Crown Castle confirms $7.1bn agreement to acquire Lightower

21 July 2017 | Natalie Bannerman


Crown Castle has confirmed that it is to buy Lightower for $7.1 billion in cash.

The news follows on from the rumoured report earlier this week, the deal for approximately $7.1 billion in cash will see Crown Castle buy LTS Group Holdings – which owns Lightower – from Berkshire Partners, Pamlico Capital and its other investors.

“We are excited about the addition of Lightower given its attractive fibre footprint and the value we believe it will create for our shareholders,” said Jay Brown, Crown Castle CEO.

“Lightower’s dense fibre footprint is well-located in top metro markets in the north-east [of the US] and is well positioned to facilitate small cell deployments by our customers. Following the transaction, we will have approximately 60,000 route miles of fibre with a presence in all of the top 10 and 23 of the top 25 metro markets,” said Brown.

“We expect the transaction to be immediately accretive to our AFFO [adjusted funds from operations] per share and long-term dividend growth and, as a result, anticipate increasing our annual common stock dividend rate, subject to approval by our board of directors, between $0.15 and $0.20 per share following the closing of the transaction.”

In addition to Lightower’s fibre footprint, the deal also presents a number of other strategic opportunities for Crown Castle.

It provides scale for small cell deployments, enhancing its ability to meet the small cell deployment needs of its wireless carrier customers, while reducing the time and capital needed to deploy them.

The buyout will increase the company’s long-term annual dividend growth target from 6-7% to 7-8% and will increase its annual common stock dividend rate by roughly $0.15-$0.20. It will contribute a predicted $850 million to $870 million in site rental revenues, $510 million to $530 million in adjusted EBITDA (earnings before interest, tax, depreciation and amortization) and $465 million to $485 million in AFFO before financing costs.

Lightower serves a mix of agencies, healthcare providers, educational institutions and carriers, with a revenue model consisting of long term contracts. Most of them have a remaining term of approximately four years, resulting in approximately $2.7 billion of remaining contract value, in addition to revenues generated from real property and rents.

Crown Castle intends to finance the deal through a combination of cash-in-hand equity and debt financing, including borrowings under its revolving credit facility and has said it expects completion of the acquisition by the end of 2017.