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CORVEXMANAGEMENTLP|712FifthAvenue,23rdFloor|NewYork,NewYork10019

RobinHoodInvestorsConference
October21,2014
CORVEXMANAGEMENTLP
Disclaimer
Corvex Management LP (Corvex) is an investment adviser to funds that buy, hold and sell securities and other financial instruments. This
presentation does not constitute either an offer to sell or a solicitation of an offer to buy any interest in any fund or entity associated with or advised by
Corvex.
Funds or entities advised by Corvex have as of the date of this presentation beneficial or economic interests in shares or share equivalents of Crown
Castle International Corp. (CCI) and may have long or short interests or investments in the other companies referenced in this presentation. Corvex
and its advised funds may buy, sell, increase or decrease their beneficial or economic exposure to, hedge or otherwise change the form, net position, or
substance of, any of its investments related to CCI or such other companies at any time and Corvex may change its views about CCI or the other
companies or industries referenced in this presentation at any time and without notice to the market or any other person.
The information contained in this presentation is based on publicly available information about CCI and other companies. This presentation includes
forwardlooking statements (including statements as to potential future performance or prices), estimates, projections and opinions prepared with
respect to, among other things, CCI and other companies. Such statements, estimates, projections and opinions may prove to be inaccurate and are
subject to economic, competitive, financial and other risks and uncertainties. No representation or warranty, express or implied, is made as to the
accuracy or completeness (currently or historically) of those statements, estimates, projections or opinions or any other written or oral communication
made by or on behalf of Corvex in the presentation or otherwise with respect to CCI, the information contained in the presentation or otherwise. The
information contained in this presentation is provided as is and, except where otherwise indicated, statements speak as of the date made, and Corvex
undertakes no obligation to correct, update or revise those statements or to otherwise provide any additional materials. The statements Corvex makes
in this presentation or otherwise are not investment advice or a recommendation or solicitation to buy or sell any securities.
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CORVEXMANAGEMENTLP
CorvexBackground
Concentrated, valuebased investing strategy across the capital structure
Focus on investing in high quality, North American businesses undergoing
change in industries with positive secular tailwinds
Engage regularly with management teams with goal of developing close
longterm relationships underpinned by constructive twoway dialogue
Longterm investment horizon and concentrated portfolio enable us to
conduct heavy diligence and focus our full energy on each investment
Knowledgebased and experienced approach to partnering with
management and other constituents to create shareholder value
Approximately $7 billion of assets under management
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CORVEXMANAGEMENTLP
InvestmentThemes
Secular growth in a nogrowth / lowgrowth world
- Shale gas revolution, mobile data growth, enterprise data growth,
proliferation of screens
Infrastructure assets of the 21
st
century
- Recurring revenue businesses critical to modern economies, with high
barriers to entry and attractive returns on invested capital
Capitalizing on the disconnect between cost of debt and cost of equity
- M&A
- Equity shrink and dividends
Consolidating industries
- Extraordinary growth through synergies and pricing power
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CORVEXMANAGEMENTLP
CompanyOverview
Crown Castle International Corp. (CCI or the Company) is the largest
U.S. operator of shared wireless infrastructure, including towers,
rooftops, small cells, and associated network services
CCI owns or operates nearly 40,000 towers in the U.S., with 56% and 71%
of these sites located in the top 50 and top 100 BTAs, respectively
Companys key customers are Verizon, AT&T, Sprint, and TMobile
~83% of total revenue and ~90% of gross profit derived from recurring
rental payments with longterm leases
CCI owns land underneath sites representing 34% of its gross profit, and
leases remaining 66% with weightedaverage maturity of 30 years
Customer contracts (before renewals) represent $22 billion of expected
future revenue with weightedaverage life of 7 years as of June 2014
CCI began operating as a REIT for U.S. federal income tax purposes
effective January 1, 2014
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CORVEXMANAGEMENTLP
TowerIndustryOverview
A tower is a vertical structure built on a parcel of land to hold
communications network equipment such as antennas and base stations
Tower operator leases space to tenant with rental payments structured
under longterm noncancellable leases (~10 year initial term with
multiple ~510 year renewal options), with fixed contractual escalators
(~34% annually) and low churn (only ~12% annually)
A tower is typically built to accommodate multiple tenants (colocation)
- An additional tenant can be added to a tower with minimal capital
investment or increase in operating costs
- Building a new tower is more expensive and timeconsuming than
leasing from an existing tower, driving shared network infrastructure
- Colocation drives attractive returns on invested capital and high
incremental margins for towers, while strengthening barriers to entry
Industry growth is driven by mobile data growth, network improvements,
and new spectrum deployments
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CORVEXMANAGEMENTLP
TowerUnitEconomics
CCI has 41,361 towers with an average of 2.3 tenants per tower today
- 0.1 0.2 tenants per tower are added to the tower portfolio each year,
driving steady longterm growth
Source:Companypresentations,Corvex estimates.Figuresintableaboveareillustrative.
