Why did net losses widen so much despite strong revenue growth?

Losses grew because the company financed rapid tower acquisitions with heavy debt. Interest expense rose to $241.3 million and depreciation and amortization to $238.8 million, which together exceeded operating income of $5.2 million. Management expects losses to continue in the near term as growth and financing costs persist.

How much debt does Crown Castle carry and when does it come due?

Total debt was $2.60 billion at December 31, 2000. Scheduled maturities are modest through 2004 (about $27.8 million in 2002, $58.4 million in 2003, and $94.0 million in 2004), with about $2.58 billion due thereafter. Many notes mature in 2011, and the 2000 Credit Facility amortizes starting in 2003.

Does the company have enough liquidity to fund its plans?

At year-end the company held $453.8 million of cash and had about $404 million of unused availability under the 2000 Credit Facility as of March 2001. The January 2001 equity offering added about $343 million. Management believes these resources, along with operating cash flow of $165.5 million, will fund planned construction, but it notes that additional financing could be needed for new acquisitions or build-to-suit opportunities.

What are the main risks to the revenue outlook?

Key risks include dependence on a few customers (the BBC at about 14.8% of revenue and Verizon at about 15.3%), the BBC contract terminating if digital television viewership is deemed insufficient, the NTL site-sharing agreement, competition from larger carriers and independent tower companies, and currency exposure, since about 34.6% of revenues came from outside the U.S. Lower wireless demand or delayed carrier build-outs could also reduce tower leasing and network services demand.

What could drive future growth beyond the existing portfolio?

Growth depends on carrier outsourcing of tower ownership, build-to-suit construction, and 3G network rollouts. The Hutchison agreement (minimum 4,000 U.K. sites, with 1,000 per year from 2001 to 2004) and the BT Cellnet agreement (1,500 additional sites by 2003) could significantly raise U.K. site rental revenue. The pending Vodafone Australia purchase of about 670 towers would expand the Australian portfolio to about 1,380 towers, and the company is pursuing broadcast network privatizations internationally.

CCI 10-K FY2000 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 30, 2001. Cited figures are marked; the original filing is the authoritative source.

Crown Castle International Corp. (CCI) reported a 2000 10-K showing rapid, acquisition-driven growth alongside widening losses.

Net revenues rose 88% to $649.2 million^a from $345.8 million in 1999, and EBITDA grew to $247.1 million from $139.8 million. However, the company posted a net loss of $204.8 million (net loss to common of $264.3 million after $59.5 million in preferred dividends), up from $96.8 million, with interest expense of $241.3 million absorbing nearly all operating profit. Operating income was only $5.2 million after $238.8 million in depreciation and amortization.

The company operates roughly 12,918 towers and rooftops across the U.S. and Puerto Rico (9,872), the U.K. (2,330), and Australia (716), with a further ~670 Vodafone Australia towers pending. The balance sheet expanded sharply, with total assets reaching $6.44 billion^b and total debt $2.60 billion, plus $843 million of redeemable preferred stock.

Stockholders' equity was $2.42 billion^c, and the debt plus preferred-to-equity ratio was 1.42x (1.25x pro forma for the January 2001 equity offering). Earnings did not cover fixed charges by $202.3 million. Cash of $454 million, a $1.2 billion 2000 Credit Facility, and a January 2001 equity raise of about $343 million support near-term funding, but management expects continued losses and substantial capital needs, including roughly $330 million of 2001 tower construction and a commitment to invest about $325 million in the British Telecom sites program.

Key forward-looking items include major 3G-related contracts in the U.K. with Hutchison (minimum 4,000 sites) and BT Cellnet (1,500 additional sites), which could materially expand site rental revenue if executed. Investors should weigh this growth potential against concentration risk: the BBC accounted for about 14.8%^d of total revenue, Verizon for 15.3%, and the company's leverage and negative fixed-charge coverage leave little margin for error if wireless demand or financing conditions weaken.

02—Key points

Key Highlights

Total net revenues grew 87.7% to $649.2 million in 2000, driven by acquisitions including the GTE joint venture, BellSouth transactions, and Cable & Wireless Optus towers.
Net loss widened to $204.8 million from $96.8 million, with interest expense rising 117.6% to $241.3 million, and earnings were insufficient to cover fixed charges by $202.3 million.
EBITDA increased to $247.1 million from $139.8 million, while operating income was only $5.2 million due to heavy depreciation and amortization of $238.8 million.
Total debt of $2.60 billion and redeemable preferred stock of $843 million against $2.42 billion of stockholders' equity; debt and preferred to equity ratio of 1.42x (1.25x pro forma).
Major forward commitments include a 2001 tower build of about 1,500 towers (~$330 million) and roughly $325 million for British Telecom sites, plus Hutchison's minimum 4,000-site lease commitment in the U.K.
Customer concentration is significant: the BBC represented about 14.8% of total revenues and Verizon about 15.3%, with the BBC analog transmission contract running through March 2007.
Raised roughly $343 million of common equity in January 2001 (13.4 million shares at $26.25) to support growth and reduce leverage.

03—Questions

Frequently Asked Questions

Why did net losses widen so much despite strong revenue growth?
Losses grew because the company financed rapid tower acquisitions with heavy debt. Interest expense rose to $241.3 million and depreciation and amortization to $238.8 million, which together exceeded operating income of $5.2 million. Management expects losses to continue in the near term as growth and financing costs persist.
How much debt does Crown Castle carry and when does it come due?
Total debt was $2.60 billion at December 31, 2000. Scheduled maturities are modest through 2004 (about $27.8 million in 2002, $58.4 million in 2003, and $94.0 million in 2004), with about $2.58 billion due thereafter. Many notes mature in 2011, and the 2000 Credit Facility amortizes starting in 2003.
Does the company have enough liquidity to fund its plans?
At year-end the company held $453.8 million of cash and had about $404 million of unused availability under the 2000 Credit Facility as of March 2001. The January 2001 equity offering added about $343 million. Management believes these resources, along with operating cash flow of $165.5 million, will fund planned construction, but it notes that additional financing could be needed for new acquisitions or build-to-suit opportunities.
What are the main risks to the revenue outlook?
Key risks include dependence on a few customers (the BBC at about 14.8% of revenue and Verizon at about 15.3%), the BBC contract terminating if digital television viewership is deemed insufficient, the NTL site-sharing agreement, competition from larger carriers and independent tower companies, and currency exposure, since about 34.6% of revenues came from outside the U.S. Lower wireless demand or delayed carrier build-outs could also reduce tower leasing and network services demand.
What could drive future growth beyond the existing portfolio?
Growth depends on carrier outsourcing of tower ownership, build-to-suit construction, and 3G network rollouts. The Hutchison agreement (minimum 4,000 U.K. sites, with 1,000 per year from 2001 to 2004) and the BT Cellnet agreement (1,500 additional sites by 2003) could significantly raise U.K. site rental revenue. The pending Vodafone Australia purchase of about 670 towers would expand the Australian portfolio to about 1,380 towers, and the company is pursuing broadcast network privatizations internationally.

04—Continue

← View all 10-K filings