Crown Castle to buy Quanta Fiber Networks/Sunesys

Crown Castle International Corp. (NYSE:CCI), which provides infrastructure services to wireless operators, plans to expand its fiber-optic network footprint by acquiring Quanta Fiber Networks, Inc. (Sunesys). Sunesys is a wholly owned subsidiary of Quanta Services, Inc. (NYSE:PWR), who will receive $1.0 billion in cash from Crown Castle should the deal go through.

Sunesys provides fiber network services via an infrastructure that includes nearly 10,000 miles of owned or leased fiber in such markets as Los Angeles, Philadelphia, Chicago, Atlanta, Silicon Valley, and northern New Jersey. Approximately 60% of Sunesys's fiber miles reside within the top 10 basic trading areas (BTAs).

Crown Castle believes the acquisition of Sunesys will strengthen its position in small cell networks by more than doubling its fiber resources available for small cell deployments and expanding its presence in several of the top U.S. metro markets. The company already owns or has rights to approximately 7,000 miles of fiber that support approximately 14,000 nodes. Pro forma, the acquisition will extend Crown Castle's footprint to more than 16,000 miles of fiber that the company will either own or have rights to.

Crown Castle expects the acquisition to be immediately accretive to adjusted funds from operations per share upon closing, which is targeted for the end of this year. The transaction is expected to contribute approximately $80 million to $85 million to gross margin, with approximately $20 million of general and administrative expenses in the first year of Crown Castle's ownership.

"We pursued this transaction based on our view that the unique location of Sunesys's high-quality fiber assets will help to accelerate and extend the runway of growth in our small cell deployments," explained Ben Moreland, Crown Castle's president and CEO. "The Sunesys fiber assets are both complementary to our existing footprint and located where we expect to see significant investment by wireless carriers. Based on current small cell activity, including awarded and proposed small cell deployments, we have visibility into more than 3,500 small cell opportunities on or near the Sunesys fiber."

Quanta Services, naturally, is happy with the deal as well.

"This transaction enables us to enhance our strategic focus on energy infrastructure markets, which we believe will undergo substantial development in the coming years," said Jim O'Neil, Quanta's president and CEO. "Further, we believe the attractive market valuations for fiber assets provide us the opportunity to unlock the value of our fiber-optic licensing operations. The purchase price represents a 15X trailing EBITDA multiple, which recognizes the significant value these operations have created as part of Quanta Services."

Quanta estimates its soon-to-be former assets would generate approximately $105 million to $110 million in revenue and $0.12 to $0.13 in diluted earnings per share for the 12 months ending December 31, 2015.

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