Lightower For Sale? The Rumor Resurfaces, Stronger Than Ever

April 17th, 2017 by · 18 Comments

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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Categories: Fiber Networks · Mergers and Acquisitions · Metro fiber

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18 Comments So Far

  • Bob says:

    I doubt it would happen, but it would be a great fit for one of the Canadian carriers to come into the US.

  • mhammett says:

    Of the options presented, I like Windstream the most.

  • Anonymous says:

    Crown Castle makes the most sense. Seems to be a lot of synergies. Let’s hope one of the cable providers doesn’t take them out and ruin what they have created from a service and support standpoint.

  • Rog says:

    I think if CCI picks it up it would only to not let someone else have it. I agree that footprint wise it makes a lot of sense, but I’m not sure they are $7B hungry for Enterprise business which I don’t think they really have their wrapped around yet. Taking on things like HFT customers and networks is not an easy think for a company who is used to 10 year tower deals to absorb and quantify. Personally I’d love to see the deal happen. The industry needs another large national player. It’s the different business models that I’m not sure if Crown execs are willing to make this large of a bet on. I feel Lumos or Fiberlight are better fits. A lot of the lightower areas are Comcast turf so I wouldn’t be surprised if they made a push for Lightower, I think they are serious about trying to move up market.

  • fred says:

    Isn’t Windstream’s network owned by Uniti? Who is going to own the EarthLink and Broadview networks?

    • Rob Powell says:

      Much of those networks is already leased, although some of the Deltacom intercity network is owned. It’s entirely possible that Windstream will do another deal with Uniti at some point to keep everything in the same bucket.

  • IberFay says:

    What about Summit IG? What’s the story on them?

  • Fibermancer says:

    Anyone think Fiberlight and Thermo would jump in and propose a merger to make an East Coast giant? Even if just to keep ANOTHER of the last big regional players from getting gobbled up by a Zayo/Crown Castle/CLink/VZ?

    • Anonymous says:

      Think they are more likely to sell than buy, but they certainly could. The piecing together of several regional players for another national network is still possible.

  • anon says:

    Would Verizon ever buy Lightower?

  • Anonymous says:

    Anyone heard any updates on these rumors?

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