Light Reading

Zayo Files for IPO

Ray Le Maistre
7/4/2014
50%
50%

Heavily-indebted wholesale services and dark fiber specialist Zayo has filed for an IPO valued initially at a token $100 million.

The network operator, which has been on an acquisition spree in North America and Europe during the past two years (including the purchase of an Atlanta data center for $52.5 million this week), has not set a price range for its stock or stated a timeline for joining the public markets. (See Zayo Group Acquires AtlantaNAP Data Center and Zayo Buys UK Fiber Network Operator.)

Zayo Group Inc. (NYSE: ZAYO), which sells fiber, Ethernet and IP services to telcos, mobile operators, web services firms, large enterprises and government agencies, generated revenues of $826.5 million in the nine months to the end of March 2014, up 11.3% from the same period a year earlier, and recorded an operating income of $69.5 million.

However, its large debt pile of $2.99 billion attracts significant interest payments, which pushed Zayo into a net loss of $105.6 million in the nine months to the end of March. The company notes that it expects to report losses for several years to come, and that it may use some of the proceeds of the IPO to pay down some of its debt.

Zayo's pitch, though, is all about long-term growth fueled by the demand for network capacity driven by video and data traffic. It operates a network that runs over 77,000 route miles (with an average of 74 fibers per route), serving 297 markets in the US and Europe. It is connected to 14,490 buildings, including 3,838 cellular towers and 527 data centers.

It has built its business through M&A activity -- 30 acquisitions since 2007 that have cost a total of $3.7 billion -- and investment: In the period from July 1, 2012 through March 31, 2014, Zayo invested $598 million of capex on its network and facilities. In its IPO filing, Zayo notes that it intends to acquire more complementary businesses and further invest in its network. (See AboveNet Finds $2.2B Buyer in Zayo Group and Zayo Completes 360 Deal.)

Zayo is currently owned by a consortium of private equity firms, including Battery Ventures , Columbia Capital , Charlesbank Capital Partners, GTCR, M/C Venture Partners , and Oak Investment Partners .

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
7/7/2014 | 4:54:24 PM
Re: A lot of debt to pare down
Seems like this IPO is more an avenue for Zayo to remain solvent rather than to expand operations. 

I get the game in M&A on a bet for multimedia traffic. But it seems to me this business strategy is a huge risk for all parties involved, including the company's future investors. 
Joe Stanganelli
50%
50%
Joe Stanganelli,
User Rank: Light Sabre
7/5/2014 | 2:28:24 AM
I'm convinced.
> "The company notes that it expects to report losses for several years to come, and that it may use some of the proceeds of the IPO to pay down some of its debt."

Well, shoot, sign me up!
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
7/4/2014 | 11:35:10 AM
A lot of debt to pare down
I'm sure Zayo will be aiming to raise much more than $100 million when it reveals its full details -- that $3 billion debt pile needs some attention.

 

In this fiscal year it has already paid out more than $100 million in interest payments so it needs a decent slice of cash to make some inroads, I'd say. 
Flash Poll
From The Founder
Networks of the future will rely on "white box" switches and servers rather than proprietary hardware and that's going to alter the shape of the communications industry. Who says so? John Chambers.
LRTV Huawei Video Resource Center
Huawei Intros Smart Device for eLTE

3|30|15   |   05:25   |   (0) comments


Huawei has developed a secure, location-aware multimedia smartphone for its eLTE trunked radio solution, says Huawei's Norman Frisch.
LRTV Huawei Video Resource Center
Win Video, Win All

3|30|15   |   06:44   |   (0) comments


Video is going to be the next main source of revenue for operators. Operators have big opportunities and advantages to monetize video services. Globally, Huawei has helped more than 70 operators achieve over 30 million video subscribers. Watch this video for more.
LRTV Custom TV
The Benefits of HyperScale Clouds for NFV

3|27|15   |   01:50   |   (0) comments


Hyperscale cloud has been developed by the Internet giants to support the creation and delivery of software-based services at blistering speeds, and at the lowest possible cost. The original ETSI NFV vision was to adopt hyperscale cloud architecture and practices. This vision has become somewhat obscured along the way, due to misunderstandings about the hyperscale ...
LRTV Huawei Video Resource Center
eLTE Rapid Meets the Need for Speed

