00:00SpaceX reportedly wants access to at least 80,000 cell sites across America.
00:05Bloomberg News reports that Crown Castle, one of the country's largest tower landlords,
00:10is among the companies in those talks.
00:12For a business with about 40,000 towers, that sounds like a major opportunity.
00:17But there's a catch.
00:18About 93% of Crown Castle's annualized site rental revenue comes from three wireless carriers
00:25in the industry SpaceX reportedly wants to enter.
00:28So is SpaceX Crown Castle's next big customer, or a new risk to the customers it already has.
00:34Crown Castle doesn't run a wireless network.
00:37It owns the infrastructure, about 40,000 towers and other structures,
00:42after selling its fiber and small cell businesses in May.
00:45Carriers rent space on those towers for their antennas, and the average tower carries two tenants.
00:51Adding another tenant to an existing tower can add rental revenue on steel that is already standing,
00:57subject to the site's capacity, any modifications needed, and the commercial terms.
01:02The question is who the existing tenants are.
01:05In the third quarter, T-Mobile, AT&T, and Verizon together made up 93% of Crown Castle's annualized site
01:14rental revenue.
01:15At the end of 2025, they made up 89.
01:18But that rise is mostly not the carrier's growing.
01:21Annualized site rental revenue fell from about $4.1 billion to about $3.9 billion.
01:28By our arithmetic on the rounded percentages, the three carriers stayed near $3.6 billion,
01:35while everyone else fell from about $450 million to about $270 million.
01:41The biggest reason is DISH.
01:43This year's outlook includes $220 million lost to DISH terminations, plus $20 million to Sprint cancellations.
01:51The second question is financial flexibility.
01:54Net debt was $17.6 billion at the end of September, a balance sheet figure, not an annual cost.
02:01That is 6.5 times the latest quarter's adjusted EBITDA, annualized.
02:06In guidance for adjusted funds from operations per share, a non-GAAP measure and not net income,
02:12has a midpoint of $4.60, up $0.01 since July.
02:17Now the two SpaceX events, which are not the same kind of news.
02:21On October 8th, after the market closed, SpaceX signed an agreement to buy up to 14 MHz of paired 800
02:28MHz spectrum from grain management.
02:31It has not closed.
02:32It needs regulatory approval, it is expected to close in the first half of 2027, and no price was disclosed.
02:40On October 22nd, after the close, came something different, a media report of talks, citing unnamed people.
02:48No company confirmed it, and no lease terms have been disclosed.
02:52The market reacted the same way both times.
02:54On October 9th, the tower landlords rose.
02:58Crown Castle 15.6%, American Tower 9.3%, SBA 7.3%.
03:04The carriers fell.
03:05T-Mobile 13.3%, AT&T 10.8%, Verizon 10.1%.
03:11On October 23rd, Crown Castle rose 9.1%, while T-Mobile fell 7.7% and AT&T 8%.
03:19These are observed price changes in the session after each event.
03:23They don't prove the news alone caused each move.
03:26A SpaceX ground network could lease existing Crown Castle towers.
03:29That would be new rental revenue, but how much depends on signed contracts?
03:33The number of sites, pricing, equipment and timing, and none of that is public.
03:38SpaceX could also build through other infrastructure.
03:41Rooftops, other tower owners, or radios on its own mounts, which its executives described in August.
03:47Crown Castle argues that small radios still need power and backhaul at every site, which its towers already have.
03:54And a new network would compete with the three carriers that pay most of Crown Castle's rent.
03:59That wouldn't stop their rent checks tomorrow, but over time it could shape how much they invest and what they
04:05renew.
04:06Both paths are possible.
04:08Neither is quantified.
04:09Crown Castle has met a new national network before.
04:12In November 2020, Dish signed a long-term agreement to lease space on up to 20,000 Crown Castle towers
04:19for its 5G build.
04:21In January this year, after a payment default, Crown Castle terminated those leases.
04:26That doesn't predict how a SpaceX deal would go.
04:29It shows that a reported talk, a signed lease, and a paying tenant are three different milestones.
04:35The stock has repriced quickly.
04:37Crown Castle closed at $68.89 on October 8th and at $85.97 on October 23rd, up 24.8%
04:46in 11 sessions.
04:48But in early June it closed above $94, and on October 1st it closed at $66.
04:54The rally recovered much of a decline.
04:57It is not, by itself, evidence of a lasting change in the business.
05:01One way to see the shift, divide the share price by this year's guided adjusted funds from operations per share,
05:08$4.60.
05:10At the October 8th close, that's about 15 times.
05:13At the October 23rd close, about 18.7 times.
05:17It's our illustrative calculation, not a gap price-to-earnings ratio.
05:22The guidance barely moved.
05:23The multiple moved because expectations did.
05:26It doesn't tell us whether the stock is cheap or expensive.
05:29The filing also shows what comes up for renewal.
05:32For 2028, Crown Castle lists about $643 million of annualized rental cash payments from AT&T at the time of
05:42renewal.
05:43The company's own projections assume renewals or extensions.
05:47This is a large renewal exposure, not a predetermined revenue loss.
05:52So what would turn the possibility into numbers?
05:54A signed lease with disclosed terms.
05:57Regulatory approval and closing of the spectrum purchase.
06:01Actual deployment commitments.
06:03How many sites, on whose infrastructure, and when.
06:06And the carrier's renewal decisions, starting with 2028.
06:11SpaceX could become a valuable new customer for Crown Castle.
06:14It could also reshape the wireless industry that supplies most of Crown Castle's rental revenue.
06:20That is the two-sided bet.
06:21The market has already repriced the possibility.
06:25What's still missing is a confirmed agreement, deployment commitments, and financial terms that show how much of the opportunity Crown
06:32Castle can capture.
06:33Until then, it's real enough to investigate, but not yet quantified.
06:38We don't predict the market.
06:39We explain what happened.
06:41We don't predict the market.
06:41We don't predict the market.
