CROWN CASTLE INTERNATIONAL 2001 ANNUAL REPORT CORPORATE PROFILE Crown Castle International Corp. is one of the world’s leading independent owners and operators of shared wireless communications and broadcast infrastructure. The Company engineers, deploys, owns and operates technologically advanced shared wireless infrastructure and delivers services to broadcasters and wireless telecommunications operators on three continents. With operations in the United States, United Kingdom and Australia, Crown Castle works closely with carriers and broadcasters through the various phases of operations and provides value-added network management services. The Company’s extensive network, encompassing more than 750 broadcast towers and more than 15,000 transmission sites, offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage to 68 of the top 100 US markets, 95% of the UK population and 92% of the Australian population. Headquartered in Houston, Texas, Crown Castle has more than 75 years of experience in engineering and operating broadcast transmission networks and more than 20 years of experience in the ownership, leasing, design and deployment of wireless communications sites and systems. FINANCIAL HIGHLIGHTS (millions of dollars) Net Revenues: Site rental and broadcast transmission Network services and other EBITDA: Site rental and broadcast transmission Network services and other Total sites owned and managed Capital expenditures Total assets Total debt Redeemable preferred stock Total stockholders’ equity Years Ended December 31, 1999 2000 2001 $ $ $ $ 267.9 77.9 345.8 140.0 (0.2) 139.8 $ $ $ $ 446.1 203.1 649.2 221.2 25.9 247.1 $ $ $ $ 576.0 323.0 899.0 301.9 14.9 316.8 7,488 12,918 15,116 $ 293.8 $ 636.5 $ 683.1 $ 3,836.7 1,542.3 422.9 1,617.7 $ 6,401.9 2,602.7 842.7 2,420.9 $ 7,375.5 3,423.1 878.9 2,364.6 6 1 ,1 5 1 8 1 9 , 2 1 8 8 4 7, 8 0 6 , 1 98 99 00 01 Site History (number of sites) 5 4 5 , 6 8 9 4 , 6 4 6 2 , 3 4 4 2 , 3 0 5 0 , 3 5 0 8 , 2 1 4 0 , 2 9 3 9 8 . 6 1 3 1 7. 4 2 8 . 9 3 1 1 . 7 3 98 99 00 01 98 99 00 01 98 99 00 01 5 7 6 1, 98 IPO Market Capitalization Net Worth History (millions of dollars) (millions of dollars) EBITDA (millions of dollars) Financial Highlights 1 2001 Annual Report MYTH VS. REALITY As in any industry, there are myths that evolve from economic, market and industry conditions. Here’s our take on the myths vs. realities facing the wireless industry: Myth: Demand for cell sites is being dampened by slowing wireless subscriber growth. Reality: There is still significant potential for growth as a result of increased usage, data network requirements and gaps in wireless carrier networks. Myth: New technologies such as smart antennas and advanced radio equipment will enable carriers to improve coverage and capacity without building more sites. Reality: Technology alone cannot provide the complete solution. Crown Castle is involved in the development of exciting new technologies that will provide cutting- edge shared infrastructure solutions for carriers; however, technology does not take away the need for more tower and rooftop sites. Myth: Capital market constraints will prevent wireless service providers from mak- ing necessary investments. Reality: Carriers must expand their networks to reduce churn tied to quality-of-service issues, and wireless service providers recognize that they benefit from their return on network investment. Crown Castle International 2 2001 Annual Report [performance] DEAR SHAREHOLDERS: I appreciate the opportunity to update you on Crown Castle’s progress, achievements and performance in 2001. Amid a difficult year for the economy, capital markets and the telecommunications industry, the Company focused its efforts on enhancing shareholder value through the disciplined execution of our busi- ness model: accommodating customers’ needs, leasing sites, controlling costs and driving substantial growth in cash flow and margins. Financial Performance We are proud of the financial success our Company enjoyed in 2001, with the organization posting increased revenues, greater margins and a 28% increase in year-over-year EBITDA. Significantly, we grew revenues by 22% on a same-tower basis. These results were in line with projections and are consistent with our original business model. While the Company has substantial debt, we also have significant financial flex- ibility, having ended