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1Q Signals Start of Phase 2 of LTE – Moreland

The next wave of tower leasing, network densification, has taken root, Ben Moreland, CEO, president and director of Crown Castle International, told the company’s first quarter earnings call.

With all four major U.S. wireless carriers engaged in major network upgrades, Crown experienced a significant amount of activity in the first quarter, logging more than 75 percent of the 2013 leasing activity into its application pipeline.

Application volume by revenue in the first quarter grew at twice the pace of last year, and 60 percent of that number was from new tenants collocating on towers they were not previously on.

“This is a trend we have been anticipating for some time, as some of the carriers are nearing completion of their LTE nationwide build out,” Moreland said. “We have been expecting to see in-fill sites, or densification, as a second wave of LTE network deployment, providing us with a longer runway of expected future growth as the carriers strive to maintain network quality and reliability through cell splitting in the face of exponential growth in mobile technology demand.”

Given the location of 74 percent of Crown’s sites in the top 100 markets, the company expects to benefit from the majority of network densification through new leases. Overall, LTE deployment should be the gift that keeps on giving to the tower industry into the future, Ted Abrams, Abrams Wireless, told AGL Bulletin.

“Working with clients deploying LTE, and those responding to major carrier requests, I see strong indications that LTE deployments are only just beginning. Evidence indicates demand growth for wireless network infrastructure — assets that support and connect small cells and macros – continuing for many years to come,” Abrams said.


Crown Castle’s T-Mobile Tower Buy a Win-Win

Crown Castle International’s purchase of T-Mobile USA ’s 7,200 towers for $2.4 billion in cash late in September not only helps fund the carrier’s LTE build out, but it also reinforces its position as the largest U.S. tower company with 30,000 towers and small cell operations in over 50 markets. Both of which are good news for the tower industry.

“T-Mobile is working aggressively to make our 4G network stronger, faster and more dependable for consumers, and this transaction will support our ongoing $4 billion network modernization initiative that is the cornerstone of this effort,” said John Legere, T-Mobile’s recently hired CEO, in a prepared release.

The urban locations of T-Mobile’s towers ­­– 83 percent of them are in the top 100 markets and 72 percent are located in the top 50 markets – were a good fit for Crown Castle.

“Consistent with our focus on the top 100 U.S. markets, the T-Mobile assets are expected to provide significant growth driven by the continued demand for wireless data services, particularly in the most densely populated areas in the United States,” Ben Moreland, Crown Castle’s president and CEO, said in a prepared release.

According to RBC Capital Markets Analyst Jonathan Atkin, T-Mobile’s financial stability was the key result from the tower sale. “In our view, the tower deal will have little operational impact on Deutsche Telekom or Crown Castle, and serves mainly to provide Deutsche Telekom with financial flexibility for pursuing its U.S. LTE build,” Atkin writes.

Crown Castle estimates that the T-Mobile towers will produce $125 million to $130 million in adjusted funds from operations before financing costs in 2013, and have sufficient capacity to accommodate at least one additional tenant per tower without significant incremental capital.  T-Mobile has committed to maintain its communications facilities on the towers for a minimum of 10 years with annual rent escalation provisions tied to the consumer price index.  Further, T-Mobile’s rent includes the rights, subject to certain limitations, to complete its current network modernization on these sites.

Crown Castle announced on Wednesday that it is offering $1.65 billion in senior debt to finance the T-Mobile tower transaction. It will also use cash on hand and funds from its revolving credit facility.

Crown Castle and T-Mobile USA Announce $2.4 Billion Tower Transaction

HOUSTON and BELLEVUE, Wash., Sept. 28, 2012 (GLOBE NEWSWIRE) — Crown Castle International Corp.(NYSE:CCI) and T-Mobile USA, Inc. (“T-Mobile”), a subsidiary of Deutsche Telekom, AG (“DT”), announced today that they have entered into definitive agreements pursuant to which Crown Castle will acquire rights to approximately 7,200 T-Mobile towers for $2.4 billion in cash at closing (subject to certain adjustments). Under the definitive agreements, Crown Castle will have the exclusive right to lease and operate the T-Mobile towers for a weighted average term of approximately 28 years. In addition, Crown Castle will have the option to purchase such towers at the end of the respective lease terms for aggregate option payments of approximately $2.4 billion, which payments, if exercised would be primarily between 2025 and 2048. The transaction is expected to close in fourth quarter 2012.

See rest of press release at:


Tower Companies Report Strong Leasing Growth

The mood was positive during second quarter conference calls of SBA Communications, Crown Castle International and American Tower, but not just because the last quarter was successful. Tower company executives are particularly hopeful that the good times will continue to roll well into the future.

SBA continued to experience strong leasing demand in the second quarter. The majority of amendments, which came from AT&T, Verizon Wireless and Sprint, accounted for almost 80 percent of the domestic leasing revenue added in the quarter.  With a strong leasing backlog, the tower company expects the third quarter to be good, as well.

“We had an excellent second quarter, one of the best that I can remember. All of the factors that materially contribute to our financial results came together positively in the second quarter and ahead of our expectations,” Jeffrey Stoops, president and CEO, said, according to a Seeking Alpha transcript. “Probably more exciting is our belief that these factors will continue to combine positively for the rest of 2012 and into 2013.”

SBA’s organic growth was spurred by strong wireless capital expenditures and network upgrades. Although there was little activity by T-Mobile or Clearwire, AT&T and Verizon continued their LTE rollouts driving amendment activity, and Sprint picked up its network provision activity. Stoops expects the trend to continue.

“We have a lot of runway left around amendments. Between AT&T, Verizon Wireless and Sprint we have commenced cash revenue recognition from 4G or network provision amendments on less than 25 percent of their existing sites through the end of the second quarter. There is a long way to go,” Stoops said. “Our backlogs of leases and amendments are very strong and we have clear visibility to continue strong organic growth through the rest of this year and well into 2013.”

American Tower said in its second quarter earnings call that it will experience “consistent incremental demand” for tower leasing in the United States well into the future.

“Each of the four largest U.S. wireless carriers have publicly committed to nationwide LTE network coverage between the 2013 to 2015 timeframe. Once full coverage is achieved carriers will use cell splitting and site augmentation in two phases, which will further enhance coverage. Those phases will continue many years into the future,” said James Taiclet, American Tower CEO, in a Morningstar transcript.

Even with the predictions of a rosy future, Taiclet said the tower company takes measures to guard against dips inn revenue growth.

“For example, we have established a comprehensive master lease agreement structure with two of our largest customers in the United States, which seek to eliminate our exposure to any significant potential future downside risk with those two customers. These new MLAs typically include 10-year contract extensions and they eliminate all churn or decommissioning risk,” Taiclet said.

Crown Castle International exceeded the high-end of its Outlook for site rental revenue in the second quarter, seeing an increase of 15 percent in leasing activity as carriers filed amendments to upgrade their networks. Crown also expects the good times to keep on rolling, increasing its full-year 2012 outlook for  site rental revenue by $43 million, site rental gross margin by $36 million and adjusted EBITDA by $63 million.

“We are enjoying unprecedented visibility into future revenue growth as evidenced in our increased guidance,” Ben Moreland, Crown president and CEO, said on the second quarter earnings call. “As the largest single provider of sites to the four largest wireless carriers in the United States, we expect to receive an outsized benefit from the significant 4G upgrade activity from all of the carriers, which we believe is reflected in our current results and updated outlook.”