Activist investor Elliott Management took aim at infrastructure company Crown Castle, arguing it had delivered disappointing returns to shareholders and urging a strategy overhaul to compete better with its rivals.
Crown Castle becomes the latest company to fall into the crosshairs of Elliott Management, which engaged in high profile battles with a number of major companies over strategy, including operators AT&T and Telecom Italia, and social media company Twitter.
The investor, which holds an economic interest of $1 billion in Crown Castle, released a letter and a presentation “outlining a path to greater strategic focus and value appreciation”, after deeming the company to have underperformed its potential for more than a decade.
Elliott Management argued the lack of performance was directly attributed to Crown Castle’s focus on fibre, “which has yielded disappointing returns despite $16 billion of investment”, including $11.2 billion on acquisitions.
The investor also pointed to stronger returns and performance by rivals American Tower and SBA, which it said had remained exclusively focused on tower ownership.
“While we admire Crown Castle’s investments in the wireless tower industry, we believe that the company’s expansion away from its core and into fibre infrastructure has detracted from shareholder returns and will continue to detract…unless significant changes are made”, Elliott Management wrote.
Crown Castle’s 2019 annual report showed it owned, operated or leased 40,000 wireless towers and 80,000 route miles of fibre.
Among its recommendations to improve the situation, Elliott Management wants Crown Castle to focus on high-value fibre opportunities rather than pursuing a spin-off, and recommended a board overhaul.
It continued to state Crown Castle’s wireless infrastructure in the US was “highly valuable and well positioned to benefit from the upcoming wave of 5G deployment”.
Crown Castle issued its own statement in response, defending its performance and highlighting a “proven record of creating significant shareholder value”.Subscribe to our daily newsletter Back