One Two Three Four
Tenant Tenants Tenants Tenants
Annual Site Rental Revenue $28,800 $57,600 $86,400 $115,200
Per Tenant per Month $2,400 $2,400 $2,400 $2,400
Annual Operating Expenses $18,000 $19,800 $21,600 $23,400
Per Site per Month $1,500 $1,650 $1,800 $1,950
Tower Cash Flow $10,800 $37,800 $64,800 $91,800
% Margin 37.5% 65.6% 75.0% 79.7%
Incremental Margin % -- 93.8% 93.8% 93.8%
Per Site per Month $900 $3,150 $5,400 $7,650
Unlevered Return on Invested Capital 4.3% 12.6% 18.5% 23.0%
Invested Capital per Tower $250,000 $300,000 $350,000 $400,000
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CORVEXMANAGEMENTLP
FinancialSummary

10,000
20,000
30,000
40,000
2007 2008 2009 2010 2011 2012 2013 2014E
TowerCount
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2007 2008 2009 2010 2011 2012 2013 2014E
TotalRevenue
$0
$500
$1,000
$1,500
$2,000
$2,500
2007 2008 2009 2010 2011 2012 2013 2014E
AdjustedEBITDA
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
2007 2008 2009 2010 2011 2012 2013 2014E
AFFOperShare
8.2%CAGR
14.5%CAGR
15.6%CAGR
16.9%CAGR
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CORVEXMANAGEMENTLP
InvestmentThesis
Strong secular growth driven by continued mobile data proliferation
Exceptional business with recurring revenues, defensible barriers to entry,
attractive returns on invested capital, and a strong customer base
Attractive valuation relative to growth prospects, business quality, tower
peers, REITs, potential dividend capacity, and our view of intrinsic value
Earnings power in excess of Street Consensus estimates in our view
Relative laggard over the last year, and still the most contrarian / least
wellliked among public peers in our estimation
Essentially all domestic tower portfolio should provide predictability,
simplicity, and lower risk
More mature business profile should result in higher capital returns
CCI offers shareholders attractive riskadjusted returns, with steady and
predictable secular growth, an inexpensive valuation, and increasing
capital returns
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CORVEXMANAGEMENTLP
HowCouldCrownCastleBeMispriced?
Sprint / TMobile: as largest domestic tower operator and owner of legacy
TMobile tower portfolio, CCI has greatest exposure to consolidation
Interest rates: investor fear that interest rates were about to rise and view
that interest rates impact tower valuation multiples or trading momentum
AT&T transaction: in October 2013, CCI acquired a portfolio of towers
from AT&T at a relatively high price with generous leasing terms, 83%
funded through new common and preferred equity issuance
Investor base: large market capitalization (AMT and CCI are #2 and #3 in
IYR, respectively) with niche business model and GARP financial profile
Capital allocation: significant component of shareholders future returns
will be driven by how management allocates capital
- Uncertainty preventing CCI from receiving market valuation reflective of
the quality and growth of its cash flows
- Potential Verizon tower sale exacerbating capital allocation overhang
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CORVEXMANAGEMENTLP
CapitalAllocationOverhang
We believe CCI is betwixt and between on capital structure and capital
allocation strategy today
- Delevering the balance sheet while maintaining an artificially low
payout ratio doesnt make sense and is hurting valuation in our view
- Management has committed to ~7080% dividend payout ratio in 35
years (20182020), but is leaving behind an optimal leverage ratio today
Discounted valuation and focus on reducing leverage could impair the
Companys ability to grow both nearterm and longterm
- Potential Verizon tower sale makes issue especially critical right now
Underperformance has created frustration and put CCI on the defensive
- Status quo is not working for shareholders
Fortunately, we believe the Companys issues can be easily fixed
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CORVEXMANAGEMENTLP
TwoOptions
#1:IncreasePayoutRatio
Quarterly Dividends
$4.00+Dividend/Share
80%+PayoutRatio
10%+LTDividendGrowth
Maintain~4.5xLeverage
Flexto~6.0xforM&A
TargetInvestmentGrade
OrganicGrowthandM&A
ValuedonDividendYield
#2:IncreaseLeverage
OngoingBuybacks
$1.60+Dividend/Share
30%PayoutRatio
15%+LTDividendGrowth
Maintain~7.0xLeverage
Flexto~7.5xforM&A
NonInvestmentGrade
OrganicGrowthandM&A
ValuedonAFFO/Share
Status Quo
DeLevering
$1.60+Dividend/Share
30%PayoutRatio
15%+LTDividendGrowth
Maintain~4.5xLeverage
Flexto~6.0xforM&A
TargetInvestmentGrade
M&AChallenged
ValuedonAFFO/Share
CCI faces two clear options in our view: (i) increase its payout ratio, or (ii)
increase leverage
- While we believe both paths have strong merit, we believe the first
option is the best fit for the Companys current business plans and DNA
Either way, we firmly believe the status quo is inferior to both options
and unacceptable
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CORVEXMANAGEMENTLP
WhatHaveWeDoneSoFar?
