Crown Castle (CCI)

Business Overview

Crown Castle is the only one of the three listed US tower REITs that now owns nothing else. It closed the sale of its fibre and small-cell businesses on 1 May 2026, and what is left is more than 40,000 towers in a single country, let to a tenant list short enough to name: T-Mobile, AT&T and Verizon together paid roughly 90% of 2025 site rental revenue.

The disposal was agreed on 13 March 2025 at $8.5 billion and closed for about $8.4 billion of net proceeds after price adjustments. That money has already been spent. Crown Castle bought back $1.0 billion of stock during the second quarter of 2026 at an average price of $88.66, and repaid more than $7 billion of debt. So this is not a company waiting on a catalyst; it is a company whose balance sheet has already changed shape.

Read the churn headline twice. Crown Castle reports non-renewal churn of 0.7% for FY2025, about $27 million against a tower billings base of roughly $3.9 billion. That figure is struck after taking out the Sprint and DISH departures. The T-Mobile and Sprint network consolidation removed around $200 million of tower rent in 2025 on its own, some 5% of the same base, so the rent Crown Castle actually lost that year was nearer 6% than 0.7%, and site rental revenue fell. Nothing here is concealed: the exclusion is disclosed, and the excluded figure genuinely describes what a normal year looks like once a merger has worked through. But 0.7% is not what the company lost, and a screen that ranks Crown Castle as the stickiest US tower name on it has ranked it on a number the company does not claim as its own experience.

How Tower Economics Work

Organic growth has three legs, and only one of them is the escalator. Escalators are a gross number. Churn is subtracted from it. Colocation and amendments, new equipment added to towers that already have a tenant, are the third leg. Crown Castle's FY2025 organic billings growth was 3.8% on the basis that excludes both Sprint and DISH (4.9% with DISH left in): roughly 3 points of escalator, 0.7 taken back by non-renewals, and about a point and a half added by new leasing. The 2026 guide is about 3.6% on the same basis. Quote an escalator on its own and you have quoted a third of the answer.

A fixed escalator is a nominal step, not a real one. Crown Castle's leases escalate by a fixed dollar amount, a fixed percentage or CPI, and the supplemental package projects the CPI-linked contracts forward at 3% a year. Where the escalator is fixed rather than indexed, 3% is 3% of nominal rent: run inflation above that and the landlord is taking a real-terms cut while the contract still reads as growth. The escalator guide works the mechanism through.

Do not judge a tower REIT on revenue growth. Site rental revenue fell $219 million, or 5.1%, from 2024 to 2025. Of that fall, $61 million was lower amortisation of prepaid rent and $147 million was lower straight-lined revenue. Straight-lining spreads the contracted escalators evenly across a lease, so revenue in any one year reflects a schedule set when the lease was signed rather than cash collected in that year. Two accounting lines therefore explain $208 million of a $219 million decline. Billings and AFFO are the lines that move with cash.

The ground under the tower is the cost nobody at Crown Castle sets. The company does not own the land beneath most of its sites. Towers accounting for about 60% of tower adjusted site rental gross margin stand on leased ground, with an average total remaining life of roughly 35 years. Tenant rent escalates on a contract Crown Castle wrote. Ground rent escalates on a contract the landowner wrote, and it comes up for renewal on the landowner's clock. That asymmetry is the largest cost line in the tower model that the tower owner does not control, and it is why ground lease extension and purchase programmes take up so much of the sector's capital.

AFFO, and what its level does not tell you. FY2025 AFFO was $4.36 per share, down 4% on 2024. Read the multiple and never the level: AFFO per share is total AFFO divided by whatever share count a company happens to have, so Crown Castle's $4.36 against SBA's $12.85 says only that SBA has around 107 million shares to Crown Castle's 437 million. At $92.30 on 10 June 2026, the multiple was about 21.2 times. One further caution before ranking anyone on it. Nareit defines FFO; no standard-setter defines AFFO, so each REIT builds it on its own schedule of deductions. Open the maintenance capital line first. The AFFO for towers guide sets out where the discretion sits.

Three leverage numbers, one balance sheet. At 31 December 2025 Crown Castle reported a Total Net Leverage Ratio of 5.9 times, the covenant measure under its 2016 credit facility, on net debt of $24.19 billion. Divide that same net debt by the $2.9 billion of adjusted EBITDA the towers earned and the answer is 8.3 times. By 30 June 2026 net debt was $17.10 billion and the company reported 6.3 times net debt to EBITDA, inside a target range of 6.0 to 6.5 times it describes as its investment-grade level.

