July 29, 2015 — Proceeds of $1.3 billion from the sale of its Australian subsidiary will aid Crown Castle in its deployment of fiber and small cells. First and foremost, the capital will be put to work through its new acquisition, Quanta Fiber Networks (Sunesys), which owns or has right to 10,000 miles of fiber in major metro markets across the country.
“The sale of [CCAL, an Australian tower operator] was opportune as it allows us to redeploy capital from a slower growth asset toward an opportunity with an expected higher growth profile in Sunesys,” said Jay Brown, Crown Castle’s chief financial officer.
The acquisition of Sunesys’ fiber footprint, which is expected to be completed in the Q3, will more than double Crown Castle’s fiber footprint for small cell deployment, according to Brown.
“Our focus and continued investment in the United States is based on our view that the continuing growth in U.S. consumer demand for mobile data, which is projected to increase seven-fold between 2014 and 2019, will require significant investments by the wireless carriers to increase the density of their networks,” Brown said.
Sunesys is expected to contribute as much as $85 million to site rental gross margin with $20 million of general and administrative expenses during the first full year of ownership, according to Brown.
“We believe that as mobile demand continues to grow, carriers will need to deploy small cells in conjunction with macro towers to address network congestion. And while it’s still early days, we are seeing evidence that support our investment pieces,” he said.
The importance of small cells to the Crown Castle’s bottom line is on the increase. Site rental revenues from small cells grew more than 30 percent in the second quarter, year over year and now represent 8 percent of site rental revenue. The small cell network currently comprises 7,000 miles of fiber supporting 15,000 nodes. Another 2,300-nodes have been awarded but are not yet under construction.
“Needless to say, we are very excited by the opportunities presented in small cells, which we believe builds on our core competency as the leading provider of U.S. wireless infrastructure, leverages our existing relationships with the wireless carriers and enhances our long-term growth in AFFO and dividend per share,” Brown said.
American Tower Sees Second Quarter DAS Growth
In this week’s second quarter earnings call, American Tower announced that it enhanced its DAS offerings in the second quarter, growing its portfolio 11 percent or by 32 networks year over year to a total of 300 indoor DAS networks.
“We are pleased with the performance of these systems,” said Tom Bartlett, American Tower CFO. “We have achieved an average indoor tenancy of 2.2 carriers. DAS, in combination with our managed rooftop business, represents 6 percent of our U.S. revenues and it increased 25 percent in the quarter.”
Quotes for this article courtesy seekingalpha.com