Corvex funds currently have beneficial or economic ownership of
approximately 12.6 million shares and share equivalents of Crown Castle
- Represents approximately $1 billion of economic exposure at current
market prices
We recently met with management, continuing the productive dialogue
we have had with the Company for several years
- As background, we have invested in and followed CCI and its tower
peers since the inception of Corvex in 2011
On October 14, 2014, we released a letter and presentation to fellow CCI
shareholders outlining a proposal to improve the Companys capital
allocation strategy and strengthen its valuation
- Given recent press suggesting Verizon towers sale could be imminent,
we felt compelled to reach out to fellow shareholders publicly
- These materials available publicly at www.CorvexCCIpresentation.com
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CORVEXMANAGEMENTLP
WhatHaveWeDoneSoFar?(contd)
Company has stated it plans to address its capital allocation policy,
including dividends, on its 3
rd
quarter earnings call (October 31, 2014)
- Management regularly solicits input from us and other shareholders
- We believe the management team is thoughtful and wants to get to the
right answer
We plan to continue to engage with the Company and our fellow
shareholders
- We believe our proposal creates significant longterm value for owners,
and we will continue to try to persuade key stakeholders of this view
- Responsibility of the Company to embrace change or provide
shareholders with a clear path to a superior alternative
While we have a high degree of conviction in our plan, we remain open to
any ideas which can be shown to further enhance this proposal or
credibly demonstrate superior returns over a similar period of time
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CORVEXMANAGEMENTLP
Risk
Adjusted
Returns
U.S.Only
Towers
REIT
Election
Target
Investment
Grade
Rating
Steady
Dividendsw/
HighPayout
Ratio
NewDividendPolicyistheMissingLink
We believe CCI should close the circle for shareholders by increasing its
dividend payout ratio
We model approximately 25% upside to CCIs recent share price through
a change in capital allocation, and potential for over 60% upside in 15
months including dividends
Recommendations:
1. Pay a dividend of at least $4.00
per share in 2015
2. Guide to 10%+ dividend per
share growth over next 3+ years
3. Plan to maintain leverage of 4.5x
and target an investment grade
rating over time
4. Flex leverage up to 6.0x for
accretive M&A
5. Delever back to 4.5x following
M&A thru EBITDA growth
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Note:ReturnsbasedonsharepricesasofOctober17,2014unlessotherwisenoted.
CORVEXMANAGEMENTLP
DividendPolicyRecommendations
Pay a dividend of at least $4.00 per share in 2015
- Equates to a payout ratio of ~80% of AFFO (over 1.20x Coverage), or
~70% of free cash flow after maintenance capex given cash flow benefit
of prepaid rents which are straightlined in reported AFFO
Guide to 10% or higher dividend per share growth over the next 3+ years
Plan to maintain leverage of approximately 4.5x net debt / EBITDA on an
ongoing basis and target an investment grade credit rating over time
Flex leverage up to 6.0x net debt / EBITDA for M&A (including potential
Verizon transaction), if deal is accretive to the standalone dividend plan
- Delever back to 4.5x following M&A through EBITDA growth (maintain
80% 90% payout ratio over time including periods following M&A)
We do not believe this capital allocation scenario would materially
reduce operating flexibility or increase CCIs risk profile minimal
execution risk in our view
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CORVEXMANAGEMENTLP
80%AFFOPayoutScenario(1.20xCoverage)
We believe CCI could
conservatively trade at a
4.0% dividend yield in
this scenario, reducing
cost of capital and driving
approx. 25% upside to
recent CCI share price
Over time, we believe the
Company should trade
below a 4.0% yield as new
investors become familiar
with the CCI story, driving
additional upside for
longterm owners
Note:WebelieveCCIwillearnapproximately$5.00pershareofAFFOin2015,althoughweexpecttheCompanytoguidemoreconservativelythanthisfigureonits
3Q14earningscallbasedonpastpractice.Stockpricesandpricepercentagechangeintablesabovedonotincludedividends received.Webelieveoperating
resultscanlikelyexceedthelongtermprojectionsabovethroughnewspectrumdeploymentsnotexplicitlymodeledhere.