the year with more than $1 billion in cash and marketable securities and more than $500 million in unutilized bank lines. Though our management team is pleased with these accomplishments, we are disappointed with how the equity market has valued our progress and, like you, we are disappointed in the Company’s stock price. While the decline in Crown Castle’s stock price is somewhat tied to economic conditions, it is also a reflection of Wall Street’s concerns about our customers’ long-term ability to add wireless subscribers and uncertainties surrounding new wireless applications. We have taken strategic steps, discussed in this report, to address these concerns and assist our customers as they expand their networks to remedy what the media has characterized as “Swiss cheese” (full-of-holes) carrier coverage and as they launch new wireless technologies. Letter to Shareholders 5 2001 Annual Report UNPARALLELED GEOGRAPHIC FOOTPRINTS With more than 15,000 towers, Crown Castle maintained unparalleled coverage footprints and closed 2001 with impressive statistics: ° towers and a significant wireless communications presence in 68 of the top 100 markets in the United States; ° near-universal broadcast coverage and more than 95% wireless communications coverage in the United Kingdom; and ° wireless communications coverage of more than 92% of the Australian population. 4 6 4 1, 8 7 1 , 1 9 0 9 Towers Constructed New towers built increased 24% in 2001 99 00 01 Crown Castle International 6 2001 Annual Report A Move to the New York Stock Exchange The common stock of Crown Castle began trading on the New York Stock Exchange under the ticker sym- bol “CCI” on April 25, 2001, giving our Company the visibility and liquidity that the NYSE’s auction market provides. The move to the NYSE should deliver value to our shareholders through reduced transaction costs and more efficient trade executions resulting from the central location of the NYSE marketplace. Industry Issues Our customers face significant opportunities and challenges in the year ahead. We certainly recognize that the issues impacting our customers impact Crown Castle, and our organization is working diligently with carriers to address their issues and craft timely solutions. Specifically, carriers continue to experience sig- nificant growth in their subscriber bases and total network utilization. They are also faced with an average 30% “churn” rate, which equates to a turnover of almost one-third of their wireless subscribers each year. While marketing and pricing plans play a role in turnover, subscribers most often cite diminished network quality as the driving force behind their decisions to switch carriers. To reduce churn, build subscriber bases and meet customer usage demands, carriers have made network quality a priority. Quite simply, we believe the primary way for carriers to improve network quality is to increase their number of transmitting sites. As such, the next few years represent an opportunity for Crown Castle to help carriers improve network quality through the utilization of our shared infrastructure concept to reduce their capital requirements while increasing their speed to market. Letter to Shareholders 9 2001 Annual Report WATCH FOR ROAD SIGNS AHEAD It’s important to look at all road signs when evaluating any industry’s future prospects. We expect to see the following trends begin to emerge in the telecommunications indus- try in 2002 and the years that follow: ° increased emphasis among wireless carriers on reducing churn rates; we believe one way for carriers to reduce churn is to improve the quality of their coverage; ° continued growth in minutes of use; and ° the launch of new and exciting advanced data services. Each of these trends should result in carriers needing additional sites and towers in the years to come. Crown Castle International 10 2001 Annual Report OPERATIONS REVIEW In 2001, Crown Castle strategically shifted its focus from acquisitions and international expansion to maximizing the efficiency of its operations. At year-end, the Company had: ° improved site-level economics through continued disci- plined execution of Crown Castle’s business model; ° created and upgraded organizational capabilities in the outsourced network services area; ° broadened relationships with customers to provide addi- tional value-added installation and outsourced services; ° established operational priorities for leasing existing sites, streamlining operations, maximizing site revenue and allocating capital efficiently; and ° increased revenue 22% year-over-year on the 12,918 sites owned as of December 31, 2000. 