Wireless infrastructure operator Crown Castle International (NYSE:CCI) reported fourth-quarter results on Jan. 25. The company, which owns and operates radio towers and fiber-connected small cell stations on behalf of cellphone networks and other businesses dependent on the radio spectrum, closed a large network buyout during this period.

Crown Castle's fourth-quarter results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$1.24 billion

$1.03 billion


Net income

$98 million

$125 million


GAAP earnings per share (diluted)




Adjusted funds from operations

$512 million

$406 million


Data source: Crown Castle.

Adjusted funds from operations (AFFO) is a non-GAAP measure of operating cash flows from real estate rental operations. It is a popular metric among real estate investment trusts (REITs) like Crown Castle, and is often seen as one of the most important performance figures to follow in this industry.

What happened with Crown Castle this quarter?

  • Crown Castle's site rental revenue increased by 13.5% as compared to the year-ago quarter. The bulk of these gains rested on acquisitions and on straight-line increases written into its customers' lease contracts, boosted by 5.1% of organic growth due to new business and lease renewals with higher fees.
  • The company's acquisition strategy included a $7.1 billion deal for northeastern metro fiber network Lightower. The buyout, which closed at the start of November, was partly financed by new debt and partly by the issuance of new shares in the fourth quarter. About $5.2 billion of share-based cash boosts added 3% to Crown Castle's total share counts, a figure that has increased by 40% over the last four years.
  • Eighty-nine percent of Crown Castle's $377 million in capital expenses were spent on revenue-generating equipment and improvements in the fourth quarter. Maintenance costs added up to $25 million.
A wireless radio tower standing tall against an azure sky dotted with fluffy clouds.

Image source: Getty Images.

What management had to say

"By all measures, 2017 was a tremendous year for Crown Castle," said CEO Jay Brown in a prepared statement. "In the near-term, we remain excited by the increasing investment activity by our customers that is translating to an expected increase in new leasing activity across towers, small cells and fiber solutions in 2018. This level of leasing activity demonstrates the attractiveness of our unique portfolio of assets, which we believe are well positioned to benefit from the continued growth in demand for data."

Looking ahead

The Lightower acquisition added approximately $140 million to Crown Castle's fourth-quarter site rental revenue and $79 million to its AFFO profits. The new fiber assets should add roughly $860 million to full-year sales in 2018 along with $475 million of AFFO income.

To put these contributions into perspective, Lightower's results should amount to something like 19% of Crown Castle's full-year site rental revenue and 21% of its AFFO totals. So Lightower should make a significant difference to Crown Castle's revenue growth ambitions while also widening profit margins.

All told, management's guidance points to site rental revenue in the neighborhood of $4.6 billion in 2018, or a 26% year-over-year increase. Earnings should land near $1.35 per diluted share, up from $1.16 per share in 2017. AFFO profits should rise from $1.86 billion to approximately $2.24 billion.

Management expects first-quarter earnings to approach $0.32 per diluted share along with roughly $543 million of AFFO profits and $1.14 billion in site rental revenue.

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