Crown Castle today announced its Q4 2020 earnings, full year 2020 earnings, full year 2021 guidance, material updates on its small cells business with Verizon and refreshed return on invested capital metrics for its tower and fiber segments.

Full Year 2020 Earnings Highlights – Crown Castle

Below are highlights from Crown Castle’s financial results for year end December 31, 2020.

  • Site Rental Revenues: grew 4%, or $227m, from $5.1bn for full year 2019 to $5.3bn for full year 2020
  • Net Income: grew 23%, or $196m, from $860m for full year 2019 to $1.1bn for full year 2020
  • Adjusted EBITDA: grew 12%, or $407m, from $3.3bn for full year 2019 to $3.7bn for full year 2020
  • Adjusted Funds From Operations (AFFO): grew 21%, or $507m, from $2.4bn for full year 2019 to $2.9bn for full year 2020
  • Capital Expenditures: $1.6bn in 2020, including $86m of sustaining capital expenditures and $1.5bn of discretionary capital expenditures
  • Dividend: during 2020, Crown Castle paid common stock dividends of $2.1bn, or $4.93 per common share, an increase of 8% on a per share basis compared to dividends paid during 2019

Full Year 2021 Guidance – Crown Castle

Crown Castle’s financial outlook for full year 2021, remains unchanged from the company’s prior forecast that it provided in its Q3 2020 earnings release. At the midpoint of Crown Castle’s full year 2021 guidance the company anticipates:

  • Site Rental Revenues: $5.6bn
  • Adjusted EBITDA: $3.6bn
  • Net Income: $1.0bn
  • Earnings per Share: $2.30
  • Adjusted Funds From Operations (AFFO): $2.9bn
  • Adjusted Funds From Operations (AFFO) per Share: $6.69

Small Cells – Net Growth in Q4 2020 and Beyond

Crown Castle finished 2020 with 50k small cells on-air. Additionally, the company meaningfully increased its overall backlog of small cells committed or under construction to 30k during Q4 2020. Indeed, during Q4 2020, Crown Castle was able to increase its backlog of small cells by 10k, from its prior 20k backlog in Q3 2020. Notably, Crown Castle expects to have 60k small cells on-air, by the end of 2021.

Verizon Strategic Relationship

The increase in small cells backlog was specifically driven by a new 5G small cell agreement that Crown Castle signed with Verizon. Indeed, Verizon has committed to lease 15k new small cells from Crown Castle over the next four years. Once installed, the small cell leases will have an initial term of 10 years.

Overall, these small cells will support Verizon’s 5G Ultra Wideband and 5G Nationwide deployments. Importantly, Crown Castle is partnering with Verizon on the decade-long investment cycle for wireless carriers to deploy 5G.

T-Mobile Cancellation

Separately, in December 2020, T-Mobile notified Crown Castle it was cancelling 5.7k small cells contracted with Sprint, prior to its merger with T-Mobile. However, the majority of the cancelled small cells were not yet constructed. Therefore, upon completion, these small cells would have been located at the same locations as other T-Mobile small cells.

In turn, T-Mobile’s cancellation accelerates payment of contractual rental obligations to Crown Castle for the 5.7k small cells. Additionally, T-Mobile is compensating Crown Castle for the payment of capital costs on these small cells to-date. Notably, Crown Castle’s 2021 guidance previously contemplated the deployment of 1.0k of these, now cancelled small cells.

Return on Invested Capital (ROIC) for Crown Castle in Q4 2020

Crown Castle’s Q4 2020 earnings provided updated disclosures for segment cash yields on invested capital. Indeed, these give investors, including Elliott Management, who owns a $1bn economic interest in Crown Castle, a better view into returns on Crown Castle’s Tower and Fiber (including Small Cells) segments.

In Q4 2020, Return on Invested Capital was 10.8% for Crown Castle’s Tower segment and 7.7% for its fiber segment. As a comparison, in Q3 2020 Return on Invested Capital was 10.7% (10 bps lower) for Crown Castle’s Tower segment and 7.8% (10 bps higher) for its fiber segment.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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