Communications Sales & Leasing announced its Q3 earnings this morning along with another acquisition, it’s third in the last twelve months. They started off this year buying PEG Bandwidth, and followed up with Tower Cloud. But their third acquisition isn’t fiber, but rather towers.
CS&L is acquiring Network Management Holdings, a privately held company that owns and operates a portfolio of towers in Latin America. It includes 313 towers in Mexico, 55 in Nicaragua, and 105 in Colombia, with another 114 sites under development as well. The deal will bring in $7.9M in annual revenue and generate $4.4M, for which CS&L is spending $65M. Once the deal is complete, they’ll be operating their tower business under the name Uniti Towers.
Meanwhile, on the earnings front, revenues checked in at $200.2M with AFFO per share of $0.64, the former of which was a bit above analyst projections. CS&L expects full year AFFO of $2.60 per share.
Of that, $169.5M came from leasing activities, while Uniti Fiber contributed $25.2M, up from $13.7M in the prior quarter. Q3 included one month from the Tower Cloud acquisition, while Q2 included just under two months from the PEG Bandwidth acquisition. Uniti Fiber’s adjusted EBITDA for the quarter was $9.3M. Uniti Fiber is projected to bring in $71M in revenue and $27M in adjusted EBITDA when the year is complete, suggesting Q4 revenues of about $32M and $12.3M in adjusted EBITDA.
I fully expect CS&L to continue to be active in M&A going forward, and with the NMS acquisition they have opened a new front alongside their triple net leasing activity and fiber-based network operations. They have $300M in undrawn borrowing capacity under thier revolving credit facility to help fund that, although there are of course other options as well.
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Categories: Fiber Networks · Financials · Mergers and Acquisitions · Towers
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What is the point of buying more towers over fiber/copper?
There isn’t one. it’s just a widget with some value and associated debt. They buy the widget from the owner, the owner pays off the debt they incurred building the widget, and then pays CS&L a lease fee. CS&L stockholders see a steady income. Widget company stockholders see reduced debt load.
CS&L is a weird finance company, not a network.