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Wells Fargo Likes CS&L Fiber/Tower Combo

By J. Sharpe Smith

Senior Editor, eDigest

February 16, 2017 — Applauding Communications Sales & Leasing’s (CSAL) REIT structure, dividend yield and diversified growth strategy, Wells Fargo Securities announced today that it has commence coverage with an outperform rating.

“We expect CSAL to show nice organic growth in its fiber segment (Uniti Fiber),” wrote Jennifer Fritzsche, senior analyst. “By having many ‘tools’ in the tool box, the CSAL model should appeal as a new vendor of choice for wireless carriers as they move forward with their respective network densification initiatives.

Wells Fargo Securities believes CSAL will grow its tower portfolio network densification build-to-suit (BTS) contracts in concert with its fiber optic network buildout.

“Importantly, CSAL views towers as complementary to its fiber services and would expect any BTS opportunity to be linked to fiber contracts,” Fritzsche wrote. “We would expect CSAL will become more active in the tower sector throughout 2017 and beyond.”

CSAL acquires and constructs both wireless and wireline communications infrastructure. It currently owns 4.2 million fiber strand miles, 468 wireless towers and other communications real estate in the United States and Mexico.

“[CSAL’s] diversification is driven by opportunistic M&A,” Fritzsche wrote. “CSAL is focused on acquiring and constructing mission critical communications infrastructure, with priority being fiber (61 percent of pipeline), towers (22 percent), ground leases (13 percent), and consumer broadband (4 percent).