Steven Moskowitz
President and Chief Executive Officer at Crown Castle
Thank you, Kris, and good afternoon, everyone.
I'm pleased to report that for the third quarter, our teams delivered solid operating and financial performance across our Towers and Fiber businesses, including Small Cells and Fiber Solutions, which allows us to reaffirm our full year 2024 outlook for adjusted EBITDA and AFFO. We continue to expect consolidated organic revenue growth of approximately 5% for the full year 2024, which includes growth of 4.5% in towers, 10% in small cells, and 2% in fiber solutions.
Our results in this quarter validate our ability to continue to deliver for our customers and shareholders while implementing the significant changes to how we operate and invest in our business that we announced in June. Our performance also demonstrates our ability to generate consistent underlying growth through wireless generational upgrade cycles and the ongoing demand for broadband connections.
Looking out over the next several years, we continue to be excited about the prospects for continued demand of our assets since mobile devices have become essential tools for communication, information, and entertainment. And we continue to see more data moving than ever before across wireless and wired networks.
CTIA, the Cellular Telephone Industry Association, recently reported that U.S. wireless data usage surpassed 100 trillion megabytes in 2023, marking a 36% increase from the prior year. This is the largest year-over-year increase in absolute data usage in the history of the U.S. wireless industry, continuing three decades of robust growth in mobile data traffic.
With wired networks, broadband usage in the U.S. is also experiencing a continuous surge as businesses embrace heavy data consumption, and fiber optics continues to be firmly established as the leading wired technology to transmit greater amounts of data at the highest possible speeds. With these trends before us and the industry forecasts suggesting that wireless and wired data demand will drive significant network investments by our customers to keep pace, we are confident that our towers, small cells and fiber assets are positioned well to benefit from these data usage tailwinds.
In addition to these demand-oriented drivers, we expect to capitalize on future growth and drive value creation across each of our businesses as we continue to strengthen our own market position and relationships with our leading carrier customers. We believe that our current efforts underway to modify our organization and our strategy will ultimately bolster the long-term strength and stability of our cash flows and enable us to capture incremental revenue growth.
Let me briefly outline some ways that we are evolving. Starting with the Tower business, we have recently announced an organizational change that I'm excited about. We're welcoming back Cathy Piche as leader of our Tower business. She will succeed Mike Kavanagh, who is retiring after 14 successful years with Crown Castle. On behalf of the Crown Castle team, I want to thank Mike for his many contributions over the years and wish him the best in whatever future endeavors he pursues.
With Cathy, she brings significant sector experience, having started in the Tower business way back in 2001. And she has deep institutional knowledge and strong relationships within Crown Castle's workforce and among Crown Castle's wireless customer base from her previous 12-year tenure at our company. We have the benefit of having Cathy and Mike work together over the next couple of months to ensure a smooth transition.
Looking ahead, we are committed to building on the strengths of our company, particularly in serving wireless carrier customers as a trusted infrastructure partner built on quality service and integrity. Recently, I heard from an executive at one of our large national wireless carriers that our teams are recognized for being thoughtful, for being communicative, and for being dedicated to meeting their needs, feedback that reinforces our approach. As we move forward, critically important to our success in towers is revenue growth, so we will be even more laser-focused on securing new organic revenue opportunities.
One initiative that we are accelerating to help us to achieve our goal is digitizing our tower portfolio. Using the latest in drone technology and enhanced automation of our IT infrastructure, our teams are capturing digital images of our towers, which allows us to visualize marketable space and access reliable data more efficiently. We believe this will help us make faster and more informed commercial decisions, make our sites more friendly for colocation, accelerate the customer application to installation cycle time, and speed up the customer construction and installation process while keeping issues at our sites to a minimum. All of this is expected to lead to improved project management capabilities, so it is more seamless for our customers to add equipment or colocate on our sites.
We're also developing a new state-of-the-art process and software tool that our tower field technicians will use for tracking and expediting customer service requests and site events to operate more effectively and efficiently across our vast footprint. Refining our processes and leveraging technology will make it easier for our employees to deliver better for our customers, all in an effort to be known as a trusted supplier so we can win more business and drive profitability.
