Please ensure Javascript is enabled for purposes of website accessibility

Crown Castle International Corp. Is Ready to Pounce on the 5G Wireless Market

By Anders Bylund – Apr 19, 2018 at 2:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The wireless tower operator is already reporting a groundswell of 5G-related orders as its telecom customers get their next-generation ducks in a row.

Cell tower operator Crown Castle International (CCI -3.10%) reported first-quarter results after the closing bell on Wednesday. Business is booming ahead of the impending installation of 5G wireless networks.

Here's a closer look at Crown Castle's report.

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


Q1 2018

Q1 2017

Year-Over-Year Change

Site rental revenues

$1.15 billion

$857 million


Net income

$114 million

$119 million


AFFO per share (diluted)




Data source: Crown Castle.

Adjusted funds from operations, or AFFO, is a profitability measure commonly used by real-estate investment trusts (REIT) such as Crown Castle. The metric is meant to reflect profits from the actual rental activity, backing out many unrelated items. It is often used as an alternative to non-GAAP earnings by Wall Street analysts and ordinary investors.

What happened with Crown Castle this quarter?

The company is still integrating its recent fiber network acquisitions while preparing for a new round of infrastructure upgrades among its telecom customers.

Driven by unexpectedly high volumes of new site rental orders, Crown Castle exceeded the midpoint of its first-quarter revenue guidance by $16 million. Almost all of that trickled down the income statement to produce a $15 million surprise against management's AFFO expectations.

Small cell installations with fiber-optic connections to Crown Castle's backbone are popular at the moment. With 50,000 small cell nodes already deployed, Crown Castle now has firm orders for another 30,000 small cell sites in the pipeline. The volume of new orders in the first quarter matched the order volume of the entire fiscal 2016 year.

A heavily populated cell tower in silhouette against a colorful sunset.

Image source: Getty Images.

What management had to say

"We continue to see tremendous activity across our unique portfolio of infrastructure assets," said CEO Jay Brown in a prepared statement.

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.

To support these conclusions about the state of the wireless network market, the company also presented some recent quotes from its largest customers. I found these two citations to be particularly helpful:

The race to 5G is heating up, and let me be clear, today's announcement is a huge step forward toward Sprint being first to offer a 5G mobile network

-- Sprint (S) CEO Marcelo Claure


Every dollar we invest in our network is a 5G dollar. All the LTE Advanced work we do is 5G work, and we're leading the industry with the most advanced LTE network in the country. Every step we take -- every innovation -- builds toward a future-proof 5G network.

-- T-Mobile (TMUS -1.67%) CTO Neville Ray

Large and swift 5G installations will help Crown Castle directly, so this secular trend should be a serious growth engine for the next few years.

Looking ahead

5G and small cells go hand in hand since the technical standards of the next-generation networks will support many more connection points with fast backbone connections but lower-powered radio signals. Crown Castle investors should keep a close eye on the evolution of the 5G marketplace.

To tide you over until then, Crown Castle issued a detailed slate of guidance targets for the second quarter and full year.

In the second quarter, site rental revenues should rise 33% year over year to land near $1.16 billion. Net income is seen growing 35% larger at $152 million. AFFO guidance pointed to approximately $544 million, or a 24% year-over-year boost.

Full-year site rental revenues are now seen stopping at roughly $4.66 billion, a 1.2% increase over the target provided three months ago. AFFO profits should stop at $2.28 billion, or $5.49 per diluted share. That target sits 1.6% above Crown Castle's previous estimate for the same metric.

Anders Bylund owns shares of T-Mobile US. The Motley Fool owns shares of and recommends Crown Castle International. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sprint Corporation Stock Quote
Sprint Corporation
T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
$133.26 (-1.67%) $-2.26
Crown Castle Inc. Stock Quote
Crown Castle Inc.
$145.41 (-3.10%) $-4.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.