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Crown Castle (CCI) to Acquire Wilcon, Boosts Fiber Assets

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Crown Castle International Corp.CCI ,a leading wireless communication tower operator in the U.S. recently inked a deal to acquire privately-held Wilcon Holdings LLC (Wilcon) for approximately $600 million from Pamlico Capital and other unit holders of Wilcon.

Wilcon is the premier service provider of dark fiber, lit transport, internet access and colocation services in Southern California. Currently, it owns 1,900 route miles of fiber in Los Angeles and San Diego. On the completion of the proposed acquisition, Crown Castle will attain ownership rights of over 28,000 route miles of fiber.

The buyout is estimated to be completed in the third quarter of 2017. In the first year of Crown Castle's ownership, the transaction is expected to contribute nearly $40 million to gross margin and approximately $10 million of general and administrative expenses.

Booming Prospects

We believe that the acquisition of Wilcon will enhance Crown Castle's dark fiber capabilities in Southern California for small cell backhaul. We look forward to seeing how Crown Castle benefits in the upcoming days by leveraging Wilcon's dark fiber assets.

Crown Castle's ongoing efforts in repositioning itself from being a tower company to a fiber provider (focused on the small cell opportunity) looks impressive. Over the last two years, Crown Castle purchased three fiber operators: FPL FiberNet Holdings, LLC (in Jan 2017), Quanta Fiber (called Sunesys, in Apr 2015) and 24/7 Mid-Atlantic Network (in Sep 2014).

Notably, the present market scenario finds wireless operators ramping up their small cell plans to improve service capabilities in large markets. Verizon Communications Inc.'s VZ plans to deploy small cells using the 3.5GHz spectrum is in sync with its small cell densification and expansion of its dark fiber footprint strategy for 5G technology trials and launch.

Accordingly, Crown Castle seeks to pursue small cell deployments for their wireless customers in order to enhance their networks to meet the whooping demand for high-speed, high-capacity wireless services.

Wireless services are rapidly gaining ground based on technological advancements and network upgradations. Much of the infrastructure and upgrades require effective site management of cell towers and equipment. Crown Castle effectively addresses this opportunity as over 90% of its quarterly revenues come from wireless service providers like Verizon Communications, AT&T Inc. T and T-Mobile US Inc. TMUS . Crown Castle had acquired 9,700 wireless towers from AT&T and taken over 7,200 wireless towers of T-Mobile US.

Zacks Rank & Price Performance

Crown Castle currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Crown Castle's stock rallied 12.2% over the past three months, outperforming the Zacks categorized Reit- Eqty Trust Other industry's gain of 5.1%.

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Crown Castle International Corporation (CCI): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

Verizon Communications Inc. (VZ): Free Stock Analysis Report

T-Mobile US, Inc. (TMUS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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