0 8 8 , 5 0 3 4 , 5 8 9 1 , 2 5 5 1 , 1 Towers Integrated Crown Castle integrated 2,198 towers into its networks in 2001 98 99 00 01 Crown Castle International 13 2001 Annual Report The Year in Review Crown Castle’s leasing momentum from 2000 continued in 2001, further confirming our business plan and reflecting our long-term value proposition of adding leases to towers and rooftops through co-location. The following are highlights for the year: United States ° The lease rate on Crown Castle’s towers met or exceeded market projections as we continued to add tenants on our towers. ° Reflecting the integration of our assets and the experience of our team, US tower revenue grew 24% in 2001 on a same-tower basis and the Company realized substantial efficiencies in growing tower cash flow. ° We continued to develop our US organizational capabilities, strengthened processes and implemented best practices, with a focus on asset, national account and project management. ° The Company constructed 675 new towers during the year for US anchor tenants. ° EBITDA increased 46% and tower gross margins grew from 58% to 62% in 2001 over 2000. Australia ° Our position as the largest independent tower operator in Australia was strengthened in April following the purchase of 643 wireless communications towers from Vodafone Australia. (continued on page 17) Letter to Shareholders 14 2001 Annual Report [momentum] The Year in Review (continued) United Kingdom ° Crown Castle’s significant relationships with all five license holders in the United Kingdom — Hutchison 3G, Orange, Vodafone, One 2 One, BT Cellnet — positioned us to continue leasing at a brisk pace amid challenging market conditions. ° In the first quarter of 2001, Crown Castle launched One 2 One’s network in Northern Ireland encompass- ing the design and build-out of the network, representing the first full outsourcing of a telecommunications network in the United Kingdom and the first time a transaction of this type had been accomplished by a wireless service provider. ° We leveraged our British Telecom relationship and began accessing BT exchange sites for the deployment of 2G and future 3G wireless services, integrating more than 200 exchange sites into our UK portfolio. ° In the fourth quarter, Manx Telecom (BT) launched Europe’s first 3G network on the Isle of Man in part- nership with Crown Castle and NEC. ° On the broadcast side, Crown Castle continued to execute our transmission contracts with public and private entities in the United Kingdom at a very high level of excellence. Letter to Shareholders 17 2001 Annual Report NEXT GENERATION With a proven history of excellence in providing 2G services, Crown Castle is strategically positioned to play an important role in “Internet- on-the-go” services as consumers embrace third generation technology. Also known as 3G, the convergence of voice, high-speed data and video represents one of the most exciting technologies in today’s rapidly advancing marketplace. Crown Castle is at the forefront to offer rapid deployment, turnkey design and build-out, extensive engineered cover- 4 4 1 age and total outsourcing for new entrants to the market. 2 5 4 0 2 3 Site Rental Revenues (millions of dollars) Site rental revenues increased more than 40% in 2001 99 00 01 Crown Castle International 18 2001 Annual Report Moving Beyond the Acquisitions Phase: A Focus on Operational Excellence Since the Company’s inception in 1994, our mission has been to develop, deploy, own and operate the world’s most technologically advanced, shared communications infrastructure. Our acquisition strategy enabled Crown Castle to acquire significant assets in our three primary geographic markets and propelled the Company into an industry-leading position. Our initiatives are global in nature, from the United States to the United Kingdom to Australia. When Crown Castle became more operationally focused in August, our management team established four priorities to drive shareholder value through disciplined execution of our business plan. We will continue to focus on these initiatives in 2002 as we (1) lease existing sites, (2) streamline