Crown Castle Inc. · NYSE:CCI
Crown Castle — Crown Castle International — Raymond James Conference March 2007
35 slides from Crown Castle's conference presentation, Mar 6, 2007
Slide 1: Crown Castle International
Crown Castle International NYSE: CCI March 6, 2007 Jay Brown VP, Treasurer
Slide 2: Cautionary Information
Cautionary 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) integration of the Global Signal assets, including the timing thereof, (ii)
Slide 3: Overview
Overview Section 1
Slide 4: Crown Castle International
Crown Castle International Real estate provider to the wireless industry 4
Slide 5: Attractive Business Fundamentals
Attractive Business Fundamentals • High incremental margins on new revenue • Minimal sustaining capital expenditure requirements – Approximately $23 million of expected annual sustaining capital expenditures • Majority of outstanding debt rated investment grade and fixed rate coupon • Long-term goal
Slide 6: Consistent Results
Consistent Results(1,2) ($ in millions) $313 $307 $292 $283 $276 $269 $225 $196 $201 $195 $189 $180 $184 $173 $165 $146 $126 $131 Q4:04 Q1:05 Q2:05 Q3:05 Q4:05 Q1:06 Q2:06 Q3:06 Q4:06 Site Rental Revenue Site Rental Gross Margin (1) Site Rental Gross margin is defined as site rental revenue less sit
Slide 7: Business Overview
Business Overview • Primary business is leasing tower space Q4 ‘06 Tower Revenue(1) to wireless operators under long-term leases – Recurring in nature and produces approximately 93% of revenue, 96% US 96% of gross margin and nearly 100% of cash flow – Approximately 80% of recurring AUS 4% revenue fr
Slide 8: U.S. Tower Footprint
U.S. Tower Footprint Over 22,000 U.S. Towers Significant Presence in 91 of the Top 100 BTA’s(1) (1) Basic Trading Areas as defined by Rand McNally & Co and as used by the FCC to determine service areas for PCS wireless licenses 8
Slide 9: The Leading U.S. Tower Operator
The Leading U.S. Tower Operator U.S. Wireless Towers • 72% of towers in the top 100 BTA’s ≈22,000 ≈20,000 – Top 100 BTA’s represent 74% of US POPs Other – Higher proportion of expected Top 100 carrier capex spending Top 50 • Over 3,100 more towers in the top ≈5,500 100 BTA’s than nearest competitor
Slide 10: U.S. Operational Overview
U.S. Operational Overview Business Overview Annualized Site Rental Revenue(3) Other Wireless • #1 tower operator in the U.S.(1) Telephony • 22,130 wireless towers 12% • 2007 Outlook(2): Other 12% Big 4 Wireless – $1.3 Bn site rental revenue Carriers – $743 mm Adjusted EBITDA 76% – $369 mm recurring
Slide 11: High-Quality Revenues
High-Quality Revenues Highest Exposure to Leading • Diversified, high-quality revenues US Wireless Carriers(2) Big 4 Site Rental Revenue Per Tower(3) • 88%(1) wireless telephony ($ in thousands) • 80%(1) investment grade revenues $39.5 $35.1 $33.7 (4) (5) CCI AMT SBA Big 4 as a (1) Run-rate site ren
Slide 12: Opportunity For Growth
Opportunity For Growth Drivers of Future Site Demand Crown Castle is Best Positioned • Carrier focus on improving network • Most towers in the top 50 and top 100 quality BTA’s • Subscriber growth • Portfolio comprised primarily of • Increasing usage (voice MOU, data) acquired towers from Verizon, AT
Slide 13: Significant Wireless Network Spending
Significant Wireless Network Spending Estimated Wireless Capital Expenditures • Growth in MOUs drives the need for $ in billions additional sites $28 $27 $27 $27 • Decreases in equipment costs allow for more deployed sites with similar levels of capital expenditures • Improved network quality reduce
Slide 14: US Market Opportunities
US Market Opportunities Mobile Penetration (%)(1) • US market offers significant growth potential: 2010 E 87% – Large population 72% 2006 – Relatively low wireless penetration – High expected growth in wireless Estimated annual wireless network MOUs(2) In billions (CAGR = 21%) network MOUs 2010 E 3,
Slide 15: Large Investments at Spectrum Auction Translates to Potential Revenue Growth
Large Investments at Spectrum Auction Translates to Potential Revenue Growth The deployment of the additional spectrum from Auction 66 is expected to drive additional leasing on wireless towers. Capacity/Coverage Total Footprint New Broadband Improvements for Investment Expansion(1) Strategy existin
Slide 16: CCIsites
CCIsites CCIsites is a web-based tool that stores the key information on our towers • Includes: – Tenant leases – Ground leases Normal Real Estate Information – Regulatory information – RF signal strength by carrier – Demographic data – Site readiness CCI Advantage – Competitive structures 16
Slide 17: Capital Allocation and Structure
Capital Allocation and Structure Section 2
Slide 18: Significant Share Purchases
Significant Share Purchases ($ in millions) CCI $490 Total •Crown Castle has invested recurring AMT 4.2x of its recurring cash cash flow $1,083 ’03 to’06(3) flow in share purchases SBA $47 over the last four years at an average price of $24.32 per share (1,2) •Strong growth in Adjusted CCI $2,039 EB
Slide 19: Best Positioned to Capture Future Value from Leasing Growth
Best Positioned to Capture Future Value from Leasing Growth Common Shares per Tower(1) Equity Capital per Tower(1) (in thousands) ($ in thousands) 19.1 18.7 $765 $549 11.9 $412 Impact of the addition of one CCI AMT SBA CCI AMT SBA tenant per tower (circa $18k of lease revenue per tower)(2) Increment
