The last two Fridays we had our annual M&A polls, checking which operators Telecom Ramblings readers think will be the consolidators or consolidatees in the year ahead. Now let’s take a quick look at those results and see what you had to say (and my own thoughts).
Readers picked Zayo as the clear leader of fiber consolidation in the sector, nearly doubling the vote count of its nearest competitor, Level 3. Zayo is indeed the obvious pick and one of mine, although now that they’ve already bought IdeaTek in December and now a big meal of colo at Latisys, I’m revising my thinking that they might not be as active as they might otherwise have been the rest of the year.
Level 3 seems likely to be busy with tw telecom though, so they weren’t one of my picks. Third though is Windstream, whose REIT effort might prompt some interesting moves once it is complete, so they were also one of my picks. CenturyLink and Lightower rounded out the top 5. I’m not sure who CenturyLink would be buying although I guess Sprint(wireline) would be logical enough, but Lightower was also my third pick. Notably not making the top 5 were any cable MSOs, although Comcast and Charter were next in line.
As for the likely targets of consolidation in readers’ eyes, there is much less in the way of consensus. XO led the pack of course, followed pretty closely by Sprint’s wireline division. Nothing new there, and XO probably got fewer votes this year than they ever have in this annual poll. Tired of being wrong perhaps? They weren’t on my list this time, as it appears Icahn’s willpower is impervious to the obvious need for an owner who knows the business.
Lightower, Fibertech, and Fiberlight rounded out the top 5, being three of the largest regional, independent morsels of metro fiber available for someone like Zayo (or each other) to buy. As for me, I picked Sprint(wireline), Earthlink, and Lumos, just because it feels like the first two are ready for action and as a public company Lumos has less sticky owners than the other regional fiber networks near the top of the list. But frankly I agree with the lack of consensus. Plenty of potential consolidation targets are out there, but few really stand out to me this year.
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Sprint wireline listed as second most likely to be acquired. At what price this time? Does anyone know route and fiber miles?
I am not sure who the people are who believe earthlink is a valuable potential take out but they clearly do not understand the challenges with that business. True, they’ve done a nice job at growing their retail focus to actually something more than it was. But while growing retail for example they have lost significant traction in the their partner channel business largely due to horrific and quite possibly the worst customer on-boarding service delivery experience in the industry.
Before we go to the post sale operational support challenges the on-boarding and installation of what are essentially standard and commodity services is one of the worst industry providers from a brief case time perspective. Moreover they put the person who ran HR who had no (i mean zero) operational experience in charge of network service delivery and around the same time lost major partners due to the ineptness and incompetence. Add to this the care and repair organization is essentially rudderless and using several sytems for trouble ticket resolutions with bandaids and bubblegum every where holding things together is at work its no wonder why customers routinely say its horrific customer support and experience. Please note i am not suggesting there aren’t good people in those organizations b/c there are – people who care and who want to do the right thing for their customers – but who simply can’t b/c the IT org has essentially spent its bank on a system called big bang that they shut down and are now scrambling to weave together with threads.
The only thing of value there was the fiber network in the southeast but its all aerial and while poseses some interesting diverse routes isn’t likely to be around long b/c the new CEO wiz boy wonder is looking to sell that asset off. That same boy wonder wiz kid is / has shut down the IT services business and lost all of the talent there as well.
So that said why would someone believe its attractive?
Atlanta-based EarthLink confirmed this week that it laid off some employees at its Vancouver EarthLink Business offices in Vancouver last week, without disclosing how many.
The company, which provides and manages network and IT solutions for business customers, offered no details of what spokeswoman Pamela O’Connor called a “small nationwide downsizing.”
In response to The Columbian, O’Connor issued this statement:
“As EarthLink continues to balance resources in 2015 to focus on profitable growth and our new strategic managed services business unit, we decided to eliminate the positions of some incredibly talented employees for whom we have great respect and appreciation. After careful consideration, we determined that this reduction was necessary to realign according to our business plan and to enable the company’s future success. The reductions at our Vancouver location were minimal and we expect that our Vancouver office will remain a core location moving forward.
“We did not take this decision about job impacts lightly and are committed to fair and compassionate treatment of our people throughout the process.”
The company issued no statements on its website or in government filings about the layoffs nationally.
O’Connor would not provide an employee count for the Vancouver office, at 3000 Columbia House Blvd. near the Grand Central shopping center. The Columbian reported in 2011 that the Vancouver office, one of dozens of EarthLink Business sales offices nationwide, had 285 employees.
Any layoff of 50 or more employees would have required notice to the state Employment Security Department. A spokesman for that department said no notice had been filed.
Honestly, who cares about earthlink. Its a waste of effort discussing it. Run by totally inept people with the biggest being the fat pig in southeast shawn double hotdogs murray.