Crown Castle kicks off review of $15B fiber, small cell biz

Crown Castle announced it will conduct a "strategic review" of its fiber business. Such jargon typically indicates efforts to sell a business.

The move represents another win for Elliott Investment Management. Just a few weeks ago the activist investor firm took aim at Crown Castle and its leadership, and has so far managed to completely reshape the cell tower giant. Earlier this month, Crown Castle CEO Jay Brown said he would retire from the company following Elliott's calls for his ouster. Crown Castle also has canceled plans to relocate its corporate headquarters to Houston.

Crown Castle's new decision to review its fiber business reflects "our commitment to taking actions that best position the company for long term success," said P. Robert Bartolo, chair of the company's board, in a statement.

The move is "a significant step forward toward a stronger and more valuable Crown Castle," said Elliott Senior Portfolio Manager Jason Genrich in that same statement. Genrich will also join Crown Castle's board of directors as part of the review.

Crown Castle's fiber business includes 115,000 small cells on air or under contract and 85,000 route miles of fiber supporting those small cells. Crown Castle's fiber business is roughly half the size of its cell tower business in terms of site rental revenues. 

Interestingly, the financial analysts at Raymond James argued that a sale of Crown Castle's fiber and small cell business may not "immediately unlock significant value." In a note to investors, they estimated that Crown Castle's fiber and small cell business is worth a total of $15.2 billion. 

But Wall Street appeared to cheer the prospect of a sale of Crown Castle's fiber business. The company's shares have gained 10% during the past month.

Regardless, a strategic review of Crown Castle's fiber business comes at an important time in the US fiber industry overall. For example, AT&T has said it remains on track to build fiber to 30 million consumer and business locations by the end of 2025 – and it has recently suggested it may also "pass an incremental 10 to 15 million consumer and business fiber locations within its existing footprint."

AT&T isn't alone in looking to pump money into the fiber industry. According to one report, Peppertree Capital Management recently raised $1.1 billion for additional investments into cell towers, fiber and other digital infrastructure. The company recently bought more than 500 cell towers from Charter Communications. Meanwhile, Surf Internet recently scored a new $200 million debt facility from DigitalBridge to fund its fiber buildout across Indiana, Illinois and Michigan.