Slide 20: Optimized Capital Structure
Optimized Capital Structure Debt Comparison with Peers ($ in billions) • ≈ 81% of Crown Castle’s debt is rated investment grade $6.0 • ≈ 90% of Crown Castle’s debt is fixed rate debt – 90% of debt outstanding is not exposed to $3.5 $4.8 interest rate fluctuations until at least Investment January 20
Slide 21: Capitalization Summary
Capitalization Summary ($ in millions) Debt Outstanding Total Capitalization Sr. Secured Twr Revenue Notes, Series 2006-1 $1,550 5.7% Sr. Secured Twr Revenue Notes, Series 2005-1 $1,900 4.9% Feb. '06 Mortgage Loan $1,550 5.7% Dec. '04 Mortgage Loan $294 4.7% Bonds $64 4.0% Term Loan $650 LIBOR + 150
Slide 22: Recurring Cash Flow Per Share
Recurring Cash Flow Per Share Recurring Cash Flow per Share(2) • Since 2001: $1.31 $1.23 – Site rental revenues increased 98%(1) $0.86 – Site rental gross margin increased 140%(1) – Average interest coupon of 5.5% $0.32 compared to 9% in Q4 2001 • Focus on recurring cash flow per share ($0.11) – Lon
Slide 23: Impact of Additional Leverage to 2007 RCF per Share
Impact of Additional Leverage to 2007 RCF per Share Impact of $1.15 B borrowings to pay cash consideration for GSL acquisition and 25% purchase of 17.7 mm •Committed to decisions that shares Growth $0.31 management believes will maximize long-term recurring cash $1.31 flow per share $1.23 $(0.23) •N
Slide 24: Components of Future RCF per Share
Components of Future RCF per Share 2006 RCF per share of $1.23 + + Anticipated + Measured Demand Future Demand Invested Capital § 1.25 tenants / tower of § MOU growth § Tower acquisitions measured need § Tower builds § Subscriber growth § Estimated incremental § Stock purchases § Data usage growth $
Slide 25: 2007 Outlook
2007 Outlook $ in millions Q1 2007 Full Year 2007 Site rental revenue $295 to 300 $1,265 to 1,280 Site rental cost of operations(1) $103 to 108 $440 to 450 Site rental gross margin $189 to 194 $820 to 830 Adjusted EBITDA $162 to 167 $735 to 750 Interest expense and amortization of deferred financing
Slide 26: CCI's Compelling Business Model
CCI’s Compelling Business Model 1. Growth based on wireless network expansion Highly efficient capital 2. Long-term contracted revenue with structure converts growth and contracted escalations investment into recurring cash 3. High credit quality of revenue stream flow per share 4. Long-term control
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures NON-GAAP FINANCIAL MEASURES Certain of Crown Castle's financial releases and broadcast conference calls include presentations or discussions of recurring cash flow and Adjusted EBITDA, which are non-GAAP financial measures. Crown Castle defines Adjusted EBITDA as net inco
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA, recurring cash flow, and recurring cash flow per share for CCI for the years ended December 31, 2001, December 31, 2002, December 31, 2003, December 31, 2004, December 31, 2005 and December 31, 2006 are computed as follows: Twelve Months Ended December 31
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Global Signal Inc. Global Signal defines Adjusted EBITDA as net income (loss) before interest, income tax expense (benefit), depreciation, amortization and accretion, gain or loss on early extinguishment of debt, non-cash stock-based compensation expense, Sprint integrati
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA, recurring cash flow and recurring cash flow per share for the quarter ending March 31, 2007 and the year ending December 31, 2007 are forecasted as follows: Forecast Ranges (in millions, except per share amounts) Q1 2007 Full Year 2007 Net income (loss) $
Slide 31: Other Calculations
Other Calculations Site rental gross margin (tower gross margin) and annualized site rental gross margin change for CCI for the year ended December 31, 2001 to December 31, 2006 annualized is computed as follows: Twelve Months Ended Three Months Ended Annualized December 31, 2001 December 31, 2006 D
Slide 32: Other Calculations
Other Calculations Site rental gross margin (tower gross margin) for CCI the quarters ended December 31, 2004, March 31, 2005, June 30, 2005, September 30, 2005, December 31, 2005, March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006 is computed as follows: Three Months Ended Dece
Slide 33: Pro Forma Reconciliations
Pro Forma Reconciliations ($ in thousands, except per share and per tower amounts) Annualized Adjusted EBITDA for pro forma Crown Castle for the quarter ending December 31, 2006 is computed as follows: CCI GSL Pro Forma Combined CCI Q4 2006 Adjusted EBITDA $ 116,507 $ 55,260 $ 171,767 Annualized Adj
Slide 34: Pro Forma Reconciliations
Pro Forma Reconciliations Net Debt divided by last quarter annualized Adjusted EBITDA for pro forma Crown Castle, AMT, and SBA for the three months ended December 31, 2006 for pro forma combined CCI and September 30, 2006 for AMT and SBAC is computed as follows: ($ in millions, except per share and
Slide 35: Pro Forma Reconciliations
Pro Forma Reconciliations CCI share purchases as a % of recurring cash flow is calculated as follows: (In thousands of dollars) Recurring cash flow 2003-2006 CCI 2003 $ (23,490) 2004 70,580 2005 187,411 2006 255,812 Total RCF 490,313 Share Purchases $ 2,038,806 416% Potential revenue growth to recur
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