses
Total stock-based compensation expense, net
12. Commitments and Contingencies
Other Matters
Years Ended December 31,
2023
2022
2021
$
$
19 $
10
128
157 $
18 $
10
128
156 $
92
187
199
14
8
109
131
The Company is involved in various claims, assessments, lawsuits or proceedings arising in the ordinary course of business. While there are
uncertainties inherent in the ultimate outcome of such matters and it is impossible to presently determine the ultimate costs or losses that may be incurred, if
any, management believes the adverse resolution of such uncertainties and the incurrence of such costs should not have a material adverse effect on the
Company's consolidated financial position or results of operations. The Company and certain of its subsidiaries are also contingently liable for commitments
or performance guarantees arising in the ordinary course of business, including certain letters of credit or surety bonds.
See note 13 for a discussion of operating lease commitments. In addition, as mentioned in note 4, the Company has the option to purchase
approximately 53% of its towers at the end of their respective lease terms. The Company has no obligation to exercise such purchase options.
13. Leases
Lessor Tenant Leases
See note 3 for further information regarding the contractual amounts owed to the Company pursuant to tenant contracts in effect as of December 31,
2023 and other information.
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Lessee Operating Leases
The components of the Company's operating lease expense are as follows:
Lease cost:
Operating lease expense
(b)
Variable lease expense
(a)
Total lease expense
(c)
Years Ended December 31,
2023
2022
2021
$
$
708 $
205
913 $
660 $
175
835 $
646
164
810
(a) Represents the Company's operating lease expense related to its ROU assets for the years ended December 31, 2023, 2022 and 2021.
(b) Represents the Company's expense related to contingent payments for operating leases (such as payments based on revenues derived from the communications infrastructure located on the
leased asset) for the years ended December 31, 2023, 2022 and 2021. Such contingencies are recognized as expense in the period they are resolved.
(c) Excludes those direct operating expenses accounted for pursuant to accounting guidance outside the scope of ASC 842.
Lessee Finance Leases
The vast majority of the Company's finance leases are related to the towers subject to prepaid master lease agreements with AT&T and T-Mobile
(including those which T-Mobile assumed in its merger with Sprint), and are recorded as "Property and equipment, net" on the consolidated balance sheet.
See note 4 for further discussion of the Company's prepaid master lease agreements. Finance leases and associated leasehold improvements related to gross
property and equipment and accumulated depreciation were $4.3 billion and $2.9 billion, respectively, as of December 31, 2023. Finance leases and
associated leasehold improvements related to gross property and equipment and accumulated depreciation were $4.3 billion and $2.7 billion, respectively, as
of December 31, 2022. For each of the years ended December 31, 2023 and 2022, the Company recorded $182 million to "Depreciation, amortization and
accretion" related to finance leases, and for 2021 recorded $200 million.
Other Lessee Information
As of December 31, 2023, the Company's weighted-average remaining lease term and weighted-average discount rate for operating leases were 15
years and 4.2%, respectively.
The following table is a summary of the Company's maturities of operating lease liabilities as of December 31, 2023:
Years Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total undiscounted
lease payments
Less: Imputed
interest
Total operating
lease liabilities
Operating leases
(a)
$
570 $
557 $
548 $
542 $
540 $
5,472 $
8,229 $
(2,336) $
5,893
(a) Excludes the Company's contingent payments for operating leases (such as payments based on revenues derived from the communications infrastructure located on the leased asset) as such
arrangements are excluded from the Company's operating lease liability. Such contingencies are recognized as expense in the period they are resolved.
14. Operating Segments and Concentrations of Credit Risk
Operating Segments
The Company's operating segments consist of (1) Towers and (2) Fiber. The Towers segment provides access, including space or capacity, to the
Company's more than 40,000 towers geographically dispersed throughout the U.S. The Towers segment also reflects certain ancillary services relating to the
Company's towers, predominately consisting of site development services and installation services. 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 Fiber
segment provides access, including space or capacity, to the Company's approximately (1) 115,000 small cells on air or under contract and (2) 90,000 route
miles of fiber primarily supporting small cells and fiber solutions geographically dispersed throughout the U.S.
The measurement of profit or loss used by the Company's chief operating decision maker ("CODM") to evaluate the performance of its operating
segments is segment operating profit (loss). Additionally, the Company CODM also reviews segment site rental gross margin and segment services and other
gross margin. The Company defines segment operating profit (loss) as segment site rental gross margin plus segment services and other gross margin, and
segment other operating (income) expense, less segment selling, general and administrative expenses. The Company defines segment site rental gross margin
as
80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
segment site rental revenues less segment site rental costs of operations, excluding stock-based compensation expense, net and amortization of prepaid lease
purchase price adjustments recorded in consolidated site rental costs of operations. The Company defines segment services and other gross margin as
segment services and other revenues less segment services and other costs of operations, excluding stock-based compensation expense, net recorded in
consolidated services and other costs of operations. All of these measurements are exclusive of depreciation, amortization and accretion, which are shown
separately.
Costs that are directly attributable to Towers and Fiber are assigned to those respective segments. Additionally, certain costs are shared across segments
and are reflected in the Company's segment measures through allocations that management believes to be reasonable. The "Other" column (1) represents
amounts excluded from specific segments, such as restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation,
amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, net,
gains (losses) on retirement of long-term obligations, interest income, other income (expense), stock-based compensation expense, net and certain selling,
general and administrative expenses, and (2) reconciles segment operating profit (loss) to income (loss) before income taxes, as the amounts are not utilized
in assessing each segment’s performance. The "Other" total assets balance includes corporate assets such as cash and cash equivalents which have not been
allocated to specific segments. There are no significant revenues resulting from transactions between the Company's operating segments.
(a)(b)
Segment site rental revenues
Segment services and other revenues
Segment revenues
Segment site rental costs of operations
Segment services and other costs of operations
Segment costs of operations
Segment site rental gross margin
Segment services and other gross margin
Segment selling, general and administrative expenses
Segment operating profit (loss)
Other selling, general and administrative expenses
Stock-based compensation expense, net
Depreciation, amortization and accretion
Restructuring charges
Interest expense and amortization of deferred financing costs, net
Other (income) expenses to reconcile to income (loss) from continuing operations before
(b)
(b)
income taxes
(c)
Income (loss) from continuing operations before income taxes
Capital expenditures
Total assets (at year end)
Total goodwill (at year end)
Year Ended December 31, 2023
Towers
Fiber
Other
Total
$
$
$
$
4,313 $
421
4,734
943
294
1,237
3,370
127
104
3,393
2,219
28
2,247
686
12
698
1,533
16
194
1,355
$
194 $
21,550 $
5,127 $
1,175 $
16,308 $
4,958 $
$
333
157
1,754
85
850
41
$
55 $
669 $
— $
6,532
449
6,981
1,629
306
1,935
4,903
143
298
4,748
333
157
1,754
85
850
41
1,528
1,424
38,527
10,085
(a) Exclusive of depreciation, amortization and accretion shown separately.
(b) Segment costs of operations for the year ended December 31, 2023 excludes (1) stock-based compensation expense, net of $29 million and (2) prepaid lease purchase price adjustments of $16
million. For the year ended December 31, 2023, segment selling, general and administrative expenses and other selling, general and administrative expenses exclude stock-based
compensation expense, net of $128 million.
See consolidated statement of operations and comprehensive income (loss) for further information.
(c)
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
(a)(b)
Segment site rental revenues
Segment services and other revenues
Segment revenues
Segment site rental costs of operations
Segment services and other costs of operations
Segment costs of operations
Segment site rental gross margin
Segment services and other gross margin
Segment selling, general and administrative expenses
Segment operating profit (loss)
Other selling, general and administrative expenses
Stock-based compensation expense, net
Depreciation, amortization and accretion
Interest expense and amortization of deferred financing costs, net
Other (income) expenses to reconcile to income (loss) from continuing operations before
(b)
(b)
income taxes
(c)
Income (loss) from continuing operations before income taxes
Capital expenditures
Total assets (at year end)
Total goodwill (at year end)
Year Ended December 31, 2022
Towers
Fiber
Other
Total
$
$
$
$
4,322 $
685
5,007
918
447
1,365
3,404
238
115
3,527
1,967
12
1,979
650
9
659
1,317
3
190
1,130
$
185 $
22,210 $
5,127 $
1,058 $
16,010 $
4,958 $
$
317
156
1,707
699
87
$
67 $
701 $
— $
6,289
697
6,986
1,568
456
2,024
4,721
241
305
4,657
317
156
1,707
699
87
1,691
1,310
38,921
10,085
(a) Exclusive of depreciation, amortization and accretion shown separately.
(b) Segment costs of operations for the year ended December 31, 2022 excludes (1) stock-based compensation expense, net of $28 million and (2) prepaid lease purchase price adjustments of $16
million. For the year ended December 31, 2022, segment selling, general and administrative expenses and other selling, general and administrative expenses exclude stock-based
compensation expense, net of $128 million.
See consolidated statement of operations and comprehensive income (loss) for further information.
(c)
(a)(b)
Segment site rental revenues
Segment services and other revenues
Segment revenues
Segment site rental costs of operations
Segment services and other costs of operations
Segment costs of operations
Segment site rental gross margin
Segment services and other gross margin
Segment selling, general and administrative expenses
Segment operating profit (loss)
Other selling, general and administrative expenses
Stock-based compensation expense, net
Depreciation, amortization and accretion
Interest expense and amortization of deferred financing costs, net
Other (income) expenses to reconcile to income (loss) from continuing operations before
(b)
(b)
income taxes
(c)
Income (loss) from continuing operations before income taxes
Capital expenditures
Total assets (at year end)
Total goodwill (at year end)
Year Ended December 31, 2021
Towers
Fiber
Other
Total
$
$
$
$
3,804 $
601
4,405
889
414
1,303
2,915
187
107
2,995
1,915
20
1,935
633
17
650
1,282
3
174
1,111
$
221 $
22,318 $
5,127 $
956 $
15,876 $
4,951 $
$
290
131
1,644
657
205
$
52 $
846 $
— $
5,719
621
6,340
1,522
431
1,953
4,197
190
281
4,106
290
131
1,644
657
205
1,179
1,229
39,040
10,078
(a) Exclusive of depreciation, amortization and accretion shown separately.
(b) Segment costs of operations for the year ended December 31, 2021 excludes (1) stock-based compensation expense, net of $22 million and (2) prepaid lease purchase price adjustments of $18
million. For the year ended December 31, 2021, segment selling, general and administrative expenses and other selling, general and administrative expenses exclude stock-based
compensation expense, net of $109 million.
See consolidated statement of operations and comprehensive income (loss) for further information.
(c)
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
Major Tenants
The following table summarizes the percentage of the consolidated revenues for those tenants accounting for more than 10% of the consolidated
revenues.
T-Mobile
AT&T
Verizon Wireless
Total
Concentrations of Credit Risk
Years Ended December 31,
2023
2022
2021
38 %
19 %
19 %
76 %
38 %
18 %
18 %
74 %
35 %
20 %
20 %
75 %
Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash and
cash equivalents and trade receivables. The Company mitigates its risk with respect to cash and cash equivalents by maintaining such deposits at high credit
quality financial institutions and monitoring the credit ratings of those institutions. The Company's restricted cash and cash equivalents are predominately
held and directed by a trustee (see note 2).
The Company derives the largest portion of its revenues from tenants in the wireless industry. The Company also has a concentration in its volume of
business with T-Mobile, AT&T and Verizon Wireless or their agents that accounts for a significant portion of the Company's revenues, receivables and
deferred site rental receivables. The Company mitigates its concentrations of credit risk with respect to trade receivables by actively monitoring the
creditworthiness of its tenants, the use of tenant leases with contractually determinable payment terms or proactive management of past due balances.
15. Supplemental Cash Flow Information
The following table is a summary of the supplemental cash flow information during the years ended December 31, 2023, 2022 and 2021.
Supplemental disclosure of cash flow information:
Cash payments related to operating lease liabilities
Interest paid
Income taxes paid
(a)
Supplemental disclosure of non-cash investing and financing activities:
ROU assets recorded in exchange for operating lease liabilities
Increase (decrease) in accounts payable for purchases of property and equipment
Capitalized stock-based compensation
Purchase of property and equipment under finance leases and installment land purchases
Years Ended December 31,
2023
2022
2021
$
571 $
800
18
12
36
29
62
560 $
684
10
191
(5)
21
28
550
661
20
573
3
21
25
(a) Excludes the Company's contingent payments pursuant to operating leases, which are recorded as expense in the period such contingencies are resolved.
The reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within various lines on the consolidated balance sheet
to amounts reported in the consolidated statement of cash flows is shown below.
Cash and cash equivalents
Restricted cash and cash equivalents, current
Restricted cash and cash equivalents reported within other assets, net
Cash and cash equivalents and restricted cash and cash equivalents
As of December 31,
2023
2022
2021
$
$
105 $
171
5
281 $
156 $
166
5
327 $
292
169
5
466
83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Tabular dollars in millions, except per share amounts)
16. Restructuring
In July 2023, the Company initiated a restructuring plan ("Plan") as part of its efforts to reduce costs to better align the Company's operational needs
with lower tower activity. The Plan includes reducing the Company's total employee headcount by approximately 15%, discontinuing installation services as
a Towers product offering while continuing to offer site development services on Company towers, and consolidating office space.
In 2023, the Company recorded approximately $85 million in charges in connection with the Plan, $62 million of which represent cash payments that
have been or will be made in connection with employee severance and other one-time termination benefits. An additional $1 million of non-cash charges
relate to share-based compensation. In connection with the office space consolidation, the Company recorded a $16 million charge related to remaining
obligations under facility leases and $6 million of non-cash charges representing accelerated depreciation.
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.
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.
