Over the past few days, word has come out that in fact DukeNet does have a book out and may very well become the next metro fiber consolidatee. DukeNet has a deep footprint in the Carolinas with a few thousand towers on-net, with additional regional/metro connectivity stretching to the north, south, and west. It's one of a dwindling number of mid-sized regional fiber operators still independent, So who might be the most likely buyers? Here's a quick survey:
- Zayo - One can't talk meaningful about likely fiber M&A buyers without starting with Dan Caruso and his team anymore, and in fact DukeNet would fit very well with Zayo's other assets. With the exception of Atlanta, the southeast below Virginia is a weak spot for them that I'm sure they'd like to fill. And since they have just $20M in planned synergies left to achieve from their current integration projects, there's probably no real impediment to bidding on DukeNet.
- Lightower - Following the Sidera deal, it seems likely that Lightower's private equity owners will be looking to use their northeastern depth as a springboard and a deep fiber asset in adjacent territory to the south seems like an ideal candidate. As there aren't that many targets of size left these days, Lightower will need to be aggressive with the opportunities that do arise and I'd be very surprised if they didn't plan to compete for it.
- Level 3 - After the various metro fiber deals of the 2006 wave (Progress, Telcove), Level 3 already has substantial assets in the Carolinas and probably doesn't need to go after DukeNet. Their small fiber purchases lately (IP Networks Inc, Fibrespan) show they're now back in the game, but I suspect they won't be the winning bidder here.
- Windstream - DukeNet's fiber is adjacent to both the Intellifiber and KDL assets Windstream already owns, and the hybrid ILEC/CLEC has also mbeen putting money into fiber-to-the-tower while their hosting business runs out of Charlotte. All those factors mean that Windstream could be a serious bidder here and can't be ruled out. However, they have yet to win an auction for any fiber assets with the sort of high multiple that DukeNet is likely to require.
- tw telecom - Despite my prediction yesterday that tw telecom will be a buyer rather than a seller, I don't think this will be where they ante up.
- CenturyLink, AT&T, Verizon - They obviously have the means, but probably not a motive strong enough to outbid the others.
- Comcast/TW Cable/Other MSOs - This isn't the sort of asset they'd go after aggressively I think.
- Others - It seems likely to me that the winner of this auction will be a strategic buyer rather than a pure financial one, and of the private equity players out there the ones behind Zayo and Lightower have the most incentive. Other theoretical possibilities though could be Fibertech or even FPL Fibernet. FiberLight would be a good fit of course, but I haven't seen evidence that the Thermo Group is looking to double down.
Any other likely candidates out there? Leave a comment below!