Even as the pandemic adversely affected the economy, Crown Castle International experienced good results for the second quarter ended June 30, 2020 and maintained its full year 2020 Outlook, with the exception reduced net income.
“In the second quarter, we generated solid results that were in line with our expectations as our business continues to perform well during this period of unprecedented uncertainty,” stated Jay Brown, Crown Castle’s CEO. “We continue to anticipate a significant increase in industry activity in the second half of this year as our carrier customers invest to improve their existing networks and as 5G investments ramp.
Site rental revenues grew 4.4 percent, or $56 million, from second quarter 2019 to second quarter 2020, inclusive of approximately $69 million in organic contribution to site rental revenues and a $13 million decrease in straight-lined revenues. The $69 million in organic contribution to site rental revenues represents approximately 5.6 percent growth, comprised of 9.4 percent growth from new leasing activity and contracted tenant escalations, net of 3.8 percent from tenant non-renewals.
“Although the full rebound in overall industry activity on towers is taking a bit more time to materialize than we previously expected, we remain on track to generate at least 7 percent growth in AFFO per share this year,” Brown said. “Looking beyond this year, I am excited about what will likely be another decade-long investment cycle for our customers with the deployment of 5G and see the potential for our AFFO per share growth to improve next year.”
Capital expenditures during the quarter were $414 million, comprised of $24 million of sustaining capital expenditures and $390 million of discretionary capital expenditures. Discretionary capital expenditures included $295 million attributable to fiber, $88 million to towers, and $7 million attributable to other areas.
“We are excited about the significant network investments our customers are pursuing as they deploy 5G, and how well we are positioned with our comprehensive infrastructure offering across towers and fiber to meet our customers’ needs and create significant value for our shareholders,” stated Dan Schlanger, Crown Castle’s chief financial officer.
Towers, small cells and fiber solutions, are still the “best opportunity” for Crown Castle to to generate growth for its shareholders, according to Brown, and the United States is still the best market for opportunity.
“As we look forward, I am excited about the opportunity we see for Crown Castle to deliver long-term value to our shareholders while delivering dividend per share growth of 7 percent to 8 percent per year,” Brown said.