On July 18, Crown Castle announced it has entered a definitive agreement to acquire Lightower for $7.1 billion cash. The transaction is expected to close by the end of 2017. Jay Brown, Crown Castle’s CEO, commented, “We are excited about the addition of Lightower given its attractive fiber footprint and the value we believe it will create for our shareholders.” The acquisition will result in the solidification of Crown Castle as the largest provider of shared wireless infrastructure in the U.S.
Lightower’s Fiber Assets
The transaction will effectively double Crown Castle’s fiber footprint, due to Lightower’s 32,000 fiber miles. After the two companies combine, Crown Castle will own approximately 60,000 route miles of fiber. This expansion will cover 23 of the 25 most populous U.S. fiber markets and will position Crown Castle to better capitalize on the growing demand for mobile connectivity as network architectures evolve and bandwidth demands continue to grow.
Crown Castle’s Small Cell Platform
By combining Lightower’s dense metro fiber footprint and Crown Castle’s indoor and outdoor small cells platform, Crown Castle can enhance its ability to more easily deploy small cell solutions (SCS) to wireless carrier customers. This will also reduce the time and capital required to deploy SCS solutions.
Increasing Revenue for Shareholders
Lightower is well-known for generating strong revenue growth with high margins and return on invested capital. Their high-quality mix of customers (ranging from large enterprises to government agencies) are still under long-term contracts, which amounts to approximately $2.7 billion in remaining contract value. Furthermore, Crown Castle is expecting to increase its long-term annual dividend growth target from 6%-7% to 7%-8%. Brown said of the acquisition, “We expect the transaction to be immediately accretive to our AFFO [Adjusted Funds from Operations] 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.” In their third quarter 2017 earnings release, Crown Castle anticipates providing its outlook for 2018 in addition to the dividend increase announcement.
For more information on Crown Castle’s acquisition of Lightower, see the full press release.
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