tw telecom Builds Out to Boston, Level 3 down in Atlanta

September 5th, 2014 by · 15 Comments

Colorado-based tw telecom is filling in one of the last, biggest holes in its national metro fiber coverage. Boston will be their first market in New England, as part of the market expansion they announced in the fourth quarter of last year.  Meanwhile, their intended acquirer, Level 3 is expanding down in Georgia.

Along with Pennsylvania, the lack of a presence in much of the northeast was perhaps the single weak point in the tw telecom's 20,000+ on-net building coverage. It's one I always figured they would fill by inorganic means, e.g. by acquiring XO. But in the end they are entering both organically via dark fiber supplied by Zayo. They are working with the Markley Group at the key carrier hotel at One Summer Street, and have an agreement with ColoSpace in Waltham as well.

For its part, Level 3 is adding fiber in the key Atlanta metro data hub of Alpharetta, increasing reach, capacity, and diversity.  The buildout will bring their coverage to more than 265 metro route miles and 300 on-net buildings in the Atlanta metro area.  An improved financial position and enterprise growth prospects are making it easier for Level 3 to justify spending capex on such expansion projects.

As both companies plug away at their expansion projects, the close of the company's acquisition by Level 3 has been drawing nearer. They have said Q4, but if regulators don't get in the way I'd be surprised if Level 3 didn't try real hard to get it done in October. I figure the Level 3/Zayo speculation will then get started by New Year's.

Categories: Mergers and Acquisitions · Metro fiber

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15 Comments So Far


  • CarlK says:

    If an October closing becomes factual, is it odd that (3) owners have not seen voting proxies yet? This merger must be approved by shareholders also, no?

  • CarlK says:

    Follow up question: You have some people all in a tizzy referencing a Level 3/Zayo speculation going public by New Year. Is this some typo error on your part mixing the two, or did I miss something by not tracking your board? Ultimately, I see (3) taking over Zayo, vs. Zayo taking over (3), even if the CEO role needed to be switched in order to identify best leading candidate, although many believe the best telecom CEO in the marketplace today is Jeff Storey. His history proves him to be quite an operator.

    • Rob Powell says:

      I don’t know anything, I just figure that once the tw telecom deal is done, where does Level 3 look next in the US? If consolidation continues, there are only so many big targets left and sooner or later the speculation will have them and Zayo somehow. I’m not saying they’re talking just that other people certainly will.

    • Rob Powell says:

      ‘go public’ was perhaps the wrong phrasing. I changed it to ‘get started’, lol.

  • CarlK says:

    I like your speculation and agree. Will Mr. Caruso retire or seem to retire like Mrs. Herda when he gets taken out? 🙂

    • Rob Powell says:

      While I think the speculation will flare, I actually think that like with tw telecom it won’t happen for years. And where those years take Caruso and Storey is anybody’s guess.

  • CarlK says:

    Ultimately it must because ALL IP ROADS lead to Level (3) Communications. The globe has been waiting for the progress that it brings, for too long now.

  • fanfare says:

    I realize the whole thing is an educated guessing game Rob, but do you really think Zayo would be a good move footprint-wise? I seem to remember Zayo having about 15k buildings …. but I could be remembering wrong. What I would question would be the LH/UHL routes. The price 3 would have to pay in further dilution … would you see that being worth the assets? What advantages (aside from customer acquisition) do you see to 3 paying for the LH/ULH routes? I get what you mean by “last player out there” … but I’m not sure I would get excited about getting what amounts to mainly another National ULH footprint with routes to Europe.

  • fanfare says:

    Qualifier: don’t get me wrong…. Zayo has some very compelling fiber assets, but my point would be the price would be high IMO, and we would be buying a lot of LH/ULH along with those metro and building assets.

  • Anonymouse says:

    Commenting on: “Ultimately it must because ALL IP ROADS lead to Level (3) Communications.”

    Not a chance, IP Transit providers are middle-men between eyeball networks and content providers. It’s a wholesale product with low margin and declining prices. The equipment costs to light massive quantities of fiber and invest in upgraded routers makes the IP transit business super lean and not anything that would save the company.

