Lone Pine Exits Its Position in Crown Castle International

Highlights of Stephen Mandel’s Lone Pine Capital's 4Q14 13F (Part 9 of 21)

(Continued from Part 8)

Lone Pine sold stake in Crown Castle International

Lone Pine Capital sold its position in Crown Castle International (CCI) in the fourth quarter of 2014. The position had accounted for 2.47% of the fund’s total third quarter portfolio. We also noted earlier on Market Realist that Glenview Capital lowered its position in CCI.

Overview of Crown Castle International

Crown Castle International owns, operates, and leases shared wireless infrastructure. It includes towers and other structures like rooftops, distributed antenna systems, a type of small cell network, and interests in land under third-party towers in various forms.

Crown Castle owns and manages ~40,000 towers in the US and 1,800 towers in Australia. Its four largest customers are AT&T (T), Sprint (S), T-Mobile US (TMUS), and Verizon (VZ) Wireless, accounting for 88% of Crown Castle’s 2014 consolidated site rental revenue. Site rental revenue accounted for 81% of the company’s net revenue.

Crown Castle plans to sell its Australian subsidiary

Crown Castle owns 77.6% of Cencall Communications, one of the largest independent tower operators in Australia. Crown Castle is exploring its available options to enhance shareholder value in the long term.

You can gain exposure to Crown Castle by investing in the iShares Dow Jones US Real Estate Fund (IYR). Crown Castle accounts for 3.40% of IYR.

Starts operations as a REIT, raises dividend

A Crown Castle release noted that the company began operations as a REIT in 2014. It raised its dividend, expanded its small cell networks, and added the AT&T portfolio of towers.

Activist hedge fund Corvex Management, which holds ~12.6 million shares of CCI, likes the combination of a REIT and a telecommunications business at Crown Castle. In its October 2014 letter to Crown Castle, the fund asked the company to boost returns to shareholders before looking for more acquisitions, including Verizon’s wireless network of towers. Corvex said that CCI could accomplish this by increasing its dividend payout ratio or improving its leverage ratio and buying back more stock.

Swings to profit

Crown Castle International’s 4Q14 revenue was up 21% to $968 million. Its site rental revenue grew 17% to $761 million, driven by 7% growth from new leasing activity, 4% growth from cash escalations and tenant lease contracts, and 4% from nonrenewals. Its net income was $137 million, or $0.41 per share, compared with a net loss of $35 million, or $0.11 per share, in 4Q13.

The next part of our series will discuss the fund’s exit from Actavis.

Continue to Part 10

Browse this series on Market Realist:

• Part 1 - Lone Pine Capital Holdings Traded During 4Q14

• Part 2 - Lone Pine Adds New Stake in Visa

• Part 3 - Lone Pine Initiates New Position in HCA Holdings