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The price performance of Crown Castle was impressive over the last three months. The stock added 0.9%, outshining the industry’s loss of 2.8% over the same time frame.
Crown Castle’s extensive tower portfolio, increased demand for infrastructure, strong business outlook, healthy leasing activity, continued acquisition of towers and growing demand for mobile broadband have given its expansion prospects a lift.
Wireless services are gaining ground based on technological advancements and network upgrade. Much of the infrastructure and upgrades require effective site management. Crown Castle taps this opportunity as over 90% of its quarterly revenues come from wireless service providers like Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and T-Mobile US Inc. (TMUS - Free Report) . The company has acquired 9,700 wireless towers from AT&T and taken over 7,200 wireless towers of T-Mobile US.
The deployment of 5G network should also drive growth in the company’s tower and small cell assets as wireless carriers look to expand and enhance their networks.
We look forward to see how Crown Castle’s ongoing efforts to reposition itself from a tower company to a fiber provider (focused on the small cell opportunity) through the purchase of several fiber operators will influence its upcoming quarterly results. The latest acquisition of privately held Wilcon Holdings LLCwill enable Crown Castle to attain ownership of over 28,000 route miles of fiber. Wilcon is the premier service provider of dark fiber, lit transport, Internet access and colocation services in Southern California and currently, it owns 1,900 route miles of fiber in Los Angeles and San Diego. The company has also inked a deal to acquire LTS Group Holdings LLC (Lightower) from Berkshire Partners, Pamlico Capital and other investors for approximately $7.1 billion in cash (subject to certain limited adjustments). If this proposed acquisition goes through, it will enable Crown Castle attain ownership of over 60,000 route miles of fiber. Over the last two years, Crown Castle purchased three fiber operators: FPL FiberNet Holdings, LLC (in Jan 2017), Quanta Fiber (called Sunesys, in Apr 2015) and 24/7 Mid-Atlantic Network (in Sep 2014).
We are also impressed with Crown Castle’s continued efforts to reward its shareholders with a quarterly cash dividend of $18.1424 per share of preferred stock, payable on Nov 1, 2017 to common stockholders of record at the close of business on Oct 15, 2017.
Notably, Crown Castle has raised its outlook for 2017. The company expects Site Rental revenues in the range of $3,504–$3,529 million. Site Rental cost of operation is projected in the $1,071–$1,096 million band. Adjusted EBITDA is anticipated between $2,389 million and $2,414 million. Interest expense (inclusive of amortization) is estimated in the $552-$582 million range. FFO is projected at $1,623-$1,653 million. AFFO is expected between $1,813 million and $1,838 million. Net income is anticipated between $426 million and $476 million.
However, the company continues to struggle with persistent headwinds like high customer concentration and consolidated wireless industry. Customer concentration is high for Crown Castle. Notably, the top four among its customers, namely Verizon Wireless, AT&T, Sprint, and T-Mobile, account for majority of its total revenues, of which AT&T contributes significant site rental revenues. Loss of any of these customers or consolidation among them will significantly affect the company’s top line. Consolidation in the wireless industry may also reduce demand for cell tower deployments and therefore is expected to have an adverse effect on Crown Castle’s top line.
Evolution of new technologies may reduce demand for site leases. Further, the recent developments of satellite-delivered radio and video services will weigh on the need for tower-based broadcast transmission. In addition, frequent changes in demand for network services and infrastructure support will tend to increase volatility in Crown Castle’s revenues.
Additionally, with the increasing popularity of the Voice over WiFi network in metro cities and both mobile handset manufacturers and wireless carriers rapidly adopting the technology, SBA Communications’ revenues may come under pressure.
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Here's Why You Should Hold Crown Castle International (CCI)
On Sep 25, 2017, Crown Castle International Corp. (CCI - Free Report) , a leading wireless communication tower operator in the United States, was downgraded by a notch to a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The price performance of Crown Castle was impressive over the last three months. The stock added 0.9%, outshining the industry’s loss of 2.8% over the same time frame.
Crown Castle’s extensive tower portfolio, increased demand for infrastructure, strong business outlook, healthy leasing activity, continued acquisition of towers and growing demand for mobile broadband have given its expansion prospects a lift.
Wireless services are gaining ground based on technological advancements and network upgrade. Much of the infrastructure and upgrades require effective site management. Crown Castle taps this opportunity as over 90% of its quarterly revenues come from wireless service providers like Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and T-Mobile US Inc. (TMUS - Free Report) . The company has acquired 9,700 wireless towers from AT&T and taken over 7,200 wireless towers of T-Mobile US.
The deployment of 5G network should also drive growth in the company’s tower and small cell assets as wireless carriers look to expand and enhance their networks.
We look forward to see how Crown Castle’s ongoing efforts to reposition itself from a tower company to a fiber provider (focused on the small cell opportunity) through the purchase of several fiber operators will influence its upcoming quarterly results. The latest acquisition of privately held Wilcon Holdings LLCwill enable Crown Castle to attain ownership of over 28,000 route miles of fiber. Wilcon is the premier service provider of dark fiber, lit transport, Internet access and colocation services in Southern California and currently, it owns 1,900 route miles of fiber in Los Angeles and San Diego. The company has also inked a deal to acquire LTS Group Holdings LLC (Lightower) from Berkshire Partners, Pamlico Capital and other investors for approximately $7.1 billion in cash (subject to certain limited adjustments). If this proposed acquisition goes through, it will enable Crown Castle attain ownership of over 60,000 route miles of fiber. Over the last two years, Crown Castle purchased three fiber operators: FPL FiberNet Holdings, LLC (in Jan 2017), Quanta Fiber (called Sunesys, in Apr 2015) and 24/7 Mid-Atlantic Network (in Sep 2014).
We are also impressed with Crown Castle’s continued efforts to reward its shareholders with a quarterly cash dividend of $18.1424 per share of preferred stock, payable on Nov 1, 2017 to common stockholders of record at the close of business on Oct 15, 2017.
Notably, Crown Castle has raised its outlook for 2017. The company expects Site Rental revenues in the range of $3,504–$3,529 million. Site Rental cost of operation is projected in the $1,071–$1,096 million band. Adjusted EBITDA is anticipated between $2,389 million and $2,414 million. Interest expense (inclusive of amortization) is estimated in the $552-$582 million range. FFO is projected at $1,623-$1,653 million. AFFO is expected between $1,813 million and $1,838 million. Net income is anticipated between $426 million and $476 million.
However, the company continues to struggle with persistent headwinds like high customer concentration and consolidated wireless industry. Customer concentration is high for Crown Castle. Notably, the top four among its customers, namely Verizon Wireless, AT&T, Sprint, and T-Mobile, account for majority of its total revenues, of which AT&T contributes significant site rental revenues. Loss of any of these customers or consolidation among them will significantly affect the company’s top line. Consolidation in the wireless industry may also reduce demand for cell tower deployments and therefore is expected to have an adverse effect on Crown Castle’s top line.
Evolution of new technologies may reduce demand for site leases. Further, the recent developments of satellite-delivered radio and video services will weigh on the need for tower-based broadcast transmission. In addition, frequent changes in demand for network services and infrastructure support will tend to increase volatility in Crown Castle’s revenues.
Additionally, with the increasing popularity of the Voice over WiFi network in metro cities and both mobile handset manufacturers and wireless carriers rapidly adopting the technology, SBA Communications’ revenues may come under pressure.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>