CCI

Crown Castle could sell fiber assets for $15 billion, says co-founder

Credit: REUTERS/AMIRA KARAOUD

By Greg Roumeliotis

Feb 20 (Reuters) - Crown Castle's CCI.N co-founder Ted Miller said on Tuesday that the U.S. telecommunications infrastructure company could fetch as much as $15 billion by selling its fiber assets if it let him and his partners join its board of directors.

Miller told Reuters that he and his team were best positioned to find buyers for the fiber business and help Crown Castle upgrade its tower assets so it can keep up with advances in wireless network technology.

"When you create a company from scratch and take it public, you learn a lot more than when you take over from someone else," Miller said.

Crown Castle said in a statement that its board had rejected Miller and his partners as director nominees after interviewing them. It added that it appreciated Miller's contributions to the company more than 20 years ago, but that Miller's nominees "do not possess the relevant expertise and experience to successfully oversee Crown Castle's strategy."

Miller could now take his and his colleagues' board director nominations directly to Crown Castle shareholders at the company's annual meeting for a vote.

The Houston-based company said in December it would explore a sale of its fiber business after reaching a deal with hedge fund Elliott Investment Management over shaking up its board.

Crown Castle shares rose 1.5% to $109.84 on Tuesday in New York.

Miller has told Crown Castle he can help it fetch between $12 billion and $15 billion for its fiber assets and that he has already carried out preparatory work that will save it six months in finding buyers, so it can complete a deal by the end of 2024.

This work, on which Miller said he had spent $5 million, included signing 25 non-disclosure agreements with prospective buyers and identifying more than $1 billion in tax benefits that could be realized if the deal closed this year, Miller said. In a presentation to Crown Castle's board, Miller said he wanted the company to assume the cost of the work.

The deal's proceeds could be used to pay down debt and buy back $1.9 billion in stock, he added.

Miller, who together with co-investors has a stake in Crown Castle worth more than $100 million, has asked that the company appoint him executive chairman and that three of his partners also join the board of directors. They are former Crown Castle chief financial officer Chuck Green, former Credit Suisse investment banker David Wheeler, and Tripp Rice, Miller's son-in-law and a partner in Miller's firm, 4M Investments.

The Wall Street Journal reported this month on Miller's challenge against Crown Castle's board.

MILLER SEEKS OVERHAUL

Miller said he could help eliminate the discount at which Crown Castle shares trade to peers such as SBA Communications SBAC.O and American Tower AMT.N not just through the fiber divestiture but by improving operations.

He has criticized the company for raising its staff headcount while keep its number of towers steady at around 40,000, and for not fully adopting technological innovations such as drone data and artificial intelligence.

"I don't believe Crown Castle has the leadership needed to right the ship, sell the fiber business, invest in its towers, restore relationships with major carriers and fix its broken culture," Miller said.

Crown Castle is looking for a chief executive after Jay Brown stepped down last month following more than seven years at the helm. Anthony Melone, a former Verizon Communications VZ.N chief technology officer and one of Crown Castle's board directors, is serving as interim chief executive.

Miller also criticized Crown Castle's pact with Elliott and asked that Crown Castle let shareholders vote on it.

The agreement, which added an Elliott representative and a former Level-3 Communications executive to Crown Castle's board, gave Elliott too much influence without requiring it to stick to ownership thresholds, Miller said.

Crown Castle said there was no requirement under corporate law in Delaware, where the company is incorporated, to stage a shareholder vote on the agreement with Elliott, and that doing so would be a departure from norms. It added that Elliott had no influence over Crown Castle's board prior their pact, and that there was no conflict of interest in negotiating it.

Elliott sold down its investment in Crown Castle from about $2 billion in December to just $141 million, Miller said, citing Elliott's most recent regulatory filing.

Such filings, however, do not always accurately reflect an investor's total stake in a company, because they can exclude derivatives and other instruments that give exposure to a stock. An Elliott spokesperson said it was false for Miller to claim Elliott had sold more than 90% of its Crown Castle stake.

"Elliott remains one of the largest investors in the company and is the largest investor after the three index fund shareholders," the spokesperson said.

Miller, 72, co-founded Crown Castle in 1994 and served as its chief executive until 2001. He has since founded and served on the board of several other companies.

Crown Castle, which rents out towers to wireless carriers such as Verizon and AT&T T.N, has a market value of $47 billion. Its shares have dropped 23% in the last 12 months versus an 11% decline in American Tower's shares.

(Reporting by Greg Roumeliotis in New York; Editing by Sonali Paul and Josie Kao)

((Greg.Roumeliotis@thomsonreuters.com; +1 646 371 8056; Reuters Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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