    Of the dozen tier 1 IP networks, there are 4 that do not have significant eyeball / residential access networks – Level 3, GTT/Tinet, Cogent, XO Comm.

    Level 3’s future is in enterprise. They will focus on taking large enterprise/corporate customers from AT&T, Verizon, BT, Telefonica etc.

    The primary challenge to serving enterprise and winning business if the cost f local access.
    Enterprises but multi-site networks, not every carrier has all sites on-net, so there is always resale in enterprise mpls contracts.

    With TWT level 3 will have many more on-net buildings and able to capture more enterprise business and do it on-net cost effectively.

    Level 3 is still not a global carrier. They think they are, but their presence in Asia is minimal. AT&T’s global network is substantially more comprehensive in eastern europe, asia, africa.

    While Level 3 continues to move up-market to compete with AT&T and Verizon, this leaves much of Level 3’s traditional content, ISP and wholesale customer unhappy.

    Zayo seems to be doing a great business with wholesale infrastructire. fiber, Eaves, collo, IP

    • fanfare says:

      Interesting, your perspective on T. I agree that LVLT lacks Trans Pac routes. They actually own part of one cable via consortium, but it is not significant. The rest, are via leased wavelengths. The thing about LVLT, vs T … is the IP network. It is global. LVLT used to have more of a presence in Asia, but sold out to .. hmm I forget now offhand. Anyway, They are running bits in some parts. Buying leased wavelengths (particle-wave duality dictates that we pay less for the 700 nm (red) wavelengths because they are just not as frequent … and we just don’t pay for the time these photons are acting like particles… ha! … lets see who actually gets that….) Anyway, I agree … enterprise is where we need to keep our focus. Still, Zayo does have about 15k on-net buildings …. am I remembering this correctly?

  • CarlK says:

    Commenting on Anonymouse’s entire commentary:

    It’s one giant contradiction missing many pieces of the puzzle whose parts will bring global eyeballs to eyeballs away from traditional domestic distribution models–legacy last mile U.S. ISP’s–into Level 3’s end to end network hands, from content creation to consumption.

    The biggest contradiction is calling Zayo’s “wholesale” business great while that business is only part of Level 3’s whole and continues to be a drag on overall operations, and will continue to be until consolidation in the space leads to one “technology” provider of essential, non discretionary, mandatory communications services containing “video” as its biggest part of travelling bits.

    Level 3 will probably buy Zayo before their IPO, at multiples their investors expect from the “public” while eliminating the risk. That assumes the vetting of Dan’s operations does not show significant pot holes from the integration risk permeating its business prior to pawning it off to less suspecting public investors, err, duping and shearing the sheep.

    If it does show significant potholes, Level 3 will take them out dirt cheap, and after Mr. Market takes the hatchet to them which is a certainty once they screw up.

    This is contrary to what the judges, jury, and executioners believe on IV. Considering I am a contrarian investor, it’s so simple to accumulate and control the supply of the most important technological resource–fiber–since Rockefeller dominated black gold and its distribution system comprised of wells, pipeline and tank cars..

    • CarlK's Twin says:

      Ditto, carbon copy CarlK.

      I’m a firm believer in a global end to end fiber network, and Level 3 is the only advanced IP backbone in the world equipped to deliver on a massive scale that is needed to run live streaming UHD vidio over the Internet. The extra reserved capacity enabled by the 12 empty conduits will meet all future video demands. Vyvx is the only sevice ready to handle the job of delivering live video flawlessly. The other two international tier 1 transit providers (at&t and Verizon) have rinky dink, junk patchwork, IP networks, that would totally flop, when trying to deliver end to end global UHD live streaming video.

      Let’s face it Level (3) Communications is the undisputed king of bandwidth!

      Ben Graham

  • JoeCool says:

    There is some misinformation on the building count out there that TW Telecom will be adding 21k+ buildings to Level 3’s total after the deal is complete. There is quite a bit of overlap in the Southeast and a few other locations in the west. There are markets on both sides that only one of the two was in the market. TW Telecom targeted a little bit different type of customer. Level 3 usually but not always enables a building offering from a T-1 to wave services whereas TW Telecom enable buildings for Ethernet services and some TDM & wave services.

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