Dycom is acquiring various wireline and wireless assets from Goodman Networks for $107.5 million, a move that will enhance its construction capabilities to better respond to its service provider customers' fiber and wireless network expansion efforts.
This deal will be financed through a combination of cash on hand and borrowings under Dycom's senior secured credit facility.
What Dycom gets out of this deal is a set of wireless and wireline construction services capabilities in Texas, Georgia, Southern California and other markets.
Dycom said that these assets are currently expected to produce revenues ranging from $150 million to $165 million over the next 12 months. The company added that it expects earnings before interest, taxes, depreciation and amortization (EBITDA) to approximate Dycom's current percentage in the 2018 fiscal year.
Financial analysts said that the deal could have some potential longer-term benefits for its largest customers such as AT&T (NYSE: T) and Verizon (NYSE: VZ).
AT&T's plans to expand its FTTH network as part of the DirecTV deal requirements has made the telecom giant a significant growth customer for Dycom. In the most recent quarter, AT&T contracts contributed 26.8 percent of Dycom's revenue, for example.
"It [Dycom] never seems to be overly reactionary and thinks more longer term than near-term blips and getting an asset at a fair price," said Jennifer Fritzsche, senior analyst for Wells Fargo, in a research note. "These Goodman assets help it with its wireless business yet -- but (perhaps more importantly, in our view) also only further strengthens the tools in its toolbox to help it better serve the needs of its largest customer."
Meanwhile, Goodman sees the sale as a way to realign its strategic focus towards its field services and professional services business segments while continuing to de-leverage and strengthen its financial position.
After meeting customary closing conditions and certain other closing conditions, Dycom said it expects the acquisition to be completed by June 30, 2016.
- see the release
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