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Crown Castle to acquire Lightower Fiber Networks for $7.1Bn

US tower operator Crown Castle International has agreed to acquire privately held Lightower Fiber Networks for about $7.1 billion in cash, a deal that will make it one of the largest owners of metro fibre in the US.

Crown Castle, which is the largest provider of shared wireless infrastructure in the US with 40,000 towers and 50,000 small cell nodes on air, is buying Lightower from a group of investors including Berkshire Partners and Pamlico Capital.

Small cell towers – and the optical fibre to connect them – are increasingly in demand as mobile operators look to increase coverage and capacity in their wireless networks, especially in urban areas. For Crown Castle, access to fibre means more opportunities to expand into new markets.

Currently, Lightower owns or has rights to approximately 32,000 route miles of fibre located primarily in northeastern cities, including Boston, New York and Philadelphia. Post-acquisition, Crown Castle's fibre assets will double to about 60,000 route miles of fibre covering 23 of the top 25 most populous US metro markets.

“We are excited about the addition of Lightower given its attractive fibre footprint and the value we believe it will create for our shareholders,” said Jay Brown, Crown Castle’s chief executive officer. “Lightower’s dense fibre footprint is well-located in top metro markets in the Northeast and is well-positioned to facilitate small cell deployments by our customers. Following the transaction, we will have approximately 60,000 route miles of fibre with a presence in all of the top 10 and 23 of the top 25 metro markets.”

Lightower also comes with a high-quality mix of customers consisting of large enterprises, government agencies, healthcare providers, educational institutions and carriers. With its recurring revenue model underpinned by long-term contracts, Lightower’s customer contracts have a weighted average remaining current term of about four years, and a remaining contract value of about $2.7 billion.

Crown Castle expects the acquisition will contribute $850 million to $870 million in site rental revenues, $510 million to $530 million in adjusted earnings before tax and $465 million to $485 million in adjusted funds from operations before financing costs during the first full year of ownership.

To finance the deal, which is expected to close by the end of the year, Crown Castle said it has received financing commitments from Morgan Stanley Senior Funding and Bank of America Merrill Lynch of about $7.1 billion for a new unsecured bridge facility.

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