operations, (3) maximize site revenue and (4) allocate capital efficiently. ° Organic tower leasing is a priority for Crown Castle as it is central to our business plan. Sharing sites between carriers allows them to improve their network quality and establish the higher-density networks required for high-speed wireless data services. It also reduces the proliferation of towers as sites are utilized by multiple providers. (continued on page 25) Letter to Shareholders 21 2001 Annual Report WIRELESS TELECOM Global demand for wireless services continues to grow rapidly, with worldwide subscribers projected to reach 1.62 billion by 2006. In the United States where wireless penetration is below Europe's 70%, subscriber growth is projected to increase from the current level of 118 million to 186 million subscribers by 2006. While the number of wireline phones will remain stable or see a moderate fluctuation at approximately 170 million, the number of wireless phones in use is expected to surpass wireline units by early 2005. Minutes of use are projected to increase by 172% per subscriber by 2010, up from 292 minutes to 797 minutes; and minutes of use per site are projected to increase by 98% to 562,000 minutes. – Source: Pyramid Research, Raymond James & Lehman Brothers 7 1 8 , 8 4 6 4 , 5 0 3 6 , 2 Number of New Tenants Added The Company increased revenue by adding new tenants 99 00 01 Crown Castle International 22 2001 Annual Report Moving Beyond the Acquisitions Phase: A Focus on Operational Excellence (continued) ° We have already achieved some notable efficiencies and streamlined certain of our operations by identifying areas to drive costs out of the Company. In the United States, we reorganized our regional delivery platform midyear from 18 to 13 regional offices. Crown Castle’s operational focus is allowing us to pursue greater effi- ciencies with our people, processes and procedures as a follow-up to the Company’s prior acquisitions phase. ° Site revenue maximization is being pursued as we develop plans around additional revenue opportunities that extend from our core business of leasing space on towers. We are taking a two-pronged approach: (1) further emphasis on developing our existing relationships to assist in solving carrier issues, and (2) providing additional services at our sites. ° Prudent capital allocation is being employed to maximize the returns on new towers constructed and other investments. Our rigorous capital review process is designed to position Crown Castle as free cash flow positive by 2004. Letter to Shareholders 25 2001 Annual Report 6 2 1 4 2 1 4 2 1 BROADCAST EXPERIENCE Seventy-five years of broadcast experience have positioned Crown Castle as an international leader. The Company launched the world’s first commercial Digital Terrestrial Television and Digital Audio Broadcast transmission networks in the United Kingdom in 1998. Leveraging our broadcast outsourcing experience, Crown Castle launched One 2 One’s network in Northern Ireland in 2001, encompassing the design and build-out of the network. This repre- sented the first full outsourcing of a telecommunications network in the UK and the first time a transaction of this type had been accomplished by a wireless service provider. In the fourth quarter, Manx Telecom (BT) launched Europe’s first 3G network on the Isle of Man in partnership with Crown Castle and NEC. Broadcast Revenues (millions of dollars) Broadcast revenues remained steady in 2001 99 00 01 Crown Castle International 26 2001 Annual Report [strategy ] The Year Ahead Crown Castle’s strategy continues to be blocking and tackling as we pursue operational excellence to bet- ter meet our customers’ needs. With a focus on details, we believe that by executing our business model and satisfying our customers in a timely and efficient manner, the relationships we have fostered over the years should position the Company to realize our expectations. As we move forward to address the opportunities that face us, several important factors bode well for our Company, including: ° Crown Castle controls an impressive global tower footprint. ° The Company is identifying techniques and tools to provide shared infrastructure for enhanced coverage. ° Carriers will continue to improve their networks in order to add new services and meet customer demands. ° We are focused on value-added endeavors and