Crown Castle shifts focus to towers with $8.5 billion sale

HOUSTON - Crown Castle Inc. (NYSE: CCI), a leading wireless infrastructure provider with a market capitalization of $41.33 billion and a prominent position in the Specialized REITs industry according to InvestingPro, announced the conclusion of its strategic review with a definitive agreement to sell its small cells and fiber solutions businesses for $8.5 billion. The transaction involves EQT Active Core Infrastructure fund acquiring the small cells business and Zayo Group Holdings Inc. acquiring the fiber solutions business. Expected to close in the first half of 2026, the sale is subject to customary closing conditions and required government and regulatory approvals.

This strategic move positions Crown Castle as the only pure-play, publicly-traded U.S. tower company, focusing on its portfolio of approximately 40,000 towers. The company believes this concentrated tower business will benefit from increasing demand for wireless data and network densification. Based on InvestingPro’s Fair Value analysis, Crown Castle currently appears overvalued, though analysts maintain an average price target suggesting 13% upside potential.

In conjunction with the transaction, Crown Castle anticipates implementing an approximately $3.0 billion share repurchase program and updating its capital allocation framework. This includes an anticipated reduction of its annualized dividend to approximately $4.25 per share starting in the second quarter of 2025. The updated dividend policy aims to approximate 75% to 80% of Adjusted Funds from Operations (AFFO) excluding amortization of prepaid rent.

Crown Castle reported a net loss of $3.9 billion for the full year 2024, compared to net income of $1.5 billion for the full year 2023, largely due to a $5.0 billion goodwill impairment charge associated with the Fiber business. Despite recent challenges, the company maintains a strong gross profit margin of 72.15% and generates substantial free cash flow. The company also experienced a decrease in site rental revenues by 2.7% from 2023 to 2024, which includes the impact of Sprint cancellation payments. The full year 2024 Adjusted EBITDA was $4.2 billion, a slight decrease from $4.4 billion in 2023. For deeper insights into Crown Castle’s financial health and future prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks.

The company’s Board of Directors will determine the use of cash proceeds from the sale, which is expected to repay existing indebtedness and fund the share repurchase program, maintaining an investment-grade credit rating.

This strategic shift reflects Crown Castle’s focus on enhancing shareholder value and capitalizing on the robust U.S. market for wireless infrastructure. With a current dividend yield of 6.57% and a track record of profitability over the last twelve months, the company’s CEO, Steven Moskowitz, expressed confidence in the pure-play tower business’s ability to generate durable and growing cash flows for shareholders.

The information provided is based on a press release statement from Crown Castle Inc.

In other recent news, Crown Castle International Corp. has delayed its fourth-quarter earnings release, citing an ongoing strategic review, which has raised expectations for an announcement regarding its strategic direction. In a significant development, the company is reportedly in negotiations with Zayo Group Holdings Inc. for the sale of its fiber business, potentially valuing the division at over $8 billion. This follows a strategic review and previous talks with TPG Capital. The anticipated sale is seen as a favorable outcome by JMP Securities, which maintains a Market Outperform rating and a $115 price target for Crown Castle.

Barclays analyst Brendon Lynch has upgraded Crown Castle’s stock from Equal Weight to Overweight, with a price target of $104, citing the potential sale as a transformative move that could enhance the company’s financial profile. Additionally, Crown Castle has announced updates to its executive incentive plan and amended its bylaws to allow more frequent stockholder-initiated meetings. These changes aim to align executive compensation with company performance and enhance corporate governance.

In governance news, two non-employee directors, Ari Fitzgerald and Cindy Christy, will not seek re-election at the upcoming annual meeting. This shift in board composition comes as the company navigates the evolving telecommunications landscape. Investors are closely monitoring these developments, as they could significantly impact Crown Castle’s strategic direction and financial performance.

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