While most tower companies have been focusing their attention on the domestic market, Crown Castle International Corp. has cast its net overseas.
Crown, through its Crown Castle UK Ltd. subsidiary, controls 1,800 towers in the United Kingdom, including the BBC’s TV and radio networks. Earlier this year, the company added to its U.K. presence with the acquisition of One 2 One’s tower portfolio.
Crown also has built a strong presence in the eastern half of the United States through relationships with BellSouth Corp., Bell Atlantic Mobile and Powertel Inc. In total, Crown owns and manages about 7,000 towers.
“What has surprised me the most is the quickness with which the major carriers decided to outsource in the United States,” said Ted Miller, chairman and chief executive officer of Crown Castle. “Moreover, that has rolled over into the international arena as well, which is where we’re starting to turn our focus in a big way.
“We felt like if we were able to garner good relationships with carriers here and in the United Kingdom that we would be able to work with them as they invested throughout the world,” said Miller.
Miller said the last year has been something of a blur for his company, which added nearly 6,000 towers to its portfolio and did six road shows resulting in $1.6 billion in debt and equity capital raised. He said the company has increased revenues by more than 200 percent and EBITDA by almost 300 percent during the last year.
“I would say that’s moving pretty quick.
“We’ve had a strategic plan since the very beginning of the company to grow by acquiring clusters from major carriers-clusters of towers that would enable us to provide rapid deployment on a turnkey basis for existing license holders who had not rolled their networks out, and for new technologies,” said Miller. “We think that concept and strategy is going to hold true for us.”
Miller noted a recent agreement with Metricom Inc., a mobile data networking and technology company, under which Crown will lease 500 sites to the company.
Miller said he sees three levels of wireless activity occurring worldwide that will affect the tower industry in different ways. In parts of Western Europe, the opportunity for tower companies is in next-generation services because wireless carriers there are far ahead of the rest of the world in terms of digital deployments and filling in coverage. In the United States, carriers are looking to tower companies as they continue to build out for coverage and capacity in addition to new technologies. The third tier, said Miller, is the rest of the world, where there is an opportunity for tower companies to buy incumbent cellular tower portfolios in markets where personal communications services licenses have yet to be awarded.
Miller said he expects outsourcing to continue and expand to include network design, buildout and maintenance. Crown’s relationship with the BBC in the United Kingdom serves as an example of that idea, he said. Crown designed the BBC’s entire digital terrestrial TV network, owns all the infrastructure and electronics, and is responsible for the signal feed from the station to the viewer.
“The way this business is viewed right now is that it’s a real estate business where you have some steel out there, somebody sends you a lease and you let them stick some equipment up there and you collect the rent,” said Miller. “It’s a lot more than that.”
Part of the challenge a tower company faces when trying to establish relationships with carriers, said Miller, is ensuring them you can understand and operate their networks as well as they do. Miller said Crown built information technology systems that would allow the company to integrate thousands of towers, ground leases and tenant leases.
Miller said he doesn’t see any end in sight to the demand for towers and the services tower-management companies provide.
“I think Wall Street has tried to pit us against each other, but I really believe that we all have a lot of upside potential, simply because the business is so big and there’s such a big need for outsourcing,” said Miller. “We’re at the tip of the iceberg in terms of the growth.
“The markets have been concerned about where we are going to get leases,” said Miller. “I’m concerned about having enough manpower to build out all the sites that are going to be needed.”
