Exclusive-EQT-backed Zayo, TPG vie for Crown Castle assets worth nearly $10 billion, sources say

By Milana Vinn

NEW YORK (Reuters) - Fiber network owner Zayo Group and buyout firm TPG are competing to acquire the fiber and wireless assets of Crown Castle (NYSE:CCI ), in a deal that could be valued at nearly $10 billion, according to people familiar with the matter.

Zayo, which is owned by buyout firms EQT AB (ST:EQTAB ) and DigitalBridge, and TPG are the two remaining bidders for the assets, which include Crown Castle's fiber business and its small cell business, which provides wireless services and technology, the sources said, requesting anonymity as the discussions are confidential.

Both units are worth less than $5 billion each and it is possible that Crown Castle could choose to sell only one of the assets, one of the sources said. If both assets are sold, the deal is likely to be valued between $8 billion and $10 billion, the source added.

A deal is still several weeks away and not imminent, the sources said, cautioning that a transaction is not guaranteed. Another suitor could also approach Crown Castle, and it is possible that no deal with any party is reached, the sources added.

If the talks are successful, the transaction would come up at a time when dealmaking in the fiber industry is heating up, as the rapid growth of fiber broadband provides a major boost to infrastructure providers, making them attractive acquisition targets.

Crown Castle, TPG, EQT, and DigitalBridge declined to comment. Zayo did not immediately respond to requests for comment.

Houston, Texas-based Crown Castle is a telecommunications infrastructure provider which operates more 40,000 cellular towers across the United States.

The company, which has a market value of roughly $52 billion, has grown its fiber business through several acquisitions since its foray into the sector in 2015. However, the high cost of building fiber infrastructure has weighed on its financial performance, forcing the company to consider a retreat from the business and slash spending.

Crown Castle, which rents out towers to wireless carriers such as Verizon (NYSE:VZ ) and AT&T (NYSE:T ), is now looking to focus on growing its tower business, which is expected to benefit from the largest U.S. carriers upgrading their networks to 5G and increasing capacity to meet booming data demand.

The company has been exploring options for its fiber assets, after reaching a deal with activist investor Elliott Investment Management over shaking up its board.

In February, Crown Castle's co-founder Ted Miller told Reuters in an interview that the company could fetch as much as $15 billion by selling its fiber assets if it let him and his partners join its board of directors.



In June, the company cut its annual profit forecast and said it would lay off 10% of its workforce as a result of an operational review of its fiber business.

Boulder, Colorado-based Zayo was taken private in 2019 by EQT and DigitalBridge's infrastructure fund that was known as Digital Colony at the time. Zayo operates a 145,000-mile fiber network across North America and Canada that connects wireless carriers, cloud service providers, data centers, and large corporations.

Source: Investing.com