Ok it has been a week of voting since we posted polls for the most likely US network operators to sell or buy in 2020. What do the plugged-in readers of Telecom Ramblings think M&A will look like this year? Here’s a quick look at my thoughts about the likely M&A targets according to readers:
Tops on the most likely to be acquired list is perrenial contender but stubborn non-conformist FiberLight. Could this be the year that Thermo cashes in? Everyone has their price, and maybe an infrastructure fund will meet it this time.
Next is GTT, which spent much of 2019 under fire after a bit of indigestion caught up with it following the Interoute deal. While we know they are thinking about selling off Euro infrastructure, it’s not clear whether readers are talking about a sale of the rest or of US assets. The latter seems less likely to me.
Third is Windstream, which of course is still navigating the waters of chapter 11 following its loss to the hedge fund Aurelius over the spinoff of what is now Unity years ago. I suppose by some standards this one is almost guaranteed, since one way or another the owners will shift here in favor of current bondholders. An actual move by someone to buy rather than just reorganize Windstream seems much messier though, and I don’t see it.
Fourth is FirstLight Fiber, currently owned by Antin and still active in its own right. I suspect the rationale here is similar to my own: the money guys can’t help but notice that the easiest way to expand beyond a regional footprint is to combine with a neighbor, and while FirstLight has no need to make a deal they do have neighbors with whom a combination could easily make sense if the right people sit down at a table.
Fifth is a puzzling one: Zayo. Zayo agreed to be bought last year and that process is not yet complete and I did attempt to clarify that this did not include already pending deals. Barring a collapse of the existing deal, it seems unlikely that another deal is in the offing. I guess one never knows though.
As for the next five, Frontier would sell but who would buy it, both Segra and Everstream I put in the same class as FirstLight, Uniti could sell something off but overall they are entangled in the Windstream thing for now, and ZenFi would be a tasty morsel for an infrastructure fund or PE group but they are tightly held locally and I don’t think they are ready to cash in.
Overall though, there were no runaway favorites here. The distribution is pretty flat, which indicates to me that actual M&A activity may continue to be a bit subdued as compared with most of the last decade.
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