Last summer there was some discussion that Lightower Fiber Networks might be up for sale, but the source was quite sketchy at the time. Nothing immediate came of it, but just before the Easter weekend broke, the rumor resurfaced and this time it's coming in as a Reuters report that is worth taking seriously.
The article suggests that Lightower is working with Evercore Partners and Citygroup to kick off an auction and mentions CenturyLink, Zayo, and Crown Castle as likely buyers. A report from Cowen, however, is pointing at the cable giants Charter, Comcast, or Cox as the most likely buyer, and that American Tower should not be ruled out. I'll throw another related possibility out there as being Altice, just to complete the set.
Smaller active buyers like Uniti Group and Windstream probably don't have the firepower to compete for this one and are already pretty busy right now. But on the other hand just because Lightower's private equity owners may be ready to move on doesn't mean some other private equity group couldn't step into the breach. Yet a strategic buyer is most likely if one emerges just because of the synergies possible.
Let's winnow down that field a bit. I'd be shocked if CenturyLink were to go after Lightower while still working on the Level 3 deal. While the assets would fit well together of course, the added complexity seems like a risk they aren't likely to take for an asset that won't come cheap. Cox doesn't seem anywhere near aggressive enough to spend $7B on regional and metro fiber right now, but they're welcome to prove me wrong. And I'll believe American Tower after they make some sort of actual move and not before, so it'll be a surprise by definition.
But Comcast, Charter/Spectrum Enterprise, and Crown Castle I do believe could make the move, and one can never discount Zayo so I won't. So in an auction, which of those four wins? The one that wants it the most. I'm going to go with Crown Castle in this case. I think they are ready to move it up a notch. Zayo will poach if the others don't bid high enough, but I don't think they need Lightower's footprint to reach what they want to reach. Comcast or Charter have the firepower, but I'm not yet convinced they will pay $7B+ for a regional (ok supra-regional) wholesale/large enterprise fiber operator.
And that's what it's going to cost, at least $7B give or take. Lightower has evolved from a rather large number of acquisitions over the years whether by themselves or those they acquired - Fibertech, Sidera, Lexent Metro Connect, National Grid Wireless, Keyspan, Hudson Valley Data Net, Veroxity, Open Access, Long Island Fiber Exchange, Datacenter101, Neon, Con Ed Communications are all names that make up their DNA today, and I'm sure there are a few others along the way as well that I'm not remembering today. They've also been building out organically, especially into new territories on their southern front in Virginia and recently North Carolina.
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