The following table summarizes the activities related to the restructuring for year ended December 31, 2023:
Charges
Payments
Non-cash items
Liability as of December 31, 2023
Employee Headcount
Reduction
Office Space Consolidation
Total
$
$
63 $
(46)
(1)
16 $
22 $
(4)
(6)
12 $
85
(50)
(7)
28
As of December 31, 2023, the liability for restructuring charges is included in "Other accrued liabilities" on the consolidated balance sheet, and the
corresponding expense is included in "Restructuring charges" on the consolidated statements of operations and comprehensive income.
The Company does not allocate restructuring charges between its operating segments. If such charges were allocated to operating segments, for the
year ended 2023, $44 million and $18 million of the aforementioned charge would have been allocated to the Company's Towers and Fiber segment,
respectively, with the remaining $23 million allocated to Other.
17. Subsequent Events
Common Stock Dividend
On February 21, 2024, the Company's board of directors declared a quarterly cash dividend of $1.565 per common share. The quarterly dividend will
be payable on March 28, 2024, to common stockholders of record as of March 15, 2024.
84
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
In connection with the preparation of the 2023 Form 10-K, the Company's management conducted an evaluation, under the supervision and with the
participation of the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")). Based
upon their evaluation, the CEO and CFO concluded that as of December 31, 2023, the Company's disclosure controls and procedures were effective to
provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and to provide reasonable assurance that
information required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management, including its CEO
and CFO, as appropriate to allow timely decisions regarding required disclosure.
(b) Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) for the Company. Under the supervision and with the participation of the Company's CEO and CFO, management assessed
the effectiveness of the Company's internal control over financial reporting based on the framework described in Internal Control – Integrated Framework
(2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles in the United States of America. The Company's internal control over financial
reporting includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles in the United States of America, and that receipts and expenditures of the Company are being made only
in accordance with authorization of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company's assets
that could have a material effect on the financial statements.
Management has assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023. Based on the
Company's assessment, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2023 to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in
accordance with generally accepted accounting principles in the United States of America.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers
LLP, an independent registered public accounting firm, as stated in their report which appears in Part II, Item 8 of the 2023 Form 10-K.
(c) Changes in Internal Control Over Financial Reporting
There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect the Company's internal
control over financial reporting.
(d) Limitations on the Effectiveness of Controls
Because of its inherent limitations, the Company's internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies and procedures may deteriorate.
85
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
N/A
86
Item 10. Directors and Executive Officers of the Registrant
PART III
The information required to be furnished pursuant to this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.
Item 11. Executive Compensation
The information required to be furnished pursuant to this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required to be furnished pursuant to this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.
The following table summarizes information with respect to equity compensation plans under which equity securities of the registrant are authorized
for issuance as of December 31, 2023:
Plan Category
(a)
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average exercise
price of outstanding options,
warrants and rights
Number of securities
remaining available for future
issuance under equity
compensation plans
(In millions of shares)
(In dollars per share)
— $
—
— $
—
—
—
(In millions of shares)
15
—
15
(b)
See note 11 to the consolidated financial statements for more detailed information regarding the registrant's equity compensation plan.
(a)
(b) Represents the 2013 Long-Term Incentive Plan ("2013 LTIP") and the 2022 Long-Term Incentive Plan ("2022 LTIP"). Of the shares remaining available for future issuance, 1 million shares
may be issued pursuant to outstanding RSUs granted under each of the 2013 LTIP and 2022 LTIP. Following the adoption of the 2022 LTIP, no further awards may be granted under the 2013
LTIP.
Item 13. Certain Relationships and Related Transactions
The information required to be furnished pursuant to this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information required to be furnished pursuant to this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.
87
Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements:
PART IV
The list of financial statements filed as part of this report is submitted as a separate section, the index to which is located on page 50.
(a)(2) Financial Statement Schedules:
Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021, which is located on page 98.
Schedule III—Schedule of Real Estate and Accumulated Depreciation for the years ended December 31, 2023 and 2022, which is located
on page 99.
All other schedules are omitted because they are not applicable or because the required information is contained in the financial statements or
notes thereto included in this 2023 Form 10-K.
(a)(3) Exhibits:
Exhibit Index
Exhibit Number
1.1
2.1
2.2
2.3
2.4
3.1
Exhibit Description
Form of Sales Agreement, dated March 19, 2021, between the Company and
each of Barclays Capital Inc., BNP Paribas Securities Corp., BofA Securities,
Inc., Citigroup Global Markets Inc., Commerz Markets LLC, Credit Agricole
Securities (USA) Inc., Deutsche Bank Securities Inc., Fifth Third Securities,
Inc., J.P. Morgan Securities LLC, Mizuho Securities USA LLC, Morgan
Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets,
LLC, Scotia Capital (USA) Inc., SG Americas Securities, LLC, SMBC Nikko
Securities America, Inc., TD Securities (USA) LLC, Truist Securities, Inc. and
Wells Fargo Securities, LLC
Agreement and Plan of Merger by and between Crown Castle International
Corp. and Crown Castle REIT Inc., dated September 19, 2014
Stock Purchase Agreement, dated as of April 29, 2015, by and among Quanta
Services, Inc., Crown Castle International Corp. and CC SCN Fiber LLC
Agreement for the Sale and Purchase of the Shares of Crown Castle Australia
Holdings Pty Ltd, dated May 14, 2015, by and among Crown Castle
International Corp., Crown Castle Operating LLC, The Trust Company
(Nominees) Limited, Todd International Investments Limited, Oceania Capital
Limited, Birdsong Capital Limited, Baytown Investments Limited, Heritage
PTC LLC, David Lloyd CCA Limited, Turri Finance Pty Ltd and Turri Bidco
Pty Ltd
Agreement and Plan of Merger, dated as of July 18, 2017, by and among
Crown Castle International Corp., LTS Group Holdings, LLC, Berkshire Fund
VII-A (LTS) Acquisition Partners, Berkshire Fund VIII-A (LTS) Acquisition
Partners, LTS Berkshire Fund VII-A Blocker Corporation, LTS Berkshire Fund
VIII-A Blocker Corporation, LTS Co-Invest Blocker LLC, LTS Co-Invest
Blocker II LLC, LTS Rollover Blocker LLC, LTS BF VII-A Blocker Merger
Sub, Inc., LTS BF VIII-A Blocker Merger Sub, Inc., LTS Co-Invest Blocker
Merger Sub, Inc., LTS Co-Invest Blocker II Merger Sub, Inc., LTS Rollover
Blocker Merger Sub, Inc., LTS Group Holdings Merger Sub, Inc. and BSR
LLC, as equityholders’ representative
Restated Certificate of Incorporation of Crown Castle Inc., dated July 25, 2023
88
Incorporated by Reference
Form
8-K
File Number
001-16441
Date of Filing
March 19, 2021
Exhibit
Number
1.1
8-K
001-16441
10-Q
001-16441
September 23,
2014
May 8, 2015
2.1
10.5
10-Q
001-16441
August 7, 2015
10.2
8-K
001-16441
July 19, 2017
2.1
10-Q
001-16441
August 2, 2023
3.1
Incorporated by Reference
Form
8-K
8-K
8-K
File Number
001-16441
001-16441
001-16441
Date of Filing
December 20,
2023
December 16,
2014
June 9, 2005
Exhibit
Number
3.1
4.2
4.1
8-K
001-16441
December 1,
2023
4.1
8-K
001-16441
September 29,
2006
10.1
8-K
001-16441
December 5,
2006
4.1
8-K
001-16441
January 20, 2010 4.1
8-K
001-16441
January 20, 2010 4.2
Exhibit Number
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Exhibit Description
Amended and Restated By-Laws of Crown Castle Inc., dated December 19,
2023
Specimen of Common Stock Certificate
Indenture, dated as of June 1, 2005, by and among JPMorgan Chase Bank,
N.A., as Indenture Trustee, and Crown Castle Towers LLC, Crown Castle
South LLC, Crown Communications Inc., Crown Castle PT Inc., Crown
Communication New York, Inc. and Crown Castle International Corp. de
Puerto Rico, collectively as Issuers, relating to the Senior Secured Tower
Revenue Notes
Indenture Supplement, dated December 1, 2023, by and among Crown Castle
Towers LLC, Crown Castle South LLC, Crown Communication LLC, Crown
Castle Towers 05 LLC, Crown Castle PR LLC, Crown Castle MU LLC, Crown
Castle MUPA LLC and The Bank of New York Mellon (as successor to The
Bank of New York, as successor to JPMorgan Chase Bank, N.A.), as trustee.
Indenture Supplement, dated as of September 26, 2006, by and among
JPMorgan Chase Bank, N.A., as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication Inc., Crown Castle PT
Inc., Crown Communication New York, Inc. and Crown Castle International
Corp. de Puerto Rico, collectively, as Issuers, relating to the Senior Secured
Tower Revenue Notes, Series 2005-1
Indenture Supplement, dated as of November 29, 2006, relating to the Senior
Secured Tower Revenue Notes, Series 2006-1, by and among The Bank of New
York (as successor to JPMorgan Chase Bank, N.A.), as Indenture Trustee, and
Crown Castle Towers LLC, Crown Castle South LLC, Crown Communication
Inc., Crown Castle PT Inc., Crown Communication New York, Inc., Crown
Castle International Corp. de Puerto Rico, Crown Castle Towers 05 LLC,
Crown Castle PR LLC, Crown Castle MU LLC and Crown Castle MUPA LLC,
collectively as Issuers
Indenture Supplement, dated as of January 15, 2010, relating to the Senior
Secured Tower Revenue Notes, Series 2010-1, by and among The Bank of New
York Mellon (as successor to The Bank of New York as successor to J.P.
Morgan Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication Inc., Crown Castle PT
Inc., Crown Communication New York, Inc., Crown Castle International Corp.
de Puerto Rico, Crown Castle Towers 05 LLC, Crown Castle PR LLC, Crown
Castle MU LLC and Crown Castle MUPA LLC, collectively as Issuers
Indenture Supplement, dated as of January 15, 2010, relating to the Senior
Secured Tower Revenue Notes, Series 2010-2, by and among The Bank of New
York Mellon (as successor to The Bank of New York as successor to JPMorgan
Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers LLC,
Crown Castle South LLC, Crown Communication Inc., Crown Castle PT Inc.,
Crown Communication New York, Inc., Crown Castle International Corp. de
Puerto Rico, Crown Castle Towers 05 LLC, Crown Castle PR LLC, Crown
Castle MU LLC and Crown Castle MUPA LLC, collectively as Issuers
89
Exhibit Number
4.8
4.9
4.10
4.11
4.12
4.13
4.14
Exhibit Description
Indenture Supplement, dated as of January 15, 2010, relating to the Senior
Secured Tower Revenue Notes, Series 2010-3, by and among The Bank of New
York Mellon (as successor to The Bank of New York as successor to JPMorgan
Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers LLC,
Crown Castle South LLC, Crown Communication Inc., Crown Castle PT Inc.,
Crown Communication New York, Inc., Crown Castle International Corp. de
Puerto Rico, Crown Castle Towers 05 LLC, Crown Castle PR LLC, Crown
Castle MU LLC and Crown Castle MUPA LLC, collectively as Issuers
Indenture Supplement, dated as of June 30, 2014, by and among The Bank of
New York Mellon (as successor to The Bank of New York as successor to
JPMorgan Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication LLC, Crown Castle
PT Inc., Crown Communication New York, Inc., Crown Castle International
Corp. de Puerto Rico, Crown Castle Towers 05 LLC, Crown Castle PR LLC,
Crown Castle MU LLC and Crown Castle MUPA LLC, relating to the Senior
Secured Tower Revenue Notes
Indenture Supplement, dated as of May 15, 2015, by and among The Bank of
New York Mellon (as successor to The Bank of New York as successor to
JPMorgan Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication LLC, Crown Castle
Towers 05 LLC, Crown Castle PR LLC, Crown Castle MU LLC and Crown
Castle MUPA LLC, collectively as Issuers, relating to the Senior Secured
Tower Revenue Notes, Series 2015-1
Indenture Supplement, dated as of May 15, 2015, by and among The Bank of
New York Mellon (as successor to The Bank of New York as successor to
JPMorgan Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication LLC, Crown Castle
Towers 05 LLC, Crown Castle PR LLC, Crown Castle MU LLC and Crown
Castle MUPA LLC, collectively as Issuers, relating to the Senior Secured
Tower Revenue Notes, Series 2015-2
Indenture Supplement, dated as of July 11, 2018, by and among The Bank of
New York Mellon (as successor to The Bank of New York as successor to
JPMorgan Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication LLC, Crown Castle
Towers 05 LLC, Crown Castle PR LLC, Crown Castle MU LLC and Crown
Castle MUPA LLC, collectively as Issuers, relating to the Senior Secured
Tower Revenue Notes, Series 2018-1, Class C-2023
Indenture Supplement, dated as of July 11, 2018, by and among The Bank of
New York Mellon (as successor to The Bank of New York as successor to
JPMorgan Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication LLC, Crown Castle
Towers 05 LLC, Crown Castle PR LLC, Crown Castle MU LLC and Crown
Castle MUPA LLC, collectively as Issuers, relating to the Senior Secured
Tower Revenue Notes, Series 2018-2, Class C-2028
Indenture Supplement, dated as of July 11, 2018, by and among The Bank of
New York Mellon (as successor to The Bank of New York as successor to
JPMorgan Chase Bank, N.A.), as Indenture Trustee, and Crown Castle Towers
LLC, Crown Castle South LLC, Crown Communication LLC, Crown Castle
Towers 05 LLC, Crown Castle PR LLC, Crown Castle MU LLC and Crown
Castle MUPA LLC, collectively as Issuers, relating to the Senior Secured
Tower Revenue Notes, Series 2018-1, Class R-2028
90
Incorporated by Reference
Form
8-K
File Number
001-16441
Date of Filing
January 20, 2010 4.3
Exhibit
Number
8-K
001-16441
July 1, 2014
4.1
8-K
001-16441
May 21, 2015
4.1
8-K
001-16441
May 21, 2015
4.2
8-K
001-16441
July 16, 2018
4.1
8-K
001-16441
July 16, 2018
4.2
8-K
001-16441
July 16, 2018
4.3
Exhibit Number
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
Exhibit Description
Indenture dated July 31, 2009, between Pinnacle Towers Acquisition Holdings
LLC, GS Savings Inc., GoldenState Towers, LLC, Pinnacle Towers Acquisition
LLC, Tower Ventures III, LLC and TVHT, LLC, as Issuers, Global Signal
Holdings III, LLC, as Guarantor, and The Bank of New York Mellon Trust
Company, N.A., as Indenture Trustee, relating to Senior Secured Notes
Indenture Supplement dated July 31, 2009, between Pinnacle Towers
Acquisition Holdings LLC, GS Savings Inc., GoldenState Towers, LLC,
Pinnacle Towers Acquisition LLC, Tower Ventures III, LLC and TVHT, LLC,
as Issuers, Global Signal Holdings III, LLC, as Guarantor, and The Bank of
New York Mellon Trust Company, N.A., as Indenture Trustee, relating to
Senior Secured Notes, Series 2009-1, Class A-2
Indenture dated April 15, 2014, between Crown Castle International Corp. and
The Bank of New York Mellon Trust Company, N.A., as trustee
Second Supplemental Indenture dated December 15, 2014, between Crown
Castle REIT Inc., Crown Castle International Corp. and The Bank of New York
Mellon Trust Company, N.A., as trustee
Third Supplemental Indenture dated December 15, 2014, between Crown
Castle REIT Inc., Crown Castle International Corp. and The Bank of New York
Mellon Trust Company, N.A., as trustee
Fourth Supplemental Indenture dated February 8, 2016 between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated April 15, 2014, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 4.450% Senior Notes due 2026
Fifth Supplemental Indenture dated May 6, 2016, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated April 15, 2014, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 3.700% Senior Notes due 2026
Seventh Supplemental Indenture dated February 2, 2017, between Crown
Castle International Corp. and The Bank of New York Mellon Trust Company,
N.A., as trustee, to the Indenture dated April 15, 2014, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 4.000% Senior Notes due 2027
Eighth Supplemental Indenture dated May 1, 2017, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated April 15, 2014, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 4.750% Senior Notes due 2047
Ninth Supplemental Indenture dated August 1, 2017, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated April 15, 2014, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 3.200% Senior Notes due 2024 and 3.650% Senior Notes
due 2027
91
Incorporated by Reference
Form
8-K
File Number
001-16441
Date of Filing
August 4, 2009
Exhibit
Number
4.1
8-K
001-16441
August 4, 2009
4.2
001-16441
April 15, 2014
8-K
8-K
001-16441
4.1
4.5
4.6
December 16,
2014
December 16,
2014
8-K
001-16441
8-K
001-16441
February 8, 2016 4.1
8-K
001-16441
May 6, 2016
4.1
8-K
001-16441
February 2, 2017 4.1
8-K
001-16441
May 1, 2017
4.1
8-K
001-16441
August 1, 2017
4.1
Exhibit Number
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
Exhibit Description
Tenth Supplemental Indenture dated January 16, 2018, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated April 15, 2014, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 3.150% Senior Notes due 2023 and 3.800% Senior Notes
due 2028
Indenture dated February 11, 2019, between Crown Castle International Corp.
