For those who thought Zayo Group (news, filings) was done shopping for the year, the word is 'nope'. This morning the rapidly expanding fiber phenomenon announced an agreement to buy First Telecom Services for $110M, it's sixth deal of the year. The purchase is expected to close by the end of the the year, and will be funded by Zayo's current cash on hand.
FTS operates 8,000 route miles of network hooking up 500 buildings across the Northeast and Midwest, but mostly in Ohio and Pennsylvania. They have been moving into lit services, but most of the revenue is currently from dark fiber IRUs. Parts of Zayo's backbone run on dark fiber IRUs from FTS, and today's deal will give them full control over that part of their network. Along with the backbone routes come metro networks in Chicago, Akron, Cleveland, Toledo, Youngstown, Southfield, New York City, Northern NJ, Reading, Washington D.C., Erie and Harrisburg. All in all, the deal seems to be very complementary to Zayo's other assets across the region.
FTS is the fiber division of First Communications, which also operates some CLEC services that don't appear to be part of this deal. The fiber runs primarily along the energy rights of way of First Energy, which like many other utilities dabbled in the fiber business during the bubble.
First is currently owned by the Gores Group [Edit: apparently not anymore...] First had recently been owned by Gores along with Alpheus Communications down in Texas which is not part of this deal either - yet anyway. There was talk when Alpheus was purchased that it would be combined with First Communications, but apparently Gores decided to take a different path.
While Zayo has been in the midst of the biggest integration it has ever attempted since the close of the AboveNet deal, today's deal probably won't have a big impact on that front as dark fiber assets are the easiest to integrate. Bank Street Group advised FTS on the transaction.
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