Zayo Buys #10?

September 10th, 2008 by · 12 Comments

Zayo gave a presentation at the Jefferies investor conference yesterday, in which it discussed yet another acquisition made recently – yes, since Columbia Fiber Solutions just a couple weeks ago.  Who was it?  Well, they didn’t put a name on it, they only described it as a conduit asset, mostly in the greater Denver area but also some landing station assets in New Jersey.  While the conduits house other networks (Level 3 and Qwest were mentioned) I presume the idea is for Zayo to put its own fiber in as well.  But I have no idea who they are buying this asset from, does anyone know?  Dan Caruso, are you going to give us more information on this one soon?

Zayo also gave an update on its financials.  Based on annualized Q2 numbers, their run rate is in the neighborhood of $220M revenue and $75M EBITDA.  That’s not a surprise, it seems about right – but since Zayo isn’t a public company we have to make use of the datapoints we do get.  If one were to put an 8x multiple on that EBITDA, the market might value Zayo at $600M – not bad at all for just over $300M invested just 18 months ago, and it is probably lower than reality.

Finally, they confirmed what I discussed in a post just the day before – that Zayo is engaged in a large fiber-to-the-tower effort right now.  One has to assume that their visit to this conference implies that they are looking for new money to do new deals, but that isn’t a surprise.  And they could very well get it, there’s nothing like a good track record in difficult times.

Categories: Mergers and Acquisitions · Metro fiber

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12 Comments So Far


  • rick barich says:

    Three quesses

    Adesta- most likley

    Abovenet

    Mcleod

  • Profile photo of Rob Powell Rob Powell says:

    Rick, I think you are probably right on Adesta. I hadn’t heard of them before, they apparently came out of MFS way back and according to their website they operate and maintain a 126 mile fiber/conduit system in metro Denver. I don’t see the cable landing station infrastructure, but it sounds like something they might have. They could be divesting themselves of those assets to focus on their core business. Makes sense to me, but I suppose we’ll see when they formally announce it.

  • Frank A. Coluccio says:

    Rob, this is interesting, indeed. I can’t address the Denver situation just yet, but I’ve got a hunch concerning the landing station conduits in New Jersey. It all started in Brooklyn a long time ago ;)

    Keyspan Communications (nee Brooklyn Union Gas Company) was once heavily into building cable routes from multiple and diversely situated landing stations on the East Coast, primarily for subsea cables terminating in the vicinity of NY City.

    KeySpan was acquired recently by National Grid and apparently sold a portion of its assets, including at least a portion of its landing stations, to Light Tower. I’ll be you didn’t expect to see ‘that’ name invoked here ;)
    http://www.darkfiberresource.com/?p=286

    Light Tower, in turn, could have conceivably sold those properties, including conduits from landing stations, to Zayo. Was LightTower involved in some sort of an in-kind swap of assets with Zayo in Denver, perhaps?

    As I stated, it’s only a hunch on my part, but it may be more than a coincidence that you noted in the same post that “Zayo is engaged in a large fiber-to-the-tower effort right now.”

    Frank

  • Frank A. Coluccio says:

    Rob,

    I could be mistaken (I tried using search and visually scanning the lists to no avail), but I don’t see Lightower Fiber (which boasts being “The most comprehensive Dark Fiber Network in the Northeast”) represented on your lists. I’m wondering if it should be.

    http://tinyurl.com/2qzrl9

    What do you think?

    Frank

  • Profile photo of Rob Powell Rob Powell says:

    Yes, they should be on my lists, I’d run into pieces of these assets in the past – NStar etc – but hadn’t known where they wound up. According to their most recent PR on the close of the Keyspan deal, they have 3600 route miles of fiber in the region. However, I have no idea how many buildings and towers they have on-net, they don’t seem to release that data – so they’d go at the bottom of my list with the others for which I have limited data.

  • Profile photo of Rob Powell Rob Powell says:

    However, I do think Adesta is more likely in this case simply because there just can’t be that many unattached conduit assets around. The wireless deals Zayo is working on are outside Light Tower’s domain, in Philadelphia and Memphis.

  • Anthony says:

    If it has to do with cable landing stations in New Jersey then the company is Adesta. Adesta also manages a conduit system that rings NJ Tpke and the Garden State Pkwy and the AC Expy that contains a host of other service providers.

  • Frank A. Coluccio says:

    Anthony, in that case I stand corrected. Thanks for the elucidation. Frank

  • Profile photo of Rob Powell Rob Powell says:

    Anthony, thanks for that final point of confirmation! It’s settled, Zayo’s deal is with Adesta.

    So the next question one has to ask is one another reader asked me offline: Why the heck does Zayo need cable landing stations in New Jersey??

  • Dan Caruso says:

    Hey. Just saw this post as well. As I understand your comments above, you have concluded that we bought Adesta. Adesta is a system integrator and construction company with a focus on physical security and telecom networks. They built the conduit system in Colorado and the landing stations. But they were not the owners of it.

    So you are close, but not quite there.

  • Anthony says:

    goes to show you what I know……back to the bathroom for some more thinking

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