The nation’s largest tower operator is making a major investment in distributed antenna systems. Crown Castle International (NYSE: CCI) says it will purchase NextG Networks Inc. for roughly $1 billion from a private equity group led by Madison Dearborn Partners. With more than 7,000 nodes on air, NextG is the largest provider of distributed antenna systems (DAS) in the United States. NextG also has 1,500 nodes under construction and owns the rights to acquire more than 4,600 miles of fiber.
“Increasingly, we believe that small-cell architecture, such as DAS, will be an important complement to traditional macro tower installations,” said Ben Moreland, Crown Castle’s president and CEO.
Crown Castle markets its DAS solutions to wireless operators that want to reach areas where traditional network build-outs are difficult because of zoning or cost constraints or lack of coverage by a macro network. The company says its acquisition of NextG will bring additional wireless coverage and capacity solutions to customers beyond those areas traditionally served by towers. Many of those customers are in hard-to-reach areas in big cities. Eighty percent of NextG’s nodes are in the 10 largest U.S. metro areas, and more than 90% are in urban and suburban locations.
Crown Castle will finance the cash deal with debt but says NextG’s cash flow should cover interest payments in the short term and increase shareholder value in the long term. The deal is expected to close in the second quarter of 2012. Shares of Crown Castle were down slightly on the news.
Kirkland & Ellis LLP and Kelley Drye & Warren LLP advised NextG Networks. In addition to Madison Dearborn, NextG investors include Accel Partners, Redpoint Ventures and Meritech Capital Partners. Cravath, Swaine & Moore LLP advised Crown Castle in the deal.
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