Founded in 1994 and headquartered in Houston, Crown Castle International (CCI) is the largest cell tower company (aka wireless infrastructure operator) in the U.S. It owns approximately 40,000 cell towers in the U.S., providing coverage to 98 of the top 100 markets. Crown Castle also serves most of Australia, where it owns and operates over 1,700 cell sites.
CCI receives most of its revenue from leasing space on its towers to wireless carriers, and has an average tenant base of ~2.5 tenants per tower. Approximately 84% of its revenue comes from the Big Three: Verizon (14%), AT&T (25%), and Sprint (23%), which has been acquired by T-Mobile (23%) as of 2019. Ninety-six percent of its revenue comes from domestic carriers and 4% from international carriers. Crown also owns more than 2,300 third party leases, acquired from one of the third-party lease buyout companies, and over 10,000 Distributed Antenna System (DAS) nodes, over 8,500 of which were procured when CCI acquired NextG in 2012. These DAS assets from NextG are expected to provide for significant growth, as they currently average only 1.25 tenants per network, and have the capacity for more. CCI is now the largest operator of DAS in the U.S.
On October 20, 2013, Crown Castle announced it’s acquisition of 9,700 towers from AT&T. Under this agreement, it has exclusive rights to lease and operate the AT&T towers for a weighted average of 28 years. Crown will also buy 600 towers outright, with the option to purchase the remaining 9,100. The ground leases, belonging to AT&T, have a 2% lease escalation rate, which is lower than the typical escalation rate between tower companies and carriers. The towers have an average tenant base of 1.6, signifying that the future collocation potential is high.
Crown Castle is expected to take over any lease negotiations to extend or buy AT&T ground leases from property owners. Our history with Crown Castle has indicated that they are more aggressive in trying to acquire the long term rights under their towers than other tower owners might be, so we fully expect that landowners with AT&T tower ground leases will soon start to receive new inquiries from Crown Castle to purchase their leases. Since industry standards trend toward valuing leases higher the closer they are to expiration, we also expect to see Crown diligently negotiating lease extensions in advance of the lease expirations.
If you have an AT&T tower lease, we advise you to wait until Crown contacts you. In other words, do not sell the lease to a third party buyout company at this time, yet do expect them to be calling. At the end of the day, you will almost certainly be better off waiting until Crown itself contacts you. If you have any questions regarding your cell site lease, contact Steel in the Air.
On September 28, 2012, Crown Castle announced that it would purchase 7,200 towers from T-Mobile, giving it exclusive rights to lease and operate the towers for about 28 years, with the option to fully acquire them at the end of the lease.
For landowners with T-Mobile tower ground leases, this deal puts you in a better situation. Crown will certainly be more aggressive about purchasing or extending the underlying ground leases than T-Mobile was. Any of the 7,200 ground lessors who have not already sold their T-Mobile ground leases are in a better bargaining position now. If you’d like to prepare yourself for a level playing field, contact Steel in the Air. We provide fair, true market values of cellular leases, and can make sure you are one step ahead of the game.
Please contact us to discuss any questions you might have about a proposal you have received from Crown Castle, or to prepare yourself for proposals you are likely to receive in the near future. The initial discussion is free and once we talk to you and understand your needs, we can advise you as to what the costs would be should you choose to retain our services. Unlike our competitors, we offer the flexibility of either a fixed fee consulting service or a contingency – based service.
Industry dynamics (mergers, acquisitions and deployment of new technologies) play a large role in cell site lease agreements. Before accepting any lease termination as final, consult our partner, Cell Tower Attorney, to determine what rights, if any, the Lessee has to terminate your lease agreement.