committed to achieving efficiencies in our operations. On behalf of the Board of Directors and our employees, I offer our sincere appreciation for your continued support and confidence. We will continue to report our accomplishments, achievements and endeavors throughout 2002. In the interim, please let us hear from you with your questions or comments. Respectfully, John P. Kelly President & CEO Letter to Shareholders 29 2001 Annual Report CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS* (In thousands of dollars, except per share amounts) Net revenues: Site rental and broadcast transmission Network services and other Total net revenues Costs of operations: Site rental and broadcast transmission Network services and other Total costs of operations General and administrative Corporate development Restructuring charges Asset write-down charges Non-cash general and administrative compensation charges Depreciation and amortization Operating income (loss) Interest and other income (expense) Interest expense and amortization of deferred financing costs Loss before income taxes, minority interests, extraordinary item and cumulative effect of change in accounting principle Provision for income taxes Minority interests Loss before extraordinary item and cumulative effect of change in accounting principle Extraordinary item – loss on early extinguishment of debt Cumulative effect of change in accounting principle for costs of start-up activities Net loss Dividends on preferred stock Net loss after deduction of dividends on preferred stock Per common share – basic and diluted: Loss before extraordinary item and cumulative effect of change in accounting principle Extraordinary item Cumulative effect of change in accounting principle Net loss Common shares outstanding – basic and diluted (in thousands) Years Ended December 31, 1999 2000 2001 $ 267,894 77,865 345,759 $ 446,039 203,126 649,165 $ 575,961 322,990 898,951 114,436 42,312 156,748 43,823 5,403 5,645 — 2,173 130,106 1,861 17,731 (110,908) (91,316) (275) (2,756) 194,424 120,176 314,600 76,944 10,489 — — 3,127 238,796 5,209 33,761 (241,294) (202,324) (246) (721) 238,748 228,485 467,233 102,539 12,337 19,416 24,922 6,112 328,491 (62,099) 8,548 (297,444) (350,995) (16,478) 1,306 (94,347) — (2,414) (96,761) (28,881) $ (125,642) (203,291) (1,495) — (204,786) (59,469) $ (264,255) (366,167) — — (366,167) (79,028) $ (445,195) $ $ (0.94) — (0.02) (0.96) 131,466 $ $ (1.47) (0.01) — (1.48) 178,588 $ $ (2.08) — — (2.08) 214,246 * The results of operations for the years ended December 31, 1999, 2000 and 2001 are not comparable as a result of business and asset acquisitions. Results of operations of these acquired businesses and assets are included in our consolidated financial statements for the periods after the respective dates of acquisition. This information should be read in conjunction with "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the Securities and Exchange Commission. Crown Castle International 30 2001 Annual Report CONDENSED CONSOLIDATED BALANCE SHEET (In thousands of dollars) Assets: Cash and cash equivalents Short-term investments Other current assets Property and equipment, net Escrow deposit for acquisition Investments Goodwill and other intangible assets, net Other assets Liabilities and Stockholders’ Equity: Current liabilities Long-term debt, less current maturities Other liabilities Minority interests Redeemable preferred stock Stockholders’ equity OTHER CONSOLIDATED DATA (In thousands of dollars) EBITDA** Summary cash flow information: Net cash provided by operating activities Net cash used for investing activities Net cash provided by financing activities 1999 December 31, 2000 $ 549,328 — 112,717 2,468,101 50,000 — 596,147 60,357 $ 3,836,650 $ 453,833 38,000 242,345 4,303,037 — 137,000 1,112,876 114,794 $ 6,401,885 2001 $ 804,602 72,963 338,496 4,844,912 — 128,500 1,051,431 134,554 $ 7,375,458 $ 131,281 1,542,343 67,064 55,292 422,923 1,617,747 $ 3,836,650 $ 286,920 2,602,687 93,354 155,344 842,718 2,420,862 $ 6,401,885 $ 411,453 3,394,011 157,549 168,936 878,861 2,364,648 $ 7,375,458 Years Ended December 31, 1999 139,785 $ 2000 247,132 2001 316,842 $ $ 92,608 (1,509,146) 1,670,402 165,495 (1,957,687) 1,707,091 131,930 (895,136) 1,109,309 ** EBITDA is defined as operating income (loss) plus depreciation and amortization, non-cash general and administrative