(Corrects paragraph 1 of Oct. 16 story to say cancellation of some contracts weighed on forecast and not slower tower leasing activity. Adds forecast range in paragraph 4 and changes dateline to Oct 16 from Oct 7)
(Reuters) -Crown Castle lowered its 2024 net income forecast on Wednesday, as the wireless tower operator expects to take a hit from the cancellation of contracts for small cell nodes.
The company said it has canceled 7,000 greenfield small cell nodes, likely leading to an asset write-down charge of $125 to $150 million in the fourth quarter, which will affect the annual net income forecast.
Inflation and rising interest rates have forced wireless carriers to tighten their budgets following the initial rollout of the 5G network, impacting demand at tower leasing companies like Crown Castle.
The company lowered its 2024 net income forecast to a range of $975 million to $1.07 billion with a midpoint of $1.02 billion, down from the previously announced $1.16 billion, but maintained its site-rental revenue and adjusted funds from operations (AFFO) outlook.
Crown Castle, which owns about 40,000 towers, derives the majority of its revenue from leasing out tower infrastructure to wireless carriers such as AT&T, T-Mobile US and Verizon Communications in the United States on a long-term basis.
Fiber network owner Zayo Group and buyout firm TPG are competing to acquire the fiber and wireless assets of Crown Castle in a deal that could be valued at nearly $10 billion, Reuters reported earlier this month citing people familiar with the matter.
The real estate investment trust posted third-quarter site rental revenue of $1.59 billion, in-line with analysts’ average expectation.
However, the telecommunication infrastructure company’s quarterly net income of $303 million at the end of September beat analysts’ estimates of $290.4 million.
Its adjusted funds from operations came in at $1.84 per share, compared with $1.77 per share in the year-ago period
(Reporting by Priyanka.G in Bengaluru; Editing by Tasim Zahid)
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