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Crown Castle (CCI) to Unite Fiber Assets Under Lightower


Crown Castle International Corp CCI is reportedly planning to unite its fiber operations/assets under the Lightower brand. The merged entity is likely to form a well-established brand and network. It will revamp Crown Castle’s position as one of the largest fiber network operators in the nation.

Crown Castle is a leading wireless communication tower operator in the United States. It owns, operates and leases more than 40,000 cell towers and approximately 60,000 route miles of fiber supporting small cells and fiber solutions in every major U.S. market.

Crown Castle’s Fiber Assets To Date

Crown Castle has been continuously trying to reposition itself from a tower company to a fiber provider (focused on the small cell opportunity), through the purchase of several fiber operators. Over the last two years, Crown Castle purchased three fiber operators: FPL FiberNet Holdings, LLC (in January 2017), Quanta Fiber (called Sunesys, in April 2015) and 24/7 Mid-Atlantic Network (in September 2014).

On Jun 26, 2017, the company gained ownership more than 28,000 route miles of fiber with the purchase of privately-held Wilcon Holdings LLC. Wilcon Holdings is the premier service provider of dark fiber, lit transport, internet access and colocation services in Southern California. It owns 1,900 route miles of fiber in Los Angeles and San Diego.

The company’s latest buyout includes LTS Group Holdings LLC (Lightower) on Nov 1, 2017. Lightower owns 32,000 route miles of fiber, primarily spread in top metro markets in the Northeast, including Boston, New York and Philadelphia. With this buyout, Crown Castle will attain ownership of more than 60,000 route miles of fiber.

Considering the current market scenario, Crown Castle is pursuing small cell deployments for wireless customers. The company is undertaking this measure to enhance its networks and meet robust demand for high-speed, high-capacity wireless services. Using small cells in unlicensed 3.5 GHz band will significantly reduce cost of operations for wireless operators. The 3.5 GHz radio frequency is being considered in many parts of the world for the upcoming 5G wireless standard.

Wireless services are rapidly gaining ground based on technological advancements and network upgrades. Much of the infrastructure and upgrades require effective site management of cell towers and equipment. Crown Castle successfully addresses this opportunity as more than 90% of its quarterly revenues come from wireless service providers like Verizon Communications Inc. VZ, AT&T Inc. T and T-Mobile US Inc. TMUS. The company has acquired 9,700 wireless towers from AT&T and taken over 7,200 wireless towers of T-Mobile US.

The deployment of 5G network should also drive growth in the company’s tower and small cell assets as wireless carriers are trying to expand and enhance their networks. The industry has already become a battleground in the race for 5G. Notably, completion of the 3rd Generation Partnership Project’s (3GPP) first implementable 5G New radio (NR) specification has set the stage for the global mobile industry to initiate full-scale development of 5G NR for large-scale trials and commercial deployments in 2019.

Bottom line

Crown Castle aims to leverage the fiber assets to serve two main business lines — small cell network deployments in top metro markets and other enterprise and adjacent wholesale opportunities. Moreover, the buyouts will help the company serve many new markets which were not accessible previously.

Zacks Rank & Price Performance

Crown Castle carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Crown Castle has been portraying an impressive price performance in the past year. Shares of Crown Castle have rallied 23.1% compared with the industry ’s gain of 2.8%.

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