and The Bank of New York Mellon Trust Company, N.A., as trustee
First Supplemental Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 4.300% Senior Notes due 2029 and 5.200% Senior Notes
due 2049
Second Supplemental Indenture dated August 15, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 3.100% Senior Notes due 2029 and 4.000% Senior Notes
due 2049
Third Supplemental Indenture dated April 3, 2020, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 3.300% Senior Notes due 2030 and 4.150% Senior Notes
due 2050
Fourth Supplemental Indenture dated June 15, 2020, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 1.350% Senior Notes due 2025, 2.250% Senior Notes due
2031 and 3.250% Senior Notes due 2051
Fifth Supplemental Indenture, dated February 16, 2021, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 1.050% Senior Notes due 2026, 2.100% Senior Notes due
2031 and 2.900% Senior Notes due 2041
Sixth Supplemental Indenture dated June 29, 2021, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 2.500% Senior Notes due 2031
Seventh Supplemental Indenture dated March 4, 2022, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, to the Indenture dated February 11, 2019, between Crown Castle
International Corp. and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to 2.900% Senior Notes due 2027
Eighth Supplemental Indenture dated January 11, 2023, between Crown Castle
Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, to the
Indenture dated February 11, 2019, between the Company and The Bank of
New York Mellon Trust Company, N.A., as trustee, relating to 5.00% Senior
Notes due 2028
92
Incorporated by Reference
Form
8-K
File Number
001-16441
Date of Filing
January 17, 2018 4.1
Exhibit
Number
8-K
8-K
001-16441
001-16441
February 11,
2019
February 11,
2019
4.1
4.2
8-K
001-16441
August 15, 2019
4.1
8-K
001-16441
April 3, 2020
4.1
8-K
001-16441
June 15, 2020
4.1
8-K
001-16441
February 16,
2021
4.1
8-K
001-16441
June 29, 2021
4.1
8-K
001-16441
March 4, 2022
4.1
8-K
001-16441
January 11, 2023 4.1
Exhibit Number
4.35
4.36
4.37*
10.1†
10.2†*
10.3†
10.4†
10.5†
10.6†
10.7†
10.8†*
10.9†
10.10†
10.11†
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†*
10.18†
10.19†
10.20
Exhibit Description
Ninth Supplemental Indenture dated April 26, 2023, between the Crown Castle
Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, to the
Indenture dated February 11, 2019, between the Company and The Bank of
New York Mellon Trust Company, N.A., as trustee, relating to 4.800% Senior
Notes due 2028 and 5.100% Senior Notes due 2033
Tenth Supplemental Indenture dated December 6, 2023, between Crown Castle
Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, to the
Indenture dated February 11, 2019, between the Company and The Bank of
New York Mellon Trust Company, N.A., as trustee, relating to 5.600% Senior
Notes due 2029 and 5.800% Senior Notes due 2034
Description of the Company's Common Stock
Amended and Restated Severance Agreement between Crown Castle
International Corp. and Jay A. Brown, effective as of June 1, 2016
Letter Agreement between Crown Castle Inc. and Jay A. Brown, dated January
16, 2024
Form of Severance Agreement between Crown Castle International Corp. and
Philip M. Kelley
Form of Amendment to Severance Agreement between Crown Castle
International Corp. and certain senior officers, including Philip M. Kelley,
effective April 6, 2009
Form of Amendment to Severance Agreement between Crown Castle
International Corp. and certain executive officers, including Philip M. Kelley
Form of Severance Agreement between Crown Castle International Corp. and
each of Daniel K. Schlanger, Michael J. Kavanagh, Christopher D. Levendos,
Catherine Piche and Edward B. Adams, Jr.
Separation and Release Agreement between Crown Castle Inc. and Catherine
Piche, dated October 6, 2023
Letter Agreement between Crown Castle Inc. and Daniel K. Schlanger, dated
January 23, 2024
Crown Castle International Corp. 2013 Long-Term Incentive Plan
First Amendment to Crown Castle International Corp. 2013 Long-Term
Incentive Plan, as amended
Amendment to Crown Castle International Corp. 2013 Long-Term Incentive
Plan, as amended
Form of 2013 Long-Term Incentive Plan Restricted Stock Units Agreement
(effective as of February 21, 2018)
Crown Castle International Corp. 2022 Long-Term Incentive Plan
First Amendment to Crown Castle International Corp. 2022 Long-Term
Incentive Plan
Form of Restricted Stock Unit Agreement for 2022 Long-Term Incentive Plan
(effective May 19, 2022)
Form of Restricted Stock Unit Agreement for 2022 Long-Term Incentive Plan
(effective August 1, 2022)
Amended and Restated Crown Castle Inc. Extended Service Separation
Program
Crown Castle Inc. 2023 EMT Annual Incentive Plan
Crown Castle Inc. 2024 EMT Annual Incentive Plan
Global Lease Agreement dated March 31, 1999 between Crown Atlantic
Company, LLC and Cellco Partnership
93
Incorporated by Reference
Form
8-K
File Number
001-16441
Date of Filing
April 26, 2023
Exhibit
Number
4.1
8-K
001-16441
December 6,
2023
4.1
—
8-K
—
8-K
8-K
—
001-16441
—
—
February 24,
2016
—
—
10.3
—
001-16441
July 15, 2008
10.1
001-16441
April 8, 2009
10.2
8-K
001-16441
10-K
001-16441
10-Q
001-16441
—
—
February 24,
2016
February 22,
2016
November 1,
2023
—
10.5
10.47
10.1
—
001-16441
April 8, 2013
App. A
001-16441
August 4, 2016
10.1
001-16441
May 20, 2022
10.3
DEF
14A
10-Q
8-K
8-K
DEF
14A
10-K
001-16441
001-16441
001-16441
8-K
001-16441
10-K
001-16441
—
8-K
8-K
8-K
—
001-16441
001-16441
000-24737
February 27,
2018
April 4, 2022
10.2
App. A
February 24,
2023
May 20, 2022
February 24,
2023
—
October 19,
2022
November 9,
2023
April 12, 1999
10.11
10.2
10.13
—
10.1
10.1
99.6
Exhibit Number
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
Exhibit Description
Agreement to Sublease dated June 1, 1999 by and among BellSouth Mobility
Inc., BellSouth Telecommunications Inc., the Transferring Entities (as defined
therein), Crown Castle International Corp. and Crown Castle South Inc.
Sublease dated June 1, 1999 by and among BellSouth Mobility Inc., Certain
BMI Affiliates, Crown Castle International Corp. and Crown Castle South Inc.
Agreement to Sublease dated August 1, 1999 by and among BellSouth Personal
Communications, Inc., BellSouth Carolinas PCS, L.P., Crown Castle
International Corp. and Crown Castle South Inc.
Sublease dated August 1, 1999 by and among BellSouth Personal
Communications, Inc., BellSouth Carolinas PCS, L.P., Crown Castle
International Corp. and Crown Castle South Inc.
Management Agreement, dated as of June 8, 2005, by and among Crown Castle
USA Inc., as Manager, and Crown Castle Towers LLC, Crown Castle South
LLC, Crown Communication Inc., Crown Castle PT Inc., Crown
Communication New York, Inc., Crown Castle International Corp. de Puerto
Rico, Crown Castle GT Holding Sub LLC and Crown Castle Atlantic LLC,
collectively as Owners
Series 2005-1 Management Agreement Amendment, dated September 26,
2006, by and among Crown Castle USA Inc., as Manager, and Crown Castle
Towers LLC, Crown Castle South LLC, Crown Communication Inc., Crown
Castle PT Inc., Crown Communication New York, Inc., Crown Castle
International Corp. de Puerto Rico, Crown Castle GT Holding Sub LLC and
Crown Castle Atlantic LLC, collectively, as Owners
Joinder and Amendment to Management Agreement, dated as of November 29,
2006, by and among Crown Castle USA Inc., as Manager, and Crown Castle
Towers LLC, Crown Castle South LLC, Crown Communication Inc., Crown
Castle PT Inc., Crown Communication New York, Inc., Crown Castle
International Corp. de Puerto Rico, Crown Castle Towers 05 LLC, Crown
Castle PR LLC, Crown Castle MU LLC, Crown Castle MUPA LLC, Crown
Castle GT Holding Sub LLC and Crown Castle Atlantic LLC, collectively as
Owners
Cash Management Agreement, dated as of June 8, 2005, by and among Crown
Castle Towers LLC, Crown Castle South LLC, Crown Communication Inc.,
Crown Castle PT Inc., Crown Communication New York, Inc. and Crown
Castle International Corp. de Puerto Rico, as Issuers, JPMorgan Chase Bank,
N.A., as Indenture Trustee, Crown Castle USA Inc., as Manager, Crown Castle
GT Holding Sub LLC, as Member of Crown Castle GT Company LLC, and
Crown Castle Atlantic LLC, as Member of Crown Atlantic Company LLC
Joinder to Cash Management Agreement, dated as of November 29, 2006, by
and among Crown Castle Towers LLC, Crown Castle South LLC, Crown
Communication Inc., Crown Castle PT Inc., Crown Communication New York,
Inc. and Crown Castle International Corp. de Puerto Rico, Crown Castle
Towers 05 LLC, Crown Castle PR LLC, Crown Castle MU LLC, Crown Castle
MUPA LLC, as Issuers, The Bank of New York (as successor to JPMorgan
Chase Bank, N.A.), as Indenture Trustee, Crown Castle USA Inc., as Manager,
Crown Castle GT Holding Sub LLC, as Member of Crown Castle GT
Company LLC, and Crown Castle Atlantic LLC, as Member of Crown Atlantic
Company LLC
Servicing Agreement, dated as of June 8, 2005, by and among Midland Loan
Services, Inc., as Servicer, and JPMorgan Chase Bank, N.A., as Indenture
Trustee
94
Incorporated by Reference
Form
8-K
File Number
000-24737
Date of Filing
June 9, 1999
Exhibit
Number
99.1
8-K
000-24737
June 9, 1999
99.3
10-K
000-24737
March 30, 2000
2.7
10-K
000-24737
March 30, 2000
2.8
8-K
001-16441
June 9, 2005
10.1
8-K
001-16441
September 29,
2006
10.2
8-K
001-16441
December 5,
2006
10.1
8-K
001-16441
June 9, 2005
10.2
8-K
001-16441
December 5,
2006
10.2
8-K
001-16441
June 9, 2005
10.3
Exhibit Number
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
Exhibit Description
Master Lease and Sublease, dated as of May 26, 2005, by and among STC One
LLC, as lessor, Sprint Telephony PCS L.P., as Sprint Collocator, Global Signal
Acquisitions II LLC, as lessee, and Global Signal Inc.