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80% AFFO Payout 2015E 2016E 2017E 2018E
AFFO $1,630 $1,823 $1,963 $2,090
AFFO / Share $4.99 $5.58 $6.09 $6.63
% Growth 17.4% 11.9% 9.0% 9.0%
Net Debt / LTM EBITDA 4.9x 4.5x 4.5x 4.5x
Dividend / Share $4.00 $4.50 $5.20 $5.75
% Growth 185.7% 12.5% 15.6% 10.6%
Dividend Yield on Recent 4.9% 5.6% 6.4% 7.1%
Coverage Ratio (AFFO) 1.2x 1.2x 1.2x 1.2x
Payout Ratio (AFFO) 80% 81% 85% 87%
CCI Price @ Yield: 2015E 2016E 2017E 2018E
3.00% $133.33 $150.00 $173.33 $191.67
3.50% $114.29 $128.57 $148.57 $164.29
4.00% $100.00 $112.50 $130.00 $143.75
4.50% $88.89 $100.00 $115.56 $127.78
5.00% $80.00 $90.00 $104.00 $115.00
Price % Change:
3.00% 64.9% 85.6% 114.4% 137.1%
3.50% 41.4% 59.0% 83.8% 103.2%
4.00% 23.7% 39.2% 60.8% 77.8%
4.50% 10.0% 23.7% 42.9% 58.1%
5.00% (1.0%) 11.3% 28.6% 42.3%
CORVEXMANAGEMENTLP
90%AFFOPayoutScenario(1.10xCoverage)
While CCI may begin at a
lower payout ratio as
shown on previous page,
we believe the optimal
longterm policy is 1.10x
Coverage of AFFO
Equates to payout ratio of
~90% of AFFO, or ~80% of
FCF after maint. capex
given cash flow benefit of
prepaid rents
1.10x Coverage scenario
drives nearly 40% upside
at a 4.0% dividend yield
Note:WebelieveCCIwillearnapproximately$5.00pershareofAFFOin2015,althoughweexpecttheCompanytoguidemoreconservativelythanthisfigureonits
3Q14earningscallbasedonpastpractice.Stockpricesandpricepercentagechangeintablesabovedonotincludedividends received.Webelieveoperating
resultscanlikelyexceedthelongtermprojectionsabovethroughnewspectrumdeploymentsnotexplicitlymodeledhere.
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1.10x Coverage 2015E 2016E 2017E 2018E
AFFO $1,626 $1,812 $1,955 $2,089
AFFO / Share $4.98 $5.55 $6.02 $6.53
% Growth 17.1% 11.4% 8.5% 8.5%
Net Debt / LTM EBITDA 5.0x 4.6x 4.5x 4.5x
Dividend / Share $4.50 $5.00 $5.50 $6.00
% Growth 221.4% 11.1% 10.0% 9.1%
Dividend Yield on Recent 5.6% 6.2% 6.8% 7.4%
Coverage Ratio (AFFO) 1.1x 1.1x 1.1x 1.1x
Payout Ratio (AFFO) 90% 90% 91% 92%
CCI Price @ Yield: 2015E 2016E 2017E 2018E
3.00% $150.00 $166.67 $183.33 $200.00
3.50% $128.57 $142.86 $157.14 $171.43
4.00% $112.50 $125.00 $137.50 $150.00
4.50% $100.00 $111.11 $122.22 $133.33
5.00% $90.00 $100.00 $110.00 $120.00
Price % Change:
3.00% 85.6% 106.2% 126.8% 147.4%
3.50% 59.0% 76.7% 94.4% 112.1%
4.00% 39.2% 54.6% 70.1% 85.6%
4.50% 23.7% 37.4% 51.2% 64.9%
5.00% 11.3% 23.7% 36.1% 48.4%
CORVEXMANAGEMENTLP
7.1%
5.6%
5.5%
5.0%
5.0%
4.9%
4.1%
4.0%
3.8%
2.3%
2.1%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2015E Dividend Yield
ComparableCompanies
Dividend paying companies across a range of industries suggest CCI
should trade below a 4.0% yield, implying at least 24% 39% upside
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Source:Bloomberg,WallStreetresearch,Corvex estimates.CCIbasedonCorvexestimates.
