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Crown Castle International Corp CCI

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Morningstar’s Analysis

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Crown Castle Reports Solid Q1; Increase to Full-Year Outlook Underpinned by Higher Noncash Revenue

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Crown Castle’s first-quarter revenue, operating profit, and adjusted funds from operations were all slightly better than our forecasts, and management said levels of new leasing activity on its towers are high, as carriers’ spectrum deployments for 5G are in full swing. Nonetheless, the firm’s full-year organic growth outlook for each of its businesses is unchanged. While Crown materially raised its full-year financial guidance, the boost was almost entirely due to higher than previously forecast straight-line revenue resulting from a long-term tower lease agreement recently commenced with Verizon. The boost to the anticipated 2021 top and bottom lines therefore won’t result in much higher cash inflows and isn’t a result of greater 2021 demand but rather a contract that extends for 10 years. We are maintaining our $110 fair value estimate. Strengthening small-cell performance would be the key to making us more optimistic, and we still haven’t seen that.

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Company Profile

Business Description

Crown Castle International owns and leases roughly 40,000 cell towers in the United States. It also owns more than 80,000 route miles of fiber. It leases space on its towers to wireless service providers, which install equipment on the towers to support their wireless networks. The company’s fiber is primarily leased by wireless service providers to set up small-cell network infrastructure and by enterprises for their internal connection needs. Crown Castle’s towers and fiber are predominantly located in the largest U.S. cities. The company has a very concentrated customer base, with more than 70% of its revenue coming from the big three U.S. mobile carriers. Crown Castle operates as a real estate investment trust.

Contact
1220 Augusta Drive, Suite 600
Houston, TX, 77057-2261
T +1 713 570-3000
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 4,900

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