Wednesday, July 26, 2017

Crown Castle to acquire Lightower for $7.1bn

Crown Castle International announced that it has entered into a definitive agreement to acquire LTS Group Holdings (Lightower) from Berkshire Partners, Pamlico Capital and other investors for approximately $7.1 billion in cash, representing an approximately 13.5x expected adjusted EBITDA over Crown Castle's first full year of ownership.

Lightower owns or holds the rights to approximately 32,000 route miles of fibre located primarily in key metro markets across the northeast, including in Boston, New York and Philadelphia, and following completion of the transaction Crown Castle noted that it will own or have rights to a total of approximately 60,000 route miles of fibre in the U.S.

The acquisition will expand Crown Castle's extensive, dense metro network, almost doubling its fibre footprint and making the company one of the largest owners of metro fibre in the U.S. The company's expanded fibre footprint after the transaction will cover 23 of the top 25 largest U.S. markets and is intended to position Crown Castle to address the growing demand for mobile connectivity and higher bandwidth.

The agreement is also designed to provide scale for small cell deployments. By combining Lightower's dense metro fibre footprint with Crown Castle's small cells platform, as well as its real estate and network engineering capabilities, the transaction will better enable Crown Castle to meet the small cell deployment needs of wireless carrier customers.

Crown Castle expects that the transaction will be immediately accretive to its adjusted funds from operations (AFFO) per share and will increase its previous 6% to 7% long-term annual dividend growth target to 7% to 8%. In the first full year of ownership, Crown Castle anticipates that Lightower will contribute $850 to $870 million in site rental revenues, $510 to $530 million in adjusted EBITDA and $465 to $485 million in AFFO, before financing costs.

The company noted that Lightower serves a mix of customers including large enterprises, government agencies, healthcare providers, educational institutions and carriers. Crown Castle provides wireless carriers with infrastructure to support their operations, specifically operating approximately 40,000 towers and 60,000 route miles of fibre supporting small cells once the Lightower acquisition is completed.