Crown Castle, American Tower, SBAC report Q2 earnings
It’s that time of year when the tower industry’s largest companies report their earnings for the second quarter of 2015.
First up is Crown Castle. The company’s net income increased from $23 million to a staggering $1.1 billion, largely due to the sale of its Australian towers. Site rental revenue was up $26.3 million compared to the same time last year, yet the average number of tenants per tower for sites 10 years or older fell slightly. Tenants for sites less than 10 years remains the same. On average, most of the company’s towers have two tenants, but Ben Moreland, Crown Castle’s president and CEO, said in a press statement about the Q2 results that he believes this isn’t good enough because it means the sites are only at 50% capacity. Based on these largely positive results, the company raised its full-year 2015 outlook for adjusted earnings before interest, taxes, depreciation, and amortization, adjusted funds from operations, and AFFO per share.
“In addition to delivering great results during the second quarter, we also announced several strategic transactions that reflect our focus on delivering attractive long-term total returns for shareholders. The completed sale of our Australian subsidiary, following a very successful 15-year investment, allows us to redeploy capital toward an opportunity with a higher anticipated growth profile through our pending acquisition of Sunesys, further reinforcing our leadership position in wireless infrastructure in the U.S.,” Moreland said.
American Tower also reported a very strong Q2. Revenue increased 14% to almost $1.2 billion and operating income rose almost 12% to $762 million. Most of this revenue came from existing towers, with only an additional 12 towers being built during the quarter. However, the future looks to get even brighter for the company, with more than 900 leasing applications in the pipeline due to its recent acquisition of towers from Verizon.
“Our second-quarter 2015 results reflected yet another quarter of strong demand for our tower space both domestically and abroad,” Jim Taiclet, American Tower’s CEO, said in an official statement. Taiclet also hopes that AT&T Mobility and Sprint will start spending on infrastructure with American Tower in the near future, while Verizon Wireless and T-Mobile US remain the tower company’s largest customers.
This quarter has been a turning point for SBA Communications, with the company proving it marches to its own beat, bucking industry trends. While most say that small cells are the future of telecom, SBAC sold off its stake in ExteNet Systems, getting out of the small cells business altogether, preferring to focus on macro sites.
“We had a window seat there for a very long time and we saw … 10, 20, 30 reasons why we simply prefer the macro site business,” SBA Communications CEO Jeffrey Stoops said.
Key Q2 stats for SBAC include site leasing revenue growth of 9%, tower cash flow growth of 10% and a net income increase from a $9.5 million loss to $28.3 million in income. In addition, SBAC built 117 towers and purchased 317 new cell sites during the second quarter. SBAC also counts T-Mobile US and Sprint among its biggest customers during the quarter, although AT&T Mobility did increase its spend with SBAC in Q2 compared to Q1.
While you wouldn’t call Q2 a runaway success, overall it was a strong period of growth for the big three in the American tower industry. Two out of three improved their 2015 outlook and have plans for moving forward, including increasing the number tenants on each tower to maximize the revenue per tower.
