Investor Presentation March 2013

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Transcription:

Investor Presentation March 2013

Cautionary Information This presentation contains forward-looking statements and information that are based on management s current expectations. Such statements may include projections, Outlook and estimates regarding (i) leasing demand and demand for our wireless infrastructure, (ii) our future growth prospects, (iii) U.S. mobile data demand, traffic, usage and growth, including 4G connections, 4G share of traffic and number of mobile device users, (iv) our potential determination to convert to a REIT, including timing thereof, (v) average revenue per user ( ARPU ), (vi) penetration, adoption and development of smartphones, other wireless devices and applications, (vii) carrier capital expenditures, including carrier coverage projections and estimates, (viii) our investment capacity, (ix) capital expenditures, (x) adjusted funds from operations ( AFFO ), including on a per share basis, (vi) Adjusted EBITDA, (vii) revenues, including site rental revenues, and (viii) cash flows. The term including, and any variation thereof, means including, without limitation. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions and other factors. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation may include certain non-gaap financial measures, including adjusted funds from operations and Adjusted EBITDA. Tables reconciling such non-gaap financial measures are available on the Company s website at http://investor.crowncastle.com. 2

3 Real Estate Provider to the Wireless Industry

Attractive Business Fundamentals Stable and Long-Term Contracted Revenues Long-Term Control of Assets ~ 8 Years weighted average remaining current term, typically with annual escalators Site Rental Revenue ($bn) 10x $20.3 ~91% of site rental gross margins generated on towers that reside on owned land (1) or have 10+ year ground leases <10 yr Leases ~9% $2.1 2012 Remaining Contracted Payments >10 yr Leases or Owned ~91% Attractive Tower Footprint Significant Network Demand Driven by Data Usage ~ 74% of U.S. towers located in top 100 BTAs, largest tower operator in the U.S. 74% % of Towers in Top 100 BTAs (2) 62% 58% ~ 9x expected growth in U.S. mobile data traffic from 2012 to 2017 Forecasted U.S. Mobile Data Usage (3) (PB per month) 1,963 9x 207 CCI AMT SBAC 2012 2017E (1) Includes perpetual and long-term easements (2) Estimated for AMT and SBAC based on latest company filings and publicly available information (3) Cisco VNI 2013 4

Proven Track Record of Operating Stability and Growth + = Strong Execution Focused Capital Deployment Significant Growth 2009 2012 CAGR Site Rental Revenue: 11% Site Rental Gross Margin: 13% $1,543 $1,087 $1,701 $1,234 $1,854 $2,124 $1,372 $1,585 10x $20,300 Discretionary Cash Spend Since 2004 (4) Land Purchases 9% Tower Builds & Improvements 14% Acquisitions & (1) Investments 49% Share purchases Share purchases 28% (2) 41% (2) $1.54 AFFO per Share $3.04 2009 2010 2011 2012 Remaining Contracted Payments Total: $9.6 billion (3) '07 '08 '09 '10 '11 '12 72% of revenues from Big 4 wireless carriers Since 2004, Crown has repurchased $2.7 billion in shares or potential shares of common stock Crown expects to convert to a REIT in 2015/2016 Remaining NOLs of $2.7 billion Proxy for distributable cash flow, taking into account operating performance and capital structure considerations Note: Components may not sum due to rounding (1) Excludes the acquisition of Global Signal, Inc. (2) Includes repurchases of shares or potential shares of common stock (3) Crown Castle acquired Global Signal Inc. in 2007 5

Footprint Focused on the U.S. Market Crown s U.S. portfolio consists of nearly 30,000 tower sites U.S. Tower Sites by BTA Location 25,000 Top 50 BTAs Top 100 BTAs CCI (1) 20,000 CCI (1) 15,000 AMT Consolidated Revenues (1) 10,000 AMT SBAC SBAC U.S. 94% Australia 6% 5,000 Well-positioned for continued stability and growth with key presence in top 100 and top 50 BTAs Top 100 BTAs represent approximately 74% of U.S. population 74% of towers in top 100 BTAs 59% of towers in top 50 BTAs Approximately the same numbers of sites in the top 50 markets as AMT and SBAC combined 94% of site rental revenue from U.S. with remaining from stable and attractive Australian market (1) As of quarter ending December 31, 2012 0 6

