On Monday we learned that Carl Icahn made a bid for Broadview Networks, the northeastern CLEC with several hundred on-net buildings. The initial approach was rebuffed, although it could easily be followed up on. But if not, what other telecom assets might Icahn be interested in buying?
While long term it still seems like Icahn will sell XO, a short term purchase to help change reboot the narrative both internally and extenally. He'd be looking for something that wouldn't cost him an arm and a leg and that would give XO either additional scale or a new dimension. Here are a few thoughts:
- FiberTower - This springs to mind quickly of course, because like Broadview they are restructuring through BK court, which is his favorite hunting ground. Of coruse, XO has the NextLink LMDS and microwave spectrum assets and the fixed wireless business itself, so it wouldn't be a new concept for them. And XO's Tier 1 metro fiber might help FiberTower's margins. It still just seems unlikely, however.
- Limelight - The opportunity to marry XO's fiber assets with a CDN that is available for a song will surely have occurred to Icahn. The outright combination of cloud-based managed services with their concentric brand wouldn't hurt either. After all, XO is already reselling Limelight's CDN since May.
- EarthLink - This would cost a bit more, but the market hasn't been giving Earthlink much credit recently so Icahn might be able to offer a premium they can't get elsewhere. XO's extra fiber assets and enterprise customer base might fit well with Earthlink's growing cloud focus and service reputation.
- Cogent - Cogent has been trading at higher and higher multiples despite losing its largest customer two quarters ago and still getting its footing back. I can only assume there is takeover talk helping out here, and on paper it looks as if it might be quite complementary to XO if they could get past the culture clash. But for Icahn the valuation is probably too high.
This is not meant to be an exhaustive list. If you'd like me to ramble on about other possible targets Icahn might consider, just leave a comment and I'll do my best. Or if you'd just like to rip the above suggestions to metaphorical shreds, that'd be fine too.
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