Crown Castle Announces Restructuring; Affirms Second Quarter Guidance; Lowers EBITDA Guidance for Year 2001
As a result of the restructuring, Crown Castle expects to reduce operating expenses by approximately $20 million annually. Cost savings are expected to be realized beginning in the third quarter of 2001.
"We have completed a detailed review of our operations and business strategy and are restructuring our organization in order to increase operational efficiencies," stated Ted B. Miller, Jr., Chairman and CEO of Crown Castle International. "The restructuring in no way reduces the range or quality of services we provide our customers. Rather, we believe that our focus on increasing efficiency will make us stronger and more flexible in responding to customer demand."
Crown Castle also announced that it is reaffirming EBITDA guidance for the second quarter of 2001, citing continued strong demand in its core site leasing business. The Company added 1,560 new tenants during the second quarter to its towers in the U.S. and the U.K., representing an annualized co- location rate of .49 tenants per tower on the 12,751 sites owned and managed in the U.S. and the U.K. at the beginning of the quarter. Leasing results for Australia have not yet been finalized.
In the U.K., the Company co-located 515 new tenants during the second quarter, representing an annualized co-location rate of .77 tenants per tower on the 2,675 sites owned and managed in the U.K. at the beginning of the quarter. A number of these tenants were added under the Company's previously announced take-or-pay contracts with Hutchison 3G UK Ltd. and BTCellnet.
In the U.S., the Company co-located 1,045 new tenants during the second quarter, representing an annualized co-location rate of .41 tenants per tower on the 10,076 sites owned and managed in the U.S. at the beginning of the quarter.
John P. Kelly, President and COO of Crown Castle International stated, "We are pleased with the performance of our core site leasing business, as we continue to see strong demand for our engineered clusters of sites, especially in the U.K. where 3G operators prepare to deploy their networks. However, we are experiencing delays in the installation of equipment on our sites in the U.K. due to delays in the delivery of equipment from manufacturers to our carrier customers. These delays are resulting in lower than anticipated network services revenues. Also, we are forecasting new tenant additions and resulting installations in the U.S. to be at the lower end of the range of published guidance, which could also negatively impact EBITDA for the balance of the year. Although total revenues for the second quarter will be at the higher end of guidance, we expect EBITDA to be at the lower end of the range. Given the continuing uncertainty in our service business, we believe it is prudent to lower our published EBITDA projections for year 2001."
OUTLOOK
The following statements are based on current expectations and assume a U.S. dollar to U.K. pound exchange rate of 1.40 dollars to 1.00 pound and a U.S. dollar to Australian dollar exchange rate of 0.52 US dollars to 1.00 Australian dollar. The following Outlook sections contain forward-looking statements, and actual results may differ materially.
REVENUE AND EBITDA OUTLOOK FOR Q2 2001
The Company expects second quarter 2001 site rental and broadcast transmission revenue to be between $136 million and $140 million, assuming that new tenants are added to existing towers at an annualized rate of between .40 tenants per tower and .50 tenants per tower during the quarter. The Company expects second quarter network services revenue to be between $65 million and $80 million. The Company expects second quarter EBITDA of between $72 million and $80 million.
REVENUE AND EBITDA OUTLOOK FOR YEAR 2001
The Company projects total revenues of between $850 million and $900 million for calendar year 2001, assuming that new tenants are added to existing towers at an annualized rate of between .40 tenants per tower and .50 tenants per tower during the year. Network services revenue is significantly dependent upon the provisioning of 3G sites in the U.K. and the subsequent availability of 3G equipment from manufacturers for network deployment. The Company expects EBITDA to be between $310 million and $330 million during year 2001.
Crown Castle has scheduled a conference call for Wednesday, July 18, 2001 at 5:00 p.m. Eastern Time to discuss the restructuring and the Company's outlook. To participate in the call from within the U.S., dial (800) 374-0542, or from outside the U.S., dial (706) 634-2324 at least ten minutes before the conference call begins and ask for the Crown Castle conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until July 24, 2001. To access the replay, dial (706) 645-9291 using a pass code of 1420223.
Investors, analysts and the general public will also have the opportunity to listen to the conference call free over the Internet by visiting the Company's website at www.crowncastle.com . To listen to the live call on the web, please visit the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live Webcast, an archived version will be available shortly after the call on the Company's website. For more information, please contact Karen Roan at Easterly Investor Relations at (713) 529-6600 or email karen@easterly.com.
Crown Castle engineers, deploys, owns and operates technologically advanced, shared wireless infrastructure. It offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage to 68 of the top 100 US markets and more than 90 percent population coverage in the UK and Australia. Pro forma for all closed and previously announced transactions, Crown Castle owns, operates, and manages over 13,000 wireless communication towers internationally. In addition, Crown Castle has development rights to 4,000 fiber exchange sites in the UK. For more information on Crown Castle, visit: www.crowncastle.com.
This press release contains forward-looking statements and information that are based on management's beliefs as well as assumptions made by and information currently available to management. Such forward-looking statements include, but are not limited to, expectations, projections and estimates regarding (i) the number of offices closed and the size of employee reductions related to the restructuring, (ii) the dollar amount of restructuring charges and cash and non-cash expenses related to the restructuring, (iii) the amount of reduced operating costs resulting from the restructuring and when such savings will be realized, (iv) demand for our assets and services, (v) currency exchange rates, (vi) site rental and broadcast transmission revenue, network services revenue, and EBITDA, (vii) new tenant co-location rates, and (viii) total revenues and total EBITDA.
Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions, including, but not limited to the success or failure of our efforts to implement our business strategy and the following:
-- We may be unable to manage our significant growth.
-- Our substantial level of indebtedness could adversely affect our
ability to react to changes in our business and limit our ability to
use debt to fund future capital needs.
-- If we are unable to service our indebtedness, our indebtedness may be
accelerated.
-- Restrictive covenants on our debt instruments may limit our ability to
take actions that may be in our best interests.
-- We may be unable to raise the significant capital required to fund our
operations and make acquisitions.
-- We may not be able to construct or acquire new towers at the pace and
in the locations that we desire.
-- Our business depends on the demand for and deployment of wireless
communications.
-- Demand for our network services business is very volatile which causes
our network services operating results to vary significantly for any
particular period.
-- Delay in the availability of UMTS equipment or deployment of UMTS.
-- We operate in an increasingly competitive industry and many of our
competitors have significantly more resources than we do.
-- Extensive regulations, which could change at any time, govern our
business and industry, and we could fail to comply with these
regulations.
-- We could suffer from future claims if radio frequency emissions from
equipment on our towers is demonstrated to cause negative health
effects.
-- Our international operations expose us to changes in foreign currency
exchange rates.
-- We are heavily dependent on our senior management.
Should one or more of these risks materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those expected. More
information about potential factors which could affect the Company's financial
results is included in the Risk Factors sections of the Company's filings with
the Securities and Exchange Commission.
Contacts: W. Benjamin Moreland, CFO
Carmen Thompson, VP Investor Relations
Crown Castle International
713-570-3000
Ken Dennard / kdennard@easterly.com
Lisa Elliott / lisae@easterly.com
Easterly Investor Relations
713-529-6600
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SOURCE Crown Castle International Corp.
CONTACT: W. Benjamin Moreland, CFO, or Carmen Thompson, VP Investor
Relations, both of Crown Castle International Corp., +1-713-570-3000; or Ken
Dennard, kdennard@easterly.com, or Lisa Elliott, lisae@easterly.com, both of
Easterly Investor Relations, +1-713-529-6600, for Crown Castle International
Corp.