Zayo Group has announced a deal with Crown Castle to acquire the company’s fibre solutions business for $4.25bn.
The acquisition will bolster Zayo’s capabilities in wavelength services, helping the company execute its strategic focus on investing in the critical fibre infrastructure to support the growth in data traffic driven by artificial intelligence across the US.
The Crown Castle metro-focused assets will significantly improve Zayo’s long-haul network coverage adding approximately 90,000 route miles of fibre to Zayo’s network and increasing its overall reach to more than 70,000 on-net locations.
This acquisition will strengthen Zayo’s ability to deliver reliable, low-latency, high-capacity fibre solutions to businesses and service providers as the demand for cloud and AI-driven connectivity continues to rise. With the US fibre market being hypercompetitive, network connectivity providers must review their fibre network infrastructure to ensure they can support the increased demand for bandwidth and capacity to compete in an AI-driven market.
Zayo to build more fibre route miles
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 fibre 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 over the next five years. Zayo has invested more than $20bn in fibre infrastructure and plans to continue significant investments to maintain the US’s leadership in AI-driven technology.
The newly acquired fibre assets will open opportunities for Zayo and critical for the provider to avoid a potential bandwidth gap in the US with AI-driven data center capacity expected to grow substantially in the coming years.
For Crown Castle, the divestment of its fibre 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, who believed the company should have disposed of the assets back in 2023.
A broader trend within the telecommunications sector
This acquisition by Zayo follows a broader trend within the telecommunications sector, as more network connectivity providers look to acquire existing fibre assets over the construction of new assets which can be time-consuming and costly.
Currently, the US fibre infrastructure is adequate to meet the growing demand and projected growth of AI.
In late 2024 and early 2025, the US fibre market has been consolidating with various network connectivity providers acquiring smaller fibre companies to boost their domestic capabilities.
To name a few recent examples, in September 2024, Verizon acquired Frontier Communications, which gives the provider additional fibre infrastructure, and in November 2024, Consolidated Communications was acquired by private equity firm, Searchlight Capital Partners, which included 60,000 miles of fibre network.
More of these acquisitions will follow in 2025
With a strong appetite for fibre assets and expanding network capabilities, it’s expected that more of these acquisitions will follow in 2025 to meet the increased demand for data, especially among larger providers looking to increase their fibre infrastructure.
US providers must continue to invest in their fibre 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.
