Zayo broadens U.S., Europe reach with AboveNet deal

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The deal: Zayo acquired AboveNet, a competitive service provider that served businesses that required a minimum of 100 Mbps services and above, last July for $2 billion.

Like Sidera, which is now in the process of being merged with Lightower Fiber Networks, AboveNet itself had been considering possible deals. Before being acquired by Zayo, AboveNet's then-President and CEO Bill LaPerch said they were thinking about expanding the service provider's reach by acquiring other service providers, analysts argued that it would be a good acquisition target because it has been profitable.

By acquiring AboveNet, Zayo immediately doubled its size with operations in 45 U.S. states and seven countries in North America and Europe.

Besides the overall reach that big part of the acquisition are the network assets.

When it completed the acquisition in July, have a network that spans over 61,000 route miles with 4.6 million miles of fiber. Perhaps the more compelling aspect is that the newly combined network will serve about 9,000 locations, including a mix of major data centers, telecommunications hubs, enterprise buildings and wireless towers.

Why it's significant: While every service provider acquisition always has its share of overlapping markets and focus, Glenn Russo, EVP, Corporate Strategy & Development, Zayo Group, in an interview with FierceTelecom at the time the deal was completed that their networks "are very complementary" and they would "be selling the same sets of services across the broader footprint so we can offer our customers more comprehensive solutions."

The acquisition also gave Zayo a greater balance of wholesale and enterprise services. With AboveNet, Russo said Zayo ended "up with a balance of 50/50 of carrier and enterprise-oriented businesses."  

Two opportunities that the combined company can better target are Fiber to the Tower (FTTT) and low latency fiber services for financial trading companies in their respective markets. Zayo could sell its FTTT services in markets like New York City where AboveNet had a large presence. Likewise, Zayo can use fiber assets to target AboveNet's financial customers that need low latency fiber-based services in cities like Atlanta, for example.

Zayo's acquisitive nature has continued beyond AboveNet, however.

Since the company's inception in 2007, Zayo, which was formed by Later in the year, it made deals to purchase a number of other smaller competitive providers, including FiberGateFirst CommunicationsLitecast, and USCarrier. Like AboveNet, these acquisitions include companies that have a similar focus on selling fiber-based network infrastructure service capabilities to businesses and other carriers.

But the bigger trend here for Zayo and AboveNet is that it represents the ongoing, and perhaps necessary, consolidation of the competitive telecom provider market.