Crown Castle Inc (CCI) 2006 Q4 法說會逐字稿

Good morning ladies and gentlemen, and thank you for standing by. Welcome to the Crown Castle fourth quarter and full year 2006 results conference call. During today's presentation, all parties will be on a listen-only mode mowed. [OPERATOR INSTRUCTIONS] This conference is being recorded today, Friday, February 9, 2007.

I would like to turn the conference over to Jay Brown, Crown Castle's Treasurer. Please go ahead sir.

Morning everyone and thank you for joining us as we review our fourth quarter and full year 2006 results. If you have not already done so, I would encourage you to go to our website under the Investor section at CrownCastle.com, and download the presentation that we posted last night. We will be discussing this presentation during the call.

With me on the call this morning are John Kelly, Crown Castle's Chief Executive Officer, and Ben Moreland, Crown Castle's Chief Financial Officer. This conference call will contain forward-looking statements and information based on management's current expectations. Although the Company be believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurances that such expectations will prove to have been correct.

Such forward-looking statements are subject to certain risks, uncertainties and assumptions. Information about the potential risk factors that could affect results are available in the press release and in the Risk Factor sections of the Company's filings with the SEC. Should one or more or other of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected.

In addition, today's call will include discussions of certain non-GAAP financial measures, including adjusted EBITDA, recurring cash flow, and recurring cash flow per share. Tables reconciling these non-GAAP financial measures are available again under the Investor section of our website. Ben.

Thanks Jay and good morning everyone. We have changed the format of this call up somewhat this time just to kick off the year, and obviously with the acquisition of Global Signal recently closed. Thought it would be helpful to review with you really the new company as it looks today, and the footprint of the assets, and our belief and thoughts around the year. So I am going to start off with reviewing some of the fourth quarter and full year results for the legacy Crown Castle company, and then we will move very quickly into the rest of this presentation that John Kelly and I will present.

So just to start off on page 4, site rental revenue for the fourth quarter was $186.7 million, up 20% from the fourth quarter of last year. We had a very good quarter I might add, very excited with results, and even though you can't see all the results for Global Signal, as they are as yet unaudited, they had a record leasing quarter as well. We know some of you are wondering how their outcome was, and it was a record leasing quarter for them in the fourth quarter, despite all the integration and distraction of the merger pending.

Full year site rental revenue for the Company was $696.7 million, up 16.7% compared with 2005. Site rental gross margin was $130.1 million, or up 23.3% compared to the fourth quarter of 2005. Full year 2006 site rental gross margin $484 million, up 21.1% compared with 2005.

Adjusted EBITDA growth, $116.5 million in the fourth quarter, up almost 29% from fourth quarter of 2005. And for the full year $427.4 million, 27.6% increase over 2005. All these numbers well above our long-term expectations.

Recurring cash flow growth, again recurring cash flow being adjusted EBITDA less interest expense and less sustaining CapEx. In our Company for the fourth quarter was $67.5 million, up 21.7% from the fourth quarter of 2005. For the the full year it was $255.8 million, up 36.5% for full year 2005.

Our most important measure we believe which brings it down really to the relative measure that matters, recurring cash flow per share growth for the fourth quarter was $0.34 per share, up 29.5% from last year. For the full year $1.23 per share, up 43.5%, from $0.86 last year, and I would add as we have talked about over the last several quarters, that number is even after the dilutive effect of borrowing throughout the year in 2006 for share repurchases, so quite pleased with that result.

With that, some of the formalities dispensed with on the quarter and the year, I am going to turn the call over to John, to start with walking you through this presentation.

Thanks Ben. Let me also thank all of you good morning, thank you for joining us this morning, as we are reviewing Crown Castle's fourth quarter 2006 results and our view of the year ahead. Ben just reviewed our very strong results in the fourth quarter 2006. I continue to be very pleased with how this Company performs, and in my view, clear demonstration of the fact that this Company knows how to execute.

Now clearly with the closing of the acquisition of Global Signal on January 12th of this year, it makes it a little more difficult for you to compare our 2007 outlook to our 2006 actual results. That is why as Ben indicated, we thought it would be helpful to review with you this morning how we look at the industry, and our place in the industry.

And it all starts with our continued belief that Crown Castle has very attractive business fundamentals. If you turn to page 11, the business continues to be characterized by high incremental margins on new revenue, a minimal requirement for sustaining capital expenditures, from 23 million proforma the acquisition of Global Signal is expected as annual sustaining capital expenditures.

The majority of Crown Castle's outstanding debt is rated investment grade, and has a fixed rate coupon. We have indicated before, and continue to believe that our long-term goal of 20 to 25% annual growth and recurring cash flow per share, is in fact sustainable in the years ahead. And we continue to see potential to achieve additional growth and value from complimentary investments. Clearly believing we have attractive business fundamentals is one thing.

If you turn to the next slide you will see our results demonstrate the attractiveness as well. These results on page 12 are for the last nine quarters, and they are proforma the acquisition of Global Signal. And I would simply suggest the one takeaway from this slide is that this clearly demonstrates in our view the attractiveness of this business, when you look at the consistent growth in site rental revenue, and the consistent growth in site rental gross margin, and as Ben did point out, notwithstanding the fact that we are not able to talk about Global fourth quarter per se, they did have a record on leasing, and that's something that we find very helpful, as we look forward into the new year as well.

So turning to the next page, 13, what is our business now that we have required Global Signal assets. It's still predominantly U.S. with 96% of proforma Q4 2006 revenue coming from the U.S., and 4% from our solid business in Australia.

Our business is primarily leasing tower space under long-term leases. It's recurring in nature, and produces approximately 93% of the revenue, 96% of the gross margin, and nearly a 100% of the cash flow. Approximately 80% of the recurring revenue is from investment grade rated tenants, which we will talk about here in a moment. We do offer a complimentary set of services to our customers that facilitates easier co-location on our towers. And the Services business that we have exists to help our customers in leasing space on our towers, and what we are finding is that that need absolutely exists in the marketplace, and the reason why we have continued to be advocates of this particular business.

Turning to the next page which is the tower map, and this is proforma the acquisition and all of our 22,000 U.S. towers plotted on this map, as you look at it, this U.S. tower footprint, and listen to the rest of our presentation, I would have you consider one thing. We believe that if you want to maximize your exposure to U.S. wireless growth, we are the tower company to own for two reasons.

We have the best footprint in the best locations, and as you will learn later, as Ben reviews some of the other attributes of our balance sheet, we have we believe a very efficient capital structure that turns revenue growth into growth in recurring cash flow per share at a higher rate than any other tower company.

Turning to page 15, our tower footprint is the best in the industry we believe, with 72% of the towers in the Top 100 BTA's. Top 100 BTA's by the way represent 74% of the U.S. population. That is where wireless companies, current and new, deploy a higher proportion of their CapEx, because that is where the people and subscribers live.

We in fact have as many towers in the Top 50 markets, as our next largest competitor has in the Top 100 markets. And we have over 3,100 more towers in the Top 100 BTA's than our nearest competitor. With 66% anchored by Verizon, AT&T, the former Cingular, or Sprint. This is all very important, because not only are these towers in the best locations by virtue of the fact that they are in the Top 50 and Top 100 BTA's, but they were also towers that were designed for wireless services, which is clearly what is being deployed today.

