Crown Castle Inc. · NYSE:CCI
Crown Castle — Crown Castle International — Investor Day (2003)
21 slides from Crown Castle's investor day presentation, 2003
Slide 1: Crown Castle International Corp.
Crown Castle International Corp. NYSE: CCI W. Benjamin Moreland Chief Financial Officer
Slide 2: Company Overview
Company Company Overview Overview Towers 2002 Tower % of Total Revenue § US 10,794 $418MM 62% 3,397 $236MM 35% § UK 1,387 $24MM 3% § AUS TOTALS 15,578 $678MM 100% shaping the wireless world SM 2
Slide 3: 2002 Overview
2002 2002 Overview Overview § Significant Events • Free cash flow positive in Q4 2002 • UK tenant leasing extremely robust • Addition of Freeview digital terrestrial television contracts • Significant reductions in G&A and Capital Expenditures • US customers acknowledging correlation between network
Slide 4: 2002 Results
2002 2002 Results Results $ in millions $678 $576 *Revenue Highlights: • 12.4% Same Tower Sales Growth • Stable pricing in US and UK $209 *Cash from Operations Highlights: $132 Free Cash • 21% growth in Tower Gross Margin from Flow 2001 to 2002 Tower Cash from Revenue Operations -$68 • Removed $37MM
Slide 5: Free Cash Flow Progress
Free Free Cash Cash Flow Flow Progress Progress $ in millions $61 -$129 -$195 -$356 -$679 2H 00 1H 01 2H 01 1H 02 2H 02 shaping the wireless world SM 5
Slide 6: Financial Flexibility
Financial Financial Flexibility Flexibility $1,200 Debt Availability Cash § Cash of $632MM $1,000 $477 $800 $308 $301 § Debt Availability of $477MM $ in millions $600 § Net bank debt / EBITDA of 1.2X $400 $632 $601 $610 $200 $0 12/31/2002 12/31/2003(E) 12/31/2004(E) *Based on the midpoint of CCI gui
Slide 7: Superior Liquidity Position
Superior Superior Liquidity Liquidity Position Position Cash 12/31/02 $632MM RR CFOA(1) $132MM 2003 - 2006 FCF No Growth $368MM Less: Maintenance CapEx <$40MM> 2003 – 2006 Additional Cash Interest (2) <$270MM> Run-Rate Free Cash Flow $92MM Debt Amortization 2003-2006 (3) <$612MM> Pro forma Cash 12/3
Slide 8: Corporate Structure
Corporate Corporate Structure Structure CCIC HY Bonds, Preferred, and Converts $2.7B Cash $341M Unrestricted Subsidiaries 63% 100% 100% CCA CCUK CCI Investment Holding Company Corp. Cash $80M $11M Cash $250M Bank Facility Operating Sub $167M Cash 3.8X Debt / LQA EBITDA Cash $33M Bank Facility $145M
Slide 9: High Quality of Revenue
High High Quality Quality of of Revenue Revenue 2002 US Leasing Q4 2002 Total Site Rental and Broadcast Revenue 100% 15% 15% 18% 90% 25% 80% Non- 70% Investment Grade 60% 28% 50% Investment 85% 85% 82% 40% Grade 75% 72% 30% 20% 10% 0% Q1 '02 Q2 '02 Q3 '02 Q4 '02 % Big 6 % Other shaping the wireless
Slide 10: Long-Term Contracted Revenue
Long-Term Long-Term Contracted Contracted Revenue Revenue % of Recurring Revenue* Details of Long-Term Lease Contracts** § 5-Year initial term with three or four 5-year renewal options § Annual 3 – 5% escalation < 5 Years § Lease-specific permitted uses with 19% regards to the respective tower 5 - 1
Slide 11: Carrier Consolidation Exposure
Carrier Carrier Consolidation Consolidation Exposure Exposure Monthly Recurring Revenue on Sites where Carriers Co-Exist Monthly Recurring Revenue ATT CINGULAR NEXTEL SPRINT VERIZON in millions CINGULAR $2.7 NEXTEL $2.1 $2.3 SPRINT $1.5 $1.6 $1.9 VERIZON $2.7 $2.3 $3.5 $2.7 T-MOBILE $1.9 $1.6 $2.0 $
Slide 12: Long-Term Control of Assets
Long-Term Long-Term Control Control of of Assets Assets < 5 Years 5% 5 - 10 Years 8% Owned Land We control 87% of our 19% 10 - 15 Years Sites for more than 18% 10 Years 20 + Years 15 - 20 Years 27% 23% shaping the wireless world SM 12
Slide 13: Tale of Two Businesses
Tale Tale of of Two Two Businesses Businesses Core Business Continues Strong Growth Tower Gross Margin $408 Service Gross Margin $400 $337 $300 $252 $ in millions $200 $154 $95 $100 $83 $48 $36 $0 1999 2000 2001 2002 shaping the wireless world SM 13
Slide 14: Reducing Reliance on Services
Reducing Reducing Reliance Reliance on on Services Services 2001 22% Why Stay in the 2002 Service Business? Services 10% 1. Maintains and enhances 78% customer relationships Service Gross Margin $94.5MM 2. Drives incremental Total Gross Margin $432MM long-term revenue 3. Optional service to Broadcas
Slide 15: 2003 – 2004 Outlook
2003 – 2004 Outlook
Slide 16: Achievable Guidance
Achievable Achievable Guidance Guidance Free Cash Flow $80 in millions $65.0 Key Assumptions $60 § $600 million+ of cash not $40 currently invested at high- $20 yielding returns $0 § Organic revenue growth of -$20 ($17.0) +/- 10% -$40 § 75% of 2002 Leasing Activity -$60 § No further working capital
Slide 17: Disciplined Investment Strategy
Disciplined Disciplined Investment Investment Strategy Strategy § Formalized Capital Committees review all capital expenditures § Requirements for investment • 15%+ contracted yield on investment • Low execution risk • More attractive than alternative uses shaping the wireless world SM 17
Slide 18: Acquisitions / Builds Have Slowed
Acquisitions Acquisitions // Builds Builds Have Have Slowed Slowed Acquired 15,578 15,116 Built § No BTS agreements remaining Beginning 12,918 Towers § No building of speculative towers 7,488 § All towers built exceed internal capital return rates 1,608 1998 1999 2000 2001 2002 shaping the wireless
Slide 19: Minimal Required Capex
Minimal Minimal Required Required Capex Capex $800 Growth CapEx BT Payment $700 $680M Maintenance Capex $640M $600 $500 $ in millions $400 $300 $277M $200 $188M $105M $100 $0 2000 2001 2002 2003(E) 2004(E) *Based on the midpoint of CCI guidance issued 2/26/03 shaping the wireless world SM 19
Slide 20: Significant Expected Available Cash
Significant Significant Expected Expected Available Available Cash Cash $ in millions CFFO $170M CFFO $175M Cash Available for: •Debt repurchases •Expansion Available Cash •Acquisitions Available Cash •Tower enhancements $130 •Debt amortization $135 Maintenance Capex Maintenance Capex $40 $40 2003(E
Slide 21: Meaningful Leverage Reduction
Meaningful Meaningful Leverage Leverage Reduction Reduction 9.0X Converts and PIK 8.2X Converts and PIK 6.9X 7.0X Converts 6.4X and PIK 5.3X Bonds Bonds Bonds 1.2X 1.1X Net Bank Net Bank Net Bank 0.6X 2002 2003(E) 2004(E) *Cumulative Ratios, based on year-end run-rate shaping the wireless world SM 2