CORVEXMANAGEMENTLP
ComparableCompanies(contd)
Clear disconnect in our view between the growth, valuation, and stability
of proforma CCI relative to other dividend paying companies
20
PFCCI
@4.0%
DataCenterREITs
OutdoorREITs
Wireline
EnergyGPs
Utilities
REITs(IYR)
Wireless
R=0.58
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
(7.0%) (2.0%) 3.0% 8.0% 13.0% 18.0%
2014E2016EEarnings/AFFOCAGR(X)vs.2015EDividendYield(Y)
PFCCI
(current)
Source:Bloomberg,WallStreetresearch,Corvex estimates.CCIbasedonCorvexestimates.PFCCIdividendyieldsshownassumes2015Edividendof$4.50pershare.
CORVEXMANAGEMENTLP
DLR
DFT
CONE
LAMR
CBSO
VZ
T
CTL
FTR
WIN
PFCCI
@4.0%
R=0.85
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
(18.0%) (13.0%) (8.0%) (3.0%) 2.0% 7.0% 12.0% 17.0%
2014E2016EEarnings/AFFOCAGR(X)vs.2015EDividendYield(Y)
ComparableCompanies(contd)
Comparable dividend paying companies suggest CCIs dividend yield
should compress below 4.0% over time
Source:Bloomberg,WallStreetresearch,Corvex estimates.CCIbasedonCorvexestimates.PFCCIdividendyieldsshownassumes2015Edividendof$4.50pershare.
PFCCI
(current)
21
CORVEXMANAGEMENTLP
ComparableCompanies(contd)
1.10x Coverage scenario would place CCI #9 in the S&P 500 in terms of
dividend yield (or #14 in 80% AFFO Payout scenario) a severe valuation
disconnect which simply could not persist in our view
Source:BloombergasofSeptember30,2014.
10.1%
8.8% 8.7%
7.4% 7.4%
7.0%
6.1%
5.7%
5.6%
5.3% 5.3%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
HighestNTMDividendYield(S&P500)
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CORVEXMANAGEMENTLP
AttractiveAbsoluteValuation
To be clear, we believe CCI is significantly undervalued on an absolute
basis, and not simply relative to dividend paying companies across a
range of industries
- We view a change in the Companys dividend payout ratio as a catalyst
for narrowing its discount to intrinsic value and peer trading multiples
- While some yield stocks may be overvalued today due to the current
low interest rate environment (i.e., stocks with high yields but limited
growth or even declining businesses), we believe investor demand for
high cash returns and doubledigit dividend growth will remain strong
for the foreseeable future
- High dividend payout ratio simply forces the market to value CCIs strong
cash flows and growth, while also reducing the overhang of capital
allocation uncertainty
23
CORVEXMANAGEMENTLP
AttractiveRiskAdjustedReturns
A dividend discount model
shows how simple and
compelling an investment in
CCI is with a high payout ratio
Strong downside protection:
exit at market multiple P/E of
CCIs dividend (which therefore
gives zero credit for cash flow
in excess of dividend or future
returns from growth capex) still
results in a 5% IRR over 3 years
In model to lose money over 3
years, need to exit below a
12.8x multiple of dividend per
share (i.e., 7.8% dividend yield)
80% AFFO 2014E 2015E 2016E 2017E
Dividend / Share $1.40 $4.00 $4.50 $5.20
% Growth -- 185.7% 12.5% 15.6%
3 Year Stock Price +
IRR Price Dividends
3.00% 31.2% $173.33 $187.73
3.50% 25.5% $148.57 $162.97
2017E 4.00% 20.8% $130.00 $144.40
Exit 4.50% 16.8% $115.56 $129.96
Yield 5.00% 13.3% $104.00 $118.40
15.0x 4.5% $78.00 $92.40
12.8x 0.0% $66.44 $80.84
1.10x & VZ Deal: 2014E 2015E 2016E 2017E
Dividend / Share $1.40 $4.60 $5.20 $5.75
% Growth -- 228.6% 13.0% 10.6%
3 Year Stock Price +
IRR Price Dividends
3.00% 35.7% $191.67 $207.92
3.50% 29.8% $164.29 $180.54
2017E 4.00% 24.9% $143.75 $160.00
Exit 4.50% 20.8% $127.78 $144.03
Yield 5.00% 17.3% $115.00 $131.25
15.0x 8.2% $86.25 $102.50
11.2x 0.0% $64.59 $80.84
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CORVEXMANAGEMENTLP
R=0.15
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
22.0x
24.0x
Apr05 Apr06 Apr07 Apr08 Apr09 Apr10 Apr11 Apr12 Apr13 Apr14
TowersAvg.EV/NTMEBITDA(LHS)vs.U.S.10YearYield(RHS)
TowersEV/EBITDA U.S.10Yr.Yield
InterestRateSensitivity
Minimal correlation between multiples and interest rates over last 10
years; towers traded at 2024x EBITDA with rates over 200bps higher
Source:Bloomberg.
