October 13, 2016
In May of this year CS&L purchased PEG Bandwidth, and Tower Cloud was acquired on Aug. 31 by CS&L. Subsequently, the two fiber optics companies have been merged to become Uniti Fiber, a wholly owned subsidiary of CS&L. We sat down with George Townsend, SVP, strategic projects, Uniti Fiber, to get his take on the new ownership and merger of Tower Cloud and PEG Bandwidth.
What is the impact of the acquisition by CS&L and the subsequent merger on TowerCloud?
Townsend: We now have the funding behind us of CS&L, which was spun off from Windstream into a REIT. The REIT collects $650 million a year in annual rental payments from Windstream and they wanted to put that capital to use and grow it.
Tower Cloud was in four states, Florida, Georgia, Alabama and South Carolina. We were going deep and expanding, but PEG had a broader footprint in roughly 15 states, moving up the Northeast seaboard, Illinois and in the South Central United States. The combination of our footprints makes us a much stronger company.
Will you continue to grow?
Townsend: We have plans to expand to a nationwide network over time, so there will probably be more M&A activity as we go forward. Our scale will grow tremendously over the next two to three years. Our goal is to get as many infrastructure miles in terms of dark fiber, lit assets, number of building connections as we can to provide for the needs of our customers.
Who are your customers?
Townsend: Both PEG and Tower Cloud began as strictly fiber to the tower businesses and as our networks expanded we developed, over the past two to three years, additional verticals to sell into, such as large bandwidth wholesale and enterprise companies. We also provide much needed connectivity between rural markets and the larger metro areas. Today, towers account for approximately 80 percent of our revenue and wholesale/enterprise solutions account for 15 to 20 percent of the total. I think it will grow over time to a much larger percentage.
What does this merger mean to the tower companies?
Townsend: We are going to be able to provide more infrastructure, more customized solutions for them as they move from their current lit footprint to wanting dark fiber and C-RAN designs. We will have the capital at a lower cost to design more custom solutions, tie multiple markets together and provide a better over experience for them.
How excited are you about the growth of small cells and DAS?
Townsend: I think that is a huge upside opportunity for us and one that we are laser focused on. We have been looking at small cells for two years now. We built out a 22-node small cell system across the 22-acre Olympic Centennial Park in Atlanta for Verizon a couple of years ago. We just added the second tenant, AT&T, about a month ago.
How does the merger impact your small cell business?
Townsend: We are doing full turnkey small cell solutions for carriers today. We will continue to provide those solutions across these vast markets that we have now. And we think the denser footprint will allow us to be a better service provider for the wireless community. Our denser fiber footprint gives the RF teams more opportunities to design around the networks we have in place, or they can locate near enough to us that we can build to them.
Can you connect multiple carriers’ small cells on a single fiber optic run?
Townsend: It’s not uncommon for us to accommodate multiple carriers’ small cells on a fiber path, if we have enough fiber available or we overbuild it.
What is CS&L’s vision of the wireless future?
Townsend: I think CS&L’s leadership team is young, aggressive and well-funded. They are looking at acquiring ground leases and tower assets, and they are looking at us to provide our expertise in lit fiber networks serving both the wireless carriers and the wholesale and enterprise entities. We are looking at small cells as a key growth area for us. We are also looking at the internet of things, which is going to be a huge opportunity . With dense fiber assets and scale, we are going to be able to get to more and more locations as that technology develops. We are also connecting data centers to other data centers, as well as connecting wholesale and enterprise customers to data centers.