On Thursday, April 30^th wireless tower company Crown Castle (NYSE: CCI) announced that it had acquired Quanta Fiber Networks, Inc., also referred to as Sunesys, a subsidiary of Quanta Services Inc. (NYSE: PWR).  The transaction is for approximately $1.0 billion and could bode well for Crown Castle, which is trying to increase its fiber network. 

Valuation Analysis and Deal Metrics  

 Transaction Facts

• The deal will be financed through approximately $1.0 billion in cash.
• Expected to close by the end of 2015. 

Strategic Considerations

• Before the transaction, Crown Castle leased approximately 1,000 miles of fiber from Sunesys. 
• Transaction should strengthen Crown Castle’s small cell networks. 
• Sunesys has the rights or owns approximately 10,000 miles of fiber in major markets spread throughout the U.S.
• Transaction gives Crown Castle access to a fiber network that includes cities, such as Philadelphia, Atlanta, Chicago, Silicon Valley, as well as northern New Jersey.
• After the acquisition closes, Crown Castle will own or have rights to over 16,000 miles of fiber. 

JSICA’s Take

• Overall, the multiples for the transaction seem to be relatively higher than past transactions in this industry over the last few years.
• The deal provides significant lease-up potential in major metro markets, such as Southern California and Philadelphia. 
• The current acquisition and Crown Castle’s previous acquisition of 24/7 Mid-Atlantic in September 2014 should help add to the firm’s total fiber miles and promote further growth for the company in the industry.