DigitalBridge could be eying Crown Castle's fiber biz

'There is a public fiber company that we are looking at,' Liam Stewart, COO of DigitalBridge, told the financial analysts at TD Cowen. The analysts believe that fiber company is Crown Castle.

Mike Dano, Editorial Director, 5G & Mobile Strategies

May 31, 2024

3 Min Read
Internet cable and yellow ethernet connector in close up against a colorful background
(Source: Ian Rutherford/Alamy Stock Photo)

Digital infrastructure company DigitalBridge might make a play for Crown Castle's fiber business in a deal that could be worth up to $15 billion.

"When asked about how the company is prioritizing its investments, management highlighted that 'there is a public fiber company that we are looking at,'" the financial analysts at TD Cowen wrote in a recent note to investors, citing their recent meeting with Liam Stewart, COO of DigitalBridge.

Continued the analysts: "We believe this is a reference to Crown Castle's fiber assets, particularly given recent unsubstantiated press reports that indicate Zayo (a portfolio company of DigitalBridge) has made first round bids for Crown Castle's fiber assets."

DigitalBridge acquired US fiber network operator Zayo in 2020.

Crown Castle announced late last year it would conduct a "strategic review" of its fiber business, jargon that typically indicates efforts to sell a business. The financial analysts at Raymond James estimated that Crown Castle's fiber and small cell business is worth a total of $15.2 billion. 

Arranging the pieces

Crown Castle's fiber sale process hasn't been smooth.

The company's strategic review itself was a response to attacks by activist investor Elliott Investment Management. The firm also managed to engineer the ouster of former Crown Castle CEO Jay Brown.

Crown Castle recently installed Steven Moskowitz, a former American Tower executive, as its new CEO.

More recently, Crown Castle's co-founder engaged in a campaign to help direct Crown Castle's strategic trajectory. Ted Miller co-founded Crown Castle in 1994 and was the company's CEO until 2001. Earlier this year, he attempted to get four nominees onto Crown Castle's board of directors. But the company's shareholders rejected that effort earlier this month.

Fiber frenzy

Finally, Crown Castle isn't the only company shopping its fiber assets.

"Our fiber is attractive and we've been very clear in saying it's a great business," Lumen Technologies CFO Chris Stansbury said this week at TD Cowen's Technology, Media & Telecom Conference, according to Seeking Alpha. Stansbury was responding to questions about the company's efforts to sell off its "mass markets" fiber business. "So, we'll see, we'll see what happens in the near term. But yeah, we will look for the right exit ramp at the right valuation on an ongoing basis."

Similarly, fiber operator Frontier Communications recently announced a "formal and comprehensive review process."

DigitalBridge CEO Marc Ganzi said in April he's evaluating such deals.

"I think we have got a significant amount of new pipeline of ideas," he said during his company's recent quarterly conference call in response to a question about M&A in the fiber sector, according to Seeking Alpha.

Ganzi said that, in general, prices are falling for some fiber assets. He said deals that were once priced at 18-25x EBITDA (earnings before interest, taxes, depreciation, and amortization) are now falling to 10-14x EBITDA.

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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