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CORVEXMANAGEMENTLP
InvestorBaseDiscussion
We believe CCI can be more successful attracting yieldoriented investors
to its shareholder base than it has been at attracting traditional REIT
investors
There are several obstacles to traditional REIT investors investing in tower
REITs, including: (i) key benchmark REIT indices, (ii) perceived technology
risk, (iii) limited alternative use for land and equipment, and (iv) no net
asset value (NAV) reference metric
In contrast to REIT investors, we believe the key requirements for yield
oriented investors are relatively straightforward: stability and growth of
dividends
We believe a sizable dividend backed by the credit quality of Americas
largest wireless operators in a business with one of the brightest areas of
growth within the telecom sector will be incredibly well received by
yieldoriented investors
26
CORVEXMANAGEMENTLP
HighlyUniqueEquitySecurity
Simply put, we are not aware of any other security in the public markets
with proforma CCIs unique combination of growth, value, stability and
yield
27
Investment
Attributes
Value
Capital
Returns
Stability
Growth
CORVEXMANAGEMENTLP
RePackagedU.S.WirelessCreditRisk
With a high payout ratio, CCI becomes a growing, pure play passthrough
of repackaged U.S. wireless credit risk, structured in a taxadvantaged
REIT
28
2.62%
2.60%
3.91%
3.84%
5.11%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Verizon AT&T Sprint TMobile HighYieldIndex
CostofDebt
(aftertax,exceptHY)
Source:Bloomberg,companyfilings.Aftertaxcostofdebtassumes38.0%normalizedtaxrate.Highyieldindexshownpretax.
CORVEXMANAGEMENTLP
PayoutRatioDiscussion
High payout ratio maximizes share price, lowers cost of capital, and allows
for higher longterm growth in our view
High payout ratio will not impact ongoing growth investments or rely on
the capital markets in our view
~70% ~90%
$3.50 $4.50
(+) ()
Greater capital
allocation
flexibility;
potentialto
drivehigher
dividendgrowth
through
increasesin
payoutratio
Unlikelyto
maximizecostof
capital;yield
investorsmaynot
givecreditfor
dividendgrowthin
above~10%;
capitalmarkets
stillrequiredfor
largeM&A
(+) ()
Maximizesmetriclikely
todrivevaluationand
costofcapital;creates
higherpredictabilityof
returns;increases
appealtoyieldand
REITinvestors;should
notlimitgrowthcapex;
maximizesvalueofIG
creditrating
Limits
managements
flexibilityamong
capitalallocation
options;may
requirecapital
marketsifcapex
growth
accelerates(e.g.,
smallcells)
DividendPayoutSpectrum
29
CORVEXMANAGEMENTLP
PayoutRatioDiscussion(contd)
Discretionary investment
capacity includes (i) AFFO
(i.e., cash flow after
maintenance capex), (ii)
prepaid rent, and (iii) the
leverage capacity created
by EBITDA growth at a
constant leverage ratio
Even in a downside case
of only 6.0% EBITDA
growth, CCI would have
$767$930mm to invest
in Growth CapEx at a
80%90% AFFO payout
ratio, compared to 2014
spending of $650mm
30
Downside Corvex Upside
2014E Adjusted EBITDA $2,115 $2,115 $2,115
2015E Adjusted EBITDA $2,242 $2,297 $2,327
% Growth y-o-y 6.0% 8.6% 10.0%
$ EBITDA Growth y-o-y $127 $182 $212
Target IG Leverage Ratio 4.50x 4.50x 4.50x
2015E Leverage Capacity Created $571 $820 $952
2015E Leverage Capacity Created $571 $820 $952
2015E AFFO $1,500 $1,626 $1,675
2015E Prepaid Rents $165 $200 $235
Total 2015E Investment Capacity $2,236 $2,646 $2,862
Total 2015E Investment Capacity $2,236 $2,646 $2,862
2015E Dividend @ 90% AFFO $1,469 $1,469 $1,469
Available for Growth CapEx $767 $1,177 $1,392
% of 2014E Growth CapEx 118% 181% 214%
Memo: 2014E Growth CapEx $650 $650 $650
Total 2015E Investment Capacity $2,236 $2,646 $2,862
2015E Dividend @ 80% AFFO $1,306 $1,306 $1,306
Available for Growth CapEx $930 $1,340 $1,556
% of 2014E Growth CapEx 143% 206% 239%
Memo: 2014E Growth CapEx $650 $650 $650
Note: 2014E EBITDA and 2014E Growth CapEx shown here are at the high end of the
Company's Guidance range as of 2Q14 earnings call.
