As Zayo Group weighs a purchase of Crown Castle fiber connectivity assets, some observers believe Zayo’s fiber assets might be worth close to $5 billion. Some might argue that is a reasonable price, assuming annual fiber revenue in the range of $1.5 billiion, representing a revenue multiple of 3.3 .
Other recent transactions have featured higher multiples.
It might be hard to compare the value of those fiber assets--which are mostly metro area connections useful for cell tower data transport--compared to assets of other fiber asset owners whose portfolios might be more heavily weighted either to long-haul transport or retail internet access service, including retail end user connections rather than business-to-business revenues.
Of course, some might argue that the value of Crown Castle's annual transport revenue is greater than the direct revenue, either for strategic reasons or using different methodologies for estimating value and revenue.
Route miles are different from fiber miles, for example. Different fiber-basesd services also have different profit margins.
Service Type | Description | Profit Margin |
Long-Haul Transport | Fiber connections over long distances. | 40% - 50% |
Local Access Transport | Metro fiber connections for local access. | 30% - 40% |
Dark Fiber | Unlit fiber available for lease. | 60% - 70% |
Lit Services | Operational fiber services (e.g., Ethernet, Wavelength). | 40% - 55% |
Data Center Interconnection | Connections between data centers. | 50% - 60% |
Enterprise/Business Connectivity | Services for businesses (e.g., MPLS, IP VPN). | 25% - 35% |
As a high-level estimate, some might argue that different service providers also have different revenue-per-route-mile profiles, with Crown Castle, whose footprint is weighted towards local access revenue and connections, might have among the highest revenue-per-mile profiles.
Company | Local Fiber Route Miles | Local Transport Revenue (Annual) | Revenue per Mile (Annual) |
Crown Castle | 80,000+ | ~$2 billion | ~$25,000 |
Lumen Technologies | 190,000+ | ~$3.5 billion | ~$18,400 |
Zayo Group | 133,000+ | ~$2.8 billion | ~$21,000 |
AT&T | 250,000+ | ~$4 billion | ~$16,000 |
Verizon | 200,000+ | ~$3.7 billion | ~$18,500 |
Combined revenues (long haul, metro and retail local access provide a different picture, generally suggesting that local connections generate more revenue per mile. By some estimates, Crown Castle's long-haul revenues are somewhere in the middle of suppliers.
Company | Long-Haul Fiber Miles | Long-Haul Transport Revenue (Annual) | Revenue per Mile (Annual) |
Lumen Technologies | 400,000+ | $6 billion | ~$15,000 |
Zayo Group | 130,000+ | $2.5 billion | ~$19,000 |
Crown Castle | 30,000+ | $0.8 billion | ~$26,700 |
AT&T | 500,000+ | $4.5 billion | ~$9,000 |
Verizon | 400,000+ | $3.8 billion | ~$9,500 |
Colt Technology | 20,000+ | $1 billion | ~$50,000 |
Telia Carrier | 60,000+ | $1.2 billion | ~$20,000 |
GTT Communications | 80,000+ | $1 billion | ~$12,500 |
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