Summary Bullets:
- Zayo has snapped up Crown Castles fiber business for $4.25 billion. The company will add 90,000 of fiber miles to its network, increasing its reach to more than 70,000 on-net locations.
- The acquisition boosts Zayo fiber infrastructure capabilities to support its growth in artificial intelligence (AI), while allowing Crown Castles to focus on its tower business.
Zayo Group, backed by two capital investment firms, DigitalBridge and EQT, has struck a deal with Crown Castle to acquire the company’s fiber solutions business for $4.25 billion. The acquisition will bolster Zayo’s capabilities in wavelength services, helping the company execute its strategic focus on investing in the critical fiber infrastructure to support the growth of AI data traffic across the US. The Crown Castle metro-focused assets will significantly improve Zayo’s long-haul network coverage, adding 44,000 on-net buildings, 40,000 towers, and 1,100 data centers, points of presence (PoPs), and central offices. This acquisition will strengthen Zayo’s ability to deliver reliable, low-latency, high-capacity fiber solutions to businesses and service providers as the demand for cloud and AI-driven connectivity continues to rise. With the US fiber market being hypercompetitive, network connectivity providers must review their fiber network infrastructure to ensure they can support the increased demand for bandwidth and capacity to compete in an AI-driven market.
The acquisition by Zayo is additional to the previous announcement by the company earlier in the year with the network operator announcing it would build more than 5,000 fiber route miles in the US to meet the growing demands of AI workloads. Zayo plans on building five new routes and overbuild seven existing routes by 2030. Zayo has invested more than $20 billion in fiber infrastructure since 2020 as it looks to continue to make additional investments moving forward to expand its AI ecosystem. The continued investment by Zayo will be critical for the provider to avoid a potential bandwidth deficit in the US with AI-driven data center capacity expected to grow substantially in the coming years. For Crown Castle, the divestment of fiber assets it acquired over the years allows the company to focus on its multitenant tower assets. The company has been looking to offload these assets for a while after a “strategic review” driven by its largest shareholder, which believed the company should have disposed of the assets back in 2023.
This acquisition by Zayo follows a broader trend within the telecoms sector as more network connectivity providers look to acquire new fiber assets over the construction of new assets, which can be time-consuming and costly, while other providers have been creating network diversity through redesigning their current network to better utilize network capacity. Over recent months, we have seen an uptick in network connectivity providers acquiring new domestic capabilities. For example, Verizon has acquired Frontier Communications, which gives the provider additional fiber infrastructure. Meanwhile, Consolidated Communications was acquired by private equity firm, Searchlight Capital Partners, which included 60,000 miles of fiber network. With a strong appetite for fiber assets and expanded network capabilities, it’s expected that more acquisitions will follow in 2025 to meet the increased demand for data, especially among larger providers looking to increase their fiber infrastructure. US providers must not stay complacent and continue to invest in their fiber infrastructure. This includes upgrading the backhaul network infrastructure to be able to meet the increased data demands and handle the workloads of higher capacity networks, while strengthening network reliability and redundancy to ensure service reliability in an AI data-driven world.