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Zayo Doubles Fiber Assets

Raymond McConville
News Analysis
Raymond McConville
2/19/2008

Zayo Group Inc. (NYSE: ZAYO) said more acquisitions were to come and it has so far kept its promise in a big way. The startup just announced the acquisition of Citynet Fiber Network (CFN), for an undisclosed sum.

CFN's network has 8,500 route miles of fiber in 10 states. The acquisition now doubles Zayo's network to over 17,000 route miles including 1,400 on-net buildings in 12 states.

CFN is the wholesale division of Citynet -- a regional provider of telecommunications services. It is unloading its fiber assets to focus more on what it feels is its core strength -- retail telecom services. Jim Martin, CEO of Citynet also notes in a statement that the transaction will allow Citynet to be "virtually debt free." [Ed. note: Free from virtual debt?]

Meanwhile, for Zayo, this is its sixth fiber acquisition since the spring of 2007. The company has built its strategy on acquiring left fiber assets in Tier 2 and Tier 3 markets where many incumbent carriers' networks do not currently reach. (See Level 3 Co-Founder Starts Zayo Bandwidth and Startup Spotlight: Zayo Bandwidth Inc.)

While the price tag of the CFN acquisition is unclear, Zayo had secured $85 million in debt financing back in November for these very purposes. "The purpose of the debt raise was primarily future acquisition opportunities," said Zayo COO John Scarano at the time of the financing. (See Zayo Buys, Grows & Raises Debt.)

Zayo Bandwidth's network now spreads through 100 metropolitan areas across the eastern and central U.S. The company has grown quickly. At the time of its formation, it only had 4,600 route miles of fiber touching 200 on-net buildings.

— Raymond McConville, Reporter, Light Reading

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Kreskin
Kreskin
12/5/2012 | 3:47:27 PM
re: Zayo Doubles Fiber Assets

Bought six properties made of junk ... PPL was an IRU ... Time Warner Telecom is cleaning up in Memphis ... every carrier has fiber on the Indiana FiberNet routes they bought ...seems Zayo is good at spending money but lacks a platform/strategy ... only 40 non-ILEC fiber carriers left in the USA. Is Zayo going to buy Level 3, Time Warner Telecom, Cogent,ITC, Telepacific, Paetec, Cox, et al ... I think not .... the number of what's left networks is much less than 40 ... I don't see big carriers buying the junk from Zayo either ... no significant markets to speak of.

Are they trying to corner the third and fourth tier market ...

This firm better have dollars to build fiber since their buying binge makes little sense to the casual observer ...


... they do a hell of a nice press release though.
minnehot
minnehot
12/5/2012 | 3:47:24 PM
re: Zayo Doubles Fiber Assets
So true. The Onvoy assets are also a mirage, much fiber 'ownership' caught up into bizarre IRU/Lease arrangements with its former independent telco owners. Also a fiber network that beautifully covers Ethanol producing areas, but no people.
Zayo is already a joke in the industry.
Kreskin
Kreskin
12/5/2012 | 3:47:23 PM
re: Zayo Doubles Fiber Assets

Even this deal, Zayo is acquiring IRU fiber, not a network sheath.

Early formation of a House of Cards ...

Plus, Zayo management has zero experience in growing companies. They are good at stripping and flipping.
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