Corvex Management Background

  • Concentrated, value?based investing strategy across the capital structure
  • Focus on investing in high quality, North American businesses undergoing change in industries with positive secular tailwinds
  • Engage regularly with management teams with goal of developing close long-term relationships underpinned by constructive two?way dialogue
  • Long?term investment horizon and concentrated portfolio enable us to conduct heavy diligence and focus our full energy on each investment
  • Knowledge?based and experienced approach to partnering with management and other constituents to create shareholder value
  • Approximately $7 billion of assets under management

Corvex Management Investment Themes

  • Secular growth in a no?growth / low?growth world
    • Shale gas revolution, mobile data growth, enterprise data growth, proliferation of “screens”
  • “Infrastructure assets” of the 21st century
    • Recurring revenue businesses critical to modern economies, with high barriers to entry and attractive returns on invested capital
  • Capitalizing on the disconnect between cost of debt and cost of equity
    • M&A
    • “Equity shrink” and dividends
  • Consolidating industries
    • Extraordinary growth through synergies and pricing power

Corvex Management: Crown Castle International Overview

  • Crown Castle International Corp. (NYSE:CCI) (“CCI” or the “Company”) is the largest U.S. operator of shared wireless infrastructure, including towers, rooftops, small cells, and associated network services
  • CCI owns or operates nearly 40,000 towers in the U.S., with 56% and 71% of these sites located in the top 50 and top 100 BTAs, respectively
  • Company’s key customers are Verizon, AT&T, Sprint, and T?Mobile
  • ~83% of total revenue and ~90% of gross profit derived from recurring rental payments with long?term leases
  • CCI owns land underneath sites representing 34% of its gross profit, and leases remaining 66% with weighted?average maturity of 30 years
  • Customer contracts (before renewals) represent $22 billion of expected future revenue with weighted?average life of 7 years as of June 2014
  • CCI began operating as a REIT for U.S. federal income tax purposes effective January 1, 2014

Corvex Management: Tower Industry Overview

  • A tower is a vertical structure built on a parcel of land to hold communications network equipment such as antennas and base stations
  • Tower operator leases space to tenant with rental payments structured under long?term non?cancellable leases (~10 year initial term with multiple ~5?10 year renewal options), with fixed contractual escalators (~3?4% annually) and low churn (only ~1?2% annually)
  • A tower is typically built to accommodate multiple tenants (“co?location”)
    • An additional tenant can be added to a tower with minimal capital investment or increase in operating costs
    • Building a new tower is more expensive and time?consuming than leasing from an existing tower, driving shared network infrastructure
    • Co?location drives attractive returns on invested capital and high incremental margins for towers, while strengthening barriers to entry
  • Industry growth is driven by mobile data growth, network improvements,
    and new spectrum deployments

Corvex Management: Tower Unit Economics

  • CCI has 41,361 towers with an average of 2.3 tenants per tower today
    • 0.1 – 0.2 tenants per tower are added to the tower portfolio each year, driving steady long?term growth

Castle Crown Corvex Management

Corvex Management 2014 Robin Hood Investment Conference Presentation