Turn to the next page, 16, we are now the #1 tower company in the U.S. based on the number of towers, with a little over 22,000 wireless towers. Our 2007 outlook, as we have distributed in the press release and then we will talk to a little later, is 1.3 billion in site rental revenue. 76% of that is coming from the Big 4 wireless carriers.

And if you flip to the next page 17, what you will see is that we have among our peers in this industry the highest exposure the leading U.S. wireless carriers. This chart depicts the Big 4 wireless carriers site rental revenue on a per tower basis, with Crown Castle approaching $40,000 per tower, 76% of the site rental revenue as previously indicated, much greater than the other tower companies. In addition to that it's diversified between those Big 4 wireless carriers, 88% of our revenue comes from wireless telephony, and 80% of our revenue is investment grade.

Turning to page 18, we see significant opportunity for growth in the year and years ahead. Carriers are absolutely focused on improving network quality, those wireless carriers that have already released the results for the year, have all mentioned it in their conference calls with you. Network quality correlates directly to customer churn. This is something that has been demonstrated over the years, and continues to be proven with some of the highest quality networks realizing the lowest churn. It translates into better economics from a carrier perspective if they continue to focus on network quality, and that's the reason why they talk to you about it on their conference calls.

So their continued focus on improving network quality certainly is a great macro dynamic for us in this industry. Couple that with subscriber growth, which continues to be the case in the U.S. market, and then even more importantly the increasing usage, voice minutes of use, and now the ever increasing data usage on these networks.

In addition to that, more and more American consumers are replacing their wireline phones with wireless exclusively, and then you couple that with the next generation network builds, the AWS auctions that concluded at the end of last year, and the number of carriers which we will talk about focused on deploying in that particular spectrum band, Sprint's 4G initiative, WiMax builds that are going on around the country, these are all very good drivers of future site demand, and our view is that we are best positioned to capture that demand, with as I have indicated before, the most towers in the Top 50 and Top 100 BTA's, and a portfolio comprised primarily of towers acquired from Verizon, AT&T, Sprint, and T-mobile.

Very importantly, we also have very strong relationships with all the aforementioned wireless carriers, as well as MetroPCS, Leap, ClearWire, and other emerging carriers. Something we do on a quarterly basis and take very, very seriously is a customer satisfaction survey. We measure a number of different attributes, we have talked about this at prior analyst days. We do that on a quarterly basis, so that we are continually monitoring how we're doing in areas such as co-location, speed to colocate, and a number of other attributes, we measure ourselves against both our prior results, and we measure ourselves against our competition.

We take it very seriously, I review the results personally with all of the various different affected areas of our Company, and I'm pleased to say over the years, we have emerged as the company, the tower company that is viewed by our customers as the #1 tower company to do business with. That is clearly in our view important because it is not just having the most towers in the United States that we think is important.

It's insuring we have a relationship with our customers that helps, as they are otherwise working very hard to insure that they are building the highest quality wireless networks around the globe. This in our view provides us with significant opportunity for increased lease-up on any acquired towers, and something I would add, we will talk about here in a couple slides, leveraging our proprietary leasing demand tools, and the industry leading customer service.

If you turn to page 19, you know, this is a Goldman Sachs research estimate, and others have otherwise provided similar kinds of estimates for the years ahead, as I indicated before, network quality and wireless customer churn correlate, and the ability to offer new advanced services, absolutely correlates to the expenditure on the network, building greater density, augmenting existing sites for these new services.

That's the reason why you see that the wireless capital expenditures from a U.S. market perspective in the years ahead, are pretty much flat at around $27 billion or $28 billion a year, and that is translating into about 15,000 sites or so per year, that are otherwise getting built out. That is all to satisfy the growth in MOU's, and the addition of data services.

In addition the decreasing equipment cost has been allowing for more deployed sites, so you could find in subsequent years that additional sites are able to be deployed bringing the densities to the markets required for a high speed data services, as the actual cost of the electronics drops, which allows the capital expenditures to remain relatively level and flat, while yet still deploying even more sites.

Turning to page 20, you know, our U.S. market is a very large population. Relatively low wireless penetration, despite the fact that we are now in the 70% range as I've indicated before on prior calls, there are many European countries that are still over a 100%, where customers carry two devices.

I think you will see more of that, and I think you do in fact see some of that among those of you that are on this call, where people will have a phone that is otherwise used predominantly for voice and other lighter data services, and then carry around a Blackberry device or something to that effect for e-mail services. That's a trend that has been experienced in other countries and that's what would drive more than 100% penetration of the population.

From a U.S. perspective there is still relatively low wireless penetration, and that there is still room to grow and adding more subscribers, and clearly as has been exhibited over the prior years, high expected growth in the wireless network minutes of use.

Turning to page 21, most recently the FTC conducted Auction 66 the AWS spectrum auction, concluded at the end of last year, some significant dollars were in fact invested in this. This chart depicts the various different wireless carriers that otherwise did successfully acquire new spectrum at auction, and what they invested in that acquisition. And some of what their various different strategies are.

Some of the emerging carriers, clearly the Metros and the Leap Wireless' are very focused on footprint expansions. They acquire the spectrum to provide them the ability to start serving new markets. Other carriers otherwise acquired spectrum to enhance their broadband strategies, allow them the additional spectrum so that they can deploy the new 3G services, without absolutely crushing their ability to offer 2G, 2.5G voice services. Then you have some carriers that otherwise bought spectrum to enhance their 3G platforms, for capacity and additional coverage in some markets.

All of that translates into new leasing opportunities for Crown Castle as the year progresses. As we have indicated on prior calls, and as is otherwise depicted in our 2007 outlook, yet we believe that this is going to be a very important driver of new leasing, but there is a lot of the planning that's going on as we sit here today. So it is not necessarily translating into leasing on the current quarter. It's going to be something that otherwise translates into new revenue producing leasing we believe later in this year, as we conclude the planning stages, which we are engaged in with these various different carriers, and actually translated into leases that are actually going on the towers at the later part of this year.

But this dynamic and the very significant investment that was made in this spectrum, clearly is a strong driver of new leasing opportunity going forward, because these investments don't pay off unless somebody actually has deployed equipment, that is translating into revenue producing services.

We turn the page to 22, I would like to just remind everybody again of what is now patented, exclusive tool that Crown Castle uses, CCI sites. It is a web-based tool that we have spent quite a bit of time, continue to do such, that stores all the key information on towers, much, much more than normal real estate information which any tower company should, and more than likely does have, things about tenant leases, ground leases, and regulatory information.

Our advantage lies in the fact that it also includes through continuing evergreen drive testing of our tower footprint, the RF signal strength by carrier, in addition to demographic data, site readiness, competitive structure, so that we are in effect able to understand much more about the leasing prospects, both of our own portfolio, as well as about those portfolios that we look to acquire.

And as I mentioned on the call when we announced the Global Signal acquisition, this is something we did in fact conduct for the Global Signal assets. We do it on every acquisition that we have ever done. We look at those results we compare them back to what our results would be on a standalone basis, and we are asking ourselves is it in fact complimentary to our customers and to our shareholders, and we do it in a very empirical way with this proprietary tool. And that is what drives us to make the investment decisions that we have been making.

