CS&L says 60% of its M&A pipeline are fiber-based companies

dark fiber

Communications Sales & Leasing (CS&L), a real estate investment trust (REIT), is establishing itself as one of the latest consolidators of the fiber infrastructure industry with plans to make more deals throughout 2017.  

Mark Wallace, CFO of CS&L, told investors at the Citi 2017 Internet, Media & Telecommunications Conference that the key priority of its acquisition strategy will focus on purchasing fiber assets.

“About 60% of our pipeline by asset type is in the fiber category,” Wallace said. “We plan to deploy most of our capital going forward in the fiber space followed by towers and a smaller component of consumer broadband.”

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Having a diverse asset portfolio, 60% of CS&L’s purchases include $250 million of capital deployed, while 25% are bigger than that figure.

“Most of our transactions are privately negotiated and are not part of a structured sales process,” Wallace said. “Our pipeline is very strong and I feel good about where our pipeline stands in 2017 and hope to make a lot more progress on our diversification plans going forward.”

While CS&L has plans to pursue more fiber deals, the service provider has already made good use of its two initial purchases of PEG Bandwidth and Tower Cloud.

Following $40 million in second quarter 2016 fiber sales, CS&L combined the operations of PEG and Tower Cloud to create Uniti Fiber, a division focused on selling dark fiber and lit services to wireless operators and enterprise customers.  

Already, this combination is paying off for CS&L.

In October, Uniti Fiber won a big dark fiber deal serving a large wireless operator, prompting it to expand its reach in three markets in Southeast Iowa and the Central and Northern Illinois regions.

Wallace said that the Uniti Fiber opportunities to sell services across the Uniti Fiber territories created via the PEG and Tower Cloud acquisitions continue to ramp.

“The Uniti Fiber team has done a great job at selling lit services contract renewals and dark fiber wins,” Wallace said. “We talk a lot at Uniti Fiber about the cross selling synergies we expect to have and we have seen opportunities to bid across the PEG and Tower Cloud networks.”