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Activist investor Elliott Management is ratcheting up the pressure on
The hedge fund disclosed a $1 billion stake in the Houston-based cell tower firm last month, arguing that Crown wasn’t getting proportional rewards for its hefty investment of time and money in its fiber-cable business. At the time, Elliott suggested Crown Castle (ticker: CCI) should target a 40% return on its fiber spending.
On Monday, Elliott turned up the heat, calling on Crown to immediately begin an operational and strategic review of the fiber business, claiming that Crown hasn’t yet put forth a credible plan to improve its fiber business. The hedge fund noted that, instead, Crown announced a series of “incremental steps and rear-guard actions,” including corporate-governance changes and the coming departure of its chief operations officer, which didn’t address Elliott’s core concerns.
“Taken together, these actions paint a picture of a Company that seems to know there is a problem, but refuses to acknowledge it,” Jesse Cohn, partner at Elliott, and Jason Genrich, an Elliott portfolio manager, said in a letter to Crown’s board.
“It is becoming clear that this management team does not understand what they bought (and spent $16 billion building) and does not understand how to run the business better,” they wrote. The duo said that since announcing their stake in Crown, they have received several comments from other fiber executives and possible financial buyers who believe they can run the business efficiently.
Crown said Monday it is “open to considering opportunities to create value.” The company noted recent governance changes and other measures it has taken, and said it has received support from shareholders.
“Crown Castle is confident that its strategy is delivering significant, measurable results and best positions the Company to create superior long-term shareholder value,” it said in an emailed statement.
Shares of Crown, which have risen 16% this year, were up 0.5% to $165.48 around midday Monday. The
was up 0.3%, while the
Dow Jones Industrial Average
was off 0.3%
Write to Carleton English at [email protected]