If you turn to page 23, it clearly was what also drove us to some very specific decisions around our doubling of our tower count, just about. Tower count increased some 83% with the acquisition of Global Signal, just about doubling our leasing prospects. But, and this is a very important consideration, notwithstanding the fact that the tower count increased by 83%, our share count has increased just 40%, because as you know, at close we otherwise incorporated a cash consideration component of $550 million.

And by virtue of our successful securitization in the fall of last year, we were in a position to also subsequently effect the purchase of $600 million, of what was to be the secondary block by some selling shareholders of Global Signal, thus reducing the overall increase in share count, from what the company was pre-Global Signal, to just up 40% notwithstanding the fact that we increased the tower count some 83%, and doubled our leasing prospects. So that is a macro view of the industry, and how we sit within the industry.

And what I would like to do is turn it over to Ben right now, walk you through our capital allocation strategy, and structure of the Company's balance sheet.

Thanks John. As you can tell, we considered these decisions very carefully and deliberately. That is on the asset side, as well as on the capital structure side. Over the last four years, we have been making very significant investments in our Company. We consider these investments, purchases of our own Company, and since 2003 have spent over $2 billion, to reduce the share count by approximately 84 million shares.

This is consistent with our belief the long-term growth prospects for our business, that are grounded in the process of evaluating future leasing opportunities through the drive testing work that John just described around our CCI sites initiative. It is with this information that we then would be comfortable investing some 4.2 times our cumulative recurring cash flow that we have generated since 2003 in our own shares, i.e., in our own towers. You have heard me say that many times, we consider this an investment in towers, just as we would an acquisition, as we made with Global Signal.

The average price over that period was $24.32, and most recently continued to make those very strong investments in the two large purchases we made around the Global Signal share closing, the $550 million in cash, and then the block trade here of late, $600 million in cash. We have created this capacity through continuing to grow EBITDA, and releveraging that EBITDA at approximately 7 times or so, with the combined capacity that that creates.

I would also add that during this period, not shown on this page, we have added, made investments of approximately $450 million in tower acquisitions outside of the Global Signal transaction. We believe in this business. We have made a significant bet with significant investments, that are designed to maximize recurring cash flow per share over the long term, very consistent with what we have talked about before.

Moving on to page 26, fundamentally value gets added to this business by capturing future leasing demands. Everybody understands that. We believe we are best positioned to capture that future leasing demand as a Company, and in part because of the asset quality and footprint John described, but also in part by the way we have capitalized the business, as demonstrated on this page.

In this example, we layout the impact of adding one additional tenant per tower, or $18,000 of revenue per tower, to each of the three major tower companies. In our case with only 12,000 shares outstanding per tower, one additional tenant per tower adds approximately $1.50 per share of recurring cash flow, more than doubling our 2007 outlook of $1.31 per share. This capital structure, the way we have leveraged the business efficiently.

Similarly the incremental returns added to the equity is a function of adding this one additional tenant per tower is significantly higher than our peers at approximately 4.4%. We have accomplished this by optimizing the capital structure as I mentioned. We have taken full advantage of the opportunity to appropriately leverage our Company, by employing low cost securitization financing in our capital structure. As a result, today 81% of debt on our balance sheet is rated investment grade.

Importantly at an all end cost of 5.9% including the the deferred financing costs, 5.5% on a weighted average coupon. Most of that debt, approximately 90% of our debt is fixed rate. 60% of our debt is not subject to interest rate fluctuations until January, 2015, and 30% is out to at least 2012. We think this is very important, and a prudent way to run a company, to minimize the fluctuations on the interest expense, particularly if you're going to run in a leveraged environment.

We believe we have effectively utilized the balance sheet to maximize the growth opportunities, and that will remain unchanged. You should expect we will continue to behave that way. This capital structure results in approximately 2 times EBITDA to interest coverage, with the largely fixed rate debt as I mentioned. This we believe is a very comfortable range, and provides the opportunity to gain the benefit of the enhanced returns and growth rates, to the recurring cash flow per share that reasonable leverage provides.

Moving on to page 28, just the capitalization summary in some detail, again with the Global Signal balance sheet now on board going forward into 2007, I would highlight just the coupons on the securitization debt. I mentioned the overall weighted average coupon is about 5.5%, and 2 times interest coverage at about 8.5 times net debt to annualized EBITDA.

I will mention we are at self imposed limits on EBITDA and interest coverage. We do view 2 times as sort of a bright line in our environment. We do that out of conservatism, not out of any empirical data. Obviously have very long-term contracts on the revenue side, and with fixed rate interest exposure are very comfortable at that level. But you should expect over time as EBITDA grows, we will likely deleverage over time. But felt it was very important to take advantage of these two opportunities here of late around the Global Signal acquisition, to not issue shares at this level.

Moving on to page 29, let's talk about recurring cash flow per share. All of the work that we do on the operating and financing sides of the business, are focused on growing long-term recurring cash flow per share. We do that by growing revenue and reducing interest coupons and reinvesting appropriately. Since 2001 site rental revenues have increased 98% on almost largely the very same tower footprint. These numbers are actually before Global Signal, this would be 2006 and backward. Site rental gross margin is up 140%, and the average interest coupon is down 5.5% as I mentioned, from 9% in 2001.

It is the combination of these factors and the ability to reinvest that make us continue to believe that we can achieve our long-term growth rate, recurring cash flow per share of 20 to 25%. When you make the kind of investments we have made in the short term, we suffer from dilution in this measure, which we can talk about on the next page. In 2006 we grew 43%, you can see from the guidance it is much smaller than that in 2007, and there's a reason for that. A very deliberate reason.

Looking at page 30, as reported the $1.23 recurring cash flow per share for 2006 the operational growth from our expected lease-up in the business, would have driven $0.31 of growth, or about 25% growth, the top end of our expectations. Very deliberate actions around borrowing a $1.15 billion, to shrink the share count by approximately 33 million shares, again that's the closing 550 million and the secondary trade we just did, with will have a short-term dilutive impact of approximately $0.23 per share on this measure, resulting in the $1.31 that is in our guidance today.

We remain committed to decisions that management believes will maximize the long-term recurring cash flow per share. Near term dilution in favor of enhanced long-term growth rates is fine with us. Our decisions are based upon our long-term outlook for site rental revenue and adjusted EBITDA growth, we get to that confidence as John was describing earlier, around the work we do evaluating our own assets. Said another way, our belief that we can continue to grow recurring cash flow per share 20 to 25% per year over the long-term, is clearly long-term accretive, when compared to interest expense on the incremental debt.

Moving on to page 31, what drives our confidence in the long-term recurring cash flow per share, well really, it's three components. It's obviously the base from which we start, the $1.23 we delivered in 2006. It's the measured demand that we see around the sites we own, that's both the Crown Castle sites and the legacy Global Signal sites, all as one large portfolio which we seek to optimize.

