Zayo Aims For Stimulus Funds, In Quantity

August 30th, 2009 by · Leave a Comment

Upstart metro and regional fiber provider Zayo Group (news, filings) has also thrown its hat into the stimulus funding ring.  That's not a surprise, the company has been quite vocal in its efforts, and began putting together a team to pursue the opportunity back in the first quarter.  They are seeking $25M directly, which would be used to extend its network into 80 communities and 21 institutes of higher education in the Midwest.  And beyond that they have applied with partners for another $50M in other markets.  To bolster their bids, they will be committing $10-15M of their own cash to the effort.   These are rather substantial amounts for a company of Zayo's size, and if the bids are successful they will have quite a bit to work with.

Zayo's on-net footprint is highly concentrated in four cities:  Philadelphia PA, Memphis TN, Columbia WA, and Indianapolis IN.  But they have a great deal of regional fiber in the Midwest, and much of it travels lesser known routes connecting tier 3, 4, and 5 markets.  Here is their OH/IN/IL footprint:  

31-Aug 08.33capture_02Each red square is a market in which they have a POP but no metro facilities.  They are a lot closer to many those 'underserved communities' than most are.   The stimulus funds offer them a chance to deepen that footprint even further.  Given the excess of bids, none should expect to get all they have asked for, but Zayo seems to have enough projects that they ought to get some approved.

Of course, Zayo is also busy closing its acquisition of ftgx, whose shareholders are due to vote on the merger in 10 days.  If the economy continues to improve and financing gets easier, I expect Zayo may find additional targets later this year.  Who knows, maybe they'll get another shot at XO...

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Categories: Fiber optic cable · Government Regulations · Metro fiber

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