Master Lease and Sublease, dated as of May 26, 2005, by and among STC Two
LLC, as lessor, SprintCom, Inc., as Sprint Collocator, Global Signal
Acquisitions II LLC, as lessee, and Global Signal Inc.
Master Lease and Sublease, dated as of May 26, 2005, by and among STC
Three LLC, as lessor, American PCS Communications, LLC, as Sprint
Collocator, Global Signal Acquisitions II LLC, as lessee, and Global Signal
Inc.
Master Lease and Sublease, dated as of May 26, 2005, by and among STC Four
LLC, as lessor, PhillieCo, L.P., as Sprint Collocator, Global Signal Acquisitions
II LLC, as lessee, and Global Signal Inc.
Master Lease and Sublease, dated as of May 26, 2005, by and among STC Five
LLC, as lessor, Sprint Spectrum L.P., as Sprint Collocator, Global Signal
Acquisitions II LLC, as lessee, and Global Signal Inc.
Master Lease and Sublease, dated as of May 26, 2005, by and among STC Six
Company, Sprint Spectrum L.P., as Sprint Collocator, Global Signal
Acquisitions II LLC, as lessee, and Global Signal Inc.
Management Agreement, dated as of July 31, 2009, by and among Crown
Castle USA Inc., as Manager, and Pinnacle Towers Acquisition Holdings LLC,
and the direct and indirect subsidiaries of Pinnacle Towers Acquisition
Holdings LLC, collectively, as Owners
Cash Management Agreement, dated as of July 31, 2009, by and among
Pinnacle Towers Acquisition Holdings LLC, Pinnacle Towers Acquisition
LLC, GS Savings Inc., GoldenState Towers, LLC, Tower Ventures III, LLC
and TVHT, LLC, as Issuers, The Bank of New York Mellon Trust Company,
N.A., as Indenture Trustee, and Crown Castle USA Inc., as Manager
Servicing Agreement, dated as of July 31, 2009, by and among Midland Loan
Services, Inc., as Servicer, and The Bank of New York Mellon Trust Company,
N.A., as Indenture Trustee
Management Agreement, dated as of December 24, 2012, by and among Crown
Castle USA Inc., as Manager, and CC Holdings GS V LLC, Global Signal
Acquisitions LLC, Global Signal Acquisitions II LLC, Pinnacle Towers LLC
and the direct and indirect subsidiaries of Pinnacle Towers LLC, collectively, as
Owners
Master Prepaid Lease, dated as of November 30, 2012, by and among T-Mobile
USA Tower LLC, T-Mobile West Tower LLC, T-Mobile USA, Inc. and
CCTMO LLC
MPL Site Master Lease Agreement, dated as of November 30, 2012, by and
among T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc.,
VoiceStream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC,
Wireless Alliance, LLC, SunCom Wireless Operating Company, L.L.C., T-
Mobile USA, Inc. and CCTMO LLC
Sale Site Master Lease Agreement, dated as of November 30, 2012, by and
among T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc.,
VoiceStream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC,
Wireless Alliance, LLC, SunCom Wireless Operating Company, L.L.C., T-
Mobile USA, Inc., T3 Tower 1 LLC and T3 Tower 2 LLC
95
Incorporated by Reference
Form
8-K
File Number
001-32168
Date of Filing
May 27, 2005
Exhibit
Number
10.1
8-K
001-32168
May 27, 2005
10.2
8-K
001-32168
May 27, 2005
10.3
8-K
001-32168
May 27, 2005
10.4
8-K
001-32168
May 27, 2005
10.5
8-K
001-32168
May 27, 2005
10.6
8-K
001-16441
August 4, 2009
10.1
8-K
001-16441
August 4, 2009
10.2
8-K
001-16441
August 4, 2009
10.3
8-K
001-16441
December 28,
2012
10.1
10-K
001-16441
10-K
001-16441
February 12,
2013
February 12,
2013
10.40
10.41
10-K
001-16441
February 12,
2013
10.42
Exhibit Number
10.44
10.45
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
Exhibit Description
Management Agreement, dated as of November 30, 2012, by and among
SunCom Wireless Operating Company, L.L.C., Cook Inlet/VS GSM IV PCS
Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC,
Powertel/Memphis, Inc., VoiceStream Pittsburgh, L.P., T-Mobile West LLC, T-
Mobile Northeast LLC, Wireless Alliance, LLC, SunCom Wireless Property
Company, L.L.C., T-Mobile USA Tower LLC, T-Mobile West Tower LLC,
CCTMO LLC, T3 Tower 1 LLC and T3 Tower 2 LLC
Master Agreement dated as of October 18, 2013, among AT&T Inc. and Crown
Castle International Corp.
Master Prepaid Lease, dated as of December 16, 2013, by and among CCATT
LLC, AT&T Mobility LLC and the AT&T Lessors party thereto
MPL Site Master Lease Agreement, dated as of December 16, 2013, by and
among CCATT LLC, AT&T Mobility LLC and the AT&T Collocators party
thereto
Sale Site Master Lease Agreement, dated as of December 16, 2013, by and
among AT&T Mobility LLC, the AT&T Collocators party thereto and the
Tower Operators party thereto
Management Agreement, dated as of December 16, 2013, by and among
CCATT LLC, the Sale Site Subsidiaries party thereto, the AT&T Newcos party
thereto and the AT&T Contributors party thereto
Credit Agreement dated as of January 21, 2016, among Crown Castle
International Corp., the lenders and issuing banks party thereto and JPMorgan
Chase Bank, N.A., as administrative agent
Amendment No. 1 dated as of February 13, 2017, among Crown Castle
International Corp., the lenders and issuing banks party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent, to the Credit Agreement dated as of
January 21, 2016, by and among Crown Castle International Corp., the lenders
and issuing banks from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent
Amendment No. 2 dated as of August 29, 2017, among Crown Castle
International Corp., the lenders and issuing banks party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent, to the Credit Agreement dated as of
January 21, 2016, by and among Crown Castle International Corp., the lenders
and issuing banks from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent
Amendment No. 3 dated as of June 14, 2018, among Crown Castle
International Corp., the lenders and issuing banks party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent, to the Credit Agreement dated as of
January 21, 2016, by and among Crown Castle International Corp., the lenders
and issuing banks from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent
Amendment No. 4 dated as of March 20, 2019, among Crown Castle
International Corp., the lenders and issuing banks party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent, to the Credit Agreement dated as of
January 21, 2016, by and among Crown Castle International Corp., the lenders
and issuing banks from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent
Amendment No. 5 dated as of June 21, 2019, among Crown Castle
International Corp., the lenders and issuing banks party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent, to the Credit Agreement dated as of
January 21, 2016, by and among Crown Castle International Corp., the lenders
and issuing banks from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent
96
Incorporated by Reference
Form
10-K
File Number
001-16441
Date of Filing
February 12,
2013
Exhibit
Number
10.43
8-K
001-16441
10-K
001-16441
10-K
001-16441
10-K
001-16441
10-K
001-16441
October 21,
2013
February 24,
2014
February 24,
2014
February 24,
2014
February 24,
2014
10.1
10.49
10.50
10.51
10.52
8-K
001-16441
January 22, 2016 10.1
8-K
001-16441
February 13,
2017
10.1
8-K
001-16441
August 29, 2017
10.1
8-K
001-16441
June 14, 2018
10.1
8-K
001-16441
March 20, 2019
10.1
8-K
001-16441
June 21, 2019
10.1
Incorporated by Reference
Form
8-K
File Number
001-16441
Date of Filing
June 22, 2021
Exhibit
Number
10.1
8-K
001-16441
July 8, 2022
10.1
001-16441
April 8, 2019
001-16441
December 20,
2023
10.1
10.1
8-K
8-K
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Exhibit Number
10.56
10.57
10.58
10.59
21*
23.1*
24*
31.1*
31.2*
32.1**
97†*
101*
104*
Exhibit Description
Amendment No. 6 dated as of June 18, 2021, among Crown Castle
International Corp., the lenders and issuing banks party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent, to the Credit Agreement dated as of
January 21, 2016, by and among Crown Castle International Corp., the lenders
and issuing banks from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent
Amendment No. 7 dated as of July 8, 2022, among Crown Castle International
Corp., the lenders and issuing banks party thereto, and JPMorgan Chase Bank,
N.A., as administrative agent, to the Credit Agreement dated as of January 21,
2016, by and among Crown Castle International Corp., the lenders and issuing
banks from time to time party thereto and JPMorgan Chase Bank, N.A., as
administrative agent
Form of Dealer Agreement among Crown Castle International Corp. and the
Dealer party thereto
Cooperation Agreement, between Crown Castle Inc., Elliott Investment
Management L.P., Elliott Associates, L.P., and Elliott International, L.P., dated
December 19, 2023
Schedule of Subsidiaries of Crown Castle Inc.
Consent of PricewaterhouseCoopers LLP
Power of Attorney (included on signature page of this annual report)
Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-
Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-
Oxley Act of 2002
Certification of Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of Sarbanes-Oxley Act of 2002
Crown Castle Inc. Incentive Compensation Recovery Policy
The following financial statements from Crown Castle Inc.'s Annual Report on
Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL:
(i) Consolidated Balance Sheet, (ii) Consolidated Statement of Operations and
Comprehensive Income (Loss), (iii) Consolidated Statement of Cash Flows,
(iv) Consolidated Statement of Equity, and (v) Notes to Consolidated Financial
Statements, tagged as blocks of text and including detailed tags
The cover page from Crown Castle Inc.'s Annual Report on Form 10-K for the
year ended December 31, 2023, formatted in Inline XBRL
* Filed herewith.
** Furnished herewith.
† Indicates management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
N/A
97
CROWN CASTLE INC. AND SUBSIDIARIES
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(In millions of dollars)
Allowance for Credit Losses:
2023
2022
2021
Deferred Tax Valuation Allowance:
2023
2022
2021
Balance at Beginning of
Year
Charged to Operations
Written Off
Balance at
End of Year
Additions
Deductions
$
$
$
19 $
17 $
17 $
11 $
8 $
5 $
(11) $
(6) $
(5) $
Balance at Beginning of
Year
Charged to Operations
Credited to Operations
Balance at
End of Year
Additions
Deductions
$
$
$
2 $
— $
— $
— $
2 $
— $
— $
— $
— $
19
19
17
2
2
—
98
CROWN CASTLE INC. AND SUBSIDIARIES
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED DECEMBER 31, 2023 AND 2022
(In millions of dollars)
Encumbrances
Initial Cost to
Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount
Carried at Close of
Current Period
Accumulated
Depreciation at Close
of Current Period Date of Construction
Date Acquired
Life on Which
Depreciation in
Latest Income
Statement is
Computed
1,760
(b)
(c)
(c)
$
29,383 $
(13,817)
Various
Various
Up to 20 years
Description
Communications
(a)
infrastructure
$
(a)
Includes (1) more than 40,000 towers, (2) approximately 115,000 small cells on air or under contract and (3) approximately 90,000 route miles of fiber. No single asset exceeds 5% of the
aggregate gross amounts at which the assets were carried at the close of the period set forth in the table above.
(b) Encumbrances are reported at face value, without contemplating the effect of deferred financing costs, discounts or premiums. Certain of the Company's debt is secured by (1) a security
interest in substantially all of the applicable issuers' assignable personal property, (2) a pledge of the equity interests in each applicable issuer and (3) a security interest in the applicable
issuers' leases with tenants to lease tower space (space licenses).
(c) The Company has omitted this information, as it would be impracticable to compile such information on an asset-by-asset basis.
Gross amount at beginning
Additions during period:
(a)
Acquisitions through foreclosure
Other acquisitions
Communications infrastructure construction and improvements
Purchase of land interests
Sustaining capital expenditures
Other
(b)
Total additions
Deductions during period:
Cost of real estate sold or disposed
Other
Total deductions
Balance at end
2023
2022
$
27,936 $
26,679
—
50
1,254
64
52
105
1,525
(78)
—
(78)
$
29,383 $
—
32
1,138
53
52
127
1,402
(145)
—
(145)
27,936
Includes acquisitions of communications infrastructure.
(a)
(b) Predominately relates to (1) the purchase of property and equipment under finance leases and installment land purchases, (2) asset retirement obligations and (3) capitalized stock-based
compensation.
Gross amount of accumulated depreciation at beginning
Additions during period:
Depreciation
Total additions
Deductions during period:
Amount for assets sold or disposed
Other
Total deductions
Balance at end
99
2023
2022
$
(12,649) $
(11,582)
(1,222)
(1,222)
38
16
54
(1,181)
(1,181)
105
9
114
$
(13,817) $
(12,649)
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this 2023 Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on this 23rd day of February, 2024.
SIGNATURES
CROWN CASTLE INC.
By:
POWER OF ATTORNEY
/s/ DANIEL K. SCHLANGER
Daniel K. Schlanger
Executive Vice President and Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Anthony J. Melone and Edward
B. Adams, Jr. and each of them, as his or her true and lawful attorneys-in-fact and agents with full power of substitution and re-substitution for him or her
and in his or her name, place and stead, in any and all capacities, to sign any and all documents relating to the 2023 Form 10-K, including any and all
amendments and supplements thereto, for the year ended December 31, 2023 and to file the same with all exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, this 2023 Form 10-K has been signed below
by the following persons on behalf of the Registrant and in the capacities indicated below on this 23rd day of February, 2024.
