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Crown Castle Goes Back to the Future with Tower Development Corp. Buy

By J. Sharpe Smith

AGL-ArticleImg1April 11, 2016 – Some tower portfolios simply go to the highest bidder, others seem to the be the result of long term relationships in the industry. Crown Castle International’s purchase of Tower Development Corporation (TDC) late last week for $461 million could be placed in the latter category. TDC, which owns and operates 336 towers in the United States and Puerto Rico, is the portfolio company of Berkshire Partners, which has a long history of working closely with CCI.

The purchase of the towers, which average two tenants each, is expected to contribute $25 million to $27 million to CCI’s site rental gross margin in the first full year and to be immediately accretive.

The acquisition of TDC brings the giant public tower company full circle with the roots of its long-term relationship with Berkshire Partners, which was one of the original investors in Crown Castle. Along with investing multiple times in CCI, Berkshire worked with its management to build the financial tools needed to participate in the tower industry consolidation, eventually helping it go public in 1998 and with subsequent sales of equity securities.

Additionally, TDC, which was formed in 2009, has developed wireless infrastructure in partnership with CCI.

Berkshire also played a role supplying capital and advice in CCI’s acquisition of the British Broadcasting Corporation’s tower and broadcast assets in 1997, which were divested in 2004.

“There was a true partnership between [Berkshire] management and investors through the key early domestic acquisitions made by CCI, and especially during the ground breaking effort to prove to the BBC that CCI was a worthy outsourcing partner with the operating skills and capital necessary to ensure continued smooth operation of their critical transmission assets,” the firm writes on its website.

At the end of 2015, CCI had operations in 100 U.S. markets, with more than 40,000 towers, 17,000 small cells and 16,000 miles of fiber-optic backhaul.