April 27, 2017 —
Crown Castle International has priced its previously announced public offering of 4,750,000 shares of its common stock. The gross proceeds from the offering are expected to be approximately $447 million. Crown Castle intends to use the net proceeds from this offering for general corporate purposes, which may include the funding of acquisitions, including the proposed acquisition of Wilcon Holdings, discretionary investments and the repayment or repurchase of outstanding indebtedness. This offering is not contingent upon the consummation of the Wilcon Acquisition.
Barclays, RBC Capital Markets, Citigroup and J.P. Morgan, the underwriters for the offering, may offer the shares of common stock from time to time in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices. The last reported sale price of Crown Castle’s common stock on April 25, 2017 was $94.27 per share.
April 18, 2017 —
Crown Castle International has acquired Wilcon Holdings, a fiber services provider that owns 1,900 route miles of fiber in Los Angeles and San Diego, for about $600 million. The acquisition feeds Crown Castle’s drive to deploy small cells.
“The acquisition of Wilcon provides us an extensive set of dense metro fiber assets that will enable us to continue to deliver fiber-fed small cell solutions for our wireless customers in our fastest growing and most active market,” said Jay Brown, Crown Castle’s CEO. With Wilcon’s complementary footprint, Crown Castle expects to benefit both in the near term and the long term, growing its small cell deployments.
Crown Castle expects the acquisition to close in the third quarter of 2017. In the first year of Crown Castle’s ownership, the transaction is expected to contribute approximately $40 million to gross margin and approximately $10 million of general and administrative expenses. Crown Castle anticipates financing the transaction consistent with maintaining its current investment grade credit metrics. With the acquisition, Crown Castle will own or have rights to over 28,000 route miles of fiber.
“Crown Castle continues to be acquisitive in the fiber space,” wrote Jennifer Fritzsche, Wells Fargo senior analyst. “We note that the biggest cost element of the small cells model is fiber, and the more CCI owns of the underlying asset, the better the long-term margin profile. With wireless carrier activity turning to densifying their networks across dense metros, we believe CCI is best positioned to capture the incremental dollar of carrier capex spend.”
Verizon to Buy Billion dollars in Fiber Optics from Corning
In other fiber optic news, Verizon Communications signed an agreement to buy a billion dollars in fiber optic cable and associated hardware from Corning for its nationwide wireless broadband network during the next three years.
The agreement calls for Corning to provide 12.4 million miles of optical fiber each year from 2018 through 2020, with a minimum purchase commitment of $1.05 billion.
In the past several months, Corning has averted a fiber-optic shortage with plans to expand capacity and to invest more than $250 million in its optical fiber, cable and solutions manufacturing facilities to help meet the demand of its global carrier and enterprise customers. Corning expects these capacity expansions to begin to come online in 2017 and become fully operational in 2018.
March 16, 2017
This is the first in a two-part series covering comments in the FCC proceeding “Streamlining Deployment of Small Cell Infrastructure by Improving Wireless Facilities Siting Policies; Mobilitie Petition for Declaratory Ruling (WT Docket No. 16-421).” First we examine some of the key problems voiced by OEMs, carriers and small cell providers. Next, we will look at the municipal point of view.
The wireless industry voice its frustration with processes in place at municipalities to regulate small cells in the public rights of way in comments filed the FCC’s streamlining small cell deployment proceeding, last week. Procedures that are sometimes confusing and other times duplicative, which extend the approval time for wireless facilities and make it less economical for the carriers, according to the comments.
T-Mobile described the current regulatory environment as a “web” of federal, state and local rules developed based on the macrocell environment. Nokia called municipalities processes “ill-defined and inefficient” said they yield “haphazard” results. Part of the problem, according to the OEM, is that many municipalities have not incorporated Section 6409(a) of the Spectrum Act, into their practices.
“The lack of clear procedures makes the application process much more difficult at the outset – it can be hard to know where to even start – let alone ultimately obtaining the required authorization to move forward,” Nokia wrote.
Jurisdictions’ inefficient processes are exacerbated by a lack of employees to process siting requests, which ends up “clogging the deployment pipeline,” Nokia wrote. Multiple review processes of different agencies within a jurisdiction can also slow the process and sow the seed of confusion.
Small cell deployments have also been delayed by moratoria, Crown Castle wrote.
ExteNet wrote that regulation by many local governments regularly “prohibits or effectively prohibits” the provision of service. The company said its distributed network system applications are subjected to formal zoning process that are not required of other entities deploying on poles in the rights of way.
Unfair Fees Threaten Small Cell Deployments
The wireless industry fully supported Mobilitie’s Petition for Declaratory Ruling, writing that the fees charged for use of the ROW are many times are not in alignment with what they thought was fair.
Crown Castle wrote that while it has cooperated with municipalities on hundreds of small cell deployments, it too has run into instances where it felt discriminated against by what it called unreasonable fees.
“Other jurisdictions, meanwhile, discriminate against small cell installations in the rights-of-way while allowing, if not encouraging, other utilities to install equipment that frequently is larger than small cell equipment,” Crown Castle wrote.
