New Cash, New Expansion Plans for XO

April 4th, 2014 by · 11 Comments

XO Communications stepped back into the public eye with some new expansion plans yesterday, backed by some new cash. Since Chris Ancell took over as CEO after last Thanksgiving, I’ve been waiting to see which way he would turn the steering wheel at XO.

XO has recently completed some $500M in financing. Some portion of that will be going toward ‘robust investments’ in their national network footprint over the next few years. Beyond that, there aren’t a lot of specifics yet.

Whether the $500M funding came from Icahn or one of his various affiliated companies or funds, the debt markets, or elsewhere was not mentioned. Does anyone out there know?

xo-network-mapAs for where in the network they will be spending it, no specifics were given.  An expansion can manifest in several ways: building out new markets, building additional network depth in existing markets, installing new/upgraded equipment with more advanced capabilities on existing routes, and developing new products.

XO’s network projects during the Icahn decade have generally been focused on the latter two, especially while lighting their intercity dark fiber and entering the wholesale business a few years back.  Their network footprint itself hasn’t changed all that much over the years as compared to their peers.  Personally, I have always thought their metro footprint should get more attention than it has, but that does require the willingness to invest significant capex.

It has been over two and a half years now since Icahn took the company private, which has been followed by several rounds of internal reorganization.  I’m curious to see where Ancell will be putting his focus now that the reins are his. Hopefully the company will tell us more in the coming quarters.

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Categories: CLEC · Metro fiber

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11 Comments So Far

  • Anonymous says:

    Surely XO ha snot deveided to ho on its own now. Must be teh relaization that Telecom value comes from up to date and maintained assets. Seems like a home owner fix up prior to a sale to increase value of the sale price

    • Rob Powell says:

      I’d have gone into the M&A waters if I had anything new, but I don’t. When it comes to this though, the things you might do to spruce up for a sale are usually the same things you ought to be doing anyway.

      FWIW though, if (and it’s a big if) XO is ready to open a new chapter and go it alone, there are a double handful of ripe M&A *targets* out there that Icahn could decide to grab & merge to gain scale. Earthlink, Cbeyond, Broadview, etc… I’m not saying they should, but it’s just as hard as always to read Icahn’s intentions.

  • bondman says:

    Accounts this afternoon received allocations of the $500 million covenant-lite term loan for XO Communications, which advanced to 100/101 after breaking for trading at 99.75/100.5, from issuance at 99.5, according to sources. The seven-year loan is priced at L+325, with a 1% LIBOR floor. UBS arranged the loan, which cleared in line with original guidance. Proceeds will be used to fund network investment. The transaction will leverage XO at roughly 2.3x adjusted EBITDA, sources noted. XO is a nationwide provider of advanced broadband-communications services for businesses, enterprises, government, carriers and service providers. Majority owner Carl Icahn purchased the remainder of the company in 2011, taking it private.

  • anonymous says:

    XO has historically not met covenants imposed by Icahn and banks, or sales goals – never mind other goals like they want to be one of the 100 best companies to work for. That explains the rapid attrition of key management, replacement heads at the top, turn over in the ranks, and morale that will not change even if the beatings are stopped. So, what’s different? Money will not change the enterprise market’s perception of the company. Customer service is still on the back burner. Maybe the new CEO can prevent the day to day meddling from Icahn’s minions. Politics is always present but if not managed it can be like a cancer. I hope for the best as there are many fine people still working there.

    • Z says:

      I know a bit outdated, but this is a tidbit from the past which is no longer a goal, b/c if it was they would not be taking away the work from home program. “..want to be one of the 100 best companies to work for”

  • Shannon says:

    This kind of Search Engine Optimization focuses on enhancing your content only for
    the search engine, ruling out people in any way.

    • Anonymous says:

      There is only one kind of SEO, and you just defined it. It is as absurd that Google determines what is “human readable” as the pursuit of an objective measure of human pain.

      • Anonymous says:

        I should clarify that: Google does NOT determine what is human readable, similar to how saying one is 10 feet tall does not make one so, even if millions of people believe it. But millions of people desperately cling to their sheltered, ignorant delusions, ironically unable to communicate in a world crippled by the wasteland of social media. Even Google, Facebook, Twitter, Apple, etc. don’t see how their own demise is already queued thanks to their self-serving blindness. Without the benefit of millions of malleable and fickle American youth, these companies would not be dominant forces in any market because they don’t succeed on their innovation and brilliance, as they constantly claim, but rather by occupying the lives and of these fearful youth so desperate for distraction from the meaninglessness that saturates their lives by their own preference for easy and convenient over anything that requires effort; basically, there is a population that is desperate for distraction, and Google, Apple, et al. provide the carnival – but the people buying the tickets are like junkies, so their doesn’t have to be much of a carnival – just enough for a fix.

        An excellent example is the Apple vs. FBI showdown: if you need to hack an iPhone in the US, you have to take Apple to court. To hack an iPhone in, say, Russia, you can pay $30 to any number of legitimately skilled and probably brilliant programmers who can quote a number of hours required for their software to unravel what so many people senselessly trust with what they hold dearest in life.

        Ultimately, the point comes down to language and how poorly it is understood by American youth; they think they can make up words and that Merriam-Webster and Oxford actually care about their nonsensical submissions that speak to a despicable level of narcissism by showing how none of the alleged wordsmiths have ever opened a dictionary – since, if they had, they’d have found there’s no need for their word or why their word can’t mean what they want it to – and yet they all expect the rest of the world to hear their utter gibberish and think, “I should look that up!” rather than recognize a person who is hemorrhaging self-respect with his attempts to buy it.

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