That measured demand today suggests about 1.25 tenants per tower of measured need. Just on the existing voice networks that are out there today. If you translated that into revenue, and then on into recurring cash flow per share, that would add $1.70 of recurring cash flow per share to our Company. Not suggesting the timeframe that all of that need will be ultimately made or met, but that's just the math of how it works out, close to $3.00 a share, if you add it to the current base we are on today.

What we don't measure, we don't measure and can't measure really the anticipated future demand from additional minutes of use growth, subscriber growth, data usage growth, wireline replacement, all of the things that we get very excited about in the business that we are in, helping our customers accomplish these things, we really don't measure, so that's additive.

Then you should also suspect we will continue to make appropriate investments with the free cash flow, and the leverage capacity that the Company generates. That will take the form likely in the future just as it has in the past, tower acquisitions, tower builds, stock repurchases, and land purchases under our long-term ground leases. All of that adds up to what we believe is future recurring cash flow per share, and we are quite excited about the prospects.

Turning briefly to our 2007 outlook, just wanted to make a couple of comments. We realize 2006, particularly around the Global Signal numbers for the fourth quarter, are not clear, and as yet unaudited.

I will suggest that you to the site rental revenue growth in the full year 2007, and remember because we closed on January 12th, that stub period impacts revenue about $15 million. So if you did a full year-over-year comparison, site rental revenue would be up about 8% year-over-year. If you do that same comparison at the EBITDA line, again adding about $10 million to this outlook because of the stub period, you would get to approximately a 15% year-over-year EBITDA growth, or approximately $100 million when you add the stub. For the first quarter where this all gets impacted, the 15 million on the revenue, and the 10 million on the EBITDA, you can see that adjusted EBITDA 1.62, 1.67, would on a normalized basis for the full quarter would have been approximately 10 million higher in the mid 1.70s.

I will also mention that is it is the first quarter, and true to historical form we are a little bit conservative in how we forecast our service margin, and would expect after a terrific fourth quarter, that the service margin in the business will actually come down quarter-to-quarter, and so that will impact the numbers in the short term in the first quarter. But obviously have a very bullish outlook for that business, particularly as we leverage that business into work around the Global Signal sites going forward, a much bigger footprint.

Moving forward on to page 33 just to sum up here, very compelling business model. I am not sure this slide has changed in seven years, other than the capital structure and the way we have now been able to more efficiently translate revenue in free cash flow, recurring cash flow per share. These attributes are very, very important, and ones that make us very pleased to be in this business, and adding value long term.

In closing, I would say that we are very pleased with the assets we have assembled, and when combined with the very deliberate approach we have taken to optimize the capital structure, we believe we are best positioned to translate growth in wireless into shareholder value.

With that, we will conclude our formal remarks, and be happy to answer any questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. [OPERATOR INSTRUCTIONS] Our first question comes from Ric Prentiss, Raymond James, please go ahead.

Good morning guys.

Good morning.

A couple questions for you. First, on the one-timers that were in the quarter I think it mentioned just over $3 million in the U.S., can you walk us through just kind of the high level, what were those from, was that Cingular maybe, or what was involved in that? And the noncash adjustments, it looks like there's some seasonality in the noncash revenue expense adjustments.

The second question is on same tower revenue, what do you see last year U.S. versus Australia, really on a same tower revenue basis, getting at organic growth if you will? Do you expect any seasonality in '07 as far as the same tower revenue growth rate on quarter-by-quarter basis.

On the one-timers without getting into all the detail, typically in the fourth quarter you do get into some one-timers. It's a combination of a lot of things. You have got some straight line adjustments in there, you have got some back billings, you have got some termination payments, it's a cross-section of a lot of things. In our business we decided, we don't even use the term one-timers, because frankly it happens a lot of different times across the year. We only try to point it out when it looks like it would otherwise compromise your ability to forward project into kind of what the run rate is, is why we point it out. There are sort of outer run rate items that we would highlight for you there.

As we look at same tower revenue growth, the quarter-to-quarter same tower was 15%, and full year 13%. Okay, now those are percentages so you have got to be careful, because every year you are coming off bigger numbers, so those percentages will necessarily decline. But that's what it was on an organic basis, as opposed to the 20% quarter-to-quarter revenue growth, and 16% full year revenue growth including the acquisitions. So you can sort of do the math and figure that out.

Sort of guessing, that percentage change will come down probably a couple hundred basis points a year, just because you are coming off a bigger base. As we look at our leasing prospects for the year for '07, we are very comfortable with what we see across the full year '07 and maybe John, you want to mention, I think Ric's other question was seasonality, if we see anything there?

In the seasonality side of the equation, Ric, it is as I indicated before. It's not so much kind of seasonality, its cycles of new development, and I think what most people expect is that the new development activity will be more back end loaded than front end loaded from these new deployments, whether or not it is a carrier's initial large scale deployment of third-generation technology, which is clearly the case in T-mobile, or its new systems being built by some of the emerging carriers, Leap and MetroPCS, those will tend to be back end.

The activity that we will be seeing in the front end is going to be normal kind of sustaining CapEx that the wireless carriers need to deploy, to insure they are not allowing their networks to degrade. That tends to be what the first part of the year's characteristics are going to look like, enhanced then in the second half of the year by these new things coming on-line.

With your services business you guys always seem to have a good crystal ball into looking at what people are thinking about earlier. What are you hearing from Sprint's 4G build out, have they actually started doing any real significant work, any further discussions with the satellite TV guys, thinking of wireless networks, the satellite communication guys there has been a lot of buzz in Washington about some new ancillary terrestrial coverage type spots out there, what are you seeing from the nontraditional guys, that might avail themselves of your services business?

Yes, Ric, you do this to us on these calls, and as you know I'm just very, very sensitive to kind of talk about customers on a specific basis, because I don't think it's fair to them. They do rely on us to be neutral third-party hosts of infrastructure, and they do in fact as you point out, spend a lot of time with us by virtue of our proprietary tool CCI sites in planning their network build.

That is because we not only offer certainly all of our site locations, but our CCI sites program has all competitive structures in it as well, that have ever been marketed to a wireless carrier. So we are able to basically help them understand what is kind of in the marketplace on a total basis. That said, what I would just simply indicate is that certainly Sprint has made public comments about what they have planned for 4G, and we are facilitating those particular plans with them.

I don't think Sprint has come off of their statements suggesting that they are not serious about that deployment, and enhancing their network to be able to provide that much more in the way of data capacity. And, you know, the best I can say Ric, is that we are in fact helping them, but as far as the specifics of what and how and when, I would leave that to question to Sprint directly.

Sure. Then just grouping all those guys as a total maybe, it sounds like still some work going on, but not much that we should expect to see '07 real activity, maybe looking towards '08, possibly for some of those other items?

On all the other AWS stuff, a lot of activity going on right now. But it goes to your earlier point about the services business and CCI sites. It's clearly kind of the planning stage. So the question is going to be when do the leases get executed, and then when do they become revenue producing. Leases getting executed could in fact start up, you know, later part of the first half of the year.

Revenue producing, I think consistently indicating it's going to be more later part of this year, going on into next year. And that is just simply the dynamic of some of what they have to do, in clearing some of the incumbents in the spectrum in some of the markets, and just the nature of otherwise planning. But I will tell you that there is a very heightened sense of urgency, to insure that the billions that were invested in the spectrum, is not left uninvested for long, that they otherwise deploy as fast as they possibly can.

