EXHIBIT 99.1
Slide Presentation from Salomon Smith Barney Media Conference
January 9, 2002
The audio webcast of this presentation and the accompanying slide presentation
is also accessible to the public on the Company's web site at
www.crowncastle.com. It will remain there until February 8, 2002.
SLIDE 1
CROWN CASTLE INTERNATIONAL CORP.
NYSE: CCI
John P. Kelly - Chief Executive Officer
W. Benjamin Moreland - Chief Financial Officer
SLIDE 2
FORWARD LOOKING INFORMATION
This presentation contains numerous forward-looking statements, based on
management's current beliefs and assumptions. The forward-looking statements
involve expectations, projections and estimates regarding the wireless industry
or Crown Castle, including expectations, projections and estimates regarding:
(i) implementation of our strategy, (ii) future free cash flow targets, (iii)
demand for our towers, (iv) new tenant co-location rates, (iv) future margins,
(iv) financial performance of our towers, (v) EBITDA growth rates, (vi) future
revenues, expenditures and liquidity, (vii) future cell site density, (viii)
emergence of new mobile technologies, including 2.5/3G, and (ix) carrier
subscriber growth rates.
Such forward-looking statements are subject to numerous risks, uncertainties and
assumptions, including (i) those relating to the matters described above, (ii)
those included in the Risk Factors sections of the Company's filings with the
Securities and Exchange Commission, and (iii) those described on the following
page. Should one or more of these risks materialize, or should any underlying
assumption prove incorrect, actual results may vary materially from those
projected in the forward-looking statements. The Company assumes no obligation
to update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
SLIDE 3
FORWARD LOOKING INFORMATION
Certain Risks and Uncertainties
- -------------------------------
* Demand for towers and wireless communication sites may be lower or slower
than anticipated for numerous reasons, including reduced carrier expansion,
carrier consolidation, network sharing, technology development, or RF
health concerns
* Demand for wireless communications may be lower or slower than anticipated
for numerous reasons, including slow customer adoption rates of 2.5/3G and
other technologies
* Our strategy may be more difficult to implement than anticipated due to
financial or other reasons, including our significant amount of
indebtedness, or reduced cash flow as a result of reduced revenues or
increased operating costs, interest rates or capital expenditures
SLIDE 4
CROWN CASTLE LEADS THE INDUSTRY
* Largest independent wireless tower operator in the world
- Largest tower portfolio (16,000 towers y/e 2001)
- Largest operating platform
* Highest revenue per tower ($40,000 +LQA)
* Highest operating margins (56% Q4 2001Estimated)
* Most experienced engineering staff
SLIDE 5
MISSION AND STRATEGY
Mission
- -------
* To develop, deploy, own, and operate the most technologically advanced,
shared communications infrastructure . . .
Strategy
- --------
* Lease existing towers
* Streamline operations
* Maximize site revenue
* Allocate capital efficiently
SLIDE 6
PREMIER USA NATIONAL TOWER FOOTPRINT
[Map showing Crown Castle International Corp. USA tower footprint]
SLIDE 7
PREMIER UK NATIONAL TOWER FOOTPRINT
[Map showing Crown Castle International Corp. United Kingdom tower footprint]
SLIDE 8
REVENUE BY CUSTOMER & INDUSTRY
% of Recurring Revenue
- ----------------------
BBC 15.2%
Verizon 12.0%
ITV Digital 5.1%
Cingular 4.6%
Deutsche Telecom 4.5%
Nextel 4.3%
NTL 3.7%
British Telecom 3.5%
Voice Stream 2.6%
- ------------ ----
Subtotal 55.7%
Other 44.3%
[The following is a tabular representation of graphical materials]
Recurring Revenue by Industry
- -----------------------------
Broadcast 26%
Telecoms 72%
Other 2%
SLIDE 9
TOWER PERFORMANCE BY YEAR
Annualized
Rev/Tower Telecom &
As of 9/30/01 (000's) BBE Margin % Broadcast ROA
- ----------------------------------- ------ --------- ------- -------------
CCUK 69.9 N/A 51% 9%
CCUS
Pre 1998 70.8 3.93 77% 16%
1998 46.3 2.57 65% 9%
1999 39.3 2.18 59% 5%
2000 27.8 1.54 42% 3%
SLIDE 10
FINANCIAL STRATEGY
- ------------------
* Capital Allocation
- Debt service (i.e. cash interest)
- Tower builds & improvements
- Service offerings (e.g., backhaul)
* Liquidity
- Fully-funded for existing business plan
- Adequate covenant headroom
* Capital Structure
- Reduce the cost of capital through operating performance and de-leveraging
the balance sheet
SLIDE 11
THE PATH TO FREE CASH FLOW IN 2004
Objective: Achieve positive free cash flow after interest and capital
expenditures in 2004 with existing financial resources while significantly de-
leveraging the capital structure.
Solution: Continued execution of the core tower leasing business and allocation
of capital spending to value-enhancing activities within the constraints
imposed.
