Crown Castle raises 2018 outlook, small cell pipeline

Crown Castle raised its 2018 expectations. (Crown Castle)

Crown Castle reported first-quarter earnings largely in line with Wall Street analyst expectations, but the company raised its revenue expectations for 2018 and also reported increased momentum in its small cell efforts.

"We continue to see tremendous activity across our unique portfolio of infrastructure assets,” the tower company’s CEO, Jay Brown, said in a release. “In our tower business, we have recently signed comprehensive leasing agreements with several of our largest customers, which we believe signals the beginning of a sustained period of infrastructure investments by our customers. In our fiber business, the volume of small cell bookings in the first quarter was comparable to what we booked during all of 2016, resulting in an increase in our contracted pipeline to more than 30,000 nodes.”

The analysts at Wall Street analyst firm Deutsche Bank Research cheered the company’s results, noting that Crown Castle had previously reported 25,000 small cell nodes in its contracted pipeline. “We continue to view CCI [Crown Castle] as a top beneficiary of accelerating U.S. wireless investment,” the firm noted.

The Deutsche Bank analysts also said that Crown Castle’s increased revenue expectations for 2018 are likely due to the company’s recently signed agreement with AT&T, which covers both towers and small cells. The firm also pointed out that Crown Castle’s deal with AT&T follows the company’s recent agreements with two other, unnamed carriers during the fourth quarter of last year, which the firm said it believes are Sprint and Verizon.

Specifically, Crown Castle reported net income in the first quarter of $114 million. The company’s site rental revenues increased by $296 million. For the full year 2018, Crown Castle now expects net income of up to $669 million and site rental revenues of up to $4.684 billion.

Although most analysts cheered Crown Castle’s results, Wall Street firm New Street Research sounded a note of caution: “Results were generally positive due to stronger-than-expected cash site leasing revenue; however, guidance was disappointing,” the firm wrote. “CCI signed an agreement with AT&T, which signals that new leasing activity is likely to accelerate for the industry. Curiously, despite the beat in Q1 and the newly inked AT&T Agreement, mgmt. lowered the midpoint of cash site leasing revenue guidance. Mgmt. attributed the lower guidance to minor adjustments within their prior range, but we suspect the lowered guidance may have been driven by the terms of the AT&T Agreement. If we are right, it would further support our relative preference for owning SBAC within the towers.”