I will suggest to you that one of the things that has happened in the industry over the years, and this is going on the last nine years or so, that I have been with this company, is that things seem to run in some cycles. Whether or not speed of deployment is absolutely the primary consideration, or whether or not there's some other characteristic of infrastructure. I will tell you right now it is speed of deployment. People are looking for the best sites, and the ability to get on them as quickly as possible. So that gives us some confidence about how the year will shape up, as we continue on through it.

Great, good luck guys.

Thanks.

Our next question comes from Anthony Klarman with Deutsche Bank, please go ahead.

Thanks, a couple of questions. First, as you look at the sort of the margin dilution from the Global Signal acquisition, or if you want to make it even more simplistic, if you look at the average revenue per tower that you had sort of Crown Castle organic versus the proforma Crown Castle, did you guys as you were evaluating the acquisition have any sense, in terms of when you would start to expect their portfolio to approximate the metrics of your current portfolio, whether that is from a revenue per tower perspective, or a gross margin per tower perspective?

Yes, Anthony we did a lot of work on that. We found that was really one of the fundamental drivers of our decision to move forward. We talked about this back in October when we announced it. We didn't spend a lot of time on it today, because I find that maybe it's not as compelling to some as just the balance sheet work we have done.

We find it very compelling, that is the fact that the typical Global Signal tower had 65% of our Crown Castle gross margin per tower. And that's a function of a lot of things. It's a function primarily of the fact that most of those sites are younger than ours. They have been in the marketplace a shorter period of time. They have less revenue. They also comparatively have higher ground rent expense, which brings that margin down. So as you say, it is dilutive to the margins when you bring them into the total.

But from a lease-up perspective, you may recall we talked about this on that prior call, it does make a dollar of revenue growth more valuable on a legacy Global Signal tower than on our own, in terms of growth rate against a 65% run rate of our current margin. You can see that we found that to be attractive, based upon the locations of these sites, and based upon the work we did around those towers, to determine what would be required to accomplish the co-location demand that we saw there.

Now, I would also speak to a little bit of how they reported their results in 2006 and 2005. It is my view that the market did not completely understand what was going on around leasing in that company. I mentioned that their fourth quarter was a record quarter. When we looked at Global Signal, and you got to the detail, the gross leasing, the gross adds on those towers, was comparable to ours. They had in fact some straight line adjustments going on.

They had some churn going on that masked the the overall results that they were delivering as a Company. When you look at just the gross adds, and you look at our future demand profile of what CCI sites told us we should expect around those towers, based upon their location.

And you look at gross adds, what they delivered historically, we got very comfortable that we in fact could enhance the growth rate, because the leasing demand would be there, and this dynamic I mentioned that you point out, around the fact that they had comparatively lower margins per tower, therefore a dollars worth of revenue growth would go further on their site than on our own.

That was very important, we didn't talk about it too much this morning. But I think it's a very important dynamic going forward, and one reason why it takes less leasing frankly now in our Company, to accomplish the same financial result as it did previously.

But still on that point, if you look at what perhaps the Street might have been expecting for Crown Castle on a standalone basis, and then you lay GSL on top of that, it looks like at least the organic growth from the acquired portfolio will be slower this year, than certainly the Crown portfolio.

I guess given the fact that they are newer towers with fewer tenants and less mature, I am just wondering, are you guys just being conservative on the expectations on how fast you will be able to change the leasing characteristics of those towers, and make them look a lot more like your own?

As I said their gross adds were comparable to ours. We have owned them not even four weeks. So yes, forgive us, maybe we are being a little bit conservative, we can frankly afford to be. This guidance is 15% up in EBITDA year-over-year, it's a $100 million. It's $0.32 per share.

So we are quite comfortable with that, and you know, you can bet that after probably one to two quarters of really hard integration work, it will take longer than that, but we have got a lot of people working very hard, to bring that level of asset knowledge and quality up to our own standards, so we can deliver those sites for our customers. So all of that sort of combines to say we are very, very pleased with that outlook. We think perhaps you could say it's conservative, I'm not sure I would say that sitting here the first of February. And we will work to accomplish that across the year.

As you look at CapEx, and the size of the portfolio you now have in the United States, one of your peers has been in the press a lot about looking at opportunities in, you know, other sort of higher growth markets. Is that something that you would also consider, in terms of looking for ways to deploy, you know, capital dollars for incremental growth?

Well, I would never rule it out. We have obviously been in other countries before, and we're still in Australia. Australia comparatively continues to grow faster than the U.S. business at the EBITDA line. That is a function of coming off a smaller base primarily. But we still think there is a lot of growth in the U.S., that's why we did the Global Signal transaction, that's why we sent a $1.15 billion buying stock in the last month.

We have made our bet in the U.S. market, and we believe we have leveraged the balance sheet to the point where the investor can now get the benefit of what is already, we think, a very dynamic wireless market in the U.S. into substantial growth at the per share line in our Company. That's the play, as John said in his remarks. If you want to make an investment leveraging yourself into wireless growth in the U.S., we think we are the investment to make.

Finally, is there anything else you can provide us with an update with respect to Modio funding status, and kind of how you would view that in terms of capital contributions that might be required to be made during the year?

Anthony, as I mentioned on the last call, what we are doing with Modio is successfully demonstrating the large scale deployment that we have finished up, for all intent and purposes, in the fourth quarter in New York City. And I am pleased to say those that have had the opportunity to use the service, are in fact excited about it. We have been able to assemble a nice content line up, with companies that are interested in working on a trial basis with us and the trial participants.

And the experience that people otherwise seeing on this is in fact consistent with what we knew was the case, notwithstanding the disinformation that had been put in the market by some, about what BVBH at 16.70, could or could not do. That said, we have also been rather consistent in the message, which was that our largest CapEx spend on this was going to be finished in 2006, because we were finishing New York, and the work around additional Top 30 markets, where we had essentially done land banking on it, until such time as we now work with prospective partners that are all being provided with units to use the service, find out for themselves how well it works, work through the economics of the network build, and different models on a retail distribution. It doesn't necessarily have to be wireless carriers, there are many others in the media sector that are otherwise interested in video to handsets.

And so all of the various different players are as we speak being provided phones, dual mode phones that are GSM and Modio video phones, and they will be experiencing what we have been talking about, and we will be then sitting down and having dialogue with those that are most interested in translating this into business opportunity for them, and for Modio, and we will be giving you more input on that in subsequent calls.

But as far as the major CapEx burn on this, Anthony, that was finished with what we were doing in the fourth quarter, and it's just rounding out the last few sites in some of the outside fringes of New York that we are finishing.

Thanks much.

Yes.

Thanks Anthony.

Our next question comes from Michael Rollins with Citigroup, please go ahead.

Hi, good morning. One follow up question, and then one separate question. Just in terms of the follow up, if I go to page 39, and look at the site rental revenue growth, I think it's for Global Signal for September 31, '06 to '05, it looking like a 4.7% year-over-year growth. I am wondering if you can walk us through some of the back of the envelope items, the straight line amortization that you references, that might have been affecting the numbers, maybe some one-timers that could have been in the numbers, to understand what that organic growth rate would look like year-over-year?

