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Crown Castle International Corp CCI

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Good Q2 Results for Crown Castle, but Small-Cell Concerns Overshadow Tower Strength

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Crown Castle’s tower revenue growth was very strong in the second quarter, and with the company’s statement that the level of new tower activity is currently higher than it has been at any time in the company’s history, site rental revenue growth is likely to accelerate. However, small-cell performance was extremely disappointing, as management said its customers are currently using towers rather than small cells for the initial rollouts of their 5G networks, leading Crown Castle to cut in half the number of small cells it said it expects to deploy over the next two years and reduce the small-cell revenue contribution it expects this year. With the environment for each segment consistent with our bigger-picture view, we are maintaining our $110 fair value estimate. We think valuations on all tower stocks are too high, but for investors looking for a tower stock nonetheless, we’d prefer Crown’s peers.

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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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