CORVEXMANAGEMENTLP
PayoutRatioDiscussion(contd)
While we understand practice of underpromising and overdelivering,
setting dividend policy based on overly conservative projections could
result in CCI capturing a limited portion of the available upside
- In theory, conservative projections imply excess coverage and therefore
stock should trade at a lower dividend yield all else equal in practice
the market may or may not give such valuation credit
We would suggest a fixed payout ratio on realized AFFO per share with a
4
th
quarter trueup in order to maximize shareholder value
31
2015E AFFO / Share $4.50 $4.60 $4.70 $4.80 $4.90 $5.00 $5.10 $5.20 $5.30
AFFO Payout Ratio 80% 80% 80% 80% 80% 80% 80% 80% 80%
2015E Dividend / Share $3.60 $3.68 $3.76 $3.84 $3.92 $4.00 $4.08 $4.16 $4.24
Payout Ratio incl. Prepaid Rents 70% 71% 71% 71% 71% 71% 71% 72% 72%
CCI Price @ 4.0% Dividend Yield $90.00 $92.00 $94.00 $96.00 $98.00 $100.00 $102.00 $104.00 $106.00
CCI Price @ 3.5% Dividend Yield $102.86 $105.14 $107.43 $109.71 $112.00 $114.29 $116.57 $118.86 $121.14
CCI Price @ 3.0% Dividend Yield $120.00 $122.67 $125.33 $128.00 $130.67 $133.33 $136.00 $138.67 $141.33
% Change @ 4.0% Dividend Yield 11.3% 13.8% 16.3% 18.8% 21.2% 23.7% 26.2% 28.6% 31.1%
% Change @ 3.5% Dividend Yield 27.2% 30.1% 32.9% 35.7% 38.5% 41.4% 44.2% 47.0% 49.9%
% Change @ 3.0% Dividend Yield 48.4% 51.7% 55.0% 58.3% 61.6% 64.9% 68.2% 71.5% 74.8%
CORVEXMANAGEMENTLP
Conclusion
We believe CCI offers shareholders strong secular growth, an exceptional
business model, an attractive valuation, and earnings power in excess of
Consensus estimates
However, CCI is betwixt and between on capital structure and capital
allocation today, and we believe this overhang has largely led to CCIs
discount and its underperformance
- We believe CCI faces two clear solutions: (i) increase its payout ratio, or
(ii) increase leverage
We recommend in part that CCI: (i) pay a dividend of at least $4.00 per
share in 2015, (ii) guide to 10% or higher dividend per share growth over
the next 3+ years, and (iii) plan to maintain leverage of approximately 4.5x
net debt / EBITDA to target an investment grade credit rating over time
Our analysis suggests approximately 25% nearterm upside, and the
potential for over 60% upside in 15 months including dividends received
We believe it is the responsibility of the Company to embrace change
now or provide shareholders with a clear path to a superior alternative
32
CORVEXMANAGEMENTLP 33
APPENDIX
CORVEXMANAGEMENTLP
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2013 2014 2015 2016 2017 2018
NorthAmericaMobileDataTrafficForecast
(TBperMonth)
MobileDataGrowth
34
Source:CiscoVisualNetworkingIndex:GlobalMobileDataTrafficForecastUpdate,20132018.
50%CAGR
Wireless carriers must continue to invest in their networks and/or deploy
additional spectrum in order to satisfy rapid mobile data growth
CORVEXMANAGEMENTLP
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2013 2014 2015 2016 2017 2018
GlobalMobileDataTrafficbyDeviceType
(TBperMonth)
Smartphones Tablets Laptops M2M
MobileDataGrowth(contd)
35
Source:CiscoVisualNetworkingIndex:GlobalMobileDataTrafficForecastUpdate,20132018.
