Category Archives: Mergers and Acquisitions

SQUAN Eyes Smart Cities With Acquisition

July 20, 2017 — 

SQUAN, a telecom infrastructure service provider, has acquired Communications Specialists, Inc. (CSI), which will not only add geography and a broader services base to support its existing clients but it will open to doors to the development of future Smart Cities.

CSI is involved in aerial and underground fiber construction services for the telecom and cable TV industry, with a focus on services in support of large and small-scale projects for Multiple Services Operators (MSOs), Internet Services Providers (ISPs) and wireless network operators

“CSI is a growing provider of services that are highly complementary to the current business in which SQUAN is engaged,” states Duane Albro, CEO, SQUAN.  “Our combined companies will leverage cross-functional skills across each of our service lines as we layer new skills onto our ever-expanding geographical footprint.”

SQUAN has been pursuing the expansion of services in support of a long-term view of Smart City development and the development and operation of heterogeneous networks. CSI fulfills an element of this overarching strategy.

“We share SQUAN’s vision of becoming a complete end-to-end network infrastructure provider,” states Ken Stabler, CEO, CSI.  “Together, we form a world-class company providing leading-edge solutions with an emphasis on quality and safety for our customers.”

In the coming months, the CSI brand will transition to SQUAN Fiber Infrastructure Solutions.  This division of SQUAN will continue to function from its main office in Fishkill, New York.  Stabler will continue to lead this organization as its president and will report to Albro.

Backed by M/C Partners, Neutral Connect Networks Buys DAS Communications, 5 Bars

July 12, 2017 — 

M/C Partners, a Boston-based telecom private equity firm, has formed Neutral Connect Networks (NCN), which purchased of DAS Communications and 5 Bars. M/C Partners is NCN’s lead investor and has committed up to $30 million to fund the firm’s continued expansion.

“We are excited to have the opportunity to combine these two leading players in the small cell arena to create Neutral Connect,” Brian M. Clark, M/C managing partner, said. “M/C Partners has a long and successful heritage in the wireless industry, and we believe that the small cell opportunity represents a massive shift in the network architecture of mobile carriers, which we are keen to participate in.”

Telecom executive Paul McGinn was hired as CEO of the newly formed NCN. McGinn was most recently the director of business development at Vertical Bridge and previously the CEO of CIG Wireless. He has also worked with TCP Communications and SBA Communications.

“This transaction brings together two complementary neutral host operators, and the combined business will have a broad geographic presence across the United States,” McGinn said.

McGinn has hired Brian Porter, former vice president of in-building at Ericsson, as the senior vice president of sales and operations for the new company. Porter has 17 years of wireless-industry experience with such companies as STI Brasil, American Tower, FiberTower and Spectra Site.

DAS, founded in 2007 by Tyler Kratz, has built and continues to operate multiple wireless networks at strategic venues in Boston and New York.

California-based 5 Bars deploys DAS systems in the sports and entertainment sectors, with deployments in numerous large stadiums and casinos. 5 Bars’ DAS team will play a role in the new company, and John Clarey, 5 Bars’ former CEO, will continue as an investor in NCN.

“The financial commitment from NCN and M/C Partners provides 5 Bars the needed resources to continue to build and operate the large projects it has in its pipeline.” The terms of the all-cash transaction remain confidential.

Verizon Wins Bidding Contest to Buy Straight Path

AGL eDigest

May 11, 2017 —

By J. Sharpe Smith

Senior Editor, AGL’s eDigest —  

Verizon Communications will acquire Straight Path for $3.1 billion outbidding AT&T for the firm which holds 133 licenses in the 28 GHz band and 735 licenses in the 39 GHz band.

Consequently, Straight Path also announced the termination of its merger with AT&T and Switchback Merger Sub, dated April 9, 2017. AT&T had bid $1.6 billion or $95.63 per share for Straight Path. The Straight Path board of directors had determined that the Verizon deal was a superior proposal to the AT&T merger agreement, which was not amended in light of the competing bid. Verizon will pay, on behalf of Straight Path, a termination fee of $38 million to AT&T.

According to MoffettNathanson, Verizon’s initial bid of $1.8 billion was raised to $2.3 billion before it landed at $3.1 billion, an increase from $0.009 per MHz-POP up to $0.017 per MHz-POP. The firm pondered the sudden rise in value of this formerly relatively obscure spectrum band.

After analyzing spectrum in the 28 GHz and 39 GHz bands, MoffettNathanson discovered that the owner of Straight Path and its spectrum would have “all the leverage in working with the FCC to repackage the spectrum for an upcoming auction.”  Until that auction is held, Straight Path’s spectrum will be the only usable 39 GHz licenses on the market, the firm added.

Verizon’s acquisition of Straight Path for $184.00 per share in Verizon stock represents a premium of 486 percent to the closing price of Straight Path common stock of $31.41 on January 11, 2017.

In spring 2016, Verizon purchased XO Communications, whose wireless spectrum includes 91 licenses of LDMS (local multipoint distribution system) spectrum in the 28-31 GHz range and 10 licenses in the 39 GHz band.

Evercore served as exclusive financial advisor to Straight Path and Weil, Gotshal & Manges LLP served as company counsel on this transaction. Debevoise & Plimpton LLP served as counsel to Verizon on this transaction.

Competing Bids Spice Things Up as Carriers Lay Claim to 5G Spectrum

AGL eDigest

By J. Sharpe Smith

Senior Editor, AGL eDigest

J. Sharpe SmithThe high stakes for the next generation of wireless begins with access to ultra-high frequency licensed spectrum. Although most spectrum transactions remain private, just how competitive that market is began to become apparent this week as Straight Path received a competing bid for its millimeterWave (mmWave) spectrum.

