February 2, 2017 — Crown Castle International has priced its previously announced public offering of 4.0 percent Senior Notes due 2027 in an aggregate principal amount of $500 million. The notes will have an interest rate of 4.0 percent per annum and will be issued at a price equal to 99.578 percent of their face value to yield 4.051 percent.
The net proceeds from the offering are expected to be approximately $493 million, after deducting the underwriting discount and other offering expenses payable by Crown Castle. Crown Castle intends to use net proceeds from the offering to repay a portion of the outstanding borrowings under Crown Castle’s senior unsecured revolving credit facility.
Barclays, J.P. Morgan, Mizuho Securities, RBC Capital Markets and TD Securities are the joint book-running managers of the offering.
The offering is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (“SEC”). The offering will be made only by means of a prospectus supplement and the accompanying base prospectus, copies of which may be obtained by contacting any joint book-running manager using the information provided below. An electronic copy of the prospectus supplement, together with the accompanying prospectus, is also available on the SEC’s website, www.sec.gov.
January 25, 2017 — Crown Castle International today reported results for the quarter and year ended December 31, 2016.
“Our strong fourth quarter and full year 2016 results and increased Outlook for 2017 demonstrates our continued focus on executing for our customers,” stated Jay Brown, Crown Castle’s Chief Executive Officer. “During 2016, we increased our dividends per share by 8percent, exceeding our long-term goal of 6 percent to 7 percent annual growth. With our recent acquisition of FiberNet, which closed in January, we now own approximately 40,000 towers and over 26,500 route miles of fiber in key metro markets throughout the US. We believe our extensive portfolio of shared wireless infrastructure positions us well to continue to serve our customers’ needs as they seek to upgrade and enhance network quality and capacity to meet increasing demand for wireless connectivity. We believe the expected substantial growth in demand for mobile data over the next several years provides us the opportunity to drive organic growth through higher utilization of our existing assets, while allowing us to deploy capital towards new assets that we expect will enhance long-term growth in our dividends per share.”
HIGHLIGHTS FROM THE QUARTER
Site rental revenues. Site rental revenues grew approximately 4 percent, or $32 million, from fourth quarter 2015 to fourth quarter 2016, inclusive of approximately $39 million in Organic Contribution to Site Rental Revenues plus $10 million in contributions from acquisitions and other items, less a $17 million reduction in straight-line revenues. The $39 million in Organic Contribution to Site Rental Revenues represents approximately 5 percent growth, comprised of approximately 8 percent growth from new leasing activity and contracted tenant escalations, net of approximately 3 percent from tenant non-renewals.
Capital expenditures. Capital expenditures during the quarter were approximately $260 million, comprised of approximately $17 million of land purchases, approximately $42 million of sustaining capital expenditures and approximately $201 million of revenue generating capital expenditures.
Common stock dividend. During the quarter, Crown Castle paid common stock dividends of approximately $343 million in the aggregate, or $0.95 per common share.
Share count. Per share results during fourth quarter and full year 2016 were impacted by 11.4 million shares of common stock issued in November 2016 in contemplation of funding the previously announced acquisition of FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy, Inc. (collectively, “FiberNet”). The acquisition of FiberNet was completed on January 17, 2017 and did not contribute to results during 2016. The share issuance in November 2016 increased the weighted-average common share outstanding on a diluted basis for fourth quarter and full year 2016 by approximately 7 million shares and 2 million shares, respectively.
HIGHLIGHTS FROM THE YEAR
Site rental revenues. Site rental revenues grew approximately 7 percent, or $215 million, from full year 2015 to full year 2016, inclusive of approximately $189 million in Organic Contribution to Site Rental Revenues plus $90 million in contributions from acquisitions and other items, less a $64 million reduction in straight-line revenues. The $189 million in Organic Contribution to Site Rental Revenues represents approximately 6 percent growth, comprised of approximately 9 percent growth from new leasing activity and contracted tenant escalations, net of approximately 3 percent from tenant non-renewals.
Capital expenditures. Capital expenditures during the year were approximately $874 million, comprised of approximately $75 million of land purchases, approximately $90 million of sustaining capital expenditures and approximately $709 million of revenue generating capital expenditures.
Common stock dividend. During the year, Crown Castle paid common stock dividends of approximately $1.2 billion in the aggregate, or $3.605 per common share.
“In addition to generating strong results during 2016, we also enhanced our leading portfolio of wireless infrastructure with the acquisition of Tower Development Corporation and continued expansion of our small cell footprint, including announcing the acquisition of FiberNet and completing the integration of Sunesys,” stated Dan Schlanger, Crown Castle’s Chief Financial Officer. “During the year, we also made significant progress in increasing our financial flexibility by increasing the average maturity of our debt, lowering our average interest rate and achieving investment grade credit ratings, which reflect the quality and stability of our business and cash flows. With these accomplishments, together with our position as the leading wireless infrastructure provider in the US, we believe we are well-positioned to continue our track record of delivering on our goal of generating 6 percent to 7 percent long-term annual growth in dividends per share.”
December 22, 2016 —
The idea of a small cell as a standalone structure serving one carrier was replaced in 2016 by large networks of small cells connected by miles and miles of fiber that serve multiple carriers and, therefore, make them economically feasible.
While the tower business was good for Crown Castle International in 2016, the majority of its capex went to its small cell business, which comprised 16,500 miles of fiber. Although small cells accounted for $385 million, or 12 percent, of annualized site rental revenues, it is obvious Crown Castle sees a bright future in them.