100
Name
/s/ ANTHONY J. MELONE
Anthony J. Melone
/s/ DANIEL K. SCHLANGER
Daniel K. Schlanger
/s/ ROBERT S. COLLINS
Robert S. Collins
/s/ P. ROBERT BARTOLO
P. Robert Bartolo
/s/ CINDY CHRISTY
Cindy Christy
/s/ ARI Q. FITZGERALD
Ari Q. Fitzgerald
/s/ JASON GENRICH
Jason Genrich
/s/ ANDREA J. GOLDSMITH
Andrea J. Goldsmith
/s/ TAMMY K. JONES
Tammy K. Jones
/s/ KEVIN T. KABAT
Kevin T. Kabat
/s/ SUNIT PATEL
Sunit Patel
/s/ BRADLEY E. SINGER
Bradley E. Singer
/s/ KEVIN A. STEPHENS
Kevin A. Stephens
/s/ MATTHEW THORNTON III
Matthew Thornton III
Title
Interim President and Chief Executive Officer, and Director
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Vice President and Controller
(Principal Accounting Officer)
Chair of the Board of Directors
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
101
Exhibit 4.37
DESCRIPTION OF COMMON STOCK
The following descriptions set forth certain general terms of our common. While we believe that the following description covers the
material terms of our common stock, the descriptions may not contain all of the information that is important to you. The descriptions set forth
below are not complete and are subject to, and qualified in their entirety by, our Restated Certificate of Incorporation, as amended and
corrected (“Charter”), our Amended and Restated By-laws (“By-laws”) and the General Corporation Law of the State of Delaware (“DGCL”).
Copies of our Charter and By-laws are filed as exhibits to the Annual Report on Form 10-K. You are urged to read the Charter and the By-laws
in their entirety.
As used in this Description of Common Stock, unless otherwise expressly stated or the context otherwise requires, the terms
“Company,” “Crown Castle,” “we,” “our” and “us” refer to Crown Castle Inc. (formerly, Crown Castle International Corp.) and not to any of
its subsidiaries.
Authorized Capital
We are authorized to issue up to 1,200,000,000 shares of common stock, par value $0.01 per share ("Common Stock"). Shares of our
Common Stock are listed for trading on the NYSE under the trading symbol “CCI.”
Common Stock
Voting Rights
Each share of our Common Stock is entitled to one vote. Holders of our Common Stock vote together as a single class on all matters
presented for a vote of the stockholders, except as provided under the DGCL. See also “-Charter and By-laws-Election and Removal of
Directors” below.
Dividends and Liquidation Rights
Each share of our Common Stock is entitled to receive dividends if, as and when declared by our board of directors out of funds
legally available for that purpose, subject to certain rights of holders of preferred stock. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, after satisfaction of amounts payable to our creditors and distribution of any preferential amounts to the
holders of outstanding preferred stock, holders of our Common Stock are entitled to share ratably in the assets available for distribution to the
stockholders.
Other Provisions
The holders of our Common Stock have no preemptive, subscription or redemption rights and are not entitled to the benefit of any
sinking fund. All outstanding shares of Common Stock are validly issued, fully paid and nonassessable. Under the DGCL, stockholders
generally are not personally liable for a corporation’s acts or debts.
Charter and By-laws
Stockholders’ rights and related matters are governed by the DGCL, our Charter and our By-laws. Certain provisions of our Charter
and By-laws, descriptions of which are summarized or otherwise incorporated within this Description of Common Stock, may have the effect,
either alone or in combination with each other, of discouraging or making more difficult a tender offer or takeover attempt that is opposed by
our board of directors but that a stockholder might consider to be in its best interest. Such provisions may also adversely affect prevailing
market prices for our Common Stock. We believe that such provisions are necessary to enable us to develop our business
1
in a manner that will foster our long-term growth without disruption caused by the threat of a takeover not deemed by our board of directors to
be in our best interests and those of our stockholders.
Election and Removal of Directors
The Charter provides for the annual election of directors on our board of directors.
The Charter also provides that any director, except for directors who may be elected by the holders of any series of preferred stock,
may be removed from office at any time, with or without cause, only by the affirmative vote of the holders of at least 80% of the voting power
of the then outstanding Voting Stock, voting together as a single class. “Voting Stock” is defined in the Charter as the outstanding shares of our
capital stock entitled to vote in a general vote of our stockholders as a single class with shares of our Common Stock.
No Stockholder Action by Written Consent; Special Meeting
The Charter prohibits stockholders from taking action by written consent in lieu of an annual or special meeting, and, thus,
stockholders may only take action at an annual or special meeting called in accordance with the By-laws. The By-laws provide that special
meetings of stockholders may only be called by (a) our secretary, chief executive officer or president at the direction of our board of directors
pursuant to a resolution adopted by the board of directors or (b) the chief executive officer.
These provisions could have the effect of delaying consideration of a stockholder proposal until the next annual meeting. These
provisions would also prevent the holders of a majority of the voting power of our capital stock entitled to vote from unilaterally using the
written consent procedure to take stockholder action.
Advance Notice Requirements for Stockholder Proposals and Director Nominations; Proxy Access
The By-laws establish advance notice and other procedural requirements for stockholder proposals and the nomination, other than by
or at the direction of the board of directors, of candidates for election as directors. These procedures provide that the notice of stockholder
proposals and stockholder nominations for the election of directors at an annual meeting must be in writing and received by our secretary at
least 90 days but not more than 120 days prior to the first anniversary of our preceding year’s annual meeting. However, if the date of our
annual meeting is more than 30 days earlier than, or more than 90 days later than, the anniversary date of our preceding year’s annual meeting,
notice by a Proposing Person (as defined in the By-laws) will be considered timely if it is delivered not earlier than the 120th day prior to such
annual meeting of stockholders and not later than the later of the 90th day prior to such annual meeting or the 10th day following the day on
which public disclosure of the date of the annual meeting was made. The notice of nominations for the election of directors must set forth
certain information concerning the Proposing Person giving the notice and each proposed nominee. In addition, the notice as to any other
business that the Proposing Person proposes to bring before the meeting must set forth certain information regarding such other proposed
business.
By requiring advance notice of nominations by Proposing Persons, these procedures afford our board of directors an opportunity to
consider the qualifications of the proposed nominees and, to the extent deemed necessary or desirable by the board of directors, to inform
stockholders about these qualifications. By requiring advance notice of other proposed business, these procedures provide our board of
directors with an opportunity to inform stockholders of any business proposed to be conducted at a meeting, together with any
recommendations as to the board of directors’ position on action to be taken on such business. This should allow stockholders to better decide
whether to attend a meeting or to grant a proxy for the disposition of any such business.
Our By-laws also contain a proxy access right provision to permit a stockholder, or group of up to 20 stockholders, who owns (and
continues to own) 3% or more of our outstanding Common Stock and has continuously owned our Common Stock for at least three years to
nominate and include in our proxy materials candidates for election as directors of the Company. Such stockholders or groups of stockholders
may nominate up
2
to the greater of two individuals or 20% of the board of directors, provided that the stockholders and the nominees satisfy the notice
requirements specified in the By-laws and comply with the other procedural requirements.
Dilution
The Charter provides that our board of directors is authorized to create and issue, whether or not in connection with the issuance and
sale of any of its stock or other securities or property, rights entitling the holders to purchase from us shares of stock or other securities of us or
of any other corporation. Our board of directors is authorized to issue these rights even though the creation and issuance of these rights could
have the effect of discouraging third parties from seeking, or impairing their right to seek, to:
•
•
•
•
acquire a significant portion of our outstanding securities;
engage in any transaction which might result in a change of control of the corporation; or
enter into any agreement, arrangement or understanding with another party to accomplish these
transactions or for the purpose of acquiring, holding, voting or disposing of any of our securities.
Amendments
The Charter and the By-laws provide that we may amend, alter, change or repeal any provision contained in the Charter or a preferred
stock designation. However, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding voting stock, voting
together as a single class, is required to amend, repeal or adopt any provision inconsistent with certain provisions of the Charter, including the
provisions discussed above relating to the issuance of stockholder rights, prohibiting stockholder action by written consent and prohibiting the
calling of special meetings by stockholders.
The By-laws may be amended by either the holders of 80% of the voting power of the voting stock or by the majority of the board, but
the board may alter, amend or repeal or adopt new by-laws in conflict with certain of the By-law provisions only by a two-thirds vote of the
entire board.
Section 203 of the Delaware General Corporation Law
We are subject to the provisions of Section 203 of the DGCL which generally prohibit certain transactions between a Delaware
corporation and an interested stockholder for a period of three years after the date such interested stockholder acquired its stock, unless:
•
•
•
the business combination is approved by the corporation’s board of directors prior to the date the interested stockholder acquired
shares;
the interested stockholder acquired at least 85% of the voting stock of the corporation in the transaction in which it became an
interested stockholder; or
the business combination is approved by a majority of the board of directors and by the affirmative vote of two-thirds of the
outstanding voting stock owned by disinterested stockholders at an annual or special meeting.
A business combination is defined broadly to include mergers, consolidations, sales or other dispositions of assets having an aggregate
value of 10% or more of the consolidated assets of the corporation, and certain transactions that would increase the interested stockholder’s
proportionate share ownership in the corporation. In general, Section 203 defines an interested stockholder as an entity or person beneficially
owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by
such entity or person.
Exclusive Forum
The By-laws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (a)
any derivative action or proceeding brought on behalf of us, (b) any action asserting a claim
3
of breach of a fiduciary duty owed by any of our current or past directors, officers or other employees to us or any of our stockholders
(including any beneficial owner of our stock), (c) any action asserting a claim arising pursuant to any provision of the DGCL, the Charter or
the By-Laws and (d) any action asserting a claim governed by the internal affairs doctrine, will, to the fullest extent permitted by law, be the
Court of Chancery of the State of Delaware or, if such court lacks jurisdiction, any state or federal court in the state of Delaware that has
jurisdiction. The By-laws also provide that, unless we consent in writing to the selection of an alternative forum, the U.S. federal courts shall
be the sole and exclusive forum for the resolution of any action asserting a cause of action arising under the Securities Act of 1933, as
amended. The By-laws also provide that any person (including any entity) purchasing or otherwise acquiring or holding any interest in shares
of our capital stock will be deemed to have notice of and consented to the exclusive forum provisions in the By-laws.
Limitations of Directors’ and Officers' Liability
The DGCL authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their
stockholders for monetary damages for breaches of directors’ or officers’ fiduciary duties, except for eliminating or limiting the liability of:
•
•
•
•
•
a director or officer for any breach of the director’s or officer’s duty of loyalty to us or our stockholders;
a direct or officer for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
a director under Section 174 of the DGCL;
a director or officer for any transaction from which the director or officer derived an improper personal benefit; and
an officer in any action by or in the right of the corporation.
The Charter provides that none of our directors or officers will be personally liable to us or our stockholders for monetary damages for
breach of fiduciary duty as a director or officer to the fullest extent permitted by the DGCL, as currently in effect or hereafter amended.
The effect of these provisions is to eliminate our rights and the rights of our stockholders (through stockholders’ derivatives suits on
behalf of us with respect to actions brought against directors) to recover monetary damages against a director or officer for breach of fiduciary
duty as a director or officer (including breaches resulting from grossly negligent behavior), except in the situations described above. These
provisions do not limit the liability of directors or officers under federal securities laws, do not limit the ability to bring an action against an
officer on behalf of us (through a stockholders’ derivative suit), and do not affect the availability of equitable remedies such as an injunction or
rescission based upon a director’s or officer’s breach of his duty of care.
Ownership Limitations and Transfer Restrictions
To facilitate our continued qualification as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as
amended (“Code”), the Charter contains ownership limitations and transfer restrictions on our capital stock. These ownership limitations and
transfer restrictions could have the effect of delaying, deferring or preventing a transaction or a change in control of us that might involve a
premium price for our capital stock or otherwise be in the best interest of our stockholders. All certificates representing shares of capital stock
bear a legend describing such ownership limitations and transfer restrictions.
In order for us to continue to satisfy the requirements for REIT qualification, our capital stock must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Also, not more
than 50% of the value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer “individuals” (as
defined in the Code to include certain entities such as private foundations) during the last half of a taxable year. To satisfy these ownership
requirements and other requirements for continued qualification as a REIT and to otherwise protect us from the consequences of a
concentration of ownership among our stockholders, the Charter contains provisions limiting the ownership and restricting the transfer of
shares of our capital stock.
4
The relevant section of the Charter provides that, among other things and subject to certain exceptions described below, no “Person”
(as defined in the Charter) may beneficially or constructively own, or be deemed to beneficially or constructively own by virtue of the
attribution provisions of the Code, more than 9.8%, by value or number of shares, whichever is more restrictive, of the outstanding shares of
our Common Stock (which restriction we refer to as the “common stock ownership limit”), or 9.8% in aggregate value of the outstanding
shares of all classes and series of our capital stock (which restriction we refer to as the “aggregate stock ownership limit”).
The applicable constructive ownership rules under the Code are complex and may cause capital stock owned actually or constructively
by a group of related individuals or entities to be treated as owned by one individual or entity. As a result, the acquisition of less than 9.8% in
value of our outstanding capital stock or less than 9.8% in value or number of our outstanding shares of Common Stock (including through the
acquisition of an interest in an entity that owns, actually or constructively, our Common Stock) by an individual or entity could nevertheless
cause that individual or entity, or another individual or entity, to own, constructively or beneficially, in excess of 9.8% in value of our
outstanding capital stock or 9.8% in value or number of our outstanding shares of Common Stock. The number and value of our outstanding
shares of capital stock (or any class or series thereof) beneficially or constructively owned by any individual or entity shall be determined by
our board of directors, whose determination shall be binding and conclusive.
Our board of directors, in its sole discretion, may (prospectively or retroactively) exempt a person from the aggregate stock ownership
limit and common stock ownership limit described above and may establish different limits on ownership for any such person (which we refer
to as an “excepted holder limit”) and may (prospectively or retroactively) increase any excepted holder limit with respect to any person.
