Crown Castle CEO Steven Moskowitz said the changes were designed to drive operational efficiencies and enhance returns in fiber solutions and small cells.
Crown Castle USA Inc. has announced it will cut 10% of its workforce and close certain offices as part of a broader effort to reduce costs and refocus its capital expenditures. The telecommunications infrastructure company detailed these measures while outlining its strategic review and plans for the future.
Capital Expenditure Reductions
Crown Castle stated it would lower its capital expenditures on “lower-return opportunities” by $275 million to $325 million in 2024. Despite these cuts, the company maintains its expectations for revenue growth across its towers, small cells, and fiber solutions.
Operational Efficiency and Job Cuts
Steven Moskowitz, who was appointed CEO in April, emphasized the necessity of these measures. “As we have continued to progress the strategic and operating review of Crown Castle’s fiber business, we are implementing changes designed to drive operational efficiencies and enhance returns in fiber solutions and small cells,” said Moskowitz. He noted that the reduction in capital expenditures will lead to decreased activity, prompting the company to reduce staffing levels and close certain offices.
Moskowitz expects these changes to deliver approximately $100 million in annualized run-rate operating cost savings, with $60 million expected to benefit the full year 2024 results. “We believe this increased focus on cost discipline and capital efficiency will enable us to generate higher returns and reduce our reliance on external capital to fund organic growth opportunities,” he added.
Small Cell Node Reductions
Crown Castle will cut between 3,000 and 5,000 small cell nodes from its 2024 construction plans. The company now projects the deployment of 11,000 to 13,000 new small cell nodes, down from the 16,000 initially planned. This reduction is part of a strategy to focus on a higher mix of collocations and network-adjacent anchor nodes while de-emphasizing greenfield locations.
“With this shift in approach, Crown Castle believes it can reduce the capital intensity of small cell projects by narrowing its investment focus,” Moskowitz explained.
Financial Outlook
Crown Castle has adjusted its 2024 EBITDA outlook, increasing it by $5 million, primarily due to planned staffing reductions and office closures. This announcement comes just days after Crown Castle’s CFO Daniel Schlanger emphasized the company’s small cell expansion plans. “What we’ve seen is a significant increase in the amount of small cells we believe that we will generate revenue,” Schlanger said at a recent investor event.
Industry Reactions and Future Prospects
The small cell industry’s growth expectations have been tempered by Crown Castle’s recent announcements. In 2018, estimates predicted the US small cell market would grow to 800,000 cells by 2026, but recent figures show only 202,100 outdoor small cells in operation as of the end of 2023.
Despite this, Crown Castle sees opportunities to increase the number of collocation nodes and improve returns by focusing on locations nearer to its existing network. The company expects these operational changes to lead to a reduction of new leasing activity by approximately $15 million in 2024.
Ongoing Strategic Review
Crown Castle’s strategic review of its fiber and small cell businesses continues, with potential sales still on the table. DigitalBridge is reportedly in the running to purchase the $15 billion operation.