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SD-WAN

Zayo's acquisition of QOS could signal more M&A to come

Zayo Group's SD-WAN services are getting a boost due to the acquisition of QOS Networks this week – and there are hints circulating that there could be more M&A to come.

But for now, Zayo believes it's found a good fit with QOS Networks. The fiber and IP network provider currently partners with SD-WAN suppliers such as Versa, but Brian Lillie, chief product and technology officer for Zayo, says the company's enterprise customers were asking for more managed SD-WAN services.

"There was a growing desire by enterprises that were in 100 to 150 buildings that we had fiber connected to, that said, 'We really like SD-WAN as a way to connect our offices,' " says Lillie. In addition, enterprises were looking to SD-WAN to connect employees working from home due to pandemic restrictions. "Increasingly, [customers] were asking us, 'Could you manage multiple, up to 100s of sites on our behalf?'

"It became clear to us that we need this over-the-top, white-glove, managed service offering that enterprises can rely on both in businesses connected by Zayo and connected by our partners."

Zayo manages over 13 million miles of metro and long-haul fiber, primarily in North America and Europe, and Lillie says the company saw an opportunity to shift to providing enterprise customers with both the underlay connectivity and over-the-top managed SD-WAN service by joining forces with QOS.

QOS Networks also partners with Versa, as well as VMware's VeloCloud and Palo Alto's CloudGenix and Prisma SD-WAN services, which will diversify Zayo's managed SD-WAN options for enterprise customers, explains Lillie. QOS Networks has deployed over 45,000 SD-WAN edge devices and will continue to operate under the QOS brand as a division of Zayo; the financial terms of the QOS acquisition have not been disclosed.

Adding AI to SD-WAN

Frank Cittadino, CEO of QOS Networks, says QOS also brings its AIOps service to the table to provide SD-WAN customers with the ability to better analyze data from their SD-WANs. AIOps – a technology platform where artificial intelligence assists IT teams in automating network operations, improving cloud application performance and supporting faster security threat detection and response – is one area that SD-WAN suppliers and managed service providers have recently been utilizing to differentiate their SD-WAN platforms.

Masergy, Palo Alto and Juniper are among the SD-WAN providers that have added AIOps to their SD-WAN services as a way to separate from the herd.

"As we integrate with [our customer's] systems, it's a seamless way for enterprises to have choice of CloudGenix, Versa or VeloCloud. They can buy the SD-WAN they want and integrate it to the systems that they already operate, making the path of least resistance really short," says Cittadino.

The team-up with QOS will provide customers with more options for managed and co-managed SD-WAN services, adds Lillie. In addition, the two companies say this partnership will strengthen their relationships with cloud hyperscalers, multi-tenant data centers and carriers that are investing in the edge, core and fiber-to-the-tower (FTTT), respectively.

More M&A on the horizon

Many of the major networking and security companies have already scooped up SD-WAN players in the past few years – Juniper acquired 128 Technologies, Cisco brought on Viptela and Palo Alto acquired CloudGenix – so it's possible Zayo may bring in more SD-WAN, SASE or edge networking vendors into the fold, in addition to QOS Networks.

Zayo became a privately held company in March of 2020 when EQT Infrastructure acquired it for $14.3 billion. In August of 2020, EQT expanded its footprint in the cloud, data center and edge network service market with the acquisition of EdgeConneX.

Zayo may even have its sights set on acquiring managed service provider Windstream, which managed to avoid bankruptcy in the fall of 2020.

"A group of investors, including Zayo and its parent companies, DigitalBridge and EQT, are reportedly looking to purchase broadband network owner Uniti Group and its Windstream business," reported Light Reading's Mike Dano last October. "An early proposal valued Uniti at $3.5 billion, but the company might be seeking double that, the Wall Street Journal said."

— Kelsey Kusterer Ziser, Senior Editor, Light Reading

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