According to some reports, buyers are planning to acquire fiber optic networks from Crown Castle and Lumen Technologies.
According to Reuters, Lumen has officially launched the process of selling its consumer fiber business to Goldman Sachs investment bankers, with a potential transaction value of between $6 billion and $9 billion. Affected by this news, Lumen’s stock price rose slightly.
According to Bloomberg, global alternative asset management company TPG is in “deep talks” to acquire the fiber optic business of mobile tower operator Crown Castle for $8 billion. The stock price of Crown Castle has been steadily declining this week.
These developments indicate that the pace of fiber optic mergers and acquisitions in the United States continues to accelerate. In the past few months, Verizon has offered $20 billion to acquire Frontier, T-Mobile has formed a joint venture with Lumos and Metronet, and BCE in Canada has reached an agreement to acquire Ziply Fiber.
But both Lumen and Crown Castle’s transactions are facing difficulties.
For example, analysts at MoffettNathanson point out that only 19% of Lumen’s “mass market” wired networks have been upgraded to fiber optic networks, compared to 49% and 65% for Frontier and Ziply, respectively. This will bring execution risks and a huge capital expenditure burden
Lumen’s management has been discussing the possibility of selling its mass market division for several months, possibly through a sale, joint venture, or other transaction. As of the end of the third quarter of 2024, Lumen’s mass market business had 2.6 million residential and small business customers. Approximately one million users are using fiber optic connections; The rest are on the operator’s copper cable network.
As for Crown Castle, the company first conducted a ‘strategic evaluation’ of its fiber optic business by the end of 2023. This effort also includes selling its small mobile phone business. The total valuation of these two companies is $15 billion.
But according to Bloomberg, TPG is only acquiring Crown Castle’s fiber optic business.
TPG is not unfamiliar with telecommunications and media services. The company is currently working to complete the acquisition of AT&T’s 70% stake in DirecTV.