Crown Castle continues to eye opportunities to bring its array of fiber services to large enterprise business customers in its territory.
The service provider has plenty of assets to serve this segment, including 85,000 route miles of fiber and 37,000 on-net fiber buildings. It mainly serves large enterprises, including government, health care, education and large corporate enterprises.
Speaking at the Communacaopia and Technology conference, Jay Brown CEO and president of Crown Castle, said it will not chase small business opportunities.
“The more sensitive economic portion of fiber businesses, which include small and medium businesses, are not a component of our fiber business,” he said.
Brown likens the potential of selling fiber to enterprises wireless operator’s towers. “In the long term, we’ll look at enterprises similar to the way we look at towers,” he said. “While 85 percent of the revenues come from the big wireless operators, another 10-15 percent comes from others and the same thing exists on the fiber side.”
Enterprise, small cell synergies
Crown Castle can further bolster its small cell service reach and revenues by selling more fiber services to large enterprises.
Crown Castle can enhance its return on investment for the small cell segment by having a fiber network that can serve multiple purposes. “Our view of the enterprise fiber business is that it adds yields and return for an asset we’re investing in for small cells,” Brown said.
The service provider has been building out small cells since 2003 and has built about 120,000 small cells currently active or under contract. It installs small cells for indoor, outdoor and mixed-use areas and works with commercial real estate companies, carriers and other partners.
Fiber makes up 85 percent of the capital cost of deploying small cells. “In the places where we have high-density fiber, it makes sense to offer fiber-based services to enterprises that help add to the return.”
Returning to growth
One of Crown Castle’s key challenges is dealing with the churn it had to cycle through as T-Mobile consolidated and shut down the former Sprint cell sites.
During its second quarter 2023 earnings call, Crown Castle said it would focus on leveraging and extending its fiber network to ease the pain it is feeling from T-Mobile and Sprint network consolidation efforts. This included a $100 million net contribution of $97 million to small cells and $3 million to fiber solutions.
Brown maintains that macroeconomic trends had not ultimately impacted the service provider’s fiber business and it has plenty of runway to become profitable again.
The company has been generating returns by co-locating additional customers on its existing fiber assets.
“As we went through the COVID period, we’ve been in the 3 percent growth rate,” he said. “We expect to return to that by the end of the year as we exit out of the churn challenge it had with Sprint and T-Mobile consolidating.”
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