However, our board of directors may not exempt any person or increase an excepted holder limit for any person whose ownership of
outstanding capital stock would violate the other provisions on transferability and ownership set forth in the Charter and described below. In
order to be considered by our board of directors for an exemption from the aggregate stock ownership limit and common stock ownership limit
or for an increase in an excepted holder limit, a person must make such representations and undertakings as our board of directors determines
are reasonably necessary to determine that no person’s beneficial or constructive ownership of our capital stock will violate the other
provisions on transferability and ownership set forth in the Charter and described below, and that such person does not and will not own,
actually or constructively, an interest in a tenant of ours that would cause us to own, actually or constructively, more than a 9.9% interest in
such tenant. As a condition to such exemption or such increase in an excepted holder limit, our board of directors may require an opinion of
counsel or Internal Revenue Service ruling satisfactory to our board of directors and may impose such other conditions or restrictions as it
deems necessary, appropriate or desirable in connection with granting such exemption or such increase in an excepted holder limit.
Our board of directors, in its sole discretion, may also increase or decrease the aggregate stock ownership limit and common stock
ownership limit for all stockholders, provided that the new ownership limits would not allow five or fewer persons to beneficially own more
than 49.9% of the value of our outstanding capital stock. A reduced aggregate stock ownership limit and common stock ownership limit will
not apply to any person whose percentage ownership of our capital stock or our Common Stock, as applicable, is in excess of such decreased
ownership limit, until such time as such person’s percentage ownership of our capital stock or our Common Stock, as applicable, equals or
falls below such decreased ownership limit. However, until such time as such person’s percentage ownership of our capital stock or our
Common Stock, as applicable, falls below such decreased ownership limit any further acquisition of our capital stock or our Common Stock,
as applicable, will be in violation of the decreased ownership limit.
The Charter further prohibits:
•
•
any person from beneficially owning shares of our capital stock to the extent that such beneficial ownership would result in our
being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held
during the last half of a taxable year);
any person from beneficially or constructively owning shares of our capital stock to the extent that such beneficial or constructive
ownership would otherwise result in our failing to qualify as a REIT (including, but not limited to, beneficial ownership or
constructive ownership that would result in our
5
actually owning or constructively owning an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income
derived by us from such tenant would cause us to fail to satisfy any of the gross income requirements of Section 856(c) of the
Code);
any person from beneficially or constructively owning shares of our capital stock to the extent such beneficial or constructive
ownership could result in our failing to qualify as a “domestically controlled qualified investment entity” within the meaning of
Section 897(h)(4)(B) of the Code; and
any person from transferring shares of our capital stock if such transfer would result in shares of our capital stock being
beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code).
•
•
The foregoing provisions on transferability and ownership, including the aggregate stock ownership limit and common stock
ownership limit, will not apply if our board of directors determines that it is no longer in our best interests to continue to qualify as a REIT.
Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will
or may violate the aggregate stock ownership limit and common stock ownership limit or any of the other foregoing restrictions on
transferability and ownership will be required to give written notice to us immediately (or, in the case of a proposed or attempted transaction,
written notice at least 15 days prior to such transaction) and provide us with such other information as we may request in order to determine
the effect, if any, of such transfer on our status as a REIT and to ensure compliance with the aggregate stock ownership limit and common
stock ownership limit.
Pursuant to the Charter, if there is any purported transfer of our capital stock or other event or change of circumstances that, if
effective, would violate any of the restrictions described above, then the number of shares causing the violation (rounded up to the nearest
whole share) will be automatically transferred to a trust for the exclusive benefit of a designated charitable beneficiary, except that any transfer
that results in the violation of the restriction relating to our capital stock being beneficially owned by fewer than 100 persons will be
automatically void and of no force or effect. The automatic transfer will be effective as of the close of business on the business day prior to the
date of the purported transfer or other event or change of circumstances that requires the transfer to the trust. We refer below to the person that
would have owned the shares if they had not been transferred to the trust as the “purported transferee.” No purported transferee shall acquire
any rights in such shares and any dividend or other distribution paid to the purported transferee, prior to our discovery that the shares had been
automatically transferred to a trust as described above, must be repaid to the trustee upon demand. If the transfer to the trust as described above
is not automatically effective, for any reason, to prevent violation of the applicable restriction contained in the Charter, then the transfer of the
excess shares will be automatically void and of no force or effect.
Shares of our capital stock transferred to the trustee are deemed to be offered for sale to us or our designee at a price per share equal to
the lesser of (i) the price per share paid by the purported transferee for the shares or, if the purported transferee did not give value for the
shares in connection with the event causing the shares to be held in trust (e.g., in the case of a gift, devise or other such transaction), the market
price on the day of such event and (ii) the market price of the shares on the date we accept, or our designee accepts, such offer. We have the
right to accept such offer until the trustee has sold the shares of our capital stock held in the trust pursuant to the clauses discussed below. We
may reduce the amount payable to the purported transferee by the amount of dividends or other distributions that we paid to the purported
transferee prior to our discovery that the shares had been transferred to the trust and that is owed by the purported transferee to the trustee as
described above. We shall pay the amount of such reduction to the trustee for the benefit of the charitable beneficiary. Upon a sale to us, the
interest of the charitable beneficiary in the shares sold terminates and the trustee must distribute the net proceeds of the sale to the purported
transferee and any dividends or other distributions held by the trustee shall be paid to the charitable beneficiary.
If we do not buy the shares, the trustee must, within 20 days after receiving notice from us of the transfer of shares to the trust, sell the
shares to a person or entity who could own the shares without violating the restrictions described above. Upon such a sale, the trustee must
distribute to the purported transferee an amount equal to the lesser of (i) the price paid by the purported transferee for the shares or, if the
purported transferee did not give value
6
for the shares in connection with the event causing the shares to be held in trust (e.g., in the case of a gift, devise or other such transaction), the
market price of the shares on the day of the event causing the shares to be held in the trust and (ii) the sales proceeds (net of commissions and
other expenses of sale) received by the trustee for the shares. The trustee may reduce the amount payable to the purported transferee by the
amount of any dividends or other distributions that we paid to the purported transferee before our discovery that the shares had been
transferred to the trust and that is owed by the purported transferee to the trustee as described above. Any net sales proceeds in excess of the
amount payable to the purported transferee will be immediately paid to the charitable beneficiary, together with any dividends or other
distributions held by the trustee with respect to such capital stock. In addition, if prior to discovery by us that shares of our capital stock have
been transferred to a trust, such shares of capital stock are sold by a purported transferee, then such shares will be deemed to have been sold on
behalf of the trust and, to the extent that the purported transferee received an amount for or in respect of such shares that exceeds the amount
that such purported transferee was entitled to receive as described above, such excess amount shall be paid to the trustee upon demand and
immediately paid to the charitable beneficiary. The purported transferee will have no rights in the shares held by the trustee.
The trustee will be designated by us and must be unaffiliated with us and with any purported transferee. Prior to the sale of any shares
by the trust, the trustee will receive, in trust for the beneficiary, all dividends and other distributions paid by us with respect to the shares, and
may also exercise all voting rights with respect to the shares.
Subject to the DGCL, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the
trustee’s sole discretion:
•
•
to rescind as void any vote cast by a purported transferee prior to our discovery that the shares have been transferred to the trust;
and
to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary of the trust.
However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.
In addition, if our board of directors determines that a proposed or purported transfer would violate the restrictions on ownership and
transfer of our capital stock set forth in the Charter, our board of directors may take such action as it deems necessary, appropriate or desirable
to refuse to give effect to or to prevent such violation, including causing us to redeem shares of our capital stock, refusing to give effect to the
transfer on our books or instituting proceedings to enjoin the transfer.
Within 30 days after the end of each taxable year, every owner of more than 5% (or such lower percentage as required by the Code or
the Treasury regulations thereunder) of the outstanding shares of our capital stock must provide us written notice of the person’s name and
address, the number of shares of each class and series of our capital stock that such person beneficially or constructively owns and a
description of the manner in which the shares are held. Each such owner must also provide us with such additional information as we may
request in order to determine the effect, if any, of such owner’s beneficial or constructive ownership on our qualification as a REIT and to
ensure compliance with the aggregate stock ownership limit and common stock ownership limit. In addition, each beneficial or constructive
owner of our capital stock, and any person (including the stockholder of record) who is holding shares of our capital stock for a beneficial or
constructive owner will, upon demand, be required to provide us with such information as we may request in order to determine our
qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such
compliance and to ensure compliance with the aggregate stock ownership limit and common stock ownership limit.
Transfer Agent and Registrar
Computershare Inc. is the transfer agent and registrar for the Company’s Common Stock.
7
Exhibit 10.2
January 16, 2024
Via DocuSign and Email (jay.brown@crowncastle.com)
Jay Brown
Crown Castle
8020 Katy Freeway
Houston, Texas 77024
Re: Confirmation of Retirement and ESSP
Dear Jay:
This letter refers to your notice of resignation under the Extended Service Separation Program (“ESSP”) of Crown Castle
Inc. (the “Company”), dated December 6, 2023.
While you will cease serving as the Company’s Chief Executive Officer and President on January 16, 2024 (the
“Retirement Date”), we have agreed that beginning January 17, 2024, and ending on June 6, 2024 you will be employed as an
Executive Advisor, reporting to the then Chief Executive Office and President, with responsibility for advising them on leadership
transition, corporate strategy and other similar matters. You will not be an officer or a member of the board of directors of the
Company (the “Board”), or an officer or a director or officer of any subsidiary of the Company. While employed as Executive
Advisor, you will continue to receive the same base salary you received in your prior role and participate in the same benefit
programs. You also will be eligible for the 2023 annual incentive to be paid out in March of 2024. You acknowledge that you will
not be eligible to receive an annual bonus with respect to 2024 and will not receive a 2024 long-term incentive award.
For purposes of the ESSP, your “Designated Termination Date” will be the Retirement Date, and you will be entitled to the
separation benefits set forth in the ESSP (other than a pro-rated annual bonus with respect to 2024), subject to the terms and
conditions thereof (including your obligation to remain employed in good standing through the Retirement Date).
You acknowledge and agree that your ceasing to serve as Chief Executive Officer and President, member of the Board (or
as a director or officer of the Company or any subsidiary), your transition to the role of Executive Advisor and the compensation
and benefits payable for service as Executive Advisor do not, individually or collectively, constitute “Good Reason” for purposes
of the Amended and Restated Severance Agreement between you and the Company or any similar plan or arrangement and that
you will have no entitlement to any benefits thereunder in connection with the foregoing.
Please sign this letter below to indicate your agreement with it. Of course, if you have any questions or if there is
something that you wish to discuss, please do not hesitate to reach out to me.
Crown Castle Inc.
By:
/s/ Edward B. Adams, Jr.
Name:
Title:
Date:
Edward B. “Teddy” Adams, Jr.
EVP & General Counsel
January 16, 2024
Jay Brown
By:
/s/ Jay Brown
Date:
January 16, 2024
2
Exhibit 10.8
NOTICE OF COMPENSATION CHANGE
January 23, 2024
Daniel K. Schlanger
8020 Katy Freeway
Houston, Texas 77024
Dear Dan:
The purpose of this letter is to provide you notice of an enhancement Crown Castle is making to your compensation package in the form of
restricted stock unit awards ("Retention RSU Awards") as consideration for your remaining with Crown Castle. These awards will be granted
to you, and this agreement shall become effective, on the later of (1) the date you acknowledge this compensation change by your signature
below; and (2) the date that the Board of Directors of Crown Castle Inc. ("Board") votes to approve such Retention RSU Awards. Further, as
detailed below and as further consideration, you acknowledge and agree that there has not been a Qualifying Termination as defined within
your Severance Agreement.
Retention RSU Award Summary:
• Retention RSU Part 1
◦
◦
◦
◦
Time-Based RSUs having a fair value of $1,240,000 as of the grant date.
Number of units to be determined by dividing grant value by the closing stock price on the date of grant.
Retention RSU Part 1 will vest in full on September 30, 2024 ("Vest Date #1"). Shares underlying such units (less shares
tendered for withholding taxes) will be delivered as soon as administratively possible following Vest Date #1.
These shares will vest regardless of whether you are employed will Crown Castle on September 30, 2024.
• Retention RSU Part 2
◦
◦
◦
9,599 time-based RSUs
Retention RSU Part 2 will vest in full on December 31, 2024 ("Vest Date #2"). Shares underlying such units (less shares
tendered for withholding taxes) will be delivered as soon as administratively possible following Vest Date #2.
These shares will not vest if you are not employed by Crown Castle on December 31, 2024.
Further, you acknowledge and agree to the following:
1. You agree that a Qualifying Termination has not occurred and will not occur on March 31, 2024, as was previously planned. As a
result, no event has occurred or is planned to occur that would result in you receiving benefits under your severance agreement.
2. Your severance agreement remains in place. Although not contemplated, if you experience a Qualifying Termination in the future, you
will be entitled to all termination benefits contained in such agreement, subject to your compliance with all post-employment
obligations contained in such agreement.
3. As previously mentioned, the granting of the Retention RSU Awards is contingent on and subject to the approval of the Board.
Please acknowledge your understanding and acceptance of the above described arrangement no later than January 24, 2024. If you have any
questions, please direct them to me. I look forward to continuing to work with you, Dan.