Industry Overview

The U.S. Market in Review U.S. is the Global Leader of the Mobile Broadband Industry (1) Due in Part to a High-Value Consumer 2012E Monthly ARPU by Wireless Penetration (2) Rest of World $51.40 $23.63 $32.77 Advanced infrastructure Early lead in 4G deployments Competitive carrier market Pervasive engagement of user communities Extensive entrepreneurial ecosystem Countries with Lower Penetration than U.S. Average Penetration: Countries with Higher Penetration than U.S. U.S. 91% 135% 109% U.S. generates among the highest service revenues in the world even though it has below average wireless penetration (1) Source: Deloitte, Airwave Overload?, September 2012 (2) Source: Wall Street research; weightings based on average wireless service revenues per country. 8

Attractive U.S. Consumer Demand As U.S. Consumers Increasingly Find Their Way to Data-Capable Devices Consumption of Vast Amounts of Data Follows Forecasted U.S. 4G Connections (connections in millions) Forecasted 4G Share of U.S. Mobile Data Traffic Forecasted U.S. Mobile Data Usage (petabyte per month) 52% CAGR 237 2.5x 62% 1,963 25% 57% CAGR 30 108 207 '12 '17E '12 '17E '11 '12 '17E Source: Cisco VNI 2013 9

Future Tower Demand Drivers Increasing smartphone penetration # of Users (mm) Monthly Usage / Device (megabyte) Total Monthly Traffic (petabyte) Adoption of emerging and embedded devices Continued development of mobile Internet applications Smartphone 304 3,315 ~2x ~6x ~10x 172 580 100 1,008 2012 2017E Importance of network speed and quality to customers 64 8,733 561 ~5x ~8x ~41x Drives carrier demand for wireless infrastructure: o Capacity / geographic buildouts o New technology deployment Tablet 13 1,084 By 2017, U.S. mobile data traffic will be equivalent to 700x the volume of U.S. mobile traffic in 2007. 14 Source: Cisco VNI 2013 10

Carriers Reaction to Growing Consumption Carriers Continue to Invest in Their Networks to Meet Demand $26.5 $30.6 $31.4 $31.5 2011 2012E 2013E 2014E Source: Wall Street research Carrier Capital Expenditures (1) ($ billions) AT&T Project VIP calls for LTE covering 300 million people by year-end 2014 as well as an extensive network densification, including DAS deployment Connected Cars By 2016, more than 53% of cars are expected to have wireless connectivity (2) Verizon LTE footprint covers 89% of U.S. population and is scheduled to completely overlap its 3G network by mid-year 2013 Sprint Network Vision initiative includes nationwide rollout of 4G LTE Currently deployed in 58 U.S. markets, with plans to touch 200 more by the end of 2013 T-Mobile Stated it will deploy 4G LTE in 200 markets by the end of 2013 (1) Includes AT&T, Clearwire, Leap, Metro PCS, Sprint, T-Mobile, U.S. Cellular, and Verizon (2) Comments made by Ralph de la Vega, President and CEO of AT&T Mobility, at UBS Global Media and Communications Conference on December 5, 2012 11

Strategic Priorities Remain Unchanged Maximize Long-Term AFFO per Share Leverage existing assets to drive organic growth Effectively allocate capital by making accretive investments 2013 Investment Capacity ($ in millions) Maintain and improve upon industry-leading customer service to maximize opportunity Continue to extend and secure the land underneath our towers $1,075 $400 to $450 $625 to $675 Manage our capital structure and optimize our cost of capital Midpoint of AFFO (1) Guidance Projected Capex Remaining Investment Capacity (1) Based on midpoint of 2013 AFFO outlook issued on January 24, 2013 12

Non-GAAP Reconciliation

Non-GAAP Measures This presentation may include presentations or discussions of Adjusted EBITDA, FFO and AFFO, which are non-gaap financial measures. These non-gaap financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, and AFFO is computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of FFO and AFFO. Our measures of Adjusted EBITDA, RCF, FFO and AFFO may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by REITs. FFO and AFFO presented are not necessarily indicative of the operating results that would have been achieved had we converted to a REIT, nor are they necessarily indicative of future financial position or operating results. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including as a result of our adjustment to the income tax provision to reflect our estimate of the cash taxes had we been a REIT. Adjusted EBITDA, RCF, FFO and AFFO are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in debt covenant calculations. Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations and stock-based compensation expense. Funds from operations. We define funds from operations as net income plus adjusted tax provision plus real estate deprecation, amortization and accretion. Adjusted funds from operations. We define adjusted funds from operations as funds from operations before straightline revenue, straight-line expense, stockbased compensation expense, non-real estate related depreciation, amortization and accretion, amortization of deferred financing costs, debt discounts, and interest rate swaps, other (income) and expense, gain (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, asset-write down charges and less capital improvement capital expenditures and corporate capital expenditures. Sustaining capital expenditures. We define sustaining capital expenditures as either (1) corporate related capital improvements, such as information technology equipment and office equipment or (2) capital improvements to towers sites that enable our customers' ongoing quiet enjoyment of the tower. The tables set forth on the following pages reconcile certain non-gaap financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding. 14

