Latest Telecom Consolidation: Crown Castle and Lightower?

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Cell-tower operator Crown Castle International reportedly has made an offer to acquire Lightower Fiber Networks in what would be its biggest acquisition to date.

Crown Castle’s offer exceeds $7 billion, including debt, Reuters said, citing people familiar with the matter. Berkshire Partners, the majority owner of Lightower, will spend the next few days analyzing Crown Castle’s bid before agreeing to a sale, and a deal could come as soon as this month, the sources added.

Crown Castle and Lightower did not respond to requests for comment.

Stratecast/Frost & Sullivan’s Roopashree Honnachari

Roopashree Honnachari, Stratecast/Frost & Sullivan’s business communication and cloud computing services industry director, tells Channel Partners this is an interesting merger that “all makes sense when you look at the portfolio and details of assets.”

“Crown Castle has always been focused on the mobile infrastructure business – towers and tower connectivity – but Lightower, [which] started off as a dark fiber company, has established itself as (a) full-fledged networking solutions provider (lit and unlit services),” she said. “The acquisition gives Crown Castle access to a dense footprint and customer base in the Midwest and Northeast region that is home to large financial services customers that use Lightower networks for low-latency trading and other high-speed connectivity applications.”

Small cells are gaining major traction in the market, especially in dense areas such as New York City where deploying new towers is out of the question, Honnachari said.

“As Crown Castle goes after the small cell market, Lightower Networks’ fiber footprint enables it to connect these small cells back to switching centers, instead of buying that service from another provider,” she said. “So this gives them a bigger piece of the customer’s wallet.”

Based in Houston, Crown Castle’s portfolio includes 40,000 towers and 29,000 miles of fiber-supporting small-cell towers.

Lightower’s network spans 3,000 fiber route miles and serves the financial services industry, as well as government clients over its network in the Northeast. Last month, Lightower announced its initiative to strengthen its all-fiber connectivity to cable landing stations across the Eastern Seaboard.

Lightower, which itself has made numerous acquisitions over the years, was the subject of buyout rumors last summer, with Zayo and Level 3 Communications seen as possible suitors.