Contrarian Corpus
activist full deck initial thesis
2020-07-06 · 67 pages

Crown Castle International CCI

N 5 Narrative
V 4 Visual
C 4 Craft
Original source ↗

The three reasons

  1. 1

    Crown Castle's fiber capex earns just 3% ROI versus ~20% for its tower business

  2. 2

    CCI spends 149% of fiber EBITDA on fiber capex — ~2x industry peers like Zayo and Lightower

  3. 3

    Entrenched board (8 of 11 non-execs >13 years tenure) has failed to discipline capital allocation

Primary demands

  • Commit to a 40% capex ROI target on $600M of annual fiber discretionary capex
  • Introduce ROIC into the executive incentive plan and restore TSR-vs-peers metric in LTIP
  • Increase dividend to $7.00/share in 2021 (46% hike) growing 7-8% annually thereafter
  • Refresh the Board with new directors, greater diversity and fiber-industry expertise
  • Restructure key Board committees and reduce entrenched long tenures

KPIs cited

Fiber capex ROI
3% EBITDA yield on cumulative fiber capex vs 20% on tower capex
Capex % of EBITDA
CCI 61% vs AMT 20% and SBA 11%; RTC Plan targets 31%
Fiber capex as % of fiber EBITDA
149% for CCI vs 23-82% for fiber peers (Cogent, Level 3, Zayo, AboveNet, tw telecom, Lightower)
ROIC
CCI ~10% vs peer average ~17% for six consecutive years (2014-2019)
Cumulative fiber investment
$15.8B invested since 2015; yield has actually declined from 9.2% (2016) to 6.1% (1Q20)
Fiber EBITDA-Capex
Cumulative -$1.7B; never cash-flow positive since 2015
Dividend per share
$4.80 current → $7.00 in 2021 (+46%) → $8.00+ by 2023 under RTC Plan
EBITDA-Capex trajectory
$1.24B (2019) → $3.1B+ (2023E) under RTC Plan, 26% CAGR
Total shareholder return vs peers
CCI underperformed AMT/SBA by 219 pts over 10yr, 161 pts over 9yr, 111 pts over 7yr
Board tenure
8 of 11 non-exec directors >13 years; Chairman 18 years in role, on Board ~25 years
Fiber acquisition multiples
CCI paid 15x average across 5 deals totaling $11B+ vs Zayo 9x average
Capital allocation alternative
Had CCI reinvested in AMT stock instead of fiber, shareholders would have 33% more value ($216/sh vs $162/sh)

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (6)

Notes

Classic Elliott campaign deck with its own micro-brand ('Reclaiming The Crown' + ReclaimingTheCrown.com standalone site). Purple palette, consistent editorial typography, strong data viz with annotated call-outs. Elliott approached CCI privately in May 2020; this July 6, 2020 deck is the first public presentation. Rhetorical spine is a 'tale of two businesses' — the 'Best Business Ever' towers vs the dilutive fiber/small-cell investment — repeatedly using CEO Jay Brown's and CFO Dan Schlanger's own past statements as contradictions. Board critique is structural rather than personal (directors listed anonymously as 'Director 1-12' with tenure/age/gender). Appendix (p.66) contains an implicit SOTP calculation isolating fiber EV at $11B at 12.2x multiple. No explicit proxy fight yet — framing is collaborative-adversarial hybrid asking the Board to act.