As we do every year on Telecom Ramblings, we kicked off January with a pair of reader polls asking about US network operators a) Who is likely buying, and b) Who is probably selling. The results this year were quite interesting. While the top picks for both buyers and sellers were perennial favorites, the next layer showed significant shifts from last year.
XO won the title as most popular consolidation target as it always does. But it had to come from behind, as both FiberLight and Integra led the poll for several days. The pair are two of the last independent supra-regional fiber providers. EarthLink and Sprint's wireline business are logical enough national targets, while Lumos and Alpheus have regional depth that could be of interest to an acquirer. But Windstream as a target? Hmmmm... And somehow serial network asset buyers Zayo and Lightower made the top 10 as consolidation targets, yet it doesn't seem like the multiple would cooperate and who would be the buyer? Let's look to the other poll for answers to that question.
Yep, Zayo is the clear winner here, and given the past 8 years I'd be shocked if they weren't. Level 3 was a clear second choice, although I put their primary M&A interest overseas and not in the US at present. But the next three are interesting: Comcast, CS&L, and Crown Castle. Comcast has yet to actually buy any significant network assets, at all, but in 2016 is expected to be moving into the large enterprise space. If people see them as a buyer, I think the target would have to be infrastructure big and deep enough to move that needle. From the top 10 targets, I'd have to be looking at Zayo or Lightower, who I was surprised to see there as well, but I seriously doubt that egg is ready to hatch yet. CS&L is a new entrant this year, and with the planned purchase of PEG Bandwidth perceptions shifted rapidly. Crown Castle is also new this year after making several buys in 2015, and would surely be focused on fiber-to-the-tower assets. Lightower is lower down the list this year, but still there. GTT and Birch have been very active consolidators, and they were my two picks alongside Zayo. And of course there's Google holding down the #10 slot - also perhaps one of the few that could buy Zayo if they wanted to, which I'll believe when I see it.
So given these poll results, what deals appear to be on the mind of the sector? Let's mix and match:
- Zayo could buy anybody (who saw Allstream coming?), but FiberLight is most obvious to me
- Level 3 and XO?
- Comcast or Google and Zayo or Lightower?
- Windstream and Integra?
- CS&L and ... I'm going to go with EarthLink's fiber assets
- Crown Castle and FiberLight? (ooh, a bidding war)
Any other thoughts from out there?
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