On Dec 28, we issued an updated research report on Crown Castle International Corp. CCI.
The company reported strong financial results in third-quarter 2015 with both the top and the bottom line surpassing the Zacks Consensus Estimate.
An extensive tower portfolio, a strong business outlook, continual acquisition of towers and accelerated 4G LTE network deployment are likely to benefit the company over the long haul.
Particularly, the purchase of Sunesys – a major fiber service provider with a portfolio comprising around 10,000 miles of fiber – should strengthen Crown Castle’s leading position in small cell networks by fortifying its presence in majority of the top U.S. metropolitan markets.
Notably, Crown Castle currently operates in 100 of the top U.S. markets with a portfolio of over 40,000 towers. Also, prior to the Sunesys acquisition, the company owned or had rights to roughly 7,000 miles of fiber that supported 15,000 small cell nodes.
Meanwhile, wireless services are advancing rapidly in terms of additional features and capabilities. Much of the infrastructure and upgrades require effective site management of cell towers and equipment. Crown Castle effectively addresses this opportunity as 96% of its quarterly revenues come from wireless service providers. Notably, U.S. telecom behemoths Verizon Communications Inc. VZ, AT&T, Inc. T and T-Mobile US, Inc. TMUS are the company’s major customers.
As network capacity and speed increases, services such as mobile video, the connected car, and more broadly the Internet of Things, will create demand for the company’s infrastructure. Mobile data is expected to double every two years through 2019, the furthest date that Cisco forecasts. Being a wireless infrastructure provider, the growing demand for mobile broadband should benefit Crown Castle by bolstering its top line.
In the third quarter of 2015, Crown Castle’s Site Rental revenues grew 6.5% year over year. The stellar revenue performance encouraged the company to raise its Site Rental segment guidance for full-year 2015 to the range of $3,011–$3,016 million (earlier guidance was $2,949–$2,959 million).
Moreover, Crown Castle’s board has approved a 7.9% increase in its quarterly cash dividend on common stock to 88.5 cents per share from 82 cents paid earlier. The raised dividend is payable on Dec 31, 2015, to shareholders of record as on Dec 18, 2015. We believe the recent dividend hike should further bolster investor confidence in the company’s financials and thus improve its market position.
Crown Castle currently carries a Zacks Rank #1 (Strong Buy).
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