Sincerely,
/s/ Tony J. Melone
Tony J. Melone
President and CEO (Interim)
ACKNOWLEDGED AND ACCEPTED
Signature
Date:
/s/ Daniel K. Schlanger
January 23, 2024
2
Exhibit 10.7
Amended and Restated
Crown Castle Inc. Extended Service Separation Program
Crown Castle Inc. (“Company”) previously adopted the Crown Castle Inc. Extended Service Separation Program (“Program”) to
provide certain compensation benefits to long-term employees of the Company and its affiliates (collectively, “Company Group”)
who voluntarily terminate their employment with the Company Group. The Company has, effective October 17, 2023 (“Effective
Date”), amended and restated the Program to make certain changes to its terms. An employee is eligible to participate in the
Program if he or she has (i) attained certain minimum age and employment criteria, (ii) provided timely notice to the Company,
(iii) agreed to timely execute a Separation Agreement (defined below), including a general release of claims against the Company
Group as well as a confidentiality agreement and an assignment of inventions, (iv) for individuals who have received awards of
restricted stock units (“RSUs”) under the Company’s 2013 Long-Term Incentive Plan or the Company’s 2022 Long-Term
Incentive Plan (collectively, “LTIP”), agreed to timely execute an agreement containing post-employment restrictions, and (v)
continued to work for the Company Group in “good standing” until his or her employment termination date as selected and
approved by the Company hereunder (“Designated Termination Date”; the terms of “Miscellaneous–Not a Contract of
Employment” below shall apply at all times with respect to any Designated Termination Date).
Eligibility Criteria
1
An employee of the Company Group who is in “good standing” is eligible to participate in the Program if he or she satisfies the
following requirements. An employee who is in “good standing” and satisfies each of the applicable requirements listed below and
terminates on a Designated Termination Date will be treated as a “Qualifying Participant” for purposes of the Program.
1.
Voluntary Termination. The Program applies to a voluntary termination of employment with the Company Group
by an eligible employee. An employee whose termination of employment is involuntary or initiated by the Company Group for
any reason is not eligible to receive benefits under the Program.
2.
Employment Requirement. As a condition to receiving benefits under the Program, an employee must satisfy the
following requirements on or before the employee’s Designated Termination Date:
2
determined without rounding up fractional years of employment ;
a.
The employee must complete at least ten years of employment with the Company Group, which shall be
b.
The employee must attain at least 50 years of age; and
1
An employee will be in “good standing” or not in “good standing” as so determined, from time to time, by the Crown Castle USA Inc. Vice President of
Human Resources (“VPHR”, which term shall include any future title changes which relate to substantially the same officer position), in his or her total
discretion, after considering any information the VPHR deems relevant, including, the employee’s current and prior performance, compliance with
applicable laws, disciplinary record and compliance with the Company’s policies and procedures. The VPHR’s determination as to “good standing” shall be
determinative and final.
2
Any calculation of years of employment shall be determined by the VPHR and shall generally be based on an employee’s date of hire, including an
“adjusted” date of hire for an employee hired in connection with an acquisition and who received credit for periods of employment with an acquired
company. An employee who is considering retirement under the Program is encouraged to contact the Business Support department at
Retirement@crowncastle.com to confirm the calculation of his or her years of employment. The VPHR’s determination as to years of employment shall be
determinative and final.
c.
The sum of the employee’s age and years of employment must be equal to or greater than 70 (for purposes
of this calculation, fractional years may be included but not rounded up).
3.
Notice Requirement. An employee who satisfies the criteria above (or will satisfy such criteria as of the employee’s
Designated Termination Date) must provide the Company with timely notice of his or her intent to terminate employment with the
Company. The Company shall, from time to time, establish a minimum notification period (“Minimum Notification Period”) and
maximum extension period (“Maximum Extension Period”) which shall apply for purposes of this Program (see “Administration
of the Program” section below). The notification provided by the employee must propose the employee’s preferred termination
date (“Requested Termination Date”), which should be a date after such Minimum Notification Period. This notification must be
provided using the electronic mail address Retirement@crowncastle.com.
4.
Approval Requirement. The VPHR must formally approve in writing the employee’s eligibility for participation in
the Program as well as the Designated Termination Date before an employee is eligible to receive any benefits under this Program.
The VPHR shall, in his or her sole discretion, select and approve a Designated Termination Date for the employee, which
Designated Termination Date may be earlier or later than the Requested Termination Date; provided, however, that (i) the
Company shall not be required to provide any additional compensation to the employee if the VPHR selects a Designated
Termination Date earlier than the Requested Termination Date and (ii) the Designated Termination Date selected by the VPHR
shall be no later than the Maximum Extension Period after the Requested Termination Date.
5.
Continued Employment Requirement. In order to be eligible to receive benefits under the Program, an eligible
employee must continue to work as an employee for a member of the Company Group in “good standing”, as determined by the
VPHR, between the date that a proposed termination notice is delivered to the Company (as described in paragraph 3 above) and
the employee’s Designated Termination Date. If an otherwise eligible employee does not satisfy this requirement, he or she will
not receive any separation benefits under this Program.
6.
Separation Agreement Requirement. In order to be eligible to participate in this Program, an otherwise qualifying
employee will be required to fully release any and all claims that he or she may have against the members of the Company Group
and their employees, agents, directors, officers, stockholders, plan fiduciaries (if applicable), benefit plans (if applicable) and
representatives, and any successors and assigns of the foregoing, and make certain other promises, including with respect to
confidentiality of information and assignment of inventions, by timely executing a copy of the Separation Agreement relating to
the Program (“Separation Agreement”) with one or more members of the Company Group, as designated by the Company. A copy
of the Separation Agreement is available upon request by contacting Retirement@crowncastle.com. An employee who has elected
to participate in the Program will have at least 45 calendar days to review the Separation Agreement prior to signing it; provided,
however, that the employee may not sign it prior to his or her Designated Termination Date. An employee will have seven calendar
days to revoke the Separation Agreement after signing; however, if an employee elects to revoke the Separation Agreement, then
the employee will not receive any separation benefits under this Program.
7.
Post-Employment Obligations. If an eligible employee has received an Eligible RSU Award (defined below), he or
she will be required to timely execute an agreement with one or more members of the Company Group, as designated by the
Company, including terms regarding post-employment obligations and conditions, which may include, at the Company’s
discretion cooperation, non-competition, non-solicitation and confidentiality, the terms of which may be incorporated into the
Separation Agreement
request by contacting
Retirement@crowncastle.com.
referenced above. A copy of
is available upon
this agreement
2
Program Benefits
An employee who is classified as a Qualifying Participant on his or her Designated Termination Date will be eligible to receive the
following benefits upon termination of employment with the Company Group:
1.
Conditional Special Vesting. If a Qualifying Participant holds any Eligible RSU Awards on his or her Designated
Termination Date, then the Qualifying Participant may receive Conditional Special Vesting (defined below) pursuant to this
paragraph 1 of the “Program Benefits” section. From and after the termination of a Qualifying Participant’s employment, and so
long as the Qualifying Participant is, and has continuously been from and after such termination, in strict compliance with each of
the requirements described in paragraphs 6 and 7 of the “Eligibility Criteria” section above (which compliance shall be determined
at all times by the VPHR, in his or her sole discretion), then all Eligible RSU Awards held by the Qualifying Participant shall
continue to have the opportunity to have their transfer and forfeiture restrictions lapse (i.e., “vest”) pursuant to the terms (other
than any employment requirement) of the applicable Eligible RSU Award agreements as if the Qualifying Person had remained an
employee of the Company Group from and after the termination date (“Conditional Special Vesting”).
a. Each Eligible RSU Award (together with any shares of capital stock that may have been issued thereunder
following the Designated Termination Date) shall be forfeited on the earlier of (i) the date upon which the Qualifying Participant
elects to revoke the Separation Agreement (or any other agreement containing the requirements of paragraphs 6 and 7 of
“Eligibility Criteria” section above), and (ii) the date upon which the Qualifying Participant violates any provision of the
Separation Agreement (or any other agreement containing the requirements of paragraphs 6 and 7 of “Eligibility Criteria” section
above), as determined by the Company in its sole discretion.
b. Except as otherwise expressly set forth herein, each of the Qualifying Participant’s Eligible RSU Awards will
remain subject to the terms of its Eligible RSU Award agreement and the LTIP.
c. For purposes of this Program, the term “Eligible RSU Award” means, except as specified in the following
sentence, a time-based or performance-based RSU that is granted to an eligible employee at least six months prior to the date of
the employee’s termination of employment. RSUs granted outside of the annual long-term incentive compensation award cycle,
such as new hire RSUs, promotion RSUs and retention RSUs, will not be treated as Eligible RSU Awards.
2.
Retirement Benefit. A Qualifying Participant who does not hold any Eligible RSU Awards on his or her termination
date will receive a retirement contribution to his or her account under the Crown Castle Inc. 401(k) Plan or the Crown Castle
Puerto Rico 1165(e) Plan, as applicable (“Qualified Plan”). The amount of the retirement contribution will be equal to the lesser
of:
a.
Twenty-five percent (25%) of the Qualifying Participant’s Final Base Compensation (defined below); or
b.
The maximum annual contribution which may be made by the Company to the Qualified Plan under
applicable law, including Section 415(c) of the Internal Revenue Code of 1986, as amended, without necessitating additional
unintended contributions in order to satisfy applicable coverage or discrimination tests, for the year in which the Qualifying
Participant terminates his or her employment with the Company.
3
The retirement contribution will be funded to the Qualified Plan in the form of a fully nonforfeitable, discretionary nonelective
employer contribution, which shall be made to the Qualifying Participant’s account at a time determined by the Company in its
sole discretion but not later than the funding date which applies to discretionary nonelective employer contributions made by the
Company for the plan year during which the Qualifying Participant has terminated his or her employment.
For purposes of this Program, the term “Final Base Compensation” means either (i) a Qualifying Participant’s annualized base
salary as in effect on the date that the Qualifying Participant terminates his or her employment with the Company Group, or (ii) a
Qualifying Participant’s annualized base hourly pay, calculated using the Qualifying Participant’s base hourly rate of pay as in
effect on the date that the Qualifying Participant terminates his or her employment with the Company group and the average
number of weekly hours worked by the Qualifying Participant for the three-year period preceding the date that the Qualifying
Participant terminates his or her employment with the Company Group.
Administration of the Program
General. This Program shall be administered by the VPHR. The VPHR shall supervise the administration and enforcement of the
Program according to the terms and provisions outlined above and the rules approved by the Compensation Committee of the
Company’s Board of Directors. The VPHR shall have all powers necessary to accomplish these purposes, including, but not by
way of limitation, the right, power, and authority:
•
•
•
•
•
•
•
to establish, from time to time, the applicable Minimum Notification Period and Maximum Extension Period;
to select and approve the Designated Termination Date for each Qualifying Participant who elects to participate in the
Program;
to make rules, regulations, and bylaws for the administration of the Program that are not inconsistent with the terms and
provisions hereof, and to interpret and enforce the terms of the Program and the rules and regulations promulgated
thereunder;
to construe in his or her discretion all terms, provisions, conditions, and limitations of the Program;
to correct any defect or to supply any omission or to reconcile any inconsistency that may appear in the Program in such
manner and to such extent as he or she shall deem in his or her discretion expedient to effectuate the purposes of the
Program;
to determine in his or her discretion all questions relating to eligibility, including whether and when an employee has
incurred a termination of employment and the reason for such termination; and
to make a determination in his or her sole discretion as to the right of any individual to a benefit under the Program and to
prescribe procedures to be followed by employees in obtaining benefits hereunder.
Claims Review Procedure. If an employee submits a notice to the Company asking to participate in the Program and his or her
participation in the Program is not approved in writing by the VPHR, he or she may submit a written claim for reconsideration of
benefits under the Program to the VPHR outlining the basis for such claim. The VPHR will make a final decision as to a claim
within 90 days after receipt of the claim. If a decision is not given to the employee within such
4
claim review period, the claim shall be treated as if it were denied on the last day of the claims review period.
Miscellaneous
Not a Contract of Employment. The adoption and maintenance of the Program shall not be deemed to be a contract between the
Company Group and any individual or to be consideration for the employment of any individual. Nothing herein shall be deemed
to (i) give any individual the right to be retained in the employ of the Company Group, (ii) restrict the right of the Company Group
to discharge any individual at any time, (iii) give the Company Group the right to require any individual to remain in the employ
of the Company Group, or (iv) restrict any individual’s right to terminate his or her employment at any time.
Alienation of Interest Forbidden. The interest of an eligible employee under the Program may not be sold, transferred, assigned, or
encumbered in any manner, either voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be null and void; neither shall the benefits hereunder be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any individual to whom such benefits or funds are payable, nor shall they be an
asset in bankruptcy or subject to garnishment, attachment or other legal or equitable proceedings.
Amendment and Termination. The Compensation Committee of the Company’s Board of Directors may from time to time, in its
sole discretion, amend or discontinue, in whole or in part, any or all of the provisions of the Program on behalf of the Company
Group. The Compensation Committee may interpret, modify or terminate the Program in its sole discretion at any time; provided,
that, without the consent of the Qualifying Participant, no change in the Program may be made that would adversely affect the
rights of a Qualifying Participant with respect to benefits agreed to pursuant to the terms and conditions of a Separation Agreement
previously entered into between the Qualifying Participant and a member of the Company Group.
Other Agreements. Nothing in the Program is intended to reduce the Company Group’s protections or the employee’s obligations
under (i) any other agreement between the employee and the Company Group, or (ii) any applicable law.
Statute of Limitations. No person may bring any action pertaining to a claim for benefits under the Program following the earlier
of (i) 365 days after the final denial of his or her claim for benefits, or (ii) the limitations period under Texas contract law.
Governing Law. All provisions of the Program shall be construed in accordance with the laws of the State of Texas, except to the
extent preempted by applicable law and except to the extent that the conflicts of laws provisions of the State of Texas would
require the application of the relevant law of another jurisdiction. The venue for any litigation relating to the Program will be in
Harris County, Texas.
Interpretation. Unless expressed otherwise in this Agreement, the term “including” means “including without limitation” and the
use of the word “or” is not exclusive. The term “law” includes any (a) law of any jurisdiction (federal, state, local or other
jurisdiction), (b) statutory or common law or (c) applicable regulations.
