Crown Castle could acquire fiber assets to bolster its small cell backhaul capabilities, says research firm

As Crown Castle looks to gain a larger foothold in the burgeoning small cell market it's clear that the provider will have to bolster its fiber network by purchasing other smaller fiber providers, a research firm said.

A new Macquarie Research report suggests that the service provider could use its growing fiber network to serve adjacent enterprise business opportunities, while conducting a number of tuck-in acquisitions.

"We believe CCI can unlock substantial value by monetizing their fiber assets in the enterprise space driving material improvements in FTTC yields and incremental returns on capital," said Macquarie Research in a report. "Crown is building a sales force to capitalize on this opportunity which Moreland views as a mechanism to support growth in the small cell business, and not a stand-alone driver of growth. CCI passed on a few fiber assets in non-core mkt's recently, but we expect them to do 2-3 fiber tuck-ins in 2016 (<$50m)."

Having more fiber assets on hand would enable it to more effectively to respond to the growing demand from service providers like Verizon for a mix of lit and dark fiber-based wireless backhaul services.

Crown Castle's CEO Ben Moreland told Macquarie that owning fiber assets can set them apart from a host of other players chasing the same opportunity.

"CCI wants to own the fiber to their small cell deployments which represents 80-90% of the $100k all-in blended cost per node," Macquarie Research said. "Carriers are awarding deployments based on time-to-market and ease of deployment, and Moreland sees the ownership of strategic fiber assets as a clear competitive advantage."

Crown Castle has not been shy about making deals to enhance its status in the small cell backhaul space.

In April, the tower company acquired Quanta Fiber (Sunesys), a subsidiary of Quanta Services, for about $1 billion in cash, bolstering its dark fiber capabilities for small cell backhaul services.

At the time, Moreland said that Quanta Fiber's assets could enable it serve more than 3,500 small cell opportunities.

By making this purchase, Crown Castle would be able to better compete against other aggressive fiber players like Lightower Fiber Networks, which inked a deal to acquire Fibertech, a move that immediately expanded its fiber footprint in the Northeast, Mid-Atlantic and Midwest regions of the United States.

For more:
- see this report (PDF)

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