M&A in 2015: Network Edition

December 28th, 2015 by · Leave a Comment

Consolidation in the sector continued at a pretty good clip this year, although it was still a deceleration overall perhaps from prior years.  Here's a quick review, and let me know if I missed anything. 

One of the most interesting moves wasn't an M&A but rather the opposite.  Windstream spun off its network assets as CS&L, a REIT specializing in triple net leasing of infrastructure assets.  The question has been whether it was just a one time thing, or whether CS&L would find other candidates.  So far we're still waiting, but this sort of thing does take some time to negotiate.

The biggest overall deals came in the ILEC and cable MSO spaces.  Verizon found a buyer for another $15B or so of its landline business.  Frontier will take on much of the Verizon fiber and copper that used to be GTE much as they did a few years ago elsewhere.  When Comcast came up short with regulators, Charter stepped in and revealed its own purchase of TW Cable.  And Altice provided the rest of the fireworks with deals to acquire SuddenLink and Cablevision.

The biggest pure fiber deal in the US this year belonged to Lightower, which pounced on regional rival Fibertech for $1.9B. Lightower's M&A appetite will likely turn outward now, possibly toward assembling a national footprint.

The second biggest pure fiber deal in the US belonged to an invader from the tower space. Crown Castle entered the fray with the $1B purchase of Synesys from Quanta, and followed up with the quiet purchase of privately held Access Fiber. Crown Castle's effect on the metro fiber markets is definitely worth keeping an eye on for 2016.

Meanwhile, the most active fiber consolidator in recent years spent its effort abroad in two significant acquisitions. Over in Europe Zayo acquired the pan-European fiber network of Viatel, complementing the previous deals for Geo and Neo and suggesting further acquisitions to come. And just to the north in Canada, Zayo will be buying Allstream for its fiber assets. Zayo's US appetite seems to have turned towards colo, but we'll save that for another day.

Zayo wasn't the only European acquirer, as the region saw M&A activity continue to simmer. Interoute bought Easynet, euNetworks picked up Inland Fibre, and CityFibre pounced on KCOM's network assets. And private equity was active too, as Fidelity bought out the public and took Colt private, while Antin took the reins over at EuroFiber.

And there was some non-incumbent activity down under to keep in mind as well. TPG bought iiNet for $AU$1.4B deal to more firmly establish itself as Telstra's fiber rival.

Back in the USA at higher levels of the network, two other upstarts gained yet further scale nationally. GTT bought the managed services division of MegaPath and followed up with a deal for One Source Networks. And Birch bought both OrbitCom and pieces of Sage Telecom. Both companies have been rolling up assets steadily and neither can be considered small anymore to be sure.

The rest of US network M&A activity was at the regional level, with private equity often helping to grease the wheels. In the far northeast, Oxford bought Bayring. In the northwest, Fatbeam bought EMAN. In Maryland, PEG Bandwidth bought a network from Gores. On the west coast, Integra added the little known assets of opticAccess to its portfolio. In the southwest, Astra Capital Management is acquiring LOGIX Communications. And in the midwest, Great Plains Communications bought pieces of Pinpoint and Arvig bought North Star Fiber, while Anderson Pacific bought Neutral Path.

 

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Categories: Fiber Networks · ILECs, PTTs · Mergers and Acquisitions · Metro fiber

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