“Can you hear me now?” or “more bars” are common refrains for cell phone advertisements. The often dropped call or text message that won’t go through are the bane of all wireless users and cause for constant complaints. Making this common frustration go away is an ongoing process that involves technology upgrades and better coverage. But when one stops to consider the practical side of making these services better, the real power of “strength in numbers” becomes apparent.
“Can you hear me now” means the need for lots and lots of cell towers, and the need for a company to own the land and towers that enable the wireless signals to be effective. There aren’t too many companies that work in this area, but they do control a vast pool of land and associated investment that provides a stable revenue stream once an individual network is assembled.
Crown Castle International Corp., a shared wireless infrastructure and tower operator, works to provide wireless tower and network services in the United States and Australia. The company offers shared wireless service infrastructure in 91 of the top US city markets and a vast majority of Australia.
From a general point of view, the company operates in a fairly predictable and stable market environment. The capital debt markets do present a certain challenge at the moment, but not to any large deterrent of company’s growth. The stability and reliability of revenue comes primarily from the nature of the company’s primary business of renting wireless tower space on its over 23,000 tower and wireless sites. Once the tower land proper is purchased and the tower is built, there is relatively minor maintenance cost past taxes and general maintenance. Because of this, revenue projections can be forecasted and generally relied upon to hold a steady course.
As capital management is a primary operational element for the company, it is continually working to reduce discretionary capital expenditure. Although this is a regular challenge for all companies, Crown Castle is focusing additional effort so current debt maturities can be eliminated and certain flexibility gained until its next maturity period in 2011. Through this period, the company is forecasting an 8% growth in revenue with a constant dollar exchange rate assumed.
Exchange rates, not withstanding, Crown Castle International has developed a network of properties that essentially makes it a cash cow. Communications, in one form or another, will likely continue to require a close network or nodal points to make wireless systems possible. Crown Castle has developed this system and is quietly counting and managing the rewards it has earned.
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