Adjusted Funds From Operations Historical Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures: FFO and AFFO for the years ended December 31, 2007, 2008, 2009, 2010, 2011 and 2012 are computed as follows: For the Year Ended December 31, 2007 December 31, 2008 December 31, 2009 December 31, 2010 December 31, 2011 December 31, 2012 ($ in millions) Net income $ (223.0) $ (48.9) $ (114.1) $ (311.3) $ 171.5 $ 200.9 Adjusted tax provision (1) (95.6) (106.9) (78.3) (29.0) 5.0 (106.7) Real estate related depreciation, amortization and accretion 502.5 492.3 520.8 522.5 531.9 601.4 FFO $ 183.9 $ 336.5 $ 328.4 $ 182.2 $ 708.4 $ 695.6 FFO (from above) $ 183.9 $ 336.5 $ 328.4 $ 182.2 $ 708.3 $ 695.6 Straight-line revenue (30.9) (22.9) (84.7) (150.3) (178.5) (175.5) Straight-line expense 41.2 39.4 37.6 38.8 39.0 54.1 Stock-based compensation expense 25.1 28.8 30.3 40.0 36.0 47.4 Non-real estate related depreciation, amortization and accretion 37.4 34.1 8.9 18.3 21.1 21.2 Amortization of deferred financing costs, debt discounts and interest rate swaps 23.9 24.8 61.4 85.5 102.9 109.3 Other (income) expense (2)(3) 80.4 62.1 (2.4) 0.6 5.6 5.4 Gains (losses) on retirement of long-term obligations - - 91.1 138.4-132.0 Net gain (loss) on interest rate swaps - 37.9 93.0 286.4 - - Acquisition and integration costs 25.4 2.5-2.1 3.3 18.3 Asset write-down charges 65.5 16.9 19.2 13.7 22.3 15.5 Capital improvement capital expenditures (9.5) (14.2) (17.8) (14.8) (14.0) (21.6) Corporate capital expenditures (13.8) (12.9) (10.3) (9.5) (9.4) (15.5) AFFO $ 428.6 $ 533.0 $ 554.7 $ 631.4 $ 736.6 $ 886.2 AFFO per Share - diluted $ 1.54 $ 1.89 $ 1.94 $ 2.20 $ 2.58 $ 3.04 (1) Adjusts the income tax provision to reflect our estimate of the cash taxes had we been a REIT, which predominately relates to foreign taxes paid. As a result, income tax expense is lower by the amount of the adjustment. (2) Primarily includes unrealized (gains) losses on foreign exchange, except as denoted with footnote (3). (3) Amount includes the impairment of available-for-sale securities of $4 million, $56 million and $76 million for 2011, 2008 and 2007, respectively. 15

Adjusted Funds From Operations (cont d) FFO and AFFO for the year ending December 31, 2013 are forecasted as follows: Full Year 2013 ($ in millions) Outlook Net income $58 to $159 Adjusted tax provision (1) $80 to $90 Real estate related depreciation, amortization and accretion $731 to $746 FFO $928 to $943 FFO (from above) $928 to $943 Straight-line revenue $(162) to $(147) Straight-line expense $76 to $91 Stock-based compensation expense $41 to $46 Non-real estate related depreciation, amortization and accretion $19 to $24 Amortization of deferred financing costs, debt discounts and interest rate swaps $95 to $106 Other (income) expense (2)(3) $5 to $7 Gains (losses) on retirement of long-term obligations $36 to $36 Acquisition and integration costs $10 to $20 Asset write-down charges $15 to $25 Capital improvement capital expenditures $(19) to $(17) Corporate capital expenditures $(13) to $(11) AFFO $1,067 to $1,082 16