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To: djane who wrote (4552)	5/12/1999 2:05:00 AM
From: djane	Read Replies (2) \| Respond to of 29987

IBD. CROWN CASTLE Controlling Towers in Booming Wireless Market Excerpt: "The range of a digital tower, however, is about half that of a traditional analog tower." Date: 5/12/99 Author: Thom Schoenborn Mobile phone companies are getting out of the tower business fast. After all, who wants to deal with the zoning headaches and specialized labor involved in building and operating transmission towers? Crown Castle International Corp. does. The company buys, operates and leases antenna space on towers for wireless telecom, radio and TV signals. The tower operations business is only about 18 months old. For years, wireless phone companies labored under the assumption that they had to run their own broadcast and reception towers. And by refusing to allow other companies to share space on their towers, wireless providers erected barriers to that market. While new entrants rushed to meet zoning laws, find contractors and set up operations, existing wireless providers could continue to boost their subscribers' bases. Now, the country is fairly well populated with towers. Most metro-area residents can choose from several mobile phone carriers. Mobile phone carriers want to focus on the profitability and quality of their services. That means hiring experts like Crown Castle to build more towers to lower the number of dropped calls. Wireless phone usage is growing like wildfire. The number of PCS and ESMR subscribers is expected to climb roughly 105% a year through 2001. What's more, the switch to shorter-range digital signals from analog signals means the U.S. will need another 75,000 towers by 2003 to meet demand, says a report by the Personal Communications Industry Association. That's a $15 billion opportunity. The wireless industry also wants to boost the value of its own towers by putting other carriers' antennas on them. But the industry seems to have decided that's a task that's best to outsource. So many mobile phone carriers are selling their tower assets to Crown Castle, which then leases space on them to other companies. This new way of doing business could boost the number of wireless providers, because it removes a key barrier to entry - finding antenna space. Also, companies that already own some of their own towers can install more antennas up on competing towers rather than building new towers. Crown Castle has aggressively expanded its tower presence in the past few months. At the start of December, it formed a joint venture with Bell Atlantic to control 1,500 of the telecom giant's wireless communications towers. It also landed a license to build all of Bell Atlantic's towers for the next five years. In mid-March, Crown Castle agreed to pay $275 million to lease 650 tower sites from Powertel Inc. for 10 years. Plus, it signed a 10-year pact to operate 821 wireless communications towers owned by One 2 One, the U.K. unit of a joint venture between Cable & Wireless PLC and MediaOne International. BellSouth also agreed that month to sell its 1,850 towers to Crown Castle for $610 million. BellSouth has contracted Crown Castle to build 500 new towers over the next five years. Other wireless telecom providers may soon sell their tower assets, says analyst Kip Rupp of Sterne, Agee & Leach. Two of the big fish in the wireless market are AT&T and Sprint. Both are organized regionally in the U.S., so any deals may be piecemeal. In the first quarter, Crown Castle lost 24 cents a share, vs. a 79-cent loss a year before. Revenue jumped 365% to $55.1 million. Analysts expect the company's losses to narrow from 80 cents a share in 1998 to 42 cents this year and 36 cents in 2000, First Call says. The company is expected to sell 27.7 million shares in a secondary offering this week. Crown Castle trades as TWRS near 18. Tower building should really sizzle in the next five years, Rupp says. Ever more carriers are using digital signals, which work at a higher frequency and contain more information. The range of a digital tower, however, is about half that of a traditional analog tower. The tower service industry is ''very fragmented,'' Rupp said. Key players include American Tower, which focuses on the East Coast, California and Texas. Nearly all of Pinnacle Holdings' tower assets are in the Southeast. Spectrasite recently won a deal for the nation's Nextel towers. Along with its heavy presence in the U.S., Crown Castle has a 10-year pact to run the British Broadcasting Corp.'s towers in the U.K. The deal with One 2 One doubled the number of towers the company has in that country. The financial aspects of owning a tower are attractive, Rupp says in Buyside magazine. Each additional antenna brings incremental revenue with little or no added cost. And there is little customer churn. Once an antenna goes up, it likely won't come down. That's reflected in the long-term lease deals signed by the companies. (C) Copyright 1999 Investors Business Daily, Inc. Metadata: TWRS E/IBD E/SN1 E/NAM E/NAM1