And then the second question I had was just more generally speaking on the subject of financial leverage, so as you talk about your expectations for recurring cash flow growth, how does that fit within your strategy, in terms of what your target leverage, and do you see that moving up over the next couple years from where it is today? Thanks.

Okay. Thanks Michael. The answer to your first question is frankly I can't reconcile that for you today on this call. And we don't have, you know, audited financial statements out in which to do that.

You will have to trust us when we say and maybe prove it up over time as we perform and execute on this portfolio, that on a gross add basis, their leasing results were quite comparable to ours. There is absolutely no way I can walk you through, or any of us through all of the the FAS 13 straight line adjustments, the churn that impacted them across the balance of the year last year, that is largely behind them going forward this year in that portfolio.

And so we realized that the GAAP reported numbers, and remember one other point I would mention, is the Sprint lease is all straight line, and all coterminous, so that entire 6500 master lease agreement, doesn't escalate at all in their numbers. When you try to take GAAP numbers, and compare them across the different tower companies, it just gets lost in a hurry.

There's a lot of straight line things going on, as well as some one-time adjustments. So frankly apologies, but I just can't do it. What we got comfortable with is what we saw fundamentally in the gross adds, and the location quality that our tool demonstrated to us was there, in terms of future demand. And perhaps we will have to leave it at that, and suggest to you that only time will tell. We are happy with that, we're fine, we understand that, we have made an investment and we have further made an investment in the stock. So we will have to prove it it up over time, and we think this guidance we have got out there today, is more than fair in terms of driving growth and value in the Company. Obviously to the degree we can do more we certainly will, you know that.

On the leverage point, I do want talk about that for a minute. We have clearly gone above what we have told you previously with sort of our 5 to 7 times range. When we first said that 5 to 7 times EBITDA range, I believe that was close to three years ago, when we were still in the deleveraging mode, and still financing at 7.5% was the last high yield deal we did, and that still was at a time when we had a bunch of 9 and 10% paper out there.

What I will suggest to you is that the debt to EBITDA measure is not the best measure. It's really interest coverage. That is a function of our long-term recurring contractual revenue we have with customers, against the fixed rate exposure we have on the balance sheet. You have very little volatility in the numerator or the denominator in that calculation, which makes me very comfortable in and around the 2 times level. So to say it another way, the old 7 times and the new 7 times are really not comparable, when you used to finance at 9% largely floating, and now you are financing at 5.5% fixed.

But to answer your question specifically, we are at about 2 times debt to EBITDA to interest coverage. I don't expect that we will go beyond 2 times debt interest coverage, so I wouldn't expect to see it below 2 times. It will probably start to improve over time as EBITDA grows. We have no intention of sort of paying down debt. We are very comfortable at these levels. Again, because of the character of the revenue or the fixed rate nature of the interest expense, but you will see it in and around this level, and perhaps a little bit lower over time.

I would mention to you on the last securitization that we got done in November, we made substantial progress compared to what we did in May of 2005. You know, fully 7.4 times debt to EBITDA there was rated investment grade. And so that is a substantial difference from where we were in May of 2005, and so the rating agencies continue to evaluate our business, and continue to improve their view of the quality credit quality, and the lack of default risk, and have raised their traunchings and ratings for each trauch, in terms of coverages. It has made a difference in that respect.

Just to sum up, I would not expect we would go beyond where we are now, that would not be what we are targeting.

I want to just jump in on one item, because I'm afraid that it still could be missed, and I don't want investors to otherwise miss this point on a go forward basis. It's in the presentation, but I think that perhaps notwithstanding the fact that we have talked about it for the last so many years, it is still something that people do not fully grasp or understand.

If you look at page 31, since Michael you were referencing the various different pages here, the point that Ben made, the 1.25 tenants of measured demand, that is an important number. That number does not suggest that there's 1.25 tenants we adding in any, this year, we don't know exactly how many years it takes to otherwise get 1.25 tenants of the measured need on these towers. The important aspect of that is, I believe we are the only tower company that ever expresses this number, and it's for a reason.

We are the only tower company in our belief, but I think it's certainly fair to say nobody has ever, nobody has ever indicated a number like this, that does the rigorous examination through engineering drive tests of our system, that determines what the measured need is. And that 1.25 is the new proforma Crown Castle 22,000 plus tower portfolio in the United States. That's not Crown, that's not Global, that is the new proforma Crown tower footprint, 1.25 tenants.

That is as you remember what current technologies and current levels of quality by carrier, by city, otherwise demonstrates to us, is a need for the specific locations that we have towers. It does not include some of the new things we have talked about. We haven't gone out and measured AWS Auction 66, because that would be premature. We don't know exactly how those systems are going to be engineered at this point in time. We are getting a sense of it through the original planning, but we don't know exactly. We can't also predict exactly what minutes of use growth will be going forward.

For those reasons we only measure what we do understand carriers are currently engineering their networks to, and that's 1.25. And the reason I want to jump in and make this point once again, I think it's something that many investors miss, and it's because you don't hear that from my other tower company. But it's an important characteristic that I suggest people take a look at, when they otherwise evaluate whether or not this is or it not a good investment from their perspective.

If you had to ballpark how many years it it takes to realize the 1.25, would you venture a guess in terms of the number of years we should think about?

Yes, Michael I think that consistent with the estimates and we provided one set from Goldman. I think that running at about a 0.2 to a 0.25 per year is about what you are going to see in terms of the CapEx investment by wireless customers. This is somewhere of a 5 to 6-year kind of measured demand opportunity in fulfilling the 1.25.

In other words, it would take about 5 or 6 years to otherwise run through that measured demand, and then of course in subsequent years, the reason why that number is continuously measured by us, is because new things are happening in the marketplace, with new auctions and new trends in engineering because of minutes, or data, or whatever, that's why we keep measuring it. But at this static level of 1.25, about 5 or 6 years.

Michael, we have talked about this before, on other calls, we sensitize that measure quite a bit in our own evaluation of the business and making investment decisions. We obviously run lots of sensitivities and downsides with various discount rates to make our investment decisions around the stock, and how we become comfortable, back to 'what do you have to believe analysis' around buying stock. In our case this latest one, almost $34.00 a share. In our view it's a much more elongated, what you have to believe is a much more elongated delivery of that 1.25, or a comparatively higher discount rate. In any event, that's sort of how we do it.

Thank you very much.

Sure.

Our next question comes from David Barden with Banc of America Securities, please go ahead.

Hey guys, thanks a lot. And for having the stamina to go this far. Two questions.

First is there is a lot of good stuff on the back of this slide deck, that I don't think we had last night, correct me if I'm reading it wrong. But it looks like the Global Signal EBITDA number here for the fourth quarter was about 55.2, which would be down year-over-year, and down sequentially, and you mentioned something earlier about churn and the base, I think it's probably fair to say if Global Signal had reported this number as a standalone company, there would have been an awful lot of questions about it. I was wondering if you could kind of just address what appears to be something having gone somewhat off kilter, from at least what we were expecting to happen in the fourth quarter for Global Signal, and what you think that means for '07?

