Crown Castle International Corp. (CCI) had mixed results during the quarter as they raised full year 2019 EBITDA and AFFO guidance but had relatively disappointing results with lower fiber demand and guidance of new small cells at 10,000 for the year, the lower end of expectations. The team discussed the lower fiber demand and reiterated that their concern is with small cells and that the incremental revenue that will come to the fiber business through the small cells is what they are focused on longer term. Discussing the construction of new small cells, the 10,000 number for 2019 is still within range of guidance, but the issues have come from delays in production rather than decreased demand. Because CCI is focused in the largest metro areas, there have been issues dealing with municipalities to get small cells built. CCI benefited from increased tower activity which has driven their increase in full year outlook. However, the long term plan has not changed. CCI is pursuing the expanding small-cell opportunity by focusing on top markets where there is greatest potential demand. The playbook is similar to towers in that they are providing fiber solutions and establishing common asset sites across their customer base. By increasing the number of users on an individual small cell site, they are incrementally increasing cash flow and, in turn, dividend yield for its investors.
Current Price: $126 TTM Return: 18%
Target Price: $130 Position Size: 2%
Continue reading “Crown Castle International ($CCI.US) Q2 2019:CCI Increases AFFO Outlook, Mixed Q2 Results”
