10-QPeriod: Q3 FY2012

CROWN CASTLE INC. Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 2, 2012For Securities:CCI

Summary

Crown Castle Inc. (CCI) reported its third-quarter and nine-month results for the period ending September 30, 2012. The company demonstrated strong revenue growth, with total net revenues increasing by 21% year-over-year for the quarter and 16% for the nine-month period. This growth was primarily driven by a robust site rental business, which saw a 15% increase in quarterly revenue and 12% for the year-to-date period, supported by new tenant additions and acquisitions. The company also made significant strategic moves, including the closing of the substantial NextG Networks acquisition in April 2012 and the Wireless Capital Partners (WCP) acquisition in January 2012, which significantly expanded its distributed antenna systems (DAS) and small cell operations. Furthermore, CCI announced a major agreement with T-Mobile for the lease, operation, or acquisition of up to 7,180 towers for approximately $2.4 billion, expected to close in Q4 2012. To support these activities and its ongoing operations, the company refinanced its credit facilities and issued new senior notes.

Financial Highlights

47 data points
Beta

Revenue

$621.34M

Net Income

$42.05M

6.8% Net Margin

EPS (Diluted)

$0.14

Total Assets

$12.74B

Cash & Equivalents

$118.90M

Free Cash Flow

$200.12M

Financial Statements
Beta
Revenue$621.34M
SG&A Expenses$55.86M
Operating Expenses$400.57M
Operating Income$220.77M
Interest Expense$119.46M
Net Income$42.05M
EPS (Basic)$0.14
EPS (Diluted)$0.14
Shares Outstanding (Basic)290.76M
Shares Outstanding (Diluted)292.10M

Key Highlights

  • 1Total net revenues increased by 21% to $621.3 million for the three months ended September 30, 2012, and by 16% to $1.76 billion for the nine months ended September 30, 2012, compared to the prior year periods.
  • 2Site rental revenues, the core business, grew by 15% for the quarter and 12% for the nine months, demonstrating consistent demand for wireless infrastructure.
  • 3The company completed two significant acquisitions: NextG Networks for approximately $1.0 billion and Wireless Capital Partners (WCP) for $214.7 million, expanding its footprint in DAS and small cells.
  • 4A substantial agreement was reached with T-Mobile to lease, operate, or acquire up to 7,180 towers for approximately $2.4 billion, expected to close in Q4 2012.
  • 5Debt refinancing occurred in January 2012, establishing a $3.1 billion senior credit facility, and in October 2012, issuing $1.65 billion in 5.25% Senior Notes to partially fund the T-Mobile transaction.
  • 6Net cash provided by operating activities increased by 15% to $524.5 million for the nine-month period, underscoring the company's strong cash generation capabilities.
  • 7Goodwill increased significantly due to acquisitions, reaching $2.8 billion as of September 30, 2012, reflecting the strategic investments made.

Frequently Asked Questions

Revenue growth was primarily driven by the core site rental business, which benefited from new tenant additions, contract renewals, and escalations. The company also saw significant revenue contributions from its recent acquisitions of NextG Networks and Wireless Capital Partners, which expanded its portfolio of distributed antenna systems (DAS) and small cell infrastructure.

Crown Castle financed its acquisitions through a combination of debt. Specifically, the NextG and WCP acquisitions were partially funded by borrowings under a new $3.1 billion senior credit facility established in January 2012. To partially fund the anticipated T-Mobile transaction, the company issued $1.65 billion in 5.25% Senior Notes in October 2012 and expects to utilize its revolving credit facility.

The agreement with T-Mobile, valued at approximately $2.4 billion, represents a significant expansion of Crown Castle's tower portfolio. If completed, it will allow the company to lease, operate, or acquire up to 7,180 T-Mobile towers, further solidifying its position as a major provider of wireless infrastructure in the U.S. The transaction is expected to close in the fourth quarter of 2012.

Crown Castle significantly restructured its debt. In January 2012, it refinanced its existing credit facilities with a new $3.1 billion senior credit facility maturing in 2017 and 2019. In October 2012, it issued $1.65 billion in new senior notes. The company continues to maintain a significant portion of its debt at fixed rates, with approximately 79% fixed as of September 30, 2012.