Crown Castle International Corp.
) has decided to convert its tower business into a Real Estate
Investment Trust (REIT). Crown Castle - a leading independent
operator of wireless communication towers in the U.S. - will
function as an REIT starting Jan 1, 2014. Earlier in 2012, the
company's closest rival
American Tower Corp.
) also converted itself as a REIT.
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis
DOUGLAS EMMETT (DEI): Free Stock Analysis
SBA COMM CORP (SBAC): Free Stock Analysis
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An REIT status will benefit the company in terms of tax savings
and enhancing long-term shareholders wealth. Moreover, it will
also minimize the weighted average cost of capital (WACC).
Following the conversion, Crown Castle will distribute 90% of its
earnings through dividends every year, reducing tax.
Unlike American Tower, Crown Castle will not make any special
dividend payments till it starts operating as an REIT. In order
to qualify as an REIT, Crown Castle will follow some major
guidelines related to ownership and transfer restrictions. The
conversion of its tower business into an REIT is subject to
approval of its board of directors and shareholders.
Crown Castle declared improved second-quarter 2013 financial
results outpacing both the top and bottom lines of the Zacks
Consensus Estimate. For fiscal 2013, the company expects Site
Rental revenues to be in the range of $2,471 million to $2,481
million while net income is expected to be between $116 million
and $212 million or 40 cents to 73 cents per share.
Crown Castle currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks in the wireless tower industry include
SBA Communications Corp.
Douglas Emmett Inc.
). Douglas Emmett carries a Zacks Rank #2 (Buy) while SBA
Communications carries a Zacks Rank #3 (Hold).