Then the second question was, just in terms of how I think there is a perception in 2007 that, you know, Cingular's tower demand will be down from last year, based on their commentary, and Sprint will be ramping up dramatically, you guys obviously now have through Global Signal a very large exposure to Sprint. Presumably then if you have a lot of Sprint towers already, Sprint's incremental leasing demands will be coming from other tower companies, not necessarily Crown Castle's margin? Could you kind of push back on that a little bit as a thought process for exposure to growth in '07. Thanks a lot.

That's a great clarification, I am glad you asked it. Let me first start off by saying these results in the back of the presentation, these are unaudited results. These were Global Signal's results, not ours. So we have got to be very careful with that. The pro forma is out there in the filings. But the 55 number you backed into, you're right. It's not, here's the answer. It was previously the convention that the company used in reporting EBITDA was cash EBITDA, okay, not effective for straight line.

If you take the straight line, and as a result the full year on a comparably done basis with our own, which we use GAAP EBITDA if you will meaning effective for straightlining of both revenues and expense, their full year would have been about 225 million against I think where most of you guys were at about 235 for the full year.

And that difference is not a lack of performance, the difference is straight lining versus cash. Straight line GAAP EBITDA was lower. That is the biggest reason why the fourth quarter for that reported metric if it were reported were 55 million of EBITDA. There were also and are still pending potentially some one-time adjustments that are going on in those numbers. You have got to be careful with that, it's not audited, not finished, those are preliminary numbers. But that's what's going on there.

Back to Mike Rollin's question it's extremely hard for you to walk you through with any specificity what that is, but the biggest reason is because their previously reported convention of cash EBITDA if you will, is different than ours. It's not apples-to-apples. On an apples-to-apples basis, it would have been about 225 for the year, again about 10 less than you guys were looking at on a cash basis.

And we have made the decision just going forward, also some guidance we have seen out of the SEC, that they would prefer us it to stay on the GAAP measure if you will, of using, you know, the impacted numbers by straight-lining of both revenue and ground lease expense. So that's how we have historically reported EBITDA, and will continue to. We give you in the body of the press release, an impact of straightlining to our numbers for the whole year, the impact on the margin was about $4.5 million positive.

But in any event that's the best explanation I can give you for that.

And then David, relative to the second part of the question, Cingular down, Sprint up. And since we have higher exposure to Sprint now, that must mean we will see less of it than somebody else out there in the tower industry. Yes, Cingular down, that's because last year, clearly there was a big push on their UMTS deployment, and so the view going into 2007 clearly is that given that they have done a significant portion of that, they're not going to have to do as much, and therefore they're going to be down.

I would suggest to you that Cingular remains very focused on insuring that they are not going to disrupt the quality improvements that they have made to their networks, and they will continue investing. But it's probably fair to say that the reduced investment as they have indicated in 2007, is in fact going to be the case.

From the Sprint side of the equation yes, a large expectation for what they're going to do this year, they have indicated it, certainly in discussions with them. But the notion that because we have got a high exposure to them otherwise kind of changes our prospects with them, I would suggest to you is not accurate. What we are finding is that by virtue of our larger exposure to Sprint at this point with the acquisition of Global Signal's towers, we actually have more robust discussions that are taking place with Sprint, than we would have had previously. Because we are that much more important in their mix, when they're looking at engineering upgrades to their networks, or enhancing and adding to their networks.

They are very clearly interested in what that means from the standpoint of Crown Castle, because we have so many sites that we lease with them. And so we have increased the level of dialogue that we have with them at different, at higher levels in the organization, because we are such an important partner of theirs at this juncture. I would suggest to you that we are not disappointed with what we see coming out of our discussions with them. When we look at all of our portfolio, and all that we have to offer, and that includes both upgrading existing facilities that Sprint is on today, as well as adding new facilities, we're not disappointed in what we see from that customer.

Okay. Thanks guys. Just to make Ben's point, you know, kind of making the math work, it does look like there's a $3 million adjustment from straightline to cash, if you go into the first three quarters of the year. So if you make that adjustment in the fourth quarter it does makes the numbers look like they line up with more of what we were expecting. Thanks a lot.

There is some audit adjustments as well that we won't bore you with, here at the end of the year on their side. Again it is not complete yet. In our view, it's all on the go forward, so that's what we are focused on.

Thanks guys.

Our next question is from Dave Coleman, RBC Capital Markets. Please go ahead.

Thank you. Just want to go back to that 1.25 tenants, I guess latent demand for the Crown towers. Maybe a year or two ago that number was at 0.7 to 0.8 tenant demand, what's changed during that period to bring it up to 1.25? Is that all Global Signal, or the amount of CapEx that the carriers are putting into their networks, I would think that that number wouldn't have increased as much. So is that all Global Signal accounting for that increase?

Yes, Dave, I'm not a 100% sure the 0.7 to 0.8, but let me help kind of again reconcile this 1.25, and how we otherwise arrive at it, and the fact that the number will change kind of year to year. Because what you are measuring, and to the degree that in a prior Analyst Day presentation, we might have otherwise had different numbers out there. Our latest was 1.3 that was out at the last Analyst Day.

What we are looking at, is we go into each system, and we're not in any way shape or form assuming that every carrier is going to engineer their system to the same level of quality as the highest quality network in that market, whoever you want to decide offers that, whether it's a Cingular, Verizon, Sprint, T-mobile, whatever. What we are doing is we are going into every city and we are otherwise looking at the combination of coverage and quality of service, aka, kind of a capacity driven proxy, we are looking at where does that carrier have gaps in their coverage and quality, coverage and capacity, such that that particular part of that geography, so if you're looking a Boston or DC, or whatever, that particular area, they are going to have to add a site, because they are below their average.

And if we happen to have a tower site there, clearly that is then an indicated need for a lease on that particular site. And so what modifies the number year-over-year is a couple of years back, not all carriers otherwise looked at levels of quality in network design the same way. That is perhaps manifesting itself to some degree today, but you had different views on what appropriate levels of quality in a network were. So we are constantly out.

We refresh the data once a year by city, so that we're able to then do is look at okay, what was a perspective set of leasing opportunities last year can change. It can go up to the degree that the carrier in question that we are measuring is otherwise increasing their quality metric. So that is why the number does in fact fluctuate.

It's the reason why the number hasn't necessarily gone from originally a couple of years ago, 1.3 down to 0, or actually to Michael's past question if it's happening at a 0.2 rate per year, we would be down under 1 it at this point in time, if all of the things were remaining equal, but they don't. What's occurring is there is additional demand attributes in the market that we are constantly refreshing the data with. That is how we get to the 1.25.

But your point Dave, which is very important, is that 1.25 is across both portfolios, and that's how we're looking at it as we go forward. This company is both portfolios and we are not breaking it down, what would it have been with Crown Castle, and what was it with Global. This company is 22,000 plus towers. There is a measured demand need of 1.25. That quite frankly, drives the recurring cash flow objectives that we have otherwise suggested we can realize, 20 to 25% growth in recurring cash flow per share for the foreseeable years.

One question on the Global Signal synergy, you put out 15 to 18 million synergy number. I know it's only one about one month as a combined company, is there anything you can update us, as far as the ability to reach that number or exceed it, and also what are the main areas that would make up that 15 to 18 million?

