Recasts paragraph 1, adds analyst comment in paragraph 6, background throughout

By Kritika Lamba and Jaspreet Singh

March 13 (Reuters) - Crown Castle CCI.N said on Thursday it will sell its fiber assets to two entities for $8.5 billion, after activist investor Elliott Investment Management pushed the wireless tower operator for changes.

The company is selling its small cells business to EQT Active Core Infrastructure fund and its fiber solutions one to Zayo Group Holdings, each for $4.25 billion.

Shares of the Texas-based company rose 4% in extended trading.

"Crown Castle's divestiture is a well-calculated move that should improve financial stability, enhance shareholder value, and signal a renewed focus on core strengths that is likely to be viewed favorably by the market," said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

Crown Castle was exploring options for its fiber assets, after reaching a deal with Elliott, which criticized the company for its continued underperformance. The company replaced two directors on its board in December 2023.

The transaction comes amid increasing dealmaking in the fiber industry, with telecom firms scaling capacity for 5G network to meet data demand.

Crown Castle also said it expects to implement a share repurchase program of around $3 billion after the deal closes in the first half of 2026. It will use the funds to repay debt and fund share buybacks.

The company will also reduce its annualized dividend in the second quarter of 2025.

Reuters reported in January that Zayo Group was in the lead to buy Crown Castle's assets.

Excluding the fiber segment, Crown Castle forecast 2025 site rental revenue to be between $3.99 billion and $4.03 billion, while analysts expected $6.23 billion, according to data compiled by LSEG.

The company expects annual adjusted funds from operations to be between $4.06 and $4.17 per share excluding fiber. Analysts, on average, expected $6.93 per share.

(Reporting by Jaspreet Singh and Kritika Lamba in Bengaluru; Editing by Arun Koyyur and Alan Barona)

((Jaspreet.Singh@thomsonreuters.com; https://twitter.com/i_jass))