In addition to operational improvements, we also plan to continue relying on comprehensive MLAs with our largest customers. By having these agreements in place, we expect to benefit from more stable and predictable revenue growth over time, while making it easier for our customers to budget their capital and operating dollars, and also making it easier for our customers to access our sites promptly and with fewer hassles. When combined with our operating improvements, we believe these agreements will help us win a greater share of the market going forward.
As we shift our focus to our Fiber and Small Cell businesses, I want to reiterate points from our last earnings call. Our operational review of the fiber segment confirmed that our assets are in excellent strategic locations and equipped with the capacity necessary to support both existing and expanding wireless and broadband customers. Based on the virtues of our fiber footprint, we announced in June that we revised our operating strategy with the goal of maximizing financial returns on our investments. Our revised strategy includes focusing on opportunities to capture market share by selling more new business within and near our existing footprints.
We believe this approach positions us to achieve higher returns in both small cells and fiber solutions and drives increased cash flow for our business. To that end, we have completed successful discussions with our customers and identified approximately 7,000 nodes in our contracted backlog that we, along with our customers, have mutually agreed to cancel. These nodes were largely greenfield builds in locations that had countless zoning and permitting delays or in high-cost markets that did not meet our investment parameters and required higher-than-normal capital investment from our customers. By removing these low-yielding anchor nodes from our backlog, we expect to save about $800 million in future capital spend.
So after making these changes, our backlog now stands at approximately 40,000 nodes with an improved risk return profile since most of this backlog are colocations, which allows us to add revenue with less capital investment. We continue to believe that persistent growth in U.S. mobile data demand will necessitate additional network capacity and densification that macro towers alone cannot provide, particularly in densely populated areas where demand is most concentrated. As carriers continue to deploy their mid-band spectrum, densification will eventually play an increasingly vital role in enhancing network performance. And looking ahead, we remain confident in the market potential for these low-profile fiber-fed cell sites.
Moving on, let me provide you with an update on our Fiber Solutions business, which focuses on delivering high-bandwidth communications connectivity to enterprise customers. Our primary clients include wireless and wholesale carriers, government entities, healthcare providers, educational systems, financial institutions, and other large organizations. Like we have done in our small cell business, we have recently made changes to enhance the profitability and efficiency of our fiber solutions offering.
We are prioritizing colocation activities within our existing footprint, working closely with our customers to capitalize on what we call on-net and near-net opportunities in and around our networks. This strategy is enabling us to grow revenues with reduced capital investment compared to previous years. Since implementing these operational changes in June, we've been encouraged by the early results. In the third quarter, we delivered 2% organic growth, excluding $4 million of prior period revenue adjustments, and we expect to deliver 2% growth for full year 2024, excluding the impact of some Sprint Cancellations.
Our thesis is driven by emerging trends that indicate promising growth potential. Demand drivers, including from AI, suggest that the need for data transport will continue to rise, and our connection hubs in major cities are well positioned to meet this demand. And our revised operational strategy should drive higher profitability, allowing us to capitalize on these positive demand trends to generate sustainable growth.
Lastly, I'd like to provide a very brief update on the ongoing strategic review. As I've mentioned before, this process is active and we are diligently evaluating our options. We are considering various paths, including potential divestitures, continued growth, or partnerships with strategic or financial investors. Our Board of Directors is committed to concluding this evaluation with the goal of unlocking the full value of these businesses.
As I conclude my comments, I want to highlight three points. First, in the business of creating value with long-term assets and long-term contracts with our carrier customers, changes don't occur so quickly. The management team and I recently set some initial goals in motion and are making important decisions to change the trajectory of this company's success. While it will take time, we believe we are on the right track as we reassess our businesses, adjust our capital allocation strategies and improve how we operate. Second, as we continue to implement changes to our operating plans, it's crucial to acknowledge the effort of our employees, the effort that they've put into delivering our third quarter results. Thank you to everyone for your hard work.
Lastly, we were also thinking about all of those affected by the devastation and loss from Hurricanes Helene and Milton. And I would like to give a special thanks to many on our Crown Castle team who worked with great urgency through challenging conditions and some dealing with personal impacts. But they stayed safe and they maintained our communications infrastructure which is even more essential in connecting people, communities and emergency services during and after these tragic types of events.
Now I'll turn it over to Dan to walk us through the details of the quarter.
