Crown Castle

Core moat drivers are strong and multi‑faceted. Switching costs are high: relocating a carrier’s equipment off a tower is complex, time‑consuming, and expensive, which protects cash flows once a site is on air.

Efficient scale also matters because new entrants face zoning, permitting, and site acquisition hurdles, especially in dense or strategically located areas where Crown Castle already operates about 40,000 towers. Intangible assets such as permits, ground leases, and established site rights add friction for challengers.

Cost advantages arise from shared infrastructure economics and low incremental costs for adding a second or third tenant per tower; company data show 2.2 to 2.9 tenants per tower by vintage and cash yields on invested capital of 10% to 21%.

Network effects are limited relative to payments networks but exist locally as carrier demand tends to coalesce on already permitted, well‑located assets.

Risks to the moat include carrier consolidation effects (e.g., Sprint cancellations), alternative network architectures, and future spectrum deployments that could favor different topologies; however, management now focuses exclusively on towers where these moats are strongest.

Component scores and weights: Switching costs 90 (35% weight), Efficient scale 90 (25%), Cost advantage 80 (20%), Intangibles 75 (15%), Network effects 35 (5%).

Pricing is anchored by multiyear, contract‑based escalators rather than discretionary price hikes. CPI‑linked contracts are modeled with 3% annual escalators, and organic growth also comes from amendments and new tenants.

That said, customer concentration limits unilateral pricing power: roughly 89% of site‑rental revenue comes from T‑Mobile, AT&T, and Verizon, which retain scale bargaining leverage.

The company has demonstrated it can preserve unit economics with disciplined capital spending and low sustaining capex, but tower pricing power remains good, not absolute.

The business behaves like a tollbooth: contracted tenant payments total about $28.1 billion with a weighted average remaining term near six years, and escalators add embedded growth.

Reported quarterly AFFO per share for continuing operations across Q4‑24 to Q3‑25 was 1.20, 1.10, 1.02, and 1.12, yielding an estimated TTM of about 4.44 per share, which aligns with the 2025 full‑year AFFO per share outlook midpoint of about 4.29. Predictability is tempered by episodic churn from carrier consolidation (Sprint cancellations) and by capex cycles at the carriers, but overall visibility is strong by REIT standards.

Balance sheet is investment grade and mostly fixed rate, but leverage is elevated until Fiber proceeds arrive. As of Q3 2025, roughly 84% of debt was fixed with a weighted average maturity near 6 years, revolver availability was about $4.2 billion, and about $2.7 billion of maturities were due over the next twelve months.

Ratings shown in the company’s supplement are BBB/BBB+ from S&P/Fitch and Baa3 from Moody’s. The $8.5 billion Fiber sale is expected to close in the first half of 2026, with proceeds primarily for debt reduction and a repurchase program, which should stabilize leverage in the targeted 6.0x to 6.5x range for a pure‑play tower REIT.

Risk‑free rates around 4.1% to 4.2% in late December 2025 remain a headwind to multiples but are manageable given the fixed‑rate mix.

Track record is mixed. The 2024 goodwill impairment of roughly $5.0 billion in the Fiber unit highlights the poor historical returns in that segment.

Management has since course‑corrected by agreeing to sell Fiber, resetting the dividend from $1.565 in Q1 2025 to $1.0625 per quarter thereafter, and adopting a payout policy of about 75% to 80% of AFFO with planned repurchases after close.

Sustaining capex needs in towers are minimal, and discretionary tower capex is modest, which supports higher through‑cycle cash conversion. Execution risk remains until Fiber proceeds are received and leverage is reduced, but the policy architecture is now aligned with long‑term value creation.

Leadership turnover was a real issue in 2024‑2025, including a CEO change in 2025. In August 2025 the board appointed Christian H. Hillabrant (ex Vantage Towers CEO) as President and CEO effective September 15, 2025, bringing deep tower operating experience.

CFO Sunit Patel is in place and the company created a Chief Transformation Officer role to focus on closing the Fiber transaction and streamlining operations. Governance has been engaged, including a strategic review influenced by shareholder input.

The new team’s strategy and early communication are sound, but long‑term execution remains to be demonstrated.