Crown Castle Acquires NextG for $1 Billion to Add Largest Antenna System

Crown Castle International Corp.’s (CCI) $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.

Crown Castle closed down 1.2 percent at $42.88. The stock has lost 2 percent this year.

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. LTE is a so-called fourth-generation technology, which enables faster wireless Internet connections.

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

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