EQT buys big stake in Spirit Communications

Private equity firm EQT is purchasing a majority stake in regional fiber provider Spirit Communications, giving the service provider a new source of capital to grow the network to respond to a host of wholesale and business service opportunities in the southeastern United States.

Spirit’s current owners, which founded the service provider in 1985, will retain a significant stake in the company. Once the transaction is completed, Spirit Communications President and CEO Robert Keane and current Chairman of the Board Brian Singleton will each be appointed to the new board of directors.

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Since its founding in 1985, Spirit has established itself as a growing provider of fiber-based data and broadband services to enterprises, governments and wireless carriers serving South Carolina, North Carolina and Georgia.

Spirit's network consists of over 9,000 miles of fiber and serves thousands of customers across 17 metro markets. Spirit's fiber is directly connected to over 2,400 buildings as well as over 2,500 cell sites.

EQT Infrastructure plans to invest in the continued development of Spirit's fiber footprint and services. The company is expected to benefit from the underlying macro trends of growing data traffic and increasing data bandwidth needs.

"After many months of effort to identify the right partner to continue and accelerate Spirit's capabilities, EQT was identified as the type of partner that would help transform the business,” said Keane in a release.

Spirit and EQT are not disclosing financial details of the deal, which is subject to customary regulatory approval and other closing conditions. The service provider has become a key player in the growing fiber infrastructure sector, a market segment where EQT holds significant industry expertise.

Spirit has continued to gain momentum in key areas like wireless backhaul. In August 2016, Spirit won a dark fiber contract from one of the largest wireless operators in multiple North Carolina cities. By the third quarter of 2018, Spirit will build fiber to over 215 towers to expand the wireless operator’s coverage in Charlotte, Winston-Salem, Greensboro, Durham, and Raleigh, North Carolina. Previously, Spirit won a dark fiber contract for this wireless operator’s South Carolina sites in 2015.

It appears that EQT is looking to establish a greater foothold in the U.S. fiber infrastructure market. This is not the first time EQT has taken a large stake of a fiber provider, having purchased fellow fiber-centric provider Lumos Networks for $950 million in February. This deal positions EQT to potentially grow Lumos’ existing fiber business.

EQT isn’t the only private equity firm that’s been taking a bigger stake in the U.S. fiber infrastructure market. Oak Hill Partners acquired FirstLight Fiber, a competitive provider that serves mainly New York and Northern New England, for example. Since it acquired FirstLight, the VC firm has purchased a number of other regional fiber-based service providers, including Oxford and Sovernet, and combined their operations with FirstLight.