Crown Castle Inc. · NYSE:CCI
Crown Castle — Crown Castle International — Raymond James Equity Conference 2006
29 slides from Crown Castle's conference presentation, Mar 8, 2006
Slide 1: Crown Castle International Corp. at Raymond James Equity Conference
Crown Castle International Corp. NYSE: CCI Jay Brown, Treasurer Raymond James Equity Conference March 8, 2006
Slide 2: Forward-Looking Information
Forward-Looking Forward-Looking Information Information This presentation contains forward-looking statements that are based on management’s current expectations. Such statements include, but are not limited to plans, projections and estimates regarding (i) recurring cash flow (including on a per sh
Slide 3: Crown Castle International: Real estate provider to the wireless industry
Crown Crown Castle Castle International International Real estate provider to the wireless industry 3
Slide 4: Business Overview
Business Business Overview Overview Q4 ‘05 Tower Revenue § Primary business is leasing tower space to wireless operators under US 93% long-term leases AUS 7% • Recurring in nature and produces approximately 90% of revenue, Annualized = $622 million 95% of gross margin and nearly 100% of cash flow Q4
Slide 5: Consistent Performance
Consistent Consistent Performance Performance $ in millions $153 $155 $147 $140 $141 $133 $135 $130 $102 $105 Annualized $99 $87 $90 $92 $93 gross margin(1) $86 increase of $79 million, or $0.37 per share(2) Q1:04 Q2:04 Q3:04 Q4:04 Q1:05 Q2:05 Q3:05 Q4:05 12,010 Towers Site Rental Revenue Site Renta
Slide 6: Attractive Business Fundamentals
Attractive Attractive Business Business Fundamentals Fundamentals § High incremental margins on new revenue • Average of 93% incremental site rental gross margins over the last 4 quarters § Minimal sustaining capital expenditure requirements • Approximately $14 million of sustaining capital expendit
Slide 7: Focus on Operational Excellence
Focus Focus on on Operational Operational Excellence Excellence § Focus shifted from acquisitions to operational excellence in August 2001 Recurring Cash Flow per Share $0.86 § Site rental revenues increased approximately 52% across the same tower assets since Q4 2001 § G&A down significantly from 2
Slide 8: Recurring Cash Flow per Share
Recurring Recurring Cash Cash Flow Flow per per Share Share § Long-term annual targeted $1.12 growth rate of 20% - 25% $0.86 § 2006 Outlook does not include the expected impact of future investments in additional $0.32 stock or asset purchases ($0.11) ($0.31) * * * (1) 2002 2003 2004 2005 2006E (1)
Slide 9: 2003 – 2005 Invested Capital
2003 2003 –– 2005 2005 Invested Invested Capital Capital Since January 2003, approximately $1.6 billion has been invested, with the vast majority being invested in the core business Purchase of Verizon's JV Interest 19% Modeo 1% FiberTower 5% Land purchases 1% Existing Sites 4% Acquired Sites 9% New
Slide 10: Transformational Financing
Transformational Transformational Financing Financing § $1.9B of investment grade rated Notes • 60%+ rated AAA/Aaa by Fitch and Moody’s § More flexibility to invest the cash flow § Reduced annualized run-rate interest expense • 8.8% average coupon to 5.0% average coupon • Lower overall cost of capit
Slide 11: Key Initiatives
Key Key Initiatives Initiatives § Grow site rental revenue § Expand site rental margins § Invest capital wisely • Expect approximately $500 million - $550 million of capital to invest in 2006(1) § Capture new revenue opportunities around existing assets § Maximize long-term recurring cash flow per s
Slide 12: Strong Revenue and Recurring Cash Flow Growth Potential
Strong Revenue and Recurring Cash Flow Growth Potential
Slide 13: US Market Opportunities
US US Market Market Opportunities Opportunities Mobile Penetration (%) 60M Incremental Subs 75% 60% § US market offers significant growth potential: • Large population 2004 2010 • Low wireless penetration Estimated annual wireless network MOUs (in billions) • High expected growth in wireless CAGR=10
Slide 14: Continued US Wireless Deployments
Continued Continued US US Wireless Wireless Deployments Deployments § 2G build-outs continuing at strong pace 2G Build-Outs § Network quality and customer satisfaction below Western Europe § Carriers are seeking to improve coverage as a competitive response 3G Build-Outs § 3G deployments acceleratin
Slide 15: Superior US Tower Assets
Superior US Tower Assets Original Cellular Tower Networks Sold by Operators(2) CCI AMT SBAC GSL § 11,074 towers in the US NYNEX Mobile § 71% in the Top 100 BTA’s Bell Atlantic Mobile Bell South Mobility § 75% with Verizon or Cingular as the anchor tenant Ameritech Wireless 1/2 1/2 SBC Wireless § 96%
