By Josh Beckerman
Crown Castle International Corp. (CCI) said it has received a
favorable ruling from the Internal Revenue Service tied to securing
status as a real estate investment trust for its wireless
small-cell networks.
The cell-tower company, which became a REIT in January, said
Tuesday that the IRS found that the real property portion of its
small-cell networks and the related rents qualify as real property
and rents from real property under REIT rules.
Crown Castle plans to include the qualifying portion of its
small-cell systems as part of the REIT, effective in January.
The company has about 40,000 towers and 13,000 small-cell
nodes.
In September 2013, Crown Castle said it planned to begin
operating as a REIT by early 2014. Chief Executive Ben Moreland
said at the time that a REIT conversion should "lower our weighted
average cost of capital and provide additional opportunities for
creating long-term shareholder value."
REIT status, a designation typically used for companies managing
real estate for profit, allows companies to avoid most corporate
taxes as long as they pay at least 90% of their taxable income
through dividends to shareholders.
The need for more and quicker data has caused wireless carriers
to spend heavily to upgrade equipment in recent years, helping
Crown Castle and its peers.
In July, Crown Castle said second-quarter earnings fell 35% on
debt-redemption losses, but the company said revenue increased 25%
to $916 million, reflecting continued investments by the four major
wireless carriers. Crown Castle also increased its guidance for
2014 adjusted funds from operations.
Write to Josh Beckerman at josh.beckerman@wsj.com
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