Crown Castle buys TDC for $461 million

Crown Castle announced late last week that it has bought Tower Development Corporation (TDC), a portfolio company owned by investment firm Berkshire Partners, for approximately $461 million in cash. The deal for TDC give Crown Castle control of 336 towers in the U.S. and Puerto Rico with an average tenancy of approximately two tenants per tower.

Crown Castle says the transaction is expected to contribute approximately $25 to $27 million to site rental gross margin in the first full year of ownership. 

"Our acquisition of TDC is another successful milestone in our long-term relationship with Berkshire Partners," Crown Castle President and CEO Ben Moreland said in a statement. "The TDC acquisition represents an attractive and accretive investment opportunity that further enhances Crown Castle's portfolio of wireless infrastructure."

Crown Castle's latest acquisition comes as some analysts believe a squeeze is coming for the tower sector. Wells Fargo Securities analysts downgraded the tower sector under the belief that carriers will back off of traditional network infrastructure while the FCC's 600 MHz incentive auction and the standards process for 5G plays out.

But Moreland recently told a different story about the demand for macro cells among the top U.S. wireless carriers, saying that towers are and will continue to be an integral part of mobile networks.

"Macro sites i.e. towers remain the most attractive and cost effective way to cover a given geography with the spectrum that they [carriers] own," Moreland said during a recent earnings call, according to a Seeking Alpha transcript. "That said, there are certainly hybrid sites and hetnet architectures that we participate in…. And I can tell you that we're working with all four carriers in that regard to utilize our cost of capital and the sharing model to be an integral part of their solution going forward. And so I think it's been helpful for the last couple of weeks that three out of four carriers have confirmed that macro tower sites are an integral part of their model going forward. That's not surprising to us."

Crown Castle funded the acquisition with cash on hand, cash from borrowings under its revolving credit facility and cash from the sale of about 3.5 million net shares of common stock at an average price of $85.52 per share year-to-date.

For more:
- see this release

Related articles:
Report: Tower companies face 'growing pains' as AT&T, others reduce spending ahead of auction, 5G
SBA, Crown Castle report carriers' continued demand for macrocells

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