Crown Castle to acquire Quanta Fiber for $1B

Crown Castle is acquiring Quanta Fiber (called Sunesys), a subsidiary of Quanta Services, for about $1 billion in cash, a deal that will immediately bolster the wireless tower company's dark fiber capabilities for small cell backhaul services.

A big element of this deal for Crown Castle is the fiber footprint to serve small cell backhaul deployments being carried out by major wireless operators in a number of key cities in the United States.

By gaining access to Sunesys' dark fiber capabilities, Crown Castle will be able to address Verizon Wireless' (NYSE: VZ) desire to have these solutions for its macro cell and small cell deployments. While other large operators have yet to join them, Verizon Wireless has been mandating that its backhaul partners deliver a dark fiber backhaul solution. 

Ben Moreland, CEO and president of Crown Castle, said in a release that by acquiring Sunesys, the company will have fiber assets that could potentially serve more than 3,500 small cell opportunities.

Sunesys currently owns or has rights to nearly 10,000 miles of fiber in major metro markets across the United States, including Los Angeles, Philadelphia, Chicago, Atlanta, Silicon Valley and northern New Jersey. About 60 percent of Sunesys' fiber miles are located in the top 10 basic trading areas (BTAs).

Crown Castle itself owns rights to about 7,000 miles of fiber supporting nearly 14,000 nodes, which it says contribute 7 percent to each of Crown Castle's site rental revenues and site rental gross margin. Upon completing the acquisition of Sunesys, Crown Castle will own or have rights more than 16,000 miles of fiber.

The company expects to close the acquisition by the end of 2015 and to be immediately accretive to Adjusted Funds from Operations (AFFO) per share upon closing. It also expects the deal to contribute approximately $80 million to $85 million to gross margin with approximately $20 million of general and administrative expenses in the first year of Crown Castle's ownership.

The acquisition of Sunesys is just one of a number of regional providers Crown Castle has snapped up in recent years as a way to create a stockpile of fiber assets. In September 2014, it purchased 24/7 Mid-Atlantic, a deal that gave it 800 route miles of fiber infrastructure across the Maryland, Delaware, and northern Virginia region. 

Crown Castle is not alone in its desire to beef up its dark fiber capabilities to serve small cell backhaul. Earlier this week, Lightower Fiber Networks inked a deal to acquire Fibertech, a move that immediately expands its fiber footprint in the Northeast, Mid-Atlantic and Midwest regions of the United States.

What's interesting about the Crown Castle/Sunesys and the Lightower/Fibertech tie-ups is that they may represent some of the last large acquisitions in the competitive fiber services space.  

Brian Washburn, service director for global business network and IT services at Current Analysis, told FierceTelecom in an interview that Zayo and Level 3 Communications have already snapped up the more attractive independent competitive assets over the past decade. This means that the remaining key fiber assets are owned by CLECs, traditional ILECs and cable operators, all of which are unlikely to sell anytime soon.

"What's left for standalone fiber-based businesses are either unattractive to prospective buyers (e.g., overlaps routes they already have), or they are not interested in selling (e.g., community fiber projects, or they are executing on a long-term business model to build value before they'll shop the market), or have other factors that make them less-than-ideal," Washburn said. "I am not saying folks can't sift through the remaining competitors and find something interesting, but I think the best deals to be had, were closed maybe about 2006-2012 or so."

For more:
- see the release
- see this FierceWireless article

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