December 16, 2011 / 6:35 PM / in 7 years

Crown Castle to buy antenna systems co for $1 billion

(Reuters) - Crown Castle International Corp (CCI.N) will buy privately held NextG Networks Inc for about $1 billion in cash, expanding its presence in the small-antenna-systems market to tap into an explosion in data traffic and compete better with larger rival American Tower Corp (AMT.N).

NextG Networks operates thousands of distributed antenna systems (DAS) — smaller alternatives to the huge towers owned by Crown Castle — in major U.S. cities like New York, Los Angeles and Chicago.

Tower firms are trying hard to quickly expand their reach, especially in heavily built-up urban areas, to meet the blazing demand for data from devices such as tablets and smartphones.

DAS are especially suited for crowded urban areas that require a large number of towers or nodes.

Due to their small size and ease of deployment, DAS also help operators get over zoning restrictions and avoid having to lease large plots to house their towers.

“Increasingly, we believe that small-cell architecture, such as DAS, will be an important complement to traditional macro tower installations,” Crown Castle Chief Executive Ben Moreland said in a statement.

Founded in 1994, Crown Castle bought Newpath Networks Inc last year, helping expand its presence in the DAS market.

The company currently has about 44 DAS indoor and outdoor networks and the NextG Networks deal will take the count of its antennae nodes to about 10,000.

The deal could add to its long-term recurring cash flow per share, Crown Castle said.

The company, which also competes with SBA Communications Corp (SBAC.O), will fund the purchase of NextG — owned by a group of investors led by Madison Dearborn Partners — with debt.

Deutsche Bank Securities Inc, Kirkland & Ellis and Kelley Drye & Warren are advisers to NextG for the deal, while Swaine & Moore is advising Crown Castle.

Crown Castle shares were down 2 percent at $42.48 on Friday on the New York Stock Exchange.

Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Sreejiraj Eluvangal

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