Crown Castle gets ‘crown jewel’ Lightower for $7.1B

The reports were right on the money. Crown Castle International (CCI) has signed a definitive agreement to acquire Lightower—technically LTS Group Holdings LLC—for approximately $7.1 billion in cash.

That Crown Castle was considering the acquisition was first reported by Bloomberg.

Lightower owns or has rights to approximately 32,000 route miles of fiber located primarily in metro markets in the Northeast, including Boston, New York and Philadelphia. Following completion of the transaction, Crown Castle will own or have rights to approximately 60,000 route miles of fiber, with a presence in all of the top 10 and 23 of the top 25 metro markets. That will make the company one of the larger fiber network operators.

“We are excited about the addition of Lightower given its attractive fiber footprint and the value we believe it will create for our shareholders,” Crown Castle CEO Jay Brown in a statement.

He added that Lightower’s footprint in top metro markets in the Northeast will be valuable for supporting small cell deployments by Crown Castle customers.

Crown Castle is widely understood to have both AT&T and Verizon as customers. The company bought several thousand of AT&T’s towers in 2013.

Wireless carriers’ evolution to 5G technology will include using millimeter-wave spectrum that is less robust than centimeter-wave spectrum traditionally used in wireless communications. In order to provide reliable coverage, millimeter-wave systems will require far more base stations—small cells—than today’s 4G systems need.

The response of financial analysts has been generally favorable.

Wells Fargo Securities refers to Lightower as a “crown jewel.” Analysts there say the deal will underscore the value of Crown Castle competitor Zayo, which will still be three times larger than the combination of Crown Castle and Lightower, and which also has a solid presence in dense urban markets where small cells are going to be needed in great numbers. 

New Street has been skeptical that supporting small cells would be anywhere near as lucrative as the macro tower business, but believes the small cell portion of Crown Castle’s business will be small enough a portion of the company to give Crown Castle “the benefit of the doubt.” 

Deutsche Bank Markets Research, like Wells Fargo and New Street, was pleased to see Crown Castle’s estimates that the deal will be more accretive than most previously expected.

Crown Castle anticipates closing the deal by the end of this year.