Ted B. Miller, co-founder of Crown Castle Inc., (NYSE: CCI) and his investment vehicle Boots Capital Management, LLC issued an open letter to the Crown Castle Board of Directors yesterday that also addressed, the company’s employees and shareholders.
Miller said it is a “crucial moment” for Crown Castle, its shareholders and employees, which is why he recommended a slate of four directors who he believes will make a difference in the leadership of the company.
“While the Board has undergone significant change in recent years,” Miller said in his letter, “this turnover has still left it lacking directors who have the depth of tower operating and public-company CEO experience essential to drive the Company forward. A need for comprehensive leadership change was also put forth by Elliott Investment Management in its November 27, 2023 letter to the Board.”
Miller said it took the prodding from Elliott to get Crown to begin studying the fate of its fiber business. He said his company, Boots Management, has also provided detailed plans for a fiber sale and a re-rating of Crown Castle stock but has yet to receive a response.
Miller’s stated plan says the following:
“1) Creating Value From the Fiber Sale
Based on our analysis, since the decision was made to invest in fiber, we believe the unit has required $22 billion of capital and continues to consume over a billion in capital expenditures each year – 2024 management guidance is $1.4 billion alone. The Board has announced that it is studying the possible sale of the fiber segment, and we also believe that the Board is weighing whether to sell the enterprise fiber business while retaining the small cells.
A sale of the fiber business is essential for our intended value-creating path as a pure play tower company, with, in our view, a multiple of at least 25 times EBITDA compared to 18 times today. Moreover, if the Company can conclude a fiber sale in 2024, we believe more than $1 billion can be saved in tax efficiencies.
2) Maintaining a Healthy, Sustainable Dividend
Our plan protects the underlying health of the dividend and the absolute dividend amount itself. Specifically, our plan offers the Company optionality to pay a $4.62 dividend solely out of cash flow (as outlined in our presentation) or incur an estimated $1.3b of debt in total between now and 2029 and sustain the dividend at its current $6.26 level. This creates soundness and flexibility around the dividend, about which we will continue to take soundings from the shareholder base. Either way, we believe our plan would materially improve Crown Castle’s cash flow dynamics.
3) Restoring Operational Excellence
Crown Castle has a 12-person Board, yet only one of its members includes a tower business in their resume. The Board’s sum of towers-operating experience from one board member is just seven years. And only one current director has been a public company CEO – of a bank. This is a $75 billion enterprise with virtually no senior leadership experience running either public or tower companies.
Our director candidates have over 50 combined years of direct and unrivaled leadership in the towers space and have created billions of dollars of value for investors. Three of us were at the founding of the industry itself, and have remained involved for the 30 years since. That sounds like exactly what Elliott had in mind in its December letter to the Board.”
Miller concluded by saying he has a “special perch” from which to drive a cultural and operational reawakening, but the Board, he said, continues to refuse to meaningfully engage with him or his “value enhancing” proposal.
“We will keep fighting for our shareholders, employees, suppliers, customers and lenders, and for the future Crown Castle deserves,” Miller said.
By Jim Fryer, Inside Towers Managing Editor
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