Crown Castle’s Towers Perform Well Again in Q3 While Small Cells Lag; 2023 Outlook Disappoints

As has been the case for most of the past two years, Crown Castle’s tower business had an excellent quarter while small cell results were disappointing. Long term, we expect towers to remain strong and for small cell sales growth to accelerate significantly from 2022 levels, but the outlook management provided for 2023 implies a weaker year. Offsetting our weaker 2023 forecast, Crown Castle will receive about $165 million in cash payments from T-Mobile in 2023 in exchange for the early cancellation of some Sprint small cell contracts. We are maintaining our $135 fair value estimate and believe the stock is fairly valued.