CORPORATE OVERVIEW. Crown Castle International owns and operates towers and transmission networks
for wireless communications and broadcast transmission companies. As of June 30, 2010, it owned,
leased or managed roughly 23,914 towers and rooftop systems, including 22,321 sites in the U.S. and Puerto
Rico and 1,593 sites in Australia. In 2009, 73% of total revenues were derived from CCI's top four customers
-- Sprint Nextel, AT&T (formerly Cingular Wireless), Verizon Wireless and T-Mobile. These accounted
for 22%, 20%, 18% and 13% of revenue, respectively.
CCI generates revenue by leasing towers that it owns to major wireless service providers in the U.S. and
Australia. The company also provides network services to major customers. In the second quarter of 2010,
site rental leasing and broadcast transmission revenues totaled $410 million, representing 90% of consolidated
revenue. Network services and other revenues totaled $46 million, accounting for about 10% of total
revenues.
We believe CCI's towers are attractive to a diverse range of wireless communications industries, including
cellular, wireless data, paging, fixed point-to-point radio, and point-to-multipoint broadcasting (such as radio
and television broadcasting).
PRIMARY BUSINESS DYNAMICS. The company's main business in the U.S. is the leasing of antenna
space on its sites to wireless carriers. As of December 31, 2009, approximately 54% of CCI's U.S. and Puerto
Rico towers were located in the 50 largest metropolitan markets in the U.S. and Puerto Rico, and approximately
71% of the towers were located in the 100 largest markets.
The major business in Australia, which is conducted through Crown Castle Australia Pty Ltd., is the leasing
of antenna space to wireless carriers. This business represents approximately 7% of the company's total
towers. CCI is considering several strategic options for its Australian unit, including an IPO, a leveraged
recapitalization, or a private sale.
Modeo is a subsidiary formed to explore a potential offering of a digital video broadcast to handsets service
to capitalize on the company's U.S. nationwide license of five megahertz of spectrum acquired in
2003.
In December 2006, Modeo launched a live, commercial quality mobile television beta service in New York
City that includes live video content from leading network programmers as well as streaming audio content.
In July 2007, CCI announced it had leased the spectrum used by Modeo to a venture formed by Telcom
Ventures, LLC and Columbia Capital, LLC, and transferred the assets to the leasing venture.We believe
CCI wrote down most of the Modeo assets, except the spectrum, in the third quarter of 2007.
IMPACT OF MAJOR DEVELOPMENTS. On July 3, 2006, Crown Castle acquired over 98% of the outstanding
equity interest of Mountain Union Telecom for approximately $305 million, and has the right to call the remaining
equity interest for approximately $5 million commencing in 2007.
In January 2007, CCI closed its acquisition of Global Signal Inc. for $55.95 per share, with each Global Signal
share converted into 1.61 CCI shares or cash in the amount of $55.95 per Global Signal share. Total
consideration for Global Signal was estimated at $5.8 billion in stock and cash. The tower portfolio of the
combined companies was 76% from the four nationwide wireless carriers, 12% from other wireless telephony
carriers, 9% from broadcasting and government, and 3% from paging.
In March 2008, the FCC concluded its 700MHz wireless spectrum auction, which raised close to $20 billion.
We expect this to be a positive for the tower companies as a whole, as service providers should begin to
build out this spectrum.
In July 2010, CCI announced it plans to acquire NewPath Networks, a DAS (distributed antenna systems)
network provider for $115 million.
FINANCIAL TRENDS. CCI's long-term goal is to increase recurring cash flow 20% to 25% per annum. CCI
sold $0.5 billion of debt in the fourth quarter of 2009 and $1.9 billion in January 2010 to refinance near-term
maturities.We believe the company will continue to use free cash flow to de-lever, which should, in turn,
increase shareholder value. In the second quarter of 2010, CCI repurchased 1.0 million shares for roughly
$38 million. As of June 30, 2010, CCI had a total debt to total capitalization ratio of 72%.