Zayo grows fiber-to-the-tower footprint to 800 macro tower, small cell sites

Zayo continues to see new opportunities in its fiber-to-the-tower (FTTT) business, announcing that as of the end of June it sold services to over 800 macro tower and small cell sites that leverage previous anchor FTTT network builds already in place.

The service provider estimates that FTTT services will produce a greater than 20 percent unlevered return (based on the initial term of the underlying contracts) on approximately $23 million of incremental net capital investments.

It is gaining benefits today from these efforts. During the first half of 2015, total volume of follow-on macro tower and small cell sales continues to grow, increasing by more than 50 percent compared to the same period in 2014.

In July, Zayo announced that it secured a new agreement with an unnamed wireless carrier to provide FTTT service to 500 towers, a deal that will not only expand its wireless backhaul business, but also could be used to target new enterprise and content service opportunities. Outside of Seattle, Zayo said during its third quarter earnings call that it also won a number of key wireless backhaul deals with major wireless operators, including projects in Dallas, Phoenix and Denver.

What will also help grow its FTTT business further are efforts by large wireless operators such as AT&T (NYSE: T), Sprint (NYSE: S) and Verizon Wireless (NYSE: VZ) to densify their networks by adding new macro cells and small cells to improve coverage and capacity. Verizon Wireless is adding new small cells in key markets such as Cincinnati, for example.

A recent SNL Kagan report revealed that the number of U.S. macro cell sites is expected to increase by nearly 25 percent over the next five years, totaling more than 380,000 sites in 2020. 

By leveraging initial anchor FTTT sales to major wireless operators, Zayo said that it can provide additional services to these operators and high-bandwidth services to other non-wireless customers that reside near the fiber routes through follow-on sales on or near the initial anchor FTTT network builds.

Matt Erickson, president and COO of Zayo's Physical Infrastructure segment said in a release that "School districts, healthcare providers, and technology companies use the fiber to interconnect their key locations and to connect to their remote cloud and data center environments."

For more:
- see the release

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