Competitive fiber operator Zayo Group (news, filings) is planning a major initiative up north in Minnesota, according to a new PR today. With the acquisition of American Fiber Systems, the stimulus award they picked up for the area earlier this year, and the regional fiber that came along with the Onvoy assets a couple of years ago, Zayo now has a very solid footprint in and around the Minneapolis/St.Paul metropolitan area. The new build plans will extend the company's total Minnesota mileage to 1700 and add service to some 350 wireless towers. Along with the twin cities, coverage will be added or increased in St. Cloud to the northwest, and in Rochester, Owatonna and Northfield to the south.
This buildout follows a similar outline to previous efforts by Zayo in eastern Pennsylvania, Memphis, Indianapolis, and Spokane. When its assets in a region are dense enough, it apparently becomes economically viable to enter the fiber to the tower business in force and they start bringing towers online in bulk. The AFS Minneapolis assets tipped the scale, and they are naturally following up. AFS itself had not entered the FTTT business in any major way prior to its acquisition
This is the first of several likely such moves in some of AFS's nine former markets. Atlanta is an obvious choice, as it was already a Zayo markets which now has much greater scale. I'm curious if Zayo will also expand similarly on the AFS assets out west in places like Boise, Reno, or Las Vegas. But as to the timing, there's only so much capex to go around. Zayo reports earnings later this week, and will no doubt offer a bit more color at that time.
Zayo hasn't announced any new M&As in four months now, and with the departure of Zayo Bandwith's John Scarano recently perhaps there will now be an extended integration phase at the company. Or maybe they'll buy Alpheus tomorrow - you never can tell.
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