5
CROWN CASTLE INC. SUBSIDIARIES
Subsidiary
Assurable Insurance LLC
CC Holdings GS V LLC
CC Towers Guarantor LLC
CC Towers Holding LLC
CCATT LLC
CCATT Holdings LLC
CCGS Holdings Corp.
CCTM Holdings LLC
CCTMO LLC
Crown Atlantic Company LLC
Crown Castle Atlantic LLC
Crown Castle CA Corp.
Crown Castle Fiber Holdings Corp.
Crown Castle Fiber LLC
Crown Castle GT Company LLC
Crown Castle GT Corp.
Crown Castle GT Holding Sub LLC
Crown Castle Investment II Corp.
Crown Castle Operating Company
Crown Castle South LLC
Crown Castle Towers 06-2 LLC
Crown Castle Towers LLC
Crown Castle USA Inc.
Crown Communication LLC
Global Signal Acquisitions II LLC
Global Signal Acquisitions IV LLC
Global Signal Holdings III LLC
Global Signal Operating Partnership, L.P.
Pinnacle Towers Acquisition LLC
Pinnacle Towers Acquisition Holdings LLC
Pinnacle Towers LLC
EXHIBIT 21
Jurisdiction of
Incorporation
Texas
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
New York
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Pennsylvania
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 ASR (No. 333-254500) and Form S-8 (No. 333-265081,
333-212383, 333-181715 and 333-188801) of Crown Castle Inc. of our report dated February 23, 2024 relating to the financial statements, financial
statement schedules and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 23, 2024
Exhibit 31.1
Certification
For the Year Ended December 31, 2023
I, Anthony J. Melone, certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of Crown Castle Inc. ("registrant");
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: February 23, 2024
/s/ Anthony J. Melone
Anthony J. Melone
Interim President and Chief Executive Officer, and Director
Exhibit 31.2
Certification
For the Year Ended December 31, 2023
I, Daniel K. Schlanger, certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of Crown Castle Inc. ("registrant");
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: February 23, 2024
/s/ Daniel K. Schlanger
Daniel K. Schlanger
Executive Vice President and Chief Financial Officer
Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of Crown Castle Inc., a Delaware Corporation ("Company"), for the period ended December 31, 2023
as filed with the Securities and Exchange Commission on the date hereof ("Report"), each of the undersigned officers of the Company hereby certifies
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of such officer's knowledge:
1)
2)
the Report complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company as of December 31, 2023 (the last date of the period covered by the Report).
/s/ Anthony J. Melone
Anthony J. Melone
Interim President and Chief Executive Officer, and Director
February 23, 2024
/s/ Daniel K. Schlanger
Daniel K. Schlanger
Executive Vice President and Chief Financial Officer
February 23, 2024
Crown Castle
Incentive Compensation Recovery Policy
Exhibit 97
Introduction
This Incentive Compensation Recovery Policy (“Recovery Policy”) is intended to comply, and will be interpreted to be consistent,
with Section 10D of the Securities Exchange Act of 1934, as amended, together with Rule 10D-1 promulgated thereunder, and
Section 303A.14 of the New York Stock Exchange (“NYSE”) Listed Company Manual (collectively, “Recovery Rules”). This
Recovery Policy applies independently of all other clawback, recoupment or forfeiture policies, agreements or other arrangements
of Crown Castle (collectively, “Other Clawback Policies”).
Unless defined in the text, capitalized terms used in this Recovery Policy have the meaning set forth in the “Definitions” section
below.
This Recovery Policy applies to Covered Officers of Crown Castle. While each Executive Officer is required to execute a
Recovery Policy Participation Agreement in the form attached as Exhibit A, in no event will failure to execute a Recovery Policy
Participation Agreement have an impact on the applicability or enforceability of this Recovery Policy.
Policy
In the event Crown Castle is required to prepare a Covered Financial Restatement, Crown Castle shall seek to recover
reasonably promptly the amount of any Excess Incentive Compensation that was Received by a Covered Officer; however, this
Recovery Policy applies only to Incentive Compensation that is Received by a Covered Officer: (i) after beginning services as an
Executive Officer; (ii) who served as an Executive Officer during the performance period for such Incentive Compensation; (iii)
while Crown Castle had a class of securities listed on the national securities exchange; and (iv) during the Look-back Period, but
no earlier than October 2, 2023 (“Effective Date”). Crown Castle’s obligation to recover Excess Incentive Compensation from a
Covered Officer is not dependent on if or when the applicable restated financial statements are filed.
Crown Castle must recover Excess Incentive Compensation pursuant to this Recovery Policy, unless the Compensation
Committee determines that recovery would be impracticable because: (i) the direct expense paid to a third party to assist in
enforcing this Recovery Policy would exceed the amount of Excess Incentive Compensation (however, Crown Castle must make
a reasonable attempt to recover such compensation before concluding that recovery is impracticable, document such reasonable
attempt and provide such documentation to the NYSE); or (ii) recovery would likely cause an otherwise tax-qualified retirement
plan, under which benefits are broadly available to Crown Castle’s employees, to fail to meet the requirements of 26 U.S.C.
401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
In no event will recoupment from a Covered Officer or any other action by Crown Castle or an agent of Crown Castle to recovery
Excess Incentive Compensation under this Recovery Policy be deemed: (i) “good reason” or term of similar import or to serve as
a basis for a claim of constructive termination under any benefit, compensation or severance arrangement applicable to such
Covered Officer; or (ii) to constitute a breach of a contract or other arrangement to which such Covered Officer is party.
1
If a Covered Financial Restatement demonstrates a deficiency, based on the adjusted Financial Reporting Measures, in the
amount of Incentive Compensation that was Received by a Covered Officer, the Company’s Board of Directors (“Board”) shall
have the authority to revise the Incentive Compensation payable to such Covered Officer or to take other such actions it deems
necessary to address such deficiency.
Means of Recovery
The Administrator shall have sole discretion to determine the appropriate timing and means by which Excess Incentive
Compensation shall be recovered, but such recovery must be reasonably prompt. Subject to compliance with any applicable law,
the Administrator may effect recovery under this Recovery Policy from any amount otherwise payable to the Covered Officer,
including amounts payable or paid to the Covered Officer prior to, on or after the Effective Date.
Any Excess Incentive Compensation that is Received by a Covered Officer and that has subsequently been (i) forfeited prior to
payment or delivery thereof or never paid or delivered to the Covered Officer (including as a result of termination of employment
or breach of contract) or (ii) recovered pursuant to Section 304 of the Sarbanes-Oxley Act, other federal or state law or Other
Clawback Policies, shall, in each case, be deemed recovered for purposes of this Recovery Policy. To the extent that any
remaining Excess Incentive Compensation consists of amounts paid to such Specified Officer in shares of Crown Castle common
stock that are still held by such Covered Officer, such Covered Officer is entitled to repay such amounts with such shares of
common stock. If a Covered Officer fails to repay any Excess Incentive Compensation in accordance with this Recovery Policy
within a reasonable amount of time, as determined by the Administrator in its sole discretion, the Administrator may require such
Covered Officer to reimburse Crown Castle for any and all expenses reasonably incurred (including legal fees) by Crown Castle
in recovering such Excess Incentive Compensation.
Administration
This Recovery Policy will be administered by the independent directors serving on the Board or such committee thereof charged
by the Board with administration of this Recovery Policy (“Administrator”). The Board has charged the Compensation Committee
to act as the initial Administrator. The Administrator will have the full power and authority to interpret, make determinations under,
and enforce this Recovery Policy, in accordance with the Recovery Rules. All determinations and decisions made by the
Administrator pursuant to this Recovery Policy will be final, conclusive and binding on all affected persons and need not be
uniform with respect to each individual covered by this Recovery Policy. Subject to any limitation under applicable law, the
Administrator may authorize and empower any officer or employee of Crown Castle to take any and all actions necessary or
appropriate to carry out the intent of this Recovery Policy (other than with respect to any recovery under this Recovery Policy
involving such officer or employee).
Definitions
“Covered Financial Restatement” means an accounting restatement required due to Crown Castle’s material
2
noncompliance with any financial reporting requirement under the federal securities laws, including any required accounting
restatement to correct an error in previously issued financial statements that is material to the previously issued financial
statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in
the current period. The following shall not constitute a Covered Financial Restatement: (i) out-of-period adjustments; (ii)
retrospective application of a change in accounting principle; (iii) retrospective revision to reportable segment information due to a
change in the structure of the internal organization of Crown Castle; (iv) retrospective reclassification due to a discontinued
operation; (v) retrospective application of a change in reporting entity, such as from a reorganization of entities under common
control; and (vi) retrospective revision for stock splits, reverse stock splits, stock dividends or other change in capital structure.
“Covered Officer” means Crown Castle’s current and former Executive Officers.
“Excess Incentive Compensation” means the amount of Incentive Compensation that is Received by a Covered Officer from
Crown Castle in excess of the amount that otherwise would have been received had it been determined based on the restated
Financial Reporting Measure following the completion of a Covered Financial Restatement as determined by the Administrator in
accordance with the Recovery Rules. The amount of Excess Incentive Compensation shall be determined on a gross basis,
without regard to any taxes owed or paid by the Covered Officer in respect of the Excess Incentive Compensation. For Incentive
Compensation based on stock price or total stockholder return, where the amount of Excess Incentive Compensation is not
subject to mathematical recalculation directly from the information in the Covered Financial Restatement, the amount of Excess
Incentive Compensation will be based on a reasonable estimate of the effect of the Covered Financial Restatement on the stock
price or total stockholder return upon which the Incentive Compensation was received.
“Executive Officer” means each “executive officer” of Crown Castle, as determined in accordance with the definition of “executive
officer” under Rule 10D-1(d), and includes, at a minimum, each person identified as an executive officer pursuant to Item 401(b)
of Regulation S-K during the Look-back Period.
“Financial Reporting Measures” means measures that are determined and presented in accordance with the accounting
principles used in preparing Crown Castle’s financial statements, and any measures that are derived in whole or in part from such
measures, including total stockholder return and stock price. Financial Reporting Measure need not be presented within Crown
Castle’s financial statements or included in a filing with the Securities and Exchange Commission.
“Incentive Compensation” means any compensation that is granted, earned or becomes vested, in whole or in part, upon the
attainment of a Financial Reporting Measure and as identified by the Administrator in accordance with the Recovery Rules.
Incentive Compensation is deemed “Received” by a Covered Officer in Crown Castle’s fiscal period during which the Financial
Reporting Measure specified in the Incentive Compensation award is achieved or attained, even if the payment, vesting, grant or
certification of achievement of the Incentive Compensation occurs after the end of that fiscal period.
3
“Look-back Period” means the three completed fiscal years of Crown Castle immediately preceding the Triggering Date. The
“Look-back Period” also includes any transition period (that results from a change in Crown Castle’s fiscal year) within or
immediately following the three completed fiscal years identified in the preceding sentence; provided, however, that a transition
period between the last day of Crown Castle’s previous fiscal year end and the first day of its new fiscal year that comprises a
period of nine to 12 months would be deemed a completed fiscal year.
“Triggering Date” means the earlier of: (i) the date the Board, a committee of the Board, or the officer or officers of Crown Castle
authorized to take such action if Board action is not required, concludes or reasonably should have concluded, that Crown Castle
is required to prepare a Covered Financial Restatement; or (ii) the date a court, regulator or other legally authorized body directs
Crown Castle to prepare a Covered Financial Restatement, provided that the determination and application of this Recovery
Policy as a result of this clause shall occur only after the action by such court, regulator or other legally authorized body, as
applicable, is final and non-appealable.
Amendment
Any amendment to this Policy shall be made only by the Board, or the appropriate committee thereof. If an amendment to this
Policy is made, appropriate disclosure should be made in accordance with applicable laws, regulations and listing standards of
the stock exchange on which shares of Crown Castle common stock are then trading.
4
Exhibit A
Recovery Policy Participation Agreement
This Recovery Policy Participation Agreement (“Participation Agreement”) to the Incentive Compensation Recovery Policy
(“Recovery Policy”) of Crown Castle Inc. (“Company”) is entered into between the Company and undersigned. Capitalized terms
used but not defined in this Participation Agreement shall have the meanings assigned to such terms in the Recovery Policy.
By signing below, the undersigned:
1. acknowledges, agrees and confirms that the undersigned has received and reviewed a copy of the Recovery Policy and
that the undersigned is, and the undersigned’s beneficiaries, heirs, executors, administrators or other legal
representatives, as applicable, are subject to the Recovery Policy;
2. agrees to comply with the Recovery Policy, including, without limitation, by returning, forfeiting or otherwise repaying
Excess Incentive Compensation pursuant to, and in accordance with, the Recovery Policy and applicable law, and that the
undersigned remains subject to the Recovery Policy during and after the undersigned’s employment or engagement with
the Company and any of its subsidiaries;
3. acknowledges and agrees that the Recovery Policy shall be governed by and construed in accordance with the laws of
the State of Texas without regard to conflicts of law principles. Except as otherwise provided under the Recovery Policy
and this Participation Agreement, the parties shall each bear their own expenses in connection with any dispute under or
relating to the Recovery Policy;
4. acknowledges and agrees that in the event of any inconsistency between the Recovery Policy and the terms of any
Severance Agreement, Separation Agreement or other similar agreement to which the undersigned is a party, or the terms
of any compensation plan, program, agreement or arrangement under which any Incentive Compensation has been
granted, awarded, earned or paid, in each case, the terms of the Recovery Policy shall govern; and
5. acknowledges that the Recovery Policy may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms thereof and the undersigned shall remain subject to the Recovery Policy in all respects, as
so amended, restated, supplemented or otherwise modified.
__________________________
Signature
__________________________
Print Name
__________________________
Date
5