SLIDE 12
ONE TOWER MODEL
Q4 01E Q4 02E Q4 03E Q4 04E
Annualized Annualized Annualized Annualized
--------------------------------------------------------------------------
BBEs 2.25 2.61 2.99 3.37
Revenue $40,500 $47,000 $53,800 $60,600
Operating Expenses 16,000 16,800 17,600 18,400
G&A 1,900 2,100 2,200 2,300
------- ------- ------- -------
EBITDA 22,600 28,100 34,000 39,900
EBITDA Margin 56% 60% 63% 66%
Incremental Margin 85% 87% 87%
Revenue Growth 16% 14% 13%
EBITDA Growth 24% 21% 17%
Assumes leasing at .4 BBE annually
SLIDE 13
2002-2004 FORECAST
(In Millions) 2002 2003 2004
---------- ---------- -----------
Tower Revenue $685 - 710 $810 - 840 $950 - 1000
Tower Gross Profit 405 - 450 510 - 560 620 - 690
Service Gross Profit 50 - 60 60 - 70 65 - 75
Total G&A 79 - 88 83 - 92 88 - 97
EBITDA 385 - 415 480 - 530 595 - 655
Capital Expenditures 510 - 610 325 - 425 260 - 360
Interest Expense 280 - 310 280 - 315 330 - 370
Cash Interest Expense 180 - 200 195 - 220 295 - 325
Based on expected lease-up of .4 - .45 tenants per tower annually
SLIDE 14
EBITDA FORECAST
[The following is a tabular representation of graphical materials]
Actual / Projected Mid-point of EBITDA Guidance (in millions)
1999 2000 2001 2002 2003 2004
Actual Actual Estimated Estimated Estimated Estimated
- ------ ------ --------- --------- --------- ---------
$140 $247 $320 $400 $505 $625
(35% CAGR)
SLIDE 15
CAPITAL EXPENDITURES FORECAST
[The following is a tabular representation of graphical materials]
Projected Midpoint of Capex Guidance (in millions)
2001 2002 2003 2004
Estimated Estimated Estimated Estimated
- ------------ --------- --------- ---------
$750 $ 560 $ 375 $ 310
SLIDE 16
FREE CASH FLOW FORECAST
[The following is a tabular representation of graphical materials]
2001 2002 2003 2004
Estimated Estimated Estimated Estimated
--------- --------- --------- ---------
Free Cash Flow (in millions) ($690) ($350) ($77) $5
Consolidated Net Debt + PIK /
LQA EBITDA 8.0x 7.6x 6.4x 5.4x
SLIDE 17
LIQUIDITY FORECAST
[The following is a tabular representation of graphical materials]
2001 2002 2003 2004
(in millions) Estimated Estimated Estimated Estimated
--------- --------- --------- ---------
Debt Availability $ 580 $ 500 $ 465 $415
Cash $ 850 $ 500 $ 270 $340
------ ------ ----- ----
Total $1,430 $1,000 $ 735 $755
SLIDE 18
CROWN CASTLE INTERNATIONAL CORP.
NYSE: CCI
John P. Kelly - Chief Executive Officer
SLIDE 19
CURRENT STATE OF MIND
* Wireless industry growth slowing due to wireless data delays
* Current coverage is sufficient
* 2.5/3G technologies reduce need for more sites
* Capital constraints may result in carriers waiting
* Capacity problems can be fixed with equipment and without sites
* Spectrum relief & removal of spectrum cap means fewer sites
SLIDE 20
1984: 5-YEAR PROJECTIONS
[The following is a tabular representation of graphical materials]
(Subscribers in Thousands)
1984 1985 1986 1987 1988 1989
------ ---- ---- ---- ----- -----
Forecast (Original Industry Projection) 0 50 100 200 200 200
Actual 0 390 602 1,289 2,148 3,502
(Source: CTIA)
SLIDE 21
1990: 5-YEAR PROJECTIONS
[The following is a tabular representation of graphical materials]
(Subscribers in Millions)
1990 1991 1992 1993 1994 1995
---- ---- ----- ----- ----- -----
Forecast (Original Industry Projection) 5.52 8.00 11.20 15.12 18.44 21.76
Actual 5.28 7.56 11.03 16.01 24.13 33.79
(Source: Kagan World Media)
SLIDE 22
1995 5-YEAR PROJECTIONS
[The following is a tabular representation of graphical materials]
(Subscribers in Millions)
1995 1996 1997 1998 1999 2000
----- ----- ----- ----- ----- -----
Forecast (Original Industry Projection) 34.78 46.45 57.37 66.90 76.54 85.63
Actual 33.79 44.04 55.31 66.21 86.05 109.48
(Source: Kagan World Media)
SLIDE 23
CURRENT REALITY
* Usage growth is sky-rocketing
* Coverage is work in progress
* Technical realities demand more sites to improve performance
- Spectrum constraints in a highly competitive environment
- TDMA/GSM spectral efficiency near maximum potential
- New PCS network build-outs
- In-building penetration coverage
- Additional 2.5/3G packet data network loading
SLIDE 24
CARRIERS' FOCUS
"more minute" campaigns . . .
