Zayo's New Capital

February 16th, 2009 by · 2 Comments

Last week Telecom Ramblings broke the news here that metro and regional fiber specialist Zayo Group (news, filings) had apparently managed to raise yet more money, and in fact they did with a series B equity round.  We don’t get too many scoops around here, so far anyway!  Of course, Zayo didn’t actually tell us how much they raised yet, more information is to come later.  But let’s make a guesstimate of $50M based on CEO Dan Caruso’s comment:

the amount of funding was material by Zayo standards but a mere snow flake in the Rocky Mountains by Level 3 standards

So what can they do with about $50M?  And why do they think they need more mid-level Corporate Development to put the money to work?  With Zayo’s history, one has to assume they might buy something.  On the other hand it seems like they wouldn’t another hand for M&A.   Could they be looking to enter a new line of business? Perhaps the answer is in the fiber-to-the-tower efforts they have been working through.  Sufficient capital means they can take on capex-heavy contracts at a time when the competition doesn’t want to, which will bring long term growth and deeper entrenchment in their markets.

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Categories: Financials · Mergers and Acquisitions · Metro fiber

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2 Comments So Far

  • Dan Caruso says:

    Okay, so maybe I should have said a snow ball instead of a snow flake. Perhaps you can improve your estimate with this added clue.

    We already do a lot of fiber to the tower as part of Zayo Bandwidth, so we would not launch a new line of business around it (or anything else). Zayo’s annual EBITDA run rate will eclipse $60M in 2Q09. This funds a material capital program to support fiber to the tower projects and other organic growth.

    The new $’s are primarily for purchasing additional fiber based telecoms. We expanded our scope of potential acquisitions to include Telecom Blogs, so Telecom Ramblings is on our list.

    Our M&A team has turned into an operate-the-business team. We don’t have anyone who is working on M&A. Ken (our CFO) and I spend time, as do a few others, but we all have a few other to-dos on our plate. Now that we have M&A capital to put to work, we need someone who can be full time on M&A. Candidates–ping us quickly as we are going through resumes as we speak.

    We will provide more info on funding size in the next month or so.

  • Rob Powell says:

    Hah, it’s so hard to be optimistic about money these days. Ok, a snowball eh? So $100M then! I wonder what’s for sale at the moment… will have to think about it.

    As for Telecom Ramblings being on your list… I wish I owned my own fiber but not yet, and don’t you have a blog already? 🙂

    Thanks for the clarifications, Dan!

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