Seeks New Executive and Board Leadership
Calls for Operational and Strategic Review of Fiber Business
Discloses $2 Billion Position
Full Letter and Presentation Available at RestoringTheCastle.com
WEST PALM BEACH, Fla., Nov. 27, 2023 /PRNewswire/ -- Elliott Investment Management L.P. ("Elliott"), which manages funds that collectively have an investment of approximately $2 billion in Crown Castle Inc. ("Crown Castle" or the "Company"), today released a letter and presentation detailing its perspectives on the Company's history of underperformance and calling for significant changes.
Elliott's 2023 "Restoring the Castle" campaign follows its 2020 "Reclaiming the Crown" campaign, which called for enhanced governance and fiber-strategy improvements at Crown Castle. In its letter today, Elliott noted that the Company "disregarded our data-driven analysis, and our recommended changes were neither made nor taken seriously." As a result, Crown Castle has continued to underperform its peers over all time periods in the last 15 years; has underperformed the S&P 500 index over one-, three- and five-year periods; and has seen its stock price recently hit a six-year low.
In its letter, Elliott wrote, "Crown Castle suffers from a profound lack of oversight by the Board, which has contributed to its irresponsible stewardship and flawed financial policy. The Company's strategy, led by CEO Jay Brown since 2016, has been a failure, as demonstrated by the breathtaking magnitude of its underperformance." Elliott added that "During the tenure of the current executive team, Crown Castle has underperformed its direct peers by an average of 85% in total return, which translates into nearly $26 billion of unfulfilled shareholder value."
Elliott outlined the following steps it believes are necessary to set the Company on the right course:
In its letter, Elliott wrote that while it prefers to pursue a constructive engagement with the Company, as it attempted in 2020, Elliott is prepared and intends to make its case directly to shareholders with a majority slate of alternative directors at the Company's annual meeting of shareholders in May 2024.
Elliott's letter and presentation can be downloaded at RestoringTheCastle.com.
The full text of the letter follows:
November 27, 2023
Crown Castle Inc.
8020 Katy Freeway
Houston, TX 77024
Dear Members of the Board:
We are writing to you on behalf of Elliott Associates, L.P. and Elliott International, L.P. (together, "Elliott" or "we"). We have an investment of approximately $2 billion in Crown Castle Inc. (the "Company" or "Crown Castle"), making us one of the largest investors in the Company.
It has been more than three years since our prior engagement with Crown Castle, during which we highlighted that the Company's fiber strategy was "detracting from shareholder returns and would continue to do so unless significant changes were made." Unfortunately for shareholders, the Company disregarded our data-driven analysis, and our recommended changes were neither made nor taken seriously. Instead, this management team has remained committed to its value-destructive strategy.
Today, we are investing in Crown Castle during a period of significant challenge. The Company's stock price is near six-year lows, and the underperformance we highlighted in 2020 has only worsened. As in 2020, Crown Castle has underperformed its direct peers in every time period over the last 15 years despite owning similar, high-quality tower assets. After spending $19 billion on its fiber strategy, performance remains poor and the Company's fiber investments now generate yields that are not only below its cost of capital, but astoundingly, also below the risk-free rate of return. Because of this operational underperformance and flawed capital allocation, the investment community has been forced to question the stability of Crown Castle's dividend and whether the Company will need to raise equity at a historically cheap valuation.
Put simply, we believe change is required at Crown Castle, and we are committed to doing our part to ensure that shareholders get the change they deserve. Crown Castle suffers from a profound lack of oversight by the Board, which has contributed to its irresponsible stewardship and flawed financial policy. The Company's strategy, led by CEO Jay Brown since 2016, has been a failure, as demonstrated by the breathtaking magnitude of its underperformance. During the tenure of the current executive team, Crown Castle has underperformed its direct peers by an average of 85% in total return, which translates into nearly $26 billion of unfulfilled shareholder value. We believe shareholders deserve better.
Accompanying this letter, we are also sharing a presentation titled "Restoring the Castle," which outlines our detailed analysis of the situation today and our recommended path forward. While we prefer to pursue a constructive engagement with the Company (as we attempted in 2020), we are prepared and intend to make our case directly to shareholders with a majority slate of alternative directors at the Company's 2024 annual meeting of shareholders. Our plan includes the following key components:
We have long admired Crown Castle and the strategic value of both its tower and fiber businesses. However, it is past time for new leaders who can serve as trusted stewards for the Company's shareholders. While we hope to achieve this outcome by working constructively with the current Board, we are highly confident in our conclusions and believe our fellow investors will support these views.
We look forward to meeting to discuss our perspectives and align on a path forward.
Best regards,
Jesse Cohn
Managing Partner
Jason Genrich
Senior Portfolio Manager
About Elliott
Elliott Investment Management L.P. (together with its affiliates, "Elliott") manages approximately $59.2 billion of assets as of June 30, 2023. Founded in 1977, it is one of the oldest funds under continuous management. The Elliott funds' investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm.
Media Contact:
Stephen Spruiell
Elliott Investment Management L.P.
(212) 478-2017
[email protected]
SOURCE Elliott Investment Management L.P.
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