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Crown Castle International Corp CCI

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Crown Castle Reports Flurry of Activity Along With Humdrum Q4 Results

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Crown Castle’s fourth-quarter revenue came in slightly below our forecast, while its adjusted EBITDA margin, after normalizing for several one-time items, came in right on our target. More notably, the firm announced a sizable small-cell agreement with Verizon and a material small-cell cancellation by T-Mobile to reverse a prior Sprint agreement, which led to T-Mobile making a substantial one-time payment to fulfill contractual obligations. None of the news was particularly surprising or changes our forecast, although the size of the Verizon commitment is slightly larger than we would have expected and could be seen as encouraging for the longer-term viability of Crown’s small-cell business, which we have been very negative on. Even so, we believe Crown is overvalued, and we don’t expect to materially raise our $94 fair value estimate.

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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.

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