Part of the problem is the fees don’t seem to be based on the costs of approving applications or maintaining the rights-of-way, according to Crown Castle. T-Mobile echoed sentiments by Mobilitie that some municipalities seek to recover the market rate of ROW instead of compensation for their expenses.
As a result, these fees can make small cell deployments expensive. Nokia complained that site “inspection fees” may be charge in excess of $3,000 per-location threaten the economics of small cell deployments.
What’s the Fix?
The Wireless Infrastructure Association offered several ways that that FCC could use existing law to help municipalities to improve their ROW processes.
WIA called on the FCC to guide municipalities in treating small cell providers in a competitively neutral and nondiscriminatory manner by clarifying Sections 253 and 332 of the Telecom Act.
The FCC should state that a municipality must not inhibit a company’s ability to compete in a fair and legal regulatory environment, according to the WIA filing. Local governments should not have “unfettered discretion over applications” and require “lengthy or onerous application processes.”
“Further, the Commission should explicitly declare that imposition of regulations and requirements on small wireless facility deployments that are not imposed on other telecommunications equipment installed on poles in the public rights-of-way are a barrier to entry,” WIA wrote, “and that such discriminatory imposition of requirements is not a reasonable or competitively neutral and nondiscriminatory management of the public rights-of-way.”
Commenting about the Mobilitie petition, WIA wrote that municipal fees imposed on small wireless facilities in the ROW must not be more those levied on other telecom equipment.
“Further, the Commission should declare that municipal fees are limited to recovery of the municipality’s actual cost of managing the occupation of the right-of-way by the small wireless facility network,” WIA wrote.
September 15, 2016 — Crown Castle has awarded the full scope of its Materials and Warehouse Management activities for Small Cell and Fiber deployments to KMM, which is currently providing service to Crown Castle in nine major markets and will be responsible for managing field network support inventory for all new deployment projects moving forward.
The two companies initially started a business relationship in August 2015, after Crown Castle engaged KMM to conduct a six-month materials management trial in four markets. Supported by eRIMS, a proprietary web-based inventory management tool, KMM delivered a turnkey solution that included material movement and consolidation as well as inventory and warehouse management services.
Since project inception, KMM has trained more than 400 Crown Castle employees from multiple markets on eRIMS, eRIMS Mobile, and eSOLVR, KMM’s workflow management system. KMM anticipates providing materials and warehouse management services at upwards of 30 locations across the U.S. by year-end 2016.
July 29, 2015 — Proceeds of $1.3 billion from the sale of its Australian subsidiary will aid Crown Castle in its deployment of fiber and small cells. First and foremost, the capital will be put to work through its new acquisition, Quanta Fiber Networks (Sunesys), which owns or has right to 10,000 miles of fiber in major metro markets across the country.
“The sale of [CCAL, an Australian tower operator] was opportune as it allows us to redeploy capital from a slower growth asset toward an opportunity with an expected higher growth profile in Sunesys,” said Jay Brown, Crown Castle’s chief financial officer.
The acquisition of Sunesys’ fiber footprint, which is expected to be completed in the Q3, will more than double Crown Castle’s fiber footprint for small cell deployment, according to Brown.
“Our focus and continued investment in the United States is based on our view that the continuing growth in U.S. consumer demand for mobile data, which is projected to increase seven-fold between 2014 and 2019, will require significant investments by the wireless carriers to increase the density of their networks,” Brown said.
Sunesys is expected to contribute as much as $85 million to site rental gross margin with $20 million of general and administrative expenses during the first full year of ownership, according to Brown.
“We believe that as mobile demand continues to grow, carriers will need to deploy small cells in conjunction with macro towers to address network congestion. And while it’s still early days, we are seeing evidence that support our investment pieces,” he said.
The importance of small cells to the Crown Castle’s bottom line is on the increase. Site rental revenues from small cells grew more than 30 percent in the second quarter, year over year and now represent 8 percent of site rental revenue. The small cell network currently comprises 7,000 miles of fiber supporting 15,000 nodes. Another 2,300-nodes have been awarded but are not yet under construction.
“Needless to say, we are very excited by the opportunities presented in small cells, which we believe builds on our core competency as the leading provider of U.S. wireless infrastructure, leverages our existing relationships with the wireless carriers and enhances our long-term growth in AFFO and dividend per share,” Brown said.
American Tower Sees Second Quarter DAS Growth
In this week’s second quarter earnings call, American Tower announced that it enhanced its DAS offerings in the second quarter, growing its portfolio 11 percent or by 32 networks year over year to a total of 300 indoor DAS networks.
“We are pleased with the performance of these systems,” said Tom Bartlett, American Tower CFO. “We have achieved an average indoor tenancy of 2.2 carriers. DAS, in combination with our managed rooftop business, represents 6 percent of our U.S. revenues and it increased 25 percent in the quarter.”
Quotes for this article courtesy seekingalpha.com