Yes, Dave I think the number was 12 to 15 that we put out.

Okay, sorry about that.

12 to 15 that was a number that we would have expected to realize across the full year. By the time we get into the second half of the year, you will see run rates in excess of that, on quarterly run rates, that would suggest more than that as we get into the third and fourth quarter. But it's largely, we are adding people obviously to the core Crown Castle side. But not comparatively as many as we had in the prior two companies obviously. And it's somewhat of a different mix.

So we are pleased with what we are seeing around the synergies, and there will be savings there. It's not why we did the transaction, it's not what we really are focused on getting. We are very focused on integrating these sites, and delivering the speed and the results for the customers around the demand that we see.

So it's really not about in a business like this, that some total will have a thousand people in it, with 23,000 towers and $7 billion worth of assets. It's not really about G&A savings, although we are happy to see them and we will get some, and maybe the upper end or more than the number we have got out there. We sort of focus on the consolidated results today, and this outlook we have in here today, and that's what we have to deliver.

Great, thank you very much.

Our next question is from Vance Edelson from Morgan Stanley, please go ahead.

Thanks a lot. Good presentation. Just wanted to dig a little deeper on some of the investment activities, starting with the land purchase initiative, where I believe you spent about 12 million. What are the trends there, is it getting easier or harder to find attractively priced land? Are you getting any more or less interested in purchasing that land?

Yes. We are very interested in purchasing it. I think we will continue to see it ramp across the 2007 timeframe. Global Signal already had a pretty well developed group, as did we that we are working on enhancing, and continuing to make those, what we find to be very attractive both financial and strategic investments. At the same time, we have I would say an equally robust effort aren't just the whole program of just a constant managing of the cycle of executing lease extensions and renewals.

So it all sort of goes together. We would expect that you will see that continue to ramp across this year, as we continue to take advantage of the opportunity to make the attractive investments. We have already got the securitization structure built in, so it's very, very efficient from that perspective, in terms of how we would finance theoretically these acquisitions of essentially eliminating ground rent payments. And going forward, obviously it's strategic to continue to strengthen and lengthen the average maturity of the ground leases.

Okay great. You spent about 20 million on the construction of new sites, but I think the number of towers in the portfolio by quarter's end was essentially unchanged. Can you give us an idea as to the timing on when those towers will be ready, how many are being built?

Yes, that is the majority, more than half of that number is the finishing up of the New York network for Modio, so that's how that gets booked, as construction. It's not new towers. Going forward build, and as John said, that spend is largely behind us in 2006, substantially all behind us in 2006.

Going forward, we hope to ramp into the range of 100 to 200 sites per year. It looks like the total cost all-in costs on the handful we have built so far is in and around 250, between 250 and 290, depending on the asset. So you know, a 100 of those would cost you 29 million. That's kind of program.

Okay. And lastly on the network services and other revenue stream, is that likely to climb as a result of the Global Signal acquisition, they weren't really providing a revenue stream breakout, but can you start selling supplemental services at their sites, such that we should expect that line item to increase?

Yes, I mean Vance, I think two things. One you asked the question, can we sell. I think it's actually turning around the other way. It's not so much do we have to sell, I mean customers are asking us will we provide those services on Global Signal sites.

And so, you know, we are going to continue to be focused on insuring that the work we do is additive to the customer experience on our site, in other words, makes it easier for them to colocate. It's not something that we force them to do, if they have got somebody else they would rather do it with, that's fine from our perspective, because we are not chasing the business and otherwise doing it for negative margin, as it were.

In essence, this has to be something that does in fact generate for us cash on cash positive margins, and facilitate that co-location. And I think the answer is yes, there will be some more that we will see by virtue of the Global Signal assets, because they didn't do that, and customers are looking for it.

Okay, thanks for the color.

Okay.

Our next question comes from Gray Powell with Wachovia Capital, please go ahead.

Hi everyone, thanks for taking the question. I just had a quick follow up on your synergies targets. It sounds like of your 12 to 15 million annual target that your guidance implies, you will get about half of that in 2007, with the full impact not seen until 2008. And then just looking at the synergy number it looks like you're taking out about 30% of Global Signal's SG&A, it looks pretty conservative, because American Tower got about 50% out of Spectra's sites. So I was wondering if you could talk about the assumptions behind that? Thanks.

First of all I don't know how you back into the 7 million, or whatever. In our forecast it's more like the high end of the range we gave you, the 12 to 15 for the year. What you are also seeing in the EBITDA forecast is as previous question Vance asked, a little bit of an increase in the services business across the full year, compared to last year, so that obviously helps the EBITDA line.

Again back to the other answer I gave, we will see savings. There is no doubt about it. And it could be higher than we have forecasted. But it is not how we run the business focused on that.

Again in our view we run, we have always run at higher G&A levels comparatively than some of our peers, and we feel like we get paid for that. Remember the service business pays for a lot of that, the margin coming out of the service business is paying for a lot of that G&A. So it is not a drag if you will on reported results.

And it's a run rate business, and the value gets created on the delta that you create every year in those numbers. So we will pick up savings undoubtedly. Maybe we hope it will be higher than what we have got out there, but you know, in terms of numbers of people, there will be less and the mix will be less as you would expect, in terms of the mix of compensation of people that we are bringing in, as opposed to what was there, you know, among senior members of the Global Signal team.

But that's all to be expected, and not something that we're really fixated on. That's again not why we did the transaction.

Okay. Thank you very much.

We will take one more I think.

Yes, I think one more question, then let everybody get back to running their businesses.

Our next question comes from Clay Moran with Stanford Group, please go ahead.

Good morning, thank you. I guess just two quick questions. Can you give us an idea of what is included in your guidance, in terms of operating expenses for Modio for 2007, then secondly there was a lot of talk about Global Signal, and you mentioned that they had some churn. I assume that's because it was higher than your churn. Is that due to contractual step down in the paging revenue, and is there any change in the pace in '07 in that churn? Thanks.

Yes, Clay, on the Modio, it's largely the run rate we have talked about before, in fact, it's entirely the run rate we have talked about before. It's right about $10 million a year in EBITDA burn, if you will, G&A burn. So that is in the forecast and that's consistent with where it was last year, that hasn't changed.

Then on the churn, they had churn from a number of different customers, they had roll down in paging, they also had churn from a customer that decommissioned some sites. We have had some as well, in some of our number it is not completely unexpected, we have had some Cingular churn, that we have talked about before. We think in their case it's probably substantially complete, you will see a little bit more in '07. Same with us, we will see some more in '07, but that's all baked into this outlook that we have got here, and we are not otherwise concerned about it.

Okay, thank you.

Okay. Thank you.

Well, with that I think we need to conclude the Q&A session. We are very happy that you joined us, and those of you that stayed with us the entire hour and a half or so, we appreciate your interest in the Company, and we look forward to reporting our results from the first quarter, when we will be reporting it as this fully consolidated Crown Castle 22,000 tower company in the U.S. So thank you, and enjoy the rest of your day, your weekend, and we will talk to you soon.

Thank you. Ladies and gentlemen, thank you for participating in today's teleconference. It has now concluded. You may now disconnect.