3|26|15   |   4:45   |   (0) comments


Designed especially for emergency and dedicated ad hoc local mobile communications coverage, Huawei's eLTE Rapid solution can deliver trunked voice, video and data coverage for multiple users over a 6km range and be set up in just 15 minutes, explains Huawei's Norman Frisch.
LRTV Huawei Video Resource Center
On Videos: Challenges & Opportunities

3|26|15   |   5:56   |   (0) comments


Most everything is now connected. And along with 4K and 4G technologies, everyone could be creating and broadcasting video contents. Users are expecting better video experience with any screen, anywhere and anytime. Operators will meet new challenges, but also see some big opportunities.
LRTV Custom TV
JDSU: Delivering Dynamic Networks for a Personalized Experience

3|26|15   |   5:59   |   (0) comments


Light Reading speaks to JDSU at Mobile World Congress 2015 about new solutions in the areas of HetNets, VoLTE, backhaul, virtualization, big data analytics, and real-time intelligence.
LRTV Custom TV
Smarter Service Chaining & New Ways to Benefit From Qosmos Technology

3|25|15   |   03:11   |   (0) comments


David Le Goff, director of strategic and product marketing at Qosmos, explains how the company has added application awareness to subscriber information to make service chaining more efficient and reduce costs for networking and infrastructure. In addition, Qosmos technology, which has been delivered as C libraries, is now also available as a virtual machine, ...
Between the CEOs
Qosmos CEO: The Changing Face of DPI

3|24|15   |   13:53   |   (0) comments


LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures. Also, how the comms market is becoming more like the automotive industry.
LRTV Huawei Video Resource Center
FC Schalke Scores With Its Agile Stadium

3|24|15   |   6:23   |   (0) comments


Top German soccer club FC Schalke 04 has deployed a new, agile WiFi network from Huawei in its Veltins-Arena stadium and is reaping the benefits in terms of customer satisfaction and business opportunities, explains marketing chief Alexander Jobst.
LRTV Huawei Video Resource Center
Huawei’s Insights on Mobile Video

3|24|15   |   7:51   |   (0) comments


More people than ever are now watching videos on smartphones. Seventy percent of mobile traffic will be video traffic until 2018. In this video, Huawei's exports give their insights on mobile video in terms of business model, network planning and 4G network construction.
LRTV Documentaries
The Rise of Industry 4.0

3|24|15   |   02:26   |   (9) comments


Are you ready for the fourth industrial revolution? It's a big deal for influential operators such as Deutsche Telekom.
LRTV Huawei Video Resource Center
Getting Connected With eLTE

3|23|15   |   06:04   |   (0) comments


Trunked radio communications have entered the 4G LTE world, and with Huawei's eLTE solution, can now deliver a full range of data and video services as well as push-to-talk voice, explains Huawei's Norman Frisch.
Upcoming Live Events
April 14, 2015, The Westin Times Square, New York City, NY
May 5, 2015, Hyatt McCormick Place, Chicago, IL
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
All Upcoming Live Events
Hot Topics
AT&T Woos SMBs With Small-Scale WiFi
Sarah Thomas, Editorial Operations Director, 3/26/2015
Just Don't Say IBM Is 'Relaunching' Networking Business
Mitch Wagner, West Coast Bureau Chief, Light Reading, 3/26/2015
TV Everywhere Nears Mainstream Adoption
Mari Silbey, Independent Technology Editor, 3/27/2015
Carriers Are Bright Spot in BlackBerry Q4
Sarah Thomas, Editorial Operations Director, 3/27/2015
Comcast Says TWC Deal Will Close Later
Mari Silbey, Independent Technology Editor, 3/26/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures.
Chattanooga’s EPB publicly owned utility comms company has become a poster child for how to enable a local economy using next-gen networking technology. Steve Saunders, Founder of Light Reading, sits down with Harold DePriest, president and CEO of EPB, to learn how EPB is bringing big time tech to small town America.