Slide 16: Superior Customer Experience
Superior Superior Customer Customer Experience Experience Crown Castle’s value proposition: § Co-locate carrier on existing site § Refer carrier to a non-CCI site § Profitably construct a new site • Traditional tower • Distributed antenna system 16
Slide 17: CCIsites
CCIsites CCIsites CCIsites is a web-based tool that stores all the information on our towers § Includes: • Tenant Leases • Ground Leases Normal Real Estate Information • Regulatory Information • RF signal strength by carrier • Demographic data CCI Advantage • Site readiness • Competitive structures
Slide 18: Site Specific Knowledge
Site Site Specific Specific Knowledge Knowledge § Regularly measure and update the following information by carrier on approximately 90% of our US sites: • Received signal strength • Failed call ratio (both peak and off-peak) • Capacity need RF Need Summary RF Received Capacity Band Blk Carrier Need
Slide 19: Revenue Conversion to Recurring Cash Flow
Revenue Revenue Conversion Conversion to to Recurring Recurring Cash Cash Flow Flow § Efficient capital structure § High incremental margins from additional revenue § 87% fixed rate debt – average maturity ~ 8 years § Investment grade rating – average cost of debt of 5% § Minimal future dilution fro
Slide 20: Potential Revenue Growth to RCF per Share
Potential Potential Revenue Revenue Growth Growth to to RCF RCF per per Share Share The addition of 1.3 tenants per tower(2) could equate to an estimated incremental $1.23 Recurring Cash Flow per Share Q4 '05 Annualized Estimated $1.23 Site rental revenue / tower $49,900 Incremental Adjusted EBITDA
Slide 21: Components of Future RCF per Share
Components Components of of Future Future RCF RCF per per Share Share ‘06E RCF per share of $1.12 per share + + + Measured Future Invested Demand Demand Capital § 1.3 tenants / § MOU growth § Tower acquisitions tower of § Subscriber growth § Tower builds measured need § Data usage growth § Stock pur
Slide 22: Enterprise Value
Enterprise Enterprise Value Value $ in billions $ 8.3 2.2 $ 5.9 0.3 $ 5.5 1.3 $ 4.3 3.0 Net Debt 0.5 2.7 5.8 0.5 3.7 Preferreds 0.8 2.4 Equity 0.8 (1) 2002 2003 2004 2005 (1) Equity value based on closing stock price of $26.91 and shares outstanding of 214.1 million as of 12/31/2005 22
Slide 23: CCI's Compelling Business Model
CCI’s CCI’s Compelling Compelling Business Business Model Model 1. Growth based on wireless network expansion 2. Long-term contracted revenue with contracted escalations 3. High credit quality of revenue stream 4. Long-term control of assets 5. Relatively fixed operating costs 6. Minimal required Ca
Slide 24: 2006 Outlook
2006 2006 Outlook Outlook $ in millions First Quarter 2006 Full Year 2006 Site rental revenue $159 to 161 $660 to 670 Site rental cost of operations(1) $50 to 52 $208 to 212 Site rental gross margin $108 to 110 $450 to 460 Adjusted EBITDA $90 to 92 $378 to 388 Interest expense and amortization of de
Slide 25: Non-GAAP Reconciliations
Non-GAAP Non-GAAP Reconciliations Reconciliations Non-GAAP Financial Measures: This presentation includes presentations of recurring cash flow and Adjusted EBITDA, which are non-GAAP financial measures. Crown Castle defines Adjusted EBITDA as net income (loss), plus cumulative effect of change in ac
Slide 26: Non-GAAP Reconciliations: Historical
Non-GAAP Non-GAAP Reconciliations Reconciliations 1. Historical Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures Adjusted EBITDA and recurring cash flow for the years ended December 31, 2001, December 31, 2002, December 31, 2003, December 31, 2004, and December 31
Slide 27: Non-GAAP Reconciliations: Outlook
Non-GAAP Non-GAAP Reconciliations Reconciliations 2. Outlook Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures Adjusted EBITDA and recurring cash flow for the quarter ending March 31, 2006 and the year ending December 31, 2006 is forecasted as follows: Forecast Ran
Slide 28: Other Calculations
Other Other Calculations Calculations Other Calculations: Site rental gross margin (tower gross margin) for the quarters ended March 31, 2004, June 30, 2004, September 30, 2004, December 31, 2004, March 31, 2005, June 30, 2005, September 30, 2005, and December 31, 2005 is computed as follows: Three
Slide 29: Other Calculations
Other Other Calculations Calculations Sustaining capital expenditures for the years ended December 31, 2003, December 31, 2004 and December 31, 2005 is computed as follows: Twelve Months Ended December 31, 2003 December 31, 2004 December 31, 2005 (In thousands of dollars) (In thousands of dollars) (
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