Crown Castle announced its 4Q 2016 earnings Wednesday night followed by a conference call yesterday. Zacks called the announcement “impressive.” “Both the top line and the bottom line surpassed the Zacks Consensus Estimate,” Zacks reported. “The spectacular performance can be attributed to the company’s extensive tower portfolio, increased demand for infrastructure, strong business outlook, healthy leasing activity, continued acquisition of towers and growing demand for mobile broadband.”
Jay Brown, Crown Castle’s Chief Executive Officer said, “Our strong fourth quarter and full year 2016 results and increased Outlook for 2017 demonstrates our continued focus on executing for our customers.”
During 2016, Crown increased their dividends per share by 8 percent, exceeding their 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 U.S.,” Brown said. “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.” Brown said he believes the expected substantial growth in demand for mobile data over the next several years provides the company and 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.”
Crown reported its 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.”
Analyst Nick Del Deo of MoffettNathanson said “13 percent of the site rental revenue Crown Castle reported this quarter was attributable to small cells, a number that will rise to about 17 percent with the inclusion of FiberNet. Small cells are now a legitimate contributor to the business,” Del Deo said.
Del Deo cautioned his investors not to be distracted by the new acquisition as 87 percent, (soon to be 83 percent), of the leasing business by revenue … “comes from good old fashion towers. We also need to be increasingly careful,” he said, “in how we conceptualize the small cell segment; with FiberNet, nearly half of the segment’s revenue will be from sources other than small cells.”
Crown’s 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.
January 27, 2017
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