Crown Delivers “Terrific” Q2 Results, According to CEO


Crown Castle International Corp. (NYSE: CCI) late yesterday reported results for the quarter ended June 30, 2019, and raised its full year 2019 Outlook.

“We delivered terrific results in the second quarter that exceeded our expectations and reflect the strong demand for our unmatched portfolio of towers, small cells and fiber assets,” stated Jay Brown, Crown Castle’s Chief Executive Officer. “We believe our ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks and are shared among multiple tenants, provides us the best opportunity to generate significant growth while delivering high returns for our shareholders.

 We remain excited about our ability to continue to generate attractive growth and returns for our shareholders as we remain focused on delivering dividend per share growth of 7 percent to 8 percent per year.”

“We entered 2019 with momentum building on the tower side of the business, and I am excited that we are experiencing even higher levels of tower activity than we expected, which is driving an increase to our full year 2019 Outlook,” Brown said. “Our current tower leasing activity is our highest in more than a decade, and we believe this level of activity will carry into next year. Additionally, we are constructing small cells for our customers as they invest in their current networks while beginning 5G deployments. The significant increase in small cell deployments is straining the response time of municipalities and utilities, resulting in longer construction timelines than we previously experienced. These pressures are most acute in several top markets where we are seeing the highest volume of activity,” he said. 

“Due to the elongated construction timelines, we now expect to deploy approximately 10,000 small cells in 2019, which is at the low end of our prior expected range of 10,000 to 15,000, but approximately 30 percent more than what we delivered last year. We expect the increase in tower activity, offset by longer small cell timelines, to generate higher expected AFFO per share growth of 8 percent for 2019, up from our prior Outlook of 7 percent growth and at the high end of our long-term growth target.”

Jennifer Fritzsche Senior Analyst at Wells Fargo Securities said this report would be an important one to set the tone for the upcoming tower reports. Her key areas of focus are: demand from carriers for both new macro sites and small cell solutions, backlog of small cell demand (and co-location stats on these sites), and update on 2019 guidance. She said they are estimating Q2 total revenue and Adjusted EBITDA of $1.43B and $841MM vs. Street consensus of $1.42B and $831MM. 

“Our site rental revenue estimate is $1.23B, in line with Street consensus, and +5 percent y/y. We estimate organic site revenue growth of 6.2 percent, inclusive of 7.2 percent new leasing, 2.0% escalators and -3.0% non-renewals,” Fritzsche said. “We look for fiber segment rental revenue of $417MM, or 34 percent of total rental revenue. Our Q2 AFFO/share estimate is $1.45 vs. Street consensus of $1.43, and a dividend payout ratio as a percentage of AFFO of 78% (flat sequentially and down from 80 percent y/y).” 

July 18, 2019         

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