“We are as excited as we have ever been by the opportunities in small cells,” Jay Brown, Crown Castle CEO, said during an earnings call. “Our small cell conversations with the carriers have increasingly become more positive with the passage of time and we are seeing the business model of small cells play out very similarly to that of towers.”
Crown Castle illustrated that the economics of small cells depended on collocating multiple carriers on a network of fiber infrastructure threaded through the cities. In Denver, it has 17 miles of fiber connecting 65 tenant nodes on 26 poles. The system it has in Las Vegas consists of 36 miles of fiber supporting 77 tenant nodes on 77 poles.
Small Cells Take Hold Indoors
CommScope showed Sprint how to add coverage to small and medium-size businesses with small cells in May, enabling a turnkey wireless solution for both employees and visitors as part of Sprint’s network densification plan.
The market is ideal for small cells, according to Rod Gatehouse, CommScope vice president, product line management and marketing for small cells. Gatehouse was formerly with Airvana, which CommScope acquired in late 2015.
The commercial deployments showed that it made sense to combine LTE small cells with Wi-Fi antennas. Based upon Qualcomm FSM small cell and Qualcomm VIVE Wi-Fi chipsets, the S1000 supports both 2.5 GHz TD-LTE and 802.11ac dual-band, dual-concurrent Wi-Fi, allowing Sprint to provide managed Wi-Fi hotspot services to enterprises such as retail and restaurant chains.
Nokia, Telfonica Replace DAS with Small Cells in Chile Shopping Center
In May, Nokia and Telefónica Chile completed a small cell development in a six-floor, 551,000-square-foot shopping center in Santiago, Chile, the largest retail development in South America.
Nokia replaced and upgraded the existing DAS with high-capacity, high-coverage Flexi Zone small cells network. Nokia’s Flexi Zone small cell technology provides a cost-effective alternative to DAS, offering faster data speeds and supporting a higher number of subscribers. Ease of deployment and the ability to upgrade 3G small cells to 4G LTE will allow Telefónica Chile to scale capacity as customer demand continues to evolve.
October 27, 2016 —
“Crown completed another great quarter of financial results that exceeded our expectations,” said Jay Brown, Crown Castle’s CEO, during the earnings call. “The leasing environment continues at a healthy pace in both towers and small cells, allowing us to once again increase our full year outlook for 2016.”
The towerco also increased its dividend by 7 percent, reflecting that it expects continued growth into next year. Additionally, site rental revenue of $3.33 billion is projected for 2017, up 3.1 percent year over year.
“We believe the healthy leasing environment will continue into 2017, including $15 million in growth from small cells and similar growth in towers as compared with 2016,” Brown said.
While leasing revenue will see a drag from the amortization of prepaid leasing next year, Crown will continue to see steady progress from wireless carriers on its macro towers and outsized growth from its small cells segment, according to Wells Fargo Senior Analyst Jennifer Fritzsche.
“While we remain on the sidelines for now, we do believe we are approaching a point where headlines could go in CCI’s favor (note: if AT&T comes back it should be most positive for CCI of the three tower companies given its exposure to the AT&T portfolio),” Fritzsche wrote.
Brown highlighted the towerco’s small cell investments, noting that, to date, the company has invested $2.6 billion including $1 billion in NextG Networks and $1 billion in Sunesys.
“These investments have resulted in that business now generating more than $400 million per year of site rental revenues and a recurring yield of 6 percent to 7 percent,” said. According to Wells Fargo statistics, small cells represented 12.6 percent of Q3 rental revenue, or $102 million.
Brown also provided color on how small cells have expanded since 2013 in Chicago when they inhabited only the central business district (300 tenant nodes on 100 miles of fiber) to today where they have expanded to cover the surrounding suburbs (1,150 tenant nodes on 200 miles of fiber).
“Chicago is representative of what we are seeing throughout major U.S. metro markets, which is why we remain so bullish on the opportunities we see in small cells,” he said.
September 29, 2016 —
Crown Castle International is one of four companies that joined the White House’s National Science Foundation-led Advanced Wireless Research Initiative, this week, collectively committing more than $8 million in in-kind contributions to help support the design, deployment, and operation of four city-scale advanced wireless testing platforms.
Crown Castle will support the testing platforms by providing network deployment and tower siting advice and space on wireless towers. Anritsu will contribute microwave components, spectrum analysis tools and equipment to support testing. Ericsson will provide researchers, systems and technology expertise, software-defined networking and radio network engineering support. FiberTower will contribute mmWave spectrum services.
The Advanced Wireless Research Initiative is part of White House Smart Cities Initiative, which kicked off Smart Cities Week, Sept. 27-29 in Washington, DC, with more than $80 million in new federal investments. The initiative also doubled the number of participating cities and communities, exceeding 70 in total.
“If we can reconceive of our government so that the interactions and the interplay between private sector, nonprofits, and government are opened up, and we use technology, data, social media in order to join forces around problems, then there’s no problem that we face in this country that is not solvable,” President Barack Obama said in a prepared release.
In September 2015, the White House launched the Smart Cities Initiative to make it easier for cities, federal agencies, universities, and the private sector to work together to research, develop and deploy new technologies that can improve cities.
Technology is being harnessed to tackle issues in climate, transportation, public safety and city services for the homeless. In particular, $15 million will go to energy challenges, such as data analytics for reducing buildings’ energy footprint. Researchers in Chattanooga will receive $15 million to test how connected and autonomous vehicles can cooperate to improve travel efficiency. More than $10 million will go to public safety, resilience and disaster response, including sensors in flood-prone areas in Texas. Additionally, three counties surrounding Seattle will use predictive analytics to identify precisely when city services succeed in helping homeless individuals transition into permanent housing.