Fitch Ratings affirmed wireless cell tower owner and operator Crown Castle International Corp.'s long-term issuer default rating and senior unsecured notes and credit facilities ratings at BBB, with a stable outlook.
The ratings and affirmation are based on an expectation that the company will maintain its net leverage, or net debt to recurring operating EBITDA ratio, in the low 5x range going forward and EBITDA margins will remain relatively stable in the high-50% range over the next two to three years. Fitch also assumes Crown will issue equity when needed, and the company's dividends will grow in the 7% to 8% range.
The ratings reflect Crown's strong recurring cash flows from its leasing operations, solid EBITDA margins and its strong tower portfolio providing stability, as well as its lower operating risk through a focus on U.S. markets.
Fitch believes that current levels of investment, driven by small-cell networks, distributed antenna system investments and fiber acquisitions, will facilitate future EBITDA growth and higher market share.
Financially, Crown has a strong liquidity position with meaningful cash generation and balance sheet cash, an available revolving credit facility, and a favorable debt maturity schedule.
The ratings agency said Crown's free cash flow is likely to be negative during the forecast period, and is affected by the company's real estate investment trust status, which requires distribution of at least 90% of its taxable income after the use of any net operating losses.