Communications Sales & Leasing (CS&L) has acquired Tower Cloud for $230 million in cash and stock, advancing its asset portfolio with a broader set of dark fiber assets and wireless operator relationships.
Set to close by early fourth quarter of 2016, Tower Cloud shareholders will receive initial consideration of $230 million, subject to customary closing adjustments, including $180 million of cash and the issuance of 1.9 million shares of CS&L common stock.
Tower Cloud established itself as an infrastructure solutions provider to the wireless and enterprise sectors.
What CS&L gets out of this deal are a larger pile of fiber assets. Currently, Tower Cloud's fiber network consists of 90,000 fiber strand miles in service across the southeastern United States, with 181,000 fiber strand miles awarded for future deployment for the major wireless carriers.
In tandem with the fiber assets, CS&L gains four other benefits in four key areas: expanding its wireless operator relationships; accelerating its small cell and dark fiber businesses; creating operational synergies; and having assets in 15 markets.
With over 90 percent of Tower Cloud's revenue coming from national wireless operators, the acquisition increases CS&L's exposure to the national wireless operators with long term contract revenues.
No less important is small cell and dark fiber. While the wireless industry is still early in the adoption for dark fiber-based services, Tower Cloud has made strident momentum in these areas. The service provider is in the process of building dark fiber routes in Florida and Georgia with $175 million in total contract revenues.
The Tower Cloud assets also complement the PEG Bandwidth assets that CS&L purchased in January. CS&L said it expects to achieve annual run-rate cost synergies of $6 million within three years after closing by combining the operations of PEG and Tower Cloud.
At the same time, the Tower Cloud assets will complement the PEG network and will grow CS&L's network to encompass 4.2 million fiber strand miles.
- see the release
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