It seemed only a matter of time before NextG Networks was purchased by a tower company. The only questions were when and by whom.
Crown Castle International answered those questions on Dec. 16 buying NextG for $1 billion, one of the largest investments into DAS ever. The deal was vindication that DAS and small-cell technology would continue to be an increasing segment of the wireless coverage equation.
“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, said in a prepared release.
Zacks Investment Research praised the synergies of the NextG acquisition, which brings Crown Casetle 7,000 nodes-on-air, 1,500 nodes under construction and rights to more than 4,600 miles of fiber.
Crown Castle’s DAS network will reach more than 10,000 nodes spread across 26 U.S. metropolitan areas, with 80 percent located in the top 10 U.S. metropolitan areas.
“Considering rapid mobile data growth and wireless coverage requirements in urban areas increasingly focused on narrow areas, DAS networks will continue to be an important role in accommodating this demand. Outdoor DAS is more of a competitor to rooftops than to towers, so this should not affect tower leasing demand at CCI (or its peers),” said Jonathan Atkin, analyst, RBC Capital Markets.
Additionally, there is a lot of room to grow through additional collocation on NextG’s infrastructure and will allow Crown Castle to better compete with the other tower companies, according to Zacks.
“NextG has huge underutilized capacity. Currently, the company has only 1.25 tenants per network on an average. This will provide significant scope for Crown Castle to add more customers without incurring additional capital expenditure,” the investment research firm wrote.
Not everyone was enamored with the NextG acquisition. Craig Stanziano, president and founder, Distributed Wireless Group, thinkgs it should be a concern to the DAS community.
“Consolidation has its benefits but from the guys who actually provide the ‘real’ services to ‘make it happen’ it is further restriction on available clients to market services too. Hence, bids on jobs will get more competitive. This will result further consolidation of those ‘real’ service providers as well! We are seeing the start of commoditization to the DAS sector!” Stanziano said in email to DAS Bulletin
The most recent tower company investment in DAS came in September 2010, when Crown Castle acquired Newpath Networks for $114 million. Before that, SBA Communications made a $128.4 million investment in ExteNet Systems in January of 2010. Before that, you have to look back to 2005 when American Tower gained entrance into DAS through its multibillion dollar merger with tower company and DAS provider SpectraSite.