ExteNet Systems, a major developer of small cells and distributed networks, said it has agreed to buy Hudson Fiber Network for an undisclosed amount. The deal highlights the importance of fiber in small cell network architectures and the escalating value of fiber assets in large metro markets.
New York is a major market for Hudson Fiber Network, but the company also operates a national network with points of presence in international markets. The company said that during the last three years, it has significantly expanded its network in New York and New Jersey and increased its dark fiber offerings.
Dark fiber refers to fiber that has not yet been "lit" by optical transceivers. Network providers often find it less expensive to lease dark fiber and activate it as needed instead of leasing fiber that is already operational.
Hudson Fiber Network has spent the last three and a half years as part of the portfolio of Tiger Infrastructure Partners, which also owns Crosslake Fibre, Etix Everywhere and SmartSky Networks. Hudson Fiber CEO Brett Diamond said he chose Tiger as a financial partner because of its "intensive value-add approach to growth infrastructure."
The value was clearly there for ExteNet Systems, which designs, builds, owns and operates network infrastructure for carriers and other broadband providers, as well as property owners and enterprises. ExteNet said it will have more than 30,000 nodes operational or under construction in the U.S. once it integrates Hudson Fiber Network.
"We plan to leverage the core competencies of both companies to offer our customers an expanded portfolio of carrier and enterprise solution offerings and rapidly expand into other major markets by leveraging ExteNet's extensive fiber plant," said ExteNet CEO Ross Manire in a release.
ExteNet's focus on fiber is not unique in the small cell business. Competitor Crown Castle has also invested heavily in fiber and has said that it would like to buy or build more dark fiber in major metro areas.
ExteNet and Crown Castle both build so-called neutral host networks, meaning that they typically build infrastructure for one carrier and then try to lease it to additional carriers to increase the return on investment.
ExteNet Systems is owned by Digital Bridge Holdings and Stonepeak Infrastructure Partners. Digital Bridge holds tower, small cell and data center assets, and founder Marc Ganzi has also launched Digital Colony Partners, the first investment fund dedicated to communications infrastructure. Digital Colony has raised $2.9 billion so far.