compensation charges, asset write-down charges and restructuring charges. EBITDA is presented as additional information because management believes it to be a useful indicator of our ability to meet debt service and capital expenditure requirements. It is not, however, intended as an alternative measure of operating results or cash flow from operations (as determined in accordance with generally accepted accounting principles). Furthermore, our measure of EBITDA may not be comparable to similarly titled measures of other companies. Crown Castle International 31 2001 Annual Report BOARD OF DIRECTORS Ted B. Miller, Jr. Chairman Randall A. Hack Senior Managing Director Nassau Capital LLC Dale N. Hatfield SENIOR OFFICERS John P. Kelly President and Chief Executive Officer Peter G. Abery President and Managing Director Crown Castle UK Limited Kelli Hunter Cole Director of Interdisciplinary Telecommunications Senior Vice President of Human Capital University of Colorado at Boulder Lee W. Hogan Individual Investor Edward C. Hutcheson, Jr. Individual Investor and Consultant David L. Ivy Individual Investor John P. Kelly Wesley D. Cunningham Senior Vice President, Chief Accounting Officer and Corporate Controller Robert E. Giles Executive Vice President of Strategic Business Units E. Blake Hawk Executive Vice President and General Counsel W. Benjamin Moreland President and Chief Executive Officer Senior Vice President, Chief Financial Officer and Treasurer J. Landis Martin Robert E. Paladino President and Chief Executive Officer Senior Vice President, Global Performance NL Industries, Inc. and Chairman and Chief Executive Officer Titanium Metals Corporation Robert F. McKenzie Individual Investor William D. Strittmatter Vice President GE Capital Corporation and Managing Director - Telecommunications for the Structured Finance Group of GE Capital Corporation Michael T. Schueppert Senior Vice President of Business Development Edward W. Wallander President and Chief Operating Officer Crown Castle USA Inc. Crown Castle International 32 2001 Annual Report CORPORATE INFORMATION General Investor Inquiries and Correspondence Corporate Headquarters 510 Bering, Suite 500 Houston, Texas 77057 713.570.3000 Agents and Trustees Mellon Investor Services LLC 600 North Pearl Street Suite 1010 Dallas, Texas 75201 214.922.4420 Transfer Agent for Common Stock, 12 3/4% Senior Exchangeable Preferred Stock, 6.25% Convertible Preferred Stock The Bank of New York 5 Penn Plaza 13th Floor, Corporate Finance Department New York, New York 10001 212.896.7268 Trustee for the Company’s Debt Securities The Law Debenture Trust Corporation p.l.c. Princes House, 95 Gresham Street London EC2V 7LY 44.(0)20.7696.5206 Trustee for Crown Castle Finance PLC (f/k/a Castle Transmission (Finance) PLC) £125 million 9% Guaranteed Bonds due 2007 Independent Auditors KPMG LLP 700 Louisiana Houston, Texas 77002 713.319.2000 Investors with general questions about the Company are invited to call at 713.570.3000. Investor correspondence should be directed to: Jay Brown Vice President of Finance Crown Castle International Corp. 510 Bering, Suite 500 Houston, Texas 77057 The Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission is available, without charge, on written request. In addition, a copy of any exhibit to the Form 10-K is available upon payment of a specified fee, which fee shall be lim- ited to the Company’s expenses in furnishing such exhibit(s). All requests should be directed to: Crown Castle International Corp. Corporate Secretary 510 Bering, Suite 500 Houston, Texas 77057 Annual Meeting Stockholders are invited to attend the 2002 Crown Castle International Corp. Annual Meeting of Stockholders, which will be held on Wednesday, May 29, 2002 at 9:00 a.m. at the: Houstonian Hotel 111 North Post Oak Lane Houston, Texas 77024 Formal notice of the meeting, along with the proxy statement and materials, will be mailed or otherwise available on or about April 26, 2002, to stockholders of record as of April 9, 2002. Web Site www.crowncastle.com Common Stock Information Crown Castle International Corp.’s common stock is traded on NYSE (stock symbol: CCI). Statements made by Crown Castle International Corp. in this annual report that are not historical facts, including those regarding future performance, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ from expectations. www.crowncastle.com