Smartphones are the primary driver of mobile data growth in the U.S. and
globally, although newer connected devices are growing even faster
'13-'18E '13 % '18E %
CAGR of Total of Total
Smartphones 63% 62% 66%
Tablets 87% 9% 18%
Laptops 30% 25% 9%
M2M 113% 1% 6%
All Other 27% 3% 1%
CORVEXMANAGEMENTLP
MobileDataGrowth(contd)
As smartphone penetration growth
begins to slow in the U.S., increased
data consumption per device
continues to drive massive mobile
data growth
A 4G connection currently drives
almost 15x the traffic of earlier
wireless technologies
Higher speeds are believed to drive
the adoption and usage of highend
devices as well as more bandwidth
intensive applications, including
mobile video
36
Source:CiscoVisualNetworkingIndex:GlobalMobileDataTrafficForecastUpdate,20132018.
CORVEXMANAGEMENTLP
MobileDataGrowth(contd)
37
Source:Sandvine 1H2014GlobalInternetPhenomenaReport.
CORVEXMANAGEMENTLP
ExceptionalBusinessModel
Attractive secular growth profile with visible longterm drivers (e.g.,
mobile data growth, new spectrum deployments) and multiyear runway
for continued growth
Steady, recurring revenues structured under longterm, noncancellable
leases with contractual escalators and low churn
Attractive returns on invested capital and high barriers to entry driven by
colocation model, locationbased scarcity and zoning restrictions,
network effects, capital requirements and timetomarket
Well capitalized, creditworthy customer base CCI cash flows essentially
represent pass through of U.S. wireless credit risk for critical network
payments (cash flows arguably senior to even wireless debt)
Strong financial profile with consistent growth, high free cash flow
conversion, high incremental margins, limited maintenance capex
requirements, and attractive tax profile via REIT structure
38
CORVEXMANAGEMENTLP
ValuationComparison
CCIs trades at a ~1.5x2.0x discount to peers on Consensus 2014E AFFO
per share, and a ~1.0x discount on Consensus 2015E AFFO per share
CCIs valuation discount has narrowed recently due in part to investor
enthusiasm around a significant dividend increase in our view
Source:Bloomberg.
19.5x
20.7x
21.3x
16.9x
18.1x
18.0x
12.0x
13.0x
14.0x
15.0x
16.0x
17.0x
18.0x
19.0x
20.0x
21.0x
22.0x
CCI AMT SBAC
ConsensusAFFO/ShareMultiples
2014E 2015E
39
CORVEXMANAGEMENTLP
EmbraceFutureToday
As we discussed previously, over the next five years we expect to increase
our dividend per share by at least 15% annually. We currently have a net
operating loss balance, or NOL, of approximately $2 billion, which we would
expect to utilize prior to 2020. We expect that once the NOLs are
exhausted, our dividend payout as a percentage of AFFO will increase from
the approximately 30% today to something in the area of 70% to 80%,
which implies a compound annual growth rate of our dividend in excess of
20% over this period of time. CFO Jay Brown, 2Q14 Earnings Call
We believe CCI should embrace its previously communicated payout
structure now rather than artificially deferring it to 20182020
- All this practice does is artificially defer stock price performance
- Payout structure should not hinder growth investments logic around
using NOLs to drive growth or pretax returns appears hazy to us
- Go on offensive with equity currency trading at higher multiple
40
CORVEXMANAGEMENTLP
21.3x
18.5x
21.0x
15.7x
14.8x
25.6x
17.7x
15.4x
17.7x
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
22.0x
24.0x
26.0x
28.0x
U.S. Tower Precedent Transactions
ReduceCostofCapital
Potential Verizon tower sale should be an additional catalyst for CCI to
change its capital allocation plan now, strengthening its equity currency in
front of a possible transaction
Source:Companyfilingsandpressreleases,WallStreetresearch,Corvexestimates.MultiplesrepresentEV/EBITDA.
41
CORVEXMANAGEMENTLP
6.4%
9.3%
10.0%
7.7%
7.9%
11.6%
9.0%
9.4%
13.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
CCI AMT SBAC
2014EDomesticOrganicRevenueGrowthGuidance
ReportedGrowth% AdjustedGrowth% AdjustedGrowth%beforeChurn
OrganicSiteRentalRevenueGrowth
CCIs organic growth (~7.7%) is similar to AMT (~7.9% domestic) after
adjusting for onetime items and accounting differences
Source:Companyfilings,WallStreetresearch,Corvexestimates.
42