Straight Path reported to the Securities and Exchange Commission that on April 13, that it received a letter from a third party is “a topping bid that it believes would be more favorable to our shareholders” than the amount bid by AT&T.

When Reuters broke the story, Straight Path investors saw their stock jump 22 percent on April 17 in response to the reports of a bid, which many speculated was by Verizon, that would trump AT&T’s offer (+160 percent premium over the Straight Path’s share price).

Welcome to the spectrum rush for 5G. In August 2016, Verizon already picked up XO Communications and its licenses at 28-31 GHz in the 39 GHz band (188 billion megahertz/POPs or 575 megahertz, according to industry estimates). AT&T answered by quietly purchased FiberTower, giving it spectrum at 24 GHz and 39 GHz in January of this year.

AT&T needs Straight Path’s 173 billion MHz-POPs of 24GHz and 39GHz spectrum plus the FiberTower buy to keep up with the spectrum haul that Verizon got with its purchase of XO Communications.

This is a land grab for what is known as ultra-high frequency spectrum, once thought uninhabitable for commercial wireless, to be used for broadband densification. Note that AT&T and Verizon paid little attention to the Broadband Incentive Auction’s 600 MHz spectrum, which is expected to be used for coverage not capacity.

“Well, some would say in the world of 5G, anything in the 2 GHz – 3.5 GHz range may be the ‘low band’ of 5G, with the high-band being the mmWave spectrum which FiberTower, Straight Path and XO all had,” wrote Jennifer Fritzsche, Wells Fargo senior analyst. “Funny – we remember when the low-band spectrum was 800 MHz and lower and it was called the ‘beach front property’ of the spectrum world.”

Globalstar, Next?

The competitive bidding over Straight Path’s spectrum begs the question of who the next acquisition target will be. Mobile satellite service provider Globalstar comes to mind. It has 11.5 megahertz  at 2.4 GH nationwide (3.7 Billion MHz-POP). On its website, it touts itself  as a “resource for LTE networks” and that “2.4 GHz is unique in its support of small cell deployment.”

The stock price of GlobalStar went up 20 percent after the Straight Path takeover, according to TheFly.com.

“Globalstar jumps as a spectrum play after Straight Path entices suitors,” TheFly.com wrote. “Shares of Globalstar are moving up after spectrum peer Straight Path said it received a bid from a third party looking to top the AT&T bid announced last week.”

TheFly.com noted that late in 2016 the FCC approved a Globalstar request to use its satellite spectrum (2483.5-2495 MHz) in a terrestrial wireless network.

It’s the Spectrum They are buying, Not the Company

None of these acquisition targets seem to be in that great of shape. Straight Path was recently fined by the FCC for not fully building out its network and providing substantial service. To settle the investigation, the Commission fined the Straight Path $100 million, but stated that it will drop that fine to $15 million if Straight Path agreed to return some licenses (93 of its 828 39-GHz spectrum licenses) to the FCC and sell the entirety of the license portfolio in arms-length transactions.

The company is proceeding with its plan to market its spectrum assets; it is required to pay the FCC 20 percent of the value received from the sale.

Nicholas Rossolillo, The Motley Fool, wrote this week that Globalstar is on “life support.”

“Globalstar has been growing its total sales, but still struggles with its bottom line. Its 2016 revenue increased 7 percent, but another round of financing could be needed to keep things afloat, as operating margin is still deep in the red,” he wrote. “After flirting with profitability early in the year, Globalstar dropped a bomb on investors in the fourth quarter. The company reported a quarterly $16.8 million loss on operations and a net loss of $117.2 million, returning the company to a long-term trend of red.”

Fiber Acquisition to Help Crown Castle Grow in California Urban Areas

April 18, 2017 — 

fiberCrown Castle International has acquired Wilcon Holdings, a fiber services provider that owns 1,900 route miles of fiber in Los Angeles and San Diego, for about $600 million. The acquisition feeds Crown Castle’s drive to deploy small cells.

“The acquisition of Wilcon provides us an extensive set of dense metro fiber assets that will enable us to continue to deliver fiber-fed small cell solutions for our wireless customers in our fastest growing and most active market,” said Jay Brown, Crown Castle’s CEO.  With Wilcon’s complementary footprint, Crown Castle expects to benefit both in the near term and the long term, growing its small cell deployments.

Crown Castle expects the acquisition to close in the third quarter of 2017.  In the first year of Crown Castle’s ownership, the transaction is expected to contribute approximately $40 million to gross margin and approximately $10 million of general and administrative expenses.  Crown Castle anticipates financing the transaction consistent with maintaining its current investment grade credit metrics. With the acquisition, Crown Castle will own or have rights to over 28,000 route miles of fiber.

“Crown Castle continues to be acquisitive in the fiber space,” wrote Jennifer Fritzsche, Wells Fargo senior analyst. “We note that the biggest cost element of the small cells model is fiber, and the more CCI owns of the underlying asset, the better the long-term margin profile. With wireless carrier activity turning to densifying their networks across dense metros, we believe CCI is best positioned to capture the incremental dollar of carrier capex spend.”

Verizon to Buy Billion dollars in Fiber Optics from Corning 

In other fiber optic news, Verizon Communications signed an agreement to buy a billion dollars in fiber optic cable and associated hardware from Corning for its nationwide wireless broadband network during the next three years.

The agreement calls for Corning to provide 12.4 million miles of optical fiber each year from 2018 through 2020, with a minimum purchase commitment of $1.05 billion.

In the past several months, Corning has averted a fiber-optic shortage with plans to expand capacity and to invest more than $250 million in its optical fiber, cable and solutions manufacturing facilities to help meet the demand of its global carrier and enterprise customers. Corning expects these capacity expansions to begin to come online in 2017 and become fully operational in 2018.