Crown Castle's Lightower Acquisition Fuels Cell-Tower Expansion
Crown Castle International (
CCI) shares fell Wednesday, following the formal announcement that it would acquire Lightower Fiber Networks for about
$7.1 billion in cash.
Crown Castle also released second-quarter results before the market open.
The deal to buy Lightower provides Crown Castle the ability to expand its cellular services in highly populated urban areas in Northeastern metro markets, including Boston, New York and Philadelphia, the company said. It also will help provide 5G wireless infrastructure to customers such as Verizon Communications (
VZ) and AT&T (
T).
The deal originally was reported Monday, and some analysts said the deal
is pricey. Crown Castle also announced a public offering of $3.25 billion worth of common shares, and $1.5 billion worth of convertible preferred stock.
Crown Castle stock fell 2.1% to close at 98.66 on the
stock market today.
Crown Castle is a real estate investment trust that owns, operates and leases a network of wireless communication towers in the U.S., with about 40,000 towers. With the Lightower acquisition, Crown Castle will expand the miles of fiber it controls to 60,000, from 32,000. Lightower is privately owned by Pamlico Capital, Berkshire Partners and other investors.
IBD'S TAKE:
Crown Castle stock is down 7% since reports first surfaced that it had bid for Lightower. Crown Castle sports a weak IBD Composite Rating of 56 of a possible 99. Check out the IBD 50 for a list of top performing stocks.
When the deal closes, Crown Castle said it plans to increase its common stock dividend to between 15 cents and 20 cents per share.
Early Wednesday, Crown Castle also said Q2 revenue was $1.038 billion, up 8% from the year-ago quarter and ahead of the Zacks consensus estimate of $1.036 billion. It reported adjusted earnings of 31 cents a share, up 41%.
5GBackhaul.com