2017 M&A Review – Networks Edition

December 28th, 2017 by · Leave a Comment

After the flurry of activity ending 2016, I expected 2017 to be a bit more relaxed on the network M&A front given how many deals were already pending and awaiting integration. To an extent that was true, but although a few big players were indeed busy elsewhere others filled in the gaps. Interestingly, like last year, if a network provider was involved in one M&A they were often/usually involved in at least one more.

GTT was this year's most prolific acquirer of networks. While they didn't get started until late spring, the transactions piled up quickly, starting with Giglinx and Perseus, going bigger with Global Capacity, and then finishing off with Transbeam. In the end it all added up to enough revenue and EBITDA to likely get GTT past its public goal of an annual run rate of $1B in revenue and $250M of EBITDA.

Crown Castle may not have made as many deals, but one they did make rocked the infrastructure markets more than any other. They agreed to acquire Lightower, around whom rumors had swirled periodically for a couple of years. But they also made an earlier deal to acquire Wilcon, adding regional depth across southern California and emphasizing just how extensive their national fiber reach has become.

The European infrastructure fund EQT made two acquisitions this year along the US eastern seaboard. First they revealed a deal to take Lumos Networks private, and then tacked on a majority stake in Spirit Communications in the adjacent Carolinas. I expect they will be looking to add more to that footprint in 2018 in additional complementary geographies. FirstLight or Southern Telecom Perhaps?

Uniti Group has been steadily rolling up network assets for a couple of years now, and this year they kept up the pace by tacking on two more. In February while they were still called CS&L, they acquired Hunt Telecom. Then a few months later they managed to convince tightly-held Southern Light Fiber to sell.

On the incumbent/wireless front, Verizon was also busy with a couple of key deals. One was for the extensive backhaul fiber WOW! had built out for them in Chicago, which they brought into their fold. And the other was for the LMDS and Microwave spectrum of Straight Path, which will apparently play a big role in the company's 5G ambitions.

In the upper northeast, FirstLight continued to roll up network assets in the region. In March they agreed to buy Finger Lakes Technology Group, adding assets across central upstate New York. Then over the summer they found more fiber to buy in New Hampshire, adding 186 Communications to their inventory.

Wave Broadband made a small deal for Cascade early in the year, but then wound up in a three way merger with RCN and Grande. The three companies shared a hybrid consumer/enterprise/wholesale model, albeit in different geographies, and the private equity group TPG decided to put them all in the same box.

Cincinnati Bell made two acquisitions, one close to home and one a bit more, umm, tropical. In the Cincinnati area they bought OnX, boosting the company's enterprise capabilities there. But their deal for Hawaiian Telecom was a bridge to a new geography, albeit for a company with a similar independent hybrid ILEC/fiber model.

We haven't heard much from Conterra on the M&A front over the years, but in 2017 they made two deals for fiber asets. The acquisition of Detel in Louisiana and Broadplex in North Carolina brought their footprint to some 5,200 network route miles. Conterra's current private equity owner, Court Square Capital, isn't a stranger to the fiber M&A world of course, so maybe there will be more to come.

Console was also a part of two deals this year, albeit from the other side of the table. They sold themselves off in halves, with the network portion going back to IXReach and the interconnection software heading over to PCCW.

Of course not every provider was doing more than one deal. This year Zayo made only one network M&A, taking out Spread Networks. Windstream took out Broadview, adding both network and cloud services to its enterprise efforts. Logix bought Alpheus to further clarify the infrastructure picture in Texas. Neutral Path bought Infinity Fiber, stretching its Midwestern network southeast into Indiana. Consolidated unloaded a bit of the assets they acquired in the Fairpoint deal, selling the People's Mutual assets to Riverstreet Networks. Fusion bought Birch, marking a new chapter in that collection of rolled-up assets that we will probably hear more from in 2018. And Epsilon bought Metcom, adding interconnection and other infrastructure in New York City.

On the international front, I don't pretend to follow them all. But there were a few infrastructure deals worth remembering, especially when noting the private equity guys making them happen. The private equity firm Stonepeak acquired euNetworks, which could possibly lead to a more aggressive stance from the company on M&A in 2018. Cinven-backed Ufinet acquired IFX, boosting its network profile across Latin America. Bevan Slattery's Superloop was one of those companies making two deals, acquiring SubPartners and NuSkope down under. The Carlyle Group has bought a majority stake in CMC, taking an interest in networking in Africa and the Middle East. KKR bought a 40% stake in Telxius from Telefonica. And CityFibre has acquired Entanet and its UK MPLS network footprint.

Categories: CLEC · Fiber Networks · ILECs, PTTs · Mergers and Acquisitions · Wireless

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