Those three figures are not a trend line. The 8.3 and the 6.3 share a basis, and between them they show the deleveraging that actually happened once the sale proceeds hit the debt. The 5.9 does not share it, so a reader who anchors on the covenant number and then meets 6.3 will read a genuine improvement as a deterioration. Say which ratio you are quoting, and never difference two of them.

What to Watch in the Financials

Whether the dividend and AFFO converge. The quarterly dividend is $1.0625, or $4.25 a year, following a 24% per-share cut during 2025. That is about 97% of FY2025 AFFO and about 93% of the $4.59 guided for 2026. Tower REITs can carry high payouts because the rent is contracted, but at this level dividend growth has to wait on AFFO growth.

Sprint runs to 2034. The 10-K says further non-renewals from the T-Mobile agreement will keep arriving through 2034, within the historical 1% to 2% of annual tower site rental revenue. The excluded item is not a single year's event that has now cleared, so the gap between the headline churn rate and the rent actually lost persists, narrower, for years.

What is driving AFFO now. Second-quarter 2026 AFFO rose 10% to $488 million, almost entirely on lower interest expense and interest earned on the sale proceeds. That is a one-off step up in the base rather than a growth rate: adjusted EBITDA is guided 6% below 2025, and full-year 2026 AFFO to $1.975 billion, or $4.59 per share.

Ground rent as a share of gross margin. An average remaining ground lease life of about 35 years is comfortable in aggregate and says nothing about the near end of the distribution. Watch whether ground costs grow faster than tenant billings, because that is the spread the escalator is really earning.

Valuation Framework

At $92.30 on 10 June 2026, Crown Castle traded at roughly 21.2 times FY2025 AFFO per share, at the top of the tower band of about 15 to 22 times. On the $4.59 guided for 2026 the multiple is about 20 times, so some of the premium is the market looking through a year in which the Sprint rent was still leaving.

What the premium is not paying for is superior churn, because the headline overstates it. The defensible case is different: Crown Castle is the cleanest pure read on US tower economics, with no currency, no country risk and no fibre business inside the numbers, and a balance sheet that has moved from 8.3 to 6.3 times on a like-for-like basis in six months. Against that sit a three-name tenant list, a payout with little room in it, and organic growth guided below 2025's.

Rate sensitivity runs through the usual channel. The cash flows are contracted, escalator-driven and long, so most of the value sits a long way out, and leverage amplifies whatever the discount rate does. Our planning 10-year Treasury of 4.50% is the conservative stress. At the bottom of the tower band, 15 times $4.36 is about $65 a share, which is a duration illustration rather than a forecast.

Key Risks

Three tenants pay nine tenths of the rent. Retention of 98% to 99% describes an ordinary year, and ordinary years are most years. Sprint is the demonstration of the other kind. Tower churn does not decay steadily; it arrives in a block several years after two carriers announce a merger and start switching off duplicate sites, and it took roughly $200 million of annual rent out of a $3.9 billion base. With three national tenants left, there is one fewer merger available to do it again, and correspondingly more damage if one happens.

Ground rent is the open end of the cost base. Roughly 60% of tower gross margin sits on land Crown Castle rents. Renewal terms are set by thousands of individual landowners with no obligation to match the 3% the tenant leases escalate at.

Leverage compared across bases. The 5.9 times covenant ratio, the 8.3 times arithmetic at the same date and the 6.3 times reported six months later measure different things. Quoting one against a peer's differently-defined figure invites false comfort in either direction.

A payout with little slack. At about 93% of guided 2026 AFFO, the dividend leaves modest room for reinvestment or for a bad year, and the 2025 cut is recent enough to be part of the record rather than history.

What the Screening Shows

Against the Infrastructure & Digital REITs Primer thresholds:

• Churn: about 6% of tower billings in 2025 including the Sprint consolidation; 0.7% on the company's excluding-Sprint-and-DISH basis. Use the first to judge 2025, the second to forecast a normal year, and never rank peers on either without the footnote.
• Leverage: 6.3x net debt to EBITDA at 30 June 2026, inside the 6.0 to 6.5x target. Not comparable with the 5.9x covenant reading it appears to follow.
• AFFO: $4.36 per share for FY2025, $4.59 guided for 2026. P/AFFO about 21.2x on the trailing figure, the top of the tower band.
• Payout: $4.25 annualised dividend, roughly 93% of guided 2026 AFFO, after a 24% cut in 2025.
• Tenant concentration: about 90% of site rental revenue from three carriers, in one country.
• Portfolio: pure US towers since 1 May 2026. The cleanest comparison to American Tower's global mix, and also the narrowest.

The multiple is at the top of its band while organic growth is guided below last year's. What has to justify that is the quality of a contracted, US-only rent stream and a repaired balance sheet, not a churn rate that leaves out the largest tenant loss the sector has seen in a decade.