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Crown Castle (CCI) Expands Credit Facility, Extends Maturity

Zacks Equity Research

Crown Castle International Corp. CCI recently enhanced its balance-sheet strength, boosting the company’s senior unsecured credit facility’s total capacity by $750 million to reach a total of $5 billion. Apart from bolstering capacity, the move also enables the company to extend its maturity date.

Specifically, the credit facility consists of a $2.3-billion senior unsecured term loan A facility, and after considering the impact of the increased commitments, a $5-billion revolving credit facility. The extended credit facility matures on Jun 21, 2024. Further, at closing, there was nearly $5 billion available under the revolver. 

Extended maturities of the assumed debt will help improve Crown Castle’s maturity profile and enjoy greater liquidity for day-to-day operations. Also, these efforts are expected to support its growth endeavors. 

The deployment of 5G will drive growth on the company’s tower and small-cell assets as the wireless carriers look to expand and enhance their networks to provide the coverage, capacity and speed needed to support mobile video, the Internet of Things (IoT) and fixed wireless broadband. These positive trends are spurring demand for the company’s communications infrastructure assets.

Furthermore, in a bid to improve and densify their networks, Crown Castle’s customers are leasing its tower and fiber assets, along with adding new cell sites and spectrum. Hence, the company has been focusing on diversifying its business from a tower operator to a fiber provider. Additionally, the company remains on track to achieve its small-cell deployment target for this year.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have rallied 8.3%, outperforming the industry’s growth of 7.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, consolidation in the wireless industry may reduce demand for cell-tower deployments and therefore, might have an adverse impact on Crown Castle’s top line. In fact, the anticipated merger of T-Mobile and Sprint S is likely to result in reduction of revenues and cash flows related to duplicate or overlapping parts of the networks of both companies.

In addition, Verizon VZ, AT&T T, Sprint, and T-Mobile accounted for majority of the company’s total revenues. Hence, any loss of any of these customers or consolidation among them will significantly affect the company’s revenues.

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