April 18, 2017 —
Crown 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.