By Svea Herbst-Bayliss
BOSTON (Reuters) - Buyout firm Digital Colony Partners has contacted Crown Castle International Corp (N:CCI) to signal interest in buying a minority stake in its fiber-cable business, according to three people familiar with the matter.
The outreach comes as activist hedge fund Elliott Management last week pushed Crown Castle to conduct an operational and strategic review of the fiber-cable business, which it says has been mismanaged and has posted disappointing returns.
Marc Ganzi, chief executive officer of Digital Colony, one of the world's biggest investors in data centers, macro cell towers, fiber networks and small cell networks, has spoken with Crown Castle's chief executive officer, said the sources, who requested anonymity as the matter is private.
Digital Colony and Elliott declined to comment. Crown Castle said this week it intends to keep both its wireless towers and fiber cable businesses.
As a prominent figure in the tightly knit fiber industry who has been involved in many industry transactions, Ganzi knows the Crown Castle assets well and could be potentially helpful in running them better, the sources said.
Digital Colony has suggested that Crown Castle would keep its investment in fiber but bring in a partner in a joint-venture type of structure, the persons said.
Elliott might also play a role in a potential deal, the sources said. They cautioned that no concrete proposal has been made and that a deal may not materialize.
Elliott, which has $41 billion in assets under management, has said it has a $1 billion economic interest in Crown Castle, without elaborating.
While best known as a hedge fund, Elliott has a private equity business that focuses on technology companies, giving the firm flexibility in deploying capital.
Crown Castle, which owns both wireless towers and thousands of miles of fiber and thousands of small cells, said it intends to stick with its strategy of keeping both businesses. It has laid out plans to refresh its board after Elliott called for improved oversight.
"The Crown Castle board of directors regularly reviews and evaluates opportunities to enhance value, and as a result, believes that our strategy to provide shared communications infrastructure across towers, small cells and fiber best positions the company to create superior long-term shareholder value," Crown Castle said in a statement.
"We have received broad shareholder support for our overall strategy and are confident in our ability to capitalize on this significant value creation opportunity," the company added.
Crown Castle, valued at $67 billion, has for months faced pressure from Elliott to make changes to its board, and how it manages the fiber business. The company and Elliott engaged privately before Elliott made its concerns public in July.