[Pictures of carrier promotions for high minutes of use rates]
SLIDE 25
USAGE IS SKYROCKETING
- - driven by price elasticity 3-yr MOU CAGR = 60%
[Graph showing rising minutes of use from 1992 through 2000]
[Graph showing rising subscribers from 1991 through 2000]
[Graph showing rising monthly usage per subscriber from 1993 through 2000]
[Graph showing ARPU (revenue per month per subscriber) declining from 1993
through 2000]
[Graph showing price per minute declining from 1993 through 2000]
SLIDE 26
NETWORK COVERAGE ISSUES
Situation
- ---------
* Cellular coverage still incomplete
* PCS coverage (as % of population)... less complete
* PCS frequencies don't propagate as well as cellular
* Lack of coverage is number one driver of churn and adds
* Huge financial incentive to prevent churn
Implication
- -----------
* PCS carriers will aggressively add coverage sites
SLIDE 27
WHY CARRIERS EXPERIENCE CHURN
[The following is a tabular representation of graphical materials]
Reason Choose Provider
- ----------------------
Good Coverage 20%
Promo/Sale 18%
Recommended 8%
Price 8%
Group Plan 5%
Reason Switched Provider
- ------------------------
Good Coverage 18%
Price Plan 17%
Promo/Sale 12%
Customer service 9%
Recommended 5%
(Source: Telephia; n = 50,000 for choose and 9,500 for switched)
SLIDE 28
NYC CASE STUDY
[The following is a description of graphical materials]
Correlating factors to churn
- ----------------------------
Dropped Calls (higher correlation)
Customer Service
Coverage
Network Quality
Blocked Calls (lower correlation)
[Graphic entitled "Net Q Satisfaction vs. Churn: New York" showing increased WSI
Net Q Score leads to lower churn rate. Chart states "Increase relative
saturation by 14% decreases churn by 1.25%"]
* For a 20% market player in NYC with 1.2 million subscribers, reduced churn
equals greater than $65 million in annual cost savings.
* At $350,000 per cell site, carrier could build 185 new cell sites per year,
further reducing churn.
SLIDE 29
FINANCIAL MAGNITUDE OF CHURN
* Impact to industry of a 1.25% reduction in churn: $6.65 billion savings
* $6.65 billion could build 19,000 cell sites per year at $350k per site
(Source Calc: 123.2 million subscribers x 1.25% x 12 months per year x $ 360
per CPGA)
SLIDE 30
RESULT
* Financial realities for carriers make network performance #1 priority
* Significant percentage of carrier expenditure will be based on site
development
SLIDE 31
TROUBLE SPOTS BY TOWER & OPERATOR
[Graphic entitled "Site Analysis, 2 Mile Radius, San Francisco March 2001"]
(Source: Telephia)
SLIDE 32
TOWER SITE DEMAND PROJECTIONS
* What is the future cell site density for 2G likely to be?
* Answers can be proxied by analysis of available metrics:
- Drive test data
- Dropped calls, call quality problems, and no service areas
- Estimate of operators' cell density
- Demographic proxies
- Scanning receivers (customer churn)
- Switch statistics (not available to tower companies)
SLIDE 33
TOWER SITE DEMAND PROJECTIONS
* If we consider 3G high speed data, then cell site density can be projected
based on one key assumption:
Data Rate Required
SLIDE 34
MIGRATION TO 3G
[Graphic showing possible evolution of technologies from 2000 through 2004]
(Source: The Strategis Group)
SLIDE 35
WIRELESS DATA: 3G
Relation to cell site density . . .
[Graphic showing higher bits/HZ technologies require smaller cell sites]
Increases in bits/HZ throughput requires smaller cell sites
SLIDE 36
WIRELESS DATA
* All of today's systems were designed for voice (12.2 KBPS) and will require
additional sites to provide ubiquitous high speed data.
* Three times the number of cell sites will be required, unless:
- Operator elects to accept lower speed data in marginal areas
- Certain technologies can improve radio link quality "enough" to support
lower speed data.
SLIDE 37
CURENT 5-YEAR PROJECTIONS
[The following is a tabular representation of graphical materials]
(Subscribers in Millions)
2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----
Forecast 106 135 162 181 201 221
(Source: CTIA)
SLIDE 38
US STILL RELATIVELY UNTAPPED
[The following is a tabular representation of graphical materials]
Penetration Rate by Country
---------------------------
Austria 83.70%
Italy 80.11%
Sweden 77.62%
Portugal 72.44%
UK 72.38%
Netherlands 71.94%
Switzerland 71.51%
Norway 70.12%
Ireland 69.89%
Spain 66.29%
Germany 64.38%
Australia 59.20%
France 56.71%
US 42.19%
(Source: Global Mobile)
SLIDE 39
CONCLUSION
Three major items impact wireless growth . . .
Quality of service
Cultural acceptance
Spectrum availability