Market capitalization at the start of 2015.

CCI – ~26.15B

ATC – ~39.14B

Market capitalization today.

CCI – ~50.96B

ATC – ~97.13B

Given recent leadership changes at American Tower and Crown Castle, I thought it would be an interesting exercise to consider a simple, yet telling, market capitalization comparative look between the top 2 publicly traded tower operators over the last ~9 years.  This straightforward metric tells us a lot about the successful, or not so successful capital allocation strategy of each company.  Starting at a point where both focused on growing high margin tower businesses and before Crown began heavily investing in fiber.  Over the timeframes above, ATC has grown market cap by 148% while Crown has by 95%.  It’s a telling sign that their capital allocation into fiber has not given them the returns they or their shareholders expect.  Doubling down on growing that capital intensive business next year didn’t bode well and signaled enough is enough. 

It makes you wonder how Crown’s market cap would look without a fiber business.  Should they have gone the boring route and scooped up as many smaller tower portfolios over the last 9 years?  Crown has invested $19B into fiber.  It’s crazy to envision what $19B invested in US towers would look like.  One thing for sure is they’d be the undisputed leader in tower count with 55,000+ towers. 

I encourage everyone interested in telecom to read Elliott Management’s most recent “Restoring the Castle” presentation.  The presentation highlights how Crown’s fiber business has performed, and your immediate takeaway is Crown must think about charting a different path. 

All in all, Crown is an absolute amazing company and I believe in them long term.  Sometimes change is good, especially when you have the same leader running the ship for 25 years.  While the next year or so will be painful, I’m positive once a new strategy is developed, the right people will be in place to execute.