Crown Castle International Corp. (NYSE:CCI) says it has agreed to purchase LTS Group Holdings LLC, which operates Northeastern U.S. fiber-optic network services provider Lightower, from Berkshire Partners, Pamlico Capital, and other investors for approximately $7.1 billion in cash, subject to certain limited adjustments. The planned acquisition, expected to close by the end of this calendar year, would double Crown Castle's fiber-optic network footprint, which would better position the company to support wireless infrastructure deployments, including small cell deployments.
Lightower owns or has rights to approximately 32,000 route miles of fiber and serves such metro markets in the Northeast as Boston, New York, and Philadelphia. It also has been active in the metro Atlantic states and has executed acquisitions of its own (see "Lightower Fiber Networks, Fibertech Networks seek merger,""Lightower acquires fiber-optic network assets from HarborLite Networks," and "Lightower opens fiber-optic network route across the Potomac River"). The acquisition would give Crown Castle control of approximately 60,000 route miles of fiber and a fiber cable presence in 23 of the 25 most populous U.S. markets. Crown Castle believes the combination of a greater fiber network footprint and its small cells platform will improve its ability to meet the small cell deployment needs of its wireless carrier customers. That includes access to approximately 40,000 towers as well as 50,000 small cell nodes on air or under development.
The proposed purchase price represents approximately 13.5x expected adjusted EBITDA contribution during its first full year of ownership, Crown Castle estimates. The company expects Lightower will contribute $850 million to $870 million in site rental revenues, $510 million to $530 million in adjusted EBITDA, and $465 million to $485 million in adjusted funds from operations (AFFO) before financing costs.
"We expect the transaction to be immediately accretive to our AFFO per share and long-term dividend growth and, as a result, anticipate increasing our annual common stock dividend rate, subject to approval by our board of directors, between $0.15 and $0.20 per share following the closing of the transaction," said Jay Brown, Crown Castle's CEO.
Crown Castle plans to use cash on hand and equity and debt financing, including borrowings under its revolving credit facility, to fund the purchase. The company says it has received financing commitments from Morgan Stanley Senior Funding, Inc. and BofA Merrill Lynch totaling approximately $7.1 billion for new unsecured bridge facility.
The Lightower deal follows the announcement in April that Crown Castle also intends to purchase West Coast fiber-optic network services provider Wilcon (see "Crown Castle International to buy Wilcon"). Pamlico Capital owns a piece of Wilcon as well as Lightower. That deal is expected to close in the third quarter of this year.
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