The wave of consolidation in the metro fiber space took another important turn this morning as Northeastern fiber operator Lightower Fiber Networks has agreed to purchase New York City-based Lexent Metro Connect. Lexent sells dark fiber solutions in both Manhattan and across the river in New Jersey, and has been a key player in the region when it comes to the low latency frenzy in the financial vertical. No financial details were provided, as both companies are privately held. That leaves us guessing for now as to what sort of EV/EBITDA multiple Lexent might have gone for. Lightower is backed by private equity M/C Venture Partners, Pamlico Capital, and Ridgemont Equity Partners.
The purchase will add 150 route miles and connectivity into 200 buildings to Lightower’s current tally of 4600 fiber route miles and 2000 on-net buildings. Lightower’s coverage prior to this in New York tended to be stronger in the northern suburbs and to the east on Long Island. Lexent’s depth in the critical Manhattan markets those ultra-low latency routes to key New Jersey facilities are therefore very complementary to Lightower’s network. Lexent is also one of only a select few providers authorized to build new dark fiber and conduit in New York City. Lightower will likely add lit services upon Lexent’s dark fiber assets, and with deeper pockets backing the combined company they will surely seek to ratchet up growth.
Lightower was itself assembled from several pieces: National Grid, DataNet Communications, and Keyspan Communications. Alongside the company’s recent purchase of Veroxity, it is clear that they are seeking greater depth across their current footprint, aiming to be the pre-eminent fiber provider in the Northeast. The other major freestanding metro fiber providers in the area are Sidera Networks (formerly RCN Metro), and Fibertech. All three have been involved in this wave of consolidation, and there might yet be more to come.
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