Crown Castle Confirms $7.1 Billion Lightower Buy

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Cell-tower operator Crown Castle International is acquiring Lightower Fiber Networks for $7.1 billion in cash.

Crown Castle said the purchase enhances its position as the largest provider of shared wireless infrastructure in the United States, with about 40,000 towers, 50,000 small-cell nodes on air or under development, and 60,000 route miles of fiber nationally. Lightower owns or has rights to about 32,000 route miles of fiber located primarily in top metro markets in the Northeast, including Boston, New York and Philadelphia.

Crown Castle’s Jay Brown

The acquisition is expected to close by the end of the year subject to federal and state regulatory approvals, including Federal Communications Commission review.

“We are excited about the addition of Lightower given its attractive fiber footprint and the value we believe it will create for our shareholders,” said Jay Brown, Crown Castle’s CEO. “Lightower’s dense fiber footprint is well-located in top metro markets in the Northeast and is well-positioned to facilitate small-cell deployments by our customers.”

In his report, Mark Fontecchio, 451 Research’s M&A research manager, said the Lightower deal is the latest and largest of a “flurry of acquisitions by the buyer to expand its small-cell coverage in the U.S.” Crown Castle now has spent $10.7 billion on M&A in three years to build its small-cell network in the Northeast, southern California, Florida and Texas through acquisitions such as FiberNet ($1.5 billion) and Sunesys ($1 billion), he said.

“In the process, Crown Castle has spent more on M&A since 2014 than it had in the entire preceding decade and paid rich multiples along the way,” he said.

Why the premiums? Fontecchio said mobile networks face increasing demand as consumers increase video consumption and enterprises deploy mobile cloud apps, so to keep up with that data demand, operators are increasingly turning to small-cell deployments.

Crown Castle plans to double its small-cell deployments in two years.

Berkshire Partners is the majority owner of Lightower. Last month, Lightower announced its initiative to strengthen its all-fiber connectivity to cable landing stations across the Eastern Seaboard.

In the first full year of ownership, Crown Castle expects Lightower will contribute $850 million to $870 million in site rental revenues.

Earlier this week, Roopashree Honnachari, Stratecast/Frost & Sullivan’s business communication and cloud computing services industry director, said the merger “all makes sense when you look at the portfolio and details of assets.” The acquisition gives Crown Castle access to a “dense footprint and customer base in the Midwest and Northeast region that is home to large financial services customers that use Lightower networks for low-latency trading and other high-speed connectivity applications,” she said.