Wireless tower operator Crown Castle International Corp. said Friday that it will buy NextG Networks Inc. for $1 billion in cash.

Madison Dearborn Partners is the lead investor in Milpitas, Calif.-based NextG.

Among other assets, NextG operates a large network of outdoor distributed antenna systems. DAS sites link a number of antennas to a fiber node, and are useful in areas with limited coverage from wireless towers. An antenna can be placed on a street light or a utility pole. The sites can be deployed indoors or outdoors, in stadiums, hospitals, resorts or in cities where tower space is limited.

"We believe this deal is a natural fit for the company, as we view DAS as the fastest-growing opportunity in the U.S. tower space," Evercore Partners analyst Jonathan Schildkraut wrote in a Friday note.

Schildkraut valued the transaction at roughly $143,000 per DAS site. He notes that the acquisition is Crown Castle's largest deal since the company bought Global Signal Inc. from investors including Fortress Investment Group LLC, Abrams Capital LLC and Greenhill Capital Partners LLC for $5.8 billion in 2007.

Madison Dearborn led a group in investing $360.1 million of equity to purchase a majority stake in NextG in September 2009. Madison Dearborn, of Chicago, took the largest piece, with 61%, and is poised to reap the biggest chunk of an estimated 2.8 times return on the investors' cost. The other investors -- Accel Partners of Palo Alto, Calif., Redpoint Ventures of Menlo Park, Calif., and Meritech Capital Partners, also of Palo Alto -- shared the remaining 39%.

Crown Castle bought another distributed antenna systems operator, NewPath Networks Inc., for $128 million in September 2010.

While DAS sites represent a growth opportunity, they also pose a challenge to traditional towers.

Crown Castle has said that DAS sites rank among a growing array of technologies and architectures that could diminish demand for towers. Other tower operators have looked outside of the U.S. for growth.

Earlier in December, American Tower Corp. said it would pay $500 million for towers in Mexico owned by a Telefónica SA unit, and announced a joint venture in Uganda with South African telecom MTN Group Ltd.

The looming question for U.S. tower companies is whether Deutsche Telekom AG's T-Mobile USA would put its portfolio of towers up for sale if its deal with AT&T Inc. unravels.

Schildkraut suggested that even with the purchase of NextG, Crown Castle would likely be a suitor for T-Mobile's 7,300 wireless towers. The analysts estimated that the NextG purchase would push the company's leverage from 5.2 times Ebitda to 5.7 times Ebitda. Crown Castle and NextG expect the deal to close in the second quarter of 2012. Deutsche Bank Securities Inc. was the banker for NextG, which retained Kirkland & Ellis LLP and Kelley Drye & Warren LLP.

Crown Castle, which did not hire a banker, received counsel from Cravath, Swaine & Moore LLP.