On the second question around non-core assets and potential size there, I don’t think we have a lot of non-core assets inside the portfolio of assets. But one of the things that I would say is that the ground leases, you specifically referenced ground leases. We have, over time, brought a significant portion of ground leases on balance sheet by acquiring the ground leases. We also extend ground leases for very long periods of time. We’re now north of 30 years of duration in our ground lease portfolio. And so, we have the opportunity, obviously, to go out and push ground leases, in terms of duration, for over very long periods of time. And we may choose to do that off balance sheet or on balance sheet. So, I would put that in the category of that could be an opportunity for us to lower the cost of capital depending on how we think about it.
In order to run the business efficiently, the key is do we have control both in terms of the cost of that activity and then do we have control in terms of certainty of being able to maintain the assets and add additional revenues? So the financing decision really just comes down to what’s the lowest cost of capital and we’re always looking for opportunities to try to figure out the way to achieve that lowest cost of capital across the asset.
Michael Rollins: Thank you.
Operator: The next question is from Nick Del Deo of MoffettNathanson. Please go ahead.
Nick Del Deo: Hey, good morning. Thanks for taking my questions. First, to continue on the capital allocation theme, in the past you generally argued that the returns you see from small sales, I guess five or more generally, we’re so far ahead of what you can get from repurchases that repurchases really weren’t in your consideration set. I guess how would you describe that relationship today? Are repurchases starting to look more interesting versus fiber or other uses of capital?
Jay Brown: Good morning, Nick. Obviously, the move downward in the stock price and the yield associated with it while we’ve maintained a long-term view that we’ll return after we get through 2025 that we’ll be able to return to growing organic growth in line with our targets. Obviously, that becomes a more attractive investment at lower prices. As I mentioned in my comments, what’s also true is there’s a growing, we believe growing demand and focus by our carrier customers for the assets around small cells. And so, it absolutely affects the way we think about the incremental projects that we take on because we’re always thinking about things as what is the opportunity cost or the potential opportunity returns that we could pursue by choosing one path over another path.
And our consistent approach has been over a long period of time to do that, to compare things like repurchasing shares or investing in assets. So, as the stock price has moved, it does suggest how we think about opportunities and it will continue to do so.
Nick Del Deo: Okay. Maybe turning to the employee relocation plan that you closed last night, it seems to reflect a pretty meaningful philosophical change in how you manage the company, at least from an outsider’s perspective. I guess, why do you think a more centralized approach is better now? Has something changed in terms of your ability to better manage the business in a more centralized way than you once were, or am I kind of overthinking it?
Jay Brown: I don’t think you’re overthinking it. We are constantly looking at ways to run our business more efficiently. And so, as we have come off of the peak of 5G activity, one of the things that we looked at as we were evaluating what’s the right sizing of the organization, one of the things that we thought was necessary was to reduce the number of employees in the business, which we did that in the July and completed that work over the last several months. The second part of it is, how can we run the business more efficiently in terms of our processes and business operations? And so the view that we took on that front is that by centralizing things, we can reduce long-term costs of operating our business and we can get to the place where we can deliver for our customers more quickly and more efficiently.
So, improving the customer experience, which we believe will do both reducing our long-term costs of operating the assets, but also give us an opportunity to potentially increase the revenue that we can deliver for customers by delivering for them more quickly. I think that’s just the way you should always be running the business, is looking for ways to reduce the costs, run it more efficiently. And as we’ve looked at the activity that we believe will occur for the business over the long-term, we believe this reformatted business will be the best way to run the business, both from a cost standpoint and then give us opportunity for additional revenues over time.
Nick Del Deo: Okay. Just one quick follow-up on that, any risk of an operational hiccup given all the changes taking place, or do you feel like you have that pretty well buttoned down?
Jay Brown: Well, I wouldn’t say there’s never, there is ever a place where there isn’t the opportunity for a hiccup. So, we’ve got to be disciplined operators of the assets and run the business thoughtfully. And we intend to do that. I have a great deal of confidence in our team and our ability to do that. The restructuring plan that we announced in the press release yesterday affects about 25% of our employees. And so, I’m confident that the plans that we have in place to work through that, they’ll do well. The 80% that are unaffected, I believe today are hard at work and doing what you would expect in terms of delivering on the business. So, it’s something we’ve got to watch and certainly manage and we have a plan internally to do that.
Nick Del Deo: Okay. Thank you, Jay.
Jay Brown: You bet.
Operator: The next question is from Jonathan Atkin of RBC Capital Markets. Please go ahead.
Jonathan Atkin: Thanks. A couple of questions, when you say no equity issuance, does that include not drawing on the ATM and then more broadly on the financial side, I wonder what your updated thinking would be about the pace of dividend growth beyond 2025 from your vantage point right now?
Jay Brown: Yes, Jon, I’ll take the first one on the ATM. Yes, it means that we’re not going to be issuing equity even under the ATM. Beyond 2025, I would look at the business and say based on the characteristics that we see for organic revenue growth and our long-term forecast for where we think the carriers are going to invest to continue to build out 5G, which is going to take the better part of the decade we expect, we see organic growth in AFFO returning to that targeted level of 7% to 8%. And so, feel good about the underlying demand drivers of how we’re going to get there. And then, as we get closer to that date, we can talk more specifically about what we think the growth rate will be in 2026. But the underlying demand drivers, and as we look at it today, look to be healthy and intact, and we think those are sustainable, and as we get through these headwinds over 2024 and 2025, that we’ll get back to a targeted level of growth in our AFFO.
Jonathan Atkin: And then lastly from my side, just on the core fiber business X small cells, what are the types of trends you’re seeing from the demand, customer renewals, pricing and so forth?
Jay Brown: Sure. Two big trends that are affecting that, as we’ve gone through the calendar year and moved past the churn events that we’ve been talking about. We’ve seen the net growth come back in line with where we expected to get, we still think we’re going to exit this year at about 3%. You could see in our guide for next year that we’re on pace to get, we believe we will be on pace to get to next year’s level of growth by the time we exit this year. The two trends that we’re seeing is both an uplift on the core leasing side. So, we’re seeing more activity from both new logos and an opportunity to continue to sell to the logos that we’re already selling to. We also see a reduction in churn. Our team has undertaken a number of really thoughtful activities over the last couple of years that are starting to bear fruit, and that results in a reduction in churn.
And so both on the top as well as the reduction in churn is leading to that 3% growth that we see next year. The more macro drivers of that business are healthy as data demand, not only for wireless, which we’ve talked a lot about on this call, but also for connectivity on a wire line basis, those growth drivers continue to be healthy. The movement of enterprises towards moving data to the cloud and off-premises continues to create opportunities for that business. We think those trends are intact, especially for the customer base that we serve. Our fiber business primarily serves large enterprises. We have very little exposure to medium and small businesses, and we don’t do anything direct-to-consumer. On the large enterprise side, we see those trends towards off-premises and movement to the cloud to be sustainable drivers that are going to drive growth for a long period of time.
