Bloomberg News

Crown Castle $1 Billion NextG Bid to Boost Antenna Coverage

December 16, 2011

(Updates with analyst’s comment in the fourth paragraph.)

Dec. 16 (Bloomberg) -- Crown Castle International Corp.’s $1 billion agreement to buy NextG Networks Inc. would form the largest independent provider of distributed antenna systems as wireless carriers look to expand fourth-generation networks.

Crown Castle is acquiring NextG from a group of investors led by Madison Dearborn Partners, according to a statement today. The purchase, due for completion in the second quarter of 2012, will be financed with debt.

The acquisition will enable Houston-based Crown Castle to provide additional wireless coverage and capacity to customers beyond areas traditionally served by towers. Distributed antenna systems are networks of smaller cell sites connected by fiber to communications hubs.

“DAS enables carriers to pinpoint coverage in difficult- to-zone areas like urban canyons,” said Jonathan Atkin, an analyst with RBC Capital Markets, who has a “outperform” rating on Crown Castle. As carriers race to expand network capacity to keep up with data-traffic demand, “this provides a good solution to optimize spectrum,” Atkin said.

Given the spending cycle ahead, with major U.S. wireless operators upgrading networks to Long Term Evolution technology, Crown Castle “shows brilliant foresight,” said Kevin Smithen, an analyst with Macquarie Securities USA Inc. He also has a “outperform” rating on Crown Castle.

Small, discrete cell sites connected by fiber-optic cable “are the future for LTE capacity additions over the next several years,” Smithen said.

Crown Castle fell 2.5 percent to $42.34 at 10:53 a.m. in New York. The stock had lost 1 percent this year before today.

--Editors: Jeffrey Tannenbaum, Niam Ring

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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