A Few Predictions for 2019

December 31st, 2018 by · 12 Comments

After the carnage of last year's predictions, one might think I'd be gun shy about making more for 2019.  Hiding under a rock definitely sounds like a safer option this year, but I'll risk it anyway.  I think it's actually easier to make predictions in chaos, because nobody expects you to have a clue.

 

 

  • Zayo will go private.  In my annual M&A poll, Zayo has frequently been up near the top of both the buyer and seller lists.  I found that prospect highly unlikely, but the situation has changed drastically in the past two quarters as the company has hit a rough patch operationally.  The growing list of private equity groups chasing infrastructure opportunities all over the world won't let this chance get away.  Strategic buyers won't outbid them for this one,not Google, Comcast, or Crown Castle.
  • The Sprint/T-Mobile will get messy, but will get done.  Getting past the CFIUS recently was the easy part, staying out of the naked mud-wrestling pit of politics with the 2020 presidential election campaign already ramping up will be much harder.  There's no question that jobs will be lost in the merger and one way or another that will become a political football, but with all the background noise it will be difficult for opponents of the deal to focus sufficient outrage.
  • Early 5G launches will happen but will underwhelm. The ongoing preparations for 5G and the buzz in the infrastructure world on how important they are won't match up with the fickle focus of the consumer markets.  Bandwidth and speed are increasingly just the means to the next big content app, and the fog is still too thick on what form that will take.
  • Security Moves Onto the Front Burner.  With the Huawei/ZTE thing, one might argue it's already there, but not to the extent that it will be.  With the 2020 election season on the way, self driving cars still leading the IoT discussion, a quantum revolution simmering in the background, and a whole lot of people figuring out how to better automate literally everything, there are more moving parts in this sector  and more eyeballs paying attention to potential missteps than I have ever seen.
  • Fiber M&A in the USA will slow down.  Other than the potential Zayo deal mentioned earlier, infrastructure M&A will be focused increasingly on the cloud and data center markets.  Deals will get done, but multiples remain high and the target list is as thin as it has been since this site got started. That being said, I'll be looking the following when it comes to fiber M&A (other than already discussed):
    • Crown Castle will make multiple moves.  They've been quiet lately, digesting the Lightower deal.  Their next meals will be smaller ones though.
    • GTT will buy some US fiber.  With their transatlantic and European footprints now having a fiber footprint, GTT will find a way to start doing the same in the US.
    • GCX Will Find a home.  The RCom soap opera will finally come to an end and all that subsea fiber connectivity will get sold.  Private equity from the APAC region will make something happen.
  • Nobody will really notice any of this outside the internet infrastructure world.  There's too much noise out there.  Too many fires to put out, or to fan.

What's your opinion?  Leave a comment below and I'll give my take.

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Categories: Government Regulations · Mergers and Acquisitions · Security · Wireless

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12 Comments So Far


  • yomdoo says:

    Maybe it is time to look for optical fiber that is invulnerable to being physically tapped?! Seems like one giant, unsecured liability.

    • Rob Powell says:

      Does such a beast actually exist?

      • Anonymous says:

        Not exactly, but you can use fibre to detect sound (!) which will generally alert you to impending problems/intrusions, such as digging, removing manhole covers etc. They can also use it to track where trains are using the fibre laid alongside the tracks, for example.

      • Anonymous says:

        Not sure that 100% secure fiber is available. End-to-end encryption and physically securing wiring closets is the best bet for now. While fiber can be tapped I’m unclear on how hacks could than decipher advanced encryption.

        • Anonymous says:

          Nation states have the ability to break most kinds of encryption, although it may take time (eg GCHQ storing traffic in large quantities to decrypt over time). But the main problem with encryption is cost.

  • Rog says:

    I’m thinking cable co’s will make some kind of move this year. The smaller ones at least, I could see RCN/Grande/Wave making a move for scale with someone like AtlanticBB, Liberty, Lumos etc. Especially since their larger competitors are buying up content providers, they will want scale for negotiations on channel rights. Just speculation…
    Other cable co’s will want to grab some metro fiber and SD-WAN to move up market. Cox Companies comes to mind here.
    I’m also thinking a portion of INAP will be sold. Since the company was split into two divisions I think Private Equity will pick up a piece and go private given the direction of the stock. Pete Aquino is no stranger to these types of deals.

  • Tim Dawson says:

    Bershire will buy Zayo and roll it under Masergy.

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