Crown Castle Discloses SEC Investigation
Crown Castle received a subpoena from the SEC in September for documents from 2015 through the present, primarily tied to the company's “long-standing capitalization and expense policies for tenant upgrades and installations in its services business,” it said in an…
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
SEC filing Wednesday. Crown Castle said it’s cooperating with the investigation. “Services represent about 10 percent of the company’s gross margin, fairly modest in absolute terms, but much larger than at peers,” MoffettNathanson’s Nick Del Deo told investors Thursday. “On its earnings call this morning, the company did not meaningfully expand upon the commentary it provided in its 8-K, and understandably so,” he said: “We can’t say for sure, but several clues suggest that Crown Castle is capitalizing certain services costs to PP&E [property, plant and equipment] and depreciating them over time. This would explain Crown Castle’s substantially higher services gross margin vs. other players that perform similar work.” Crown Castle said site rental revenue grew 6.4 percent in Q3, or $76 million, from the year earlier period. Net income was $272 million vs. $164 million during the same period last year. The company said small-cell deployments are expected to be steady through 2020. “We are experiencing the highest level of tower leasing activity in more than a decade, and we expect to generate a similar level of new leasing activity from towers in 2020 as our customers deploy additional cell sites and spectrum in response to the rapid growth in mobile data traffic,” said CEO Jay Brown. The company “expects a similar level of activity for BOTH small cells and macro in 2020, although the timeframe to get small cell deployments deployed continues to be lengthy (up to 36 months),” wrote Wells Fargo’s Jennifer Fritzsche: “Checks would suggest this is NOT an issue with demand but rather the permitting process.”