Fresh off the closing of its acquisition of Tower Cloud, CS&L is making a move in the financial markets. The network infrastructure REIT is putting plans in place to potentially sell some $250M in stock via the establishment of an 'at the market' equity offering.
They don't plan to actually sell any stock just yet, but rather are billing the move as 'additional flexibility' for future moves. The most obvious need for such flexibility, of course, would be for further M&A.
CS&L has bought PEG Bandwidth and Tower Cloud already this year, and is combining the two under the new brand Uniti Fiber. It seems quite clear that they hope to follow up those purchases with further inorganic moves, bringing all operating assets under the new umbrella.
CS&L of course got started as a spinoff by Windstream of its network assets under a triple net leasing arrangement. The early money said that CS&L would aim for additional triple net leasing arrangements with other companies, but instead they have bought their way into the operations side of things.
Future targets might include wholesale network infrastructure assets with a particular focus on the wireless backhaul segment. Beyond that, however, the industry's only network REIT is making up the rules as it goes along. FiberLight seems like a good fit. But I wonder if CS&L might be a natural buyer of one or more of the assets currently under the INDATEL banner.
Those tend to be closely held by consortiums of local and regional rural players who haven't really participated in the consolidation of the sector. But while they might shy away from a Zayo-type suitor, an approach from a network REIT with something between a buyout and a triple net lease arrangement that would let them keep control over their network might be a more enticing option.
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