Crown Castle announced the sale of its fibre unit on March 13, and its long planned divesture from fibre and small cells.
It will sell its small cell business to EQT and its fibre business to Zayo for a combined total of US$8.5. The Transaction is expected to close in the first half of 2026, and brings to the end Crown Castle's unsuccessful foray into adjacent assets.
The divestment allows Crown Castle to focus on its core business of 40,000 towers across the United States, which end of year results revealed saw 4.5% organic revenue growth in 2024.
Steven Moskowitz, Chief Executive Officer of Crown Castle, said: “Selling our fiber segment represents a significant step on Crown Castle’s path towards a refined focus as a pure-play provider of multi-tenant tower assets.”
The unit has now been sold for less than half of its cumulative investment – US$8.5 vs. US$17.5B via M&A and capex. The direct loss amounts to $21 per share, according to analysis from MoffetNathanson, and that’s before taking into account any opportunity cost of that capital.
New homes for fibre and small cell
The unwinding of Crown Castle's diversification experiment is good news for the DigitalBridge and EQT. DigitalBridge's portfolio company Zayo, which it acquired in partnership with EQT in 2020, will acquire Crown Castle’s fibre business in a transaction valuing the business at approximately $4.25 billion.
This will expand its network with approximately 90,000 route miles of fibre, increasing its overall reach to more than 70,000 on-net locations.
Crown Castle’s metro-focused fiber assets complement Zayo’s long-haul network, enhancing services for hyperscalers, data centers, enterprises, carriers, cities, and rural communities as demand for cloud and AI-driven connectivity continues to rise.
“As AI adoption accelerates, the need for scalable, high-capacity networks has never been greater,” said Marc Ganzi, Chief Executive Officer of DigitalBridge. “Crown Castle’s metro-focused fiber network is a valuable addition that will help Zayo expand its reach in key markets and better support the next generation of digital applications. Alongside EQT."
EQT will be pleased with the acquisition of Crown Castle's small cell business, again valued at US$4.25 billion. EQT will now own a nationwide portfolio of approximately 115,000 small cells on air or under contract. EQT will now become the partner of choice for US carriers expanding their footprint.
What comes next
The sale concludes a 15-month review process that Crown Castle initiated in 2023, partly in response to pressure from activist investor Elliott Investment Management.
It has been over a years since Crown Castle were faced with an open letter from Ted Miller outlining the problems with its fibre business and operational set-up.
Crown Castle was one of the diversified towercos highlighted last year in our Tomorrow's Towerco Report, but diversification's poster had been in trouble in recent years.
Miller's letter outlined plans for reform which were rebuffed by management. Half of the suggestion, dispose of the fibre business has now been pursued. But the other half, invest in technology to reduce headcount per tower and offer a best in class experience, has not.
Its valuation has declined as analysts and investors have questioned the wisdom of allocating so much capex, opex and management bandwidth to non-core assets.
After a decline in share price of 14% over the last week the market responded positively to the announcement, with shares rising 5.5% in after-hours trading on Thursday in New York.
Diversification by towercos in a higher-for-longer rate environment will be more cautious than in previous years. Companies like Helios Towers will continue to provide power-as-a-service, Protelindo will continue expanding their fibre network, SBA Edge delivers on edge for SBA Communications, CoreSite is accretive for American Tower, but towerco executive teams will look to Crown Castle and take home some lessons about the pace and scale of expansion.
