Zayo Is Paying $345M for 360Networks

October 25th, 2011 by · 1 Comment

Yowza, I honestly had no idea 360Networks had done so well by itself since emerging from the ashes of the last bubble with the old Touch America assets. According to an SEC filing recently that a reader pointed out in a comment today, Zayo is paying $345M for the company, making the deal three times larger than any of their prior acquisitions.

The deal does double the company’s total fiber network, but most of it is in the intercity realm rather than the metro. But then again, it does go down to the conduit where Montana Power did the building, and the routes were often rather diverse. So this is a type of asset we don’t often see sold, we’re not talking about a few strands of dark fiber – I suppose I shouldn’t have been surprised.

We still don’t have revenue or EBITDA estimates for 360Networks, but let’s just make a back of the envelope guess for the sake of discussion. If Zayo paid an EV/EBITDA multiple of 10x, that would correspond to annualized EBITDA of $34.5M. And if 360Networks’ EBITDA margins were 30%, that would further correspond to $115M annually. Now I’m sure those assumptions aren’t accurate, they’re just stand-ins.  But it will be interesting to see what the real numbers are when the time comes.

The other question though is what is the breakdown between the wholesale VoIP business, which Zayo will separate and spin off to Onvoy as before, and the data/fiber business which they will keep.  I have no idea what the relative sizes of the two were.

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Categories: Mergers and Acquisitions · Metro fiber

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  • Anonymous says:

    I heard by a close source that the cash flow was around $40M, not sure if that was a EBITDA number or actual free cash flow. Never the less the multiple assuming it was EBITDA would be 9.1X’s

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