Sizing up 2012's top wireline mergers and acquisitions

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Sean Buckley, FierceTelecomWhat were the big merger and acquisition deals that took place in the wireline telecom industry in 2012? FierceTelecom is answering those questions in our fourth annual wireline M&A report where we detail the top deals of the year.

As seen in previous years, the M&A trend took place on two main planes: service provider consolidation and vendor consolidation.

The range of deals was driven by not only large service providers and vendors such as Consolidated Communications, Zayo and Cisco (Nasdaq: CSCO), but also smaller independent ILECs like Ritter Communications, which like many smaller telcos is looking for new ways to diversify its revenue base as it sees POTS service revenues decline.

Consolidation of the wireline vendor and service provider segments is a survival-of-the-fittest scsenario where growing competition in the vendor and service provider sectors can either make or break a company. Smaller and larger players either look to be purchased, or they take the plunge by buying another company that fills in a potential service or network gap that they could not fill on their own.

However, not everyone is a big fan of acquiring other companies.

Despite rumors that CenturyLink (NYSE: CTL) might buy them, tw telecom (Nasdaq: TWTC), a competitive telco that's seen continual growth in the Ethernet services market, maintains that while it has considered deals it sees no sense of urgency to purchase another company.

"When you have organic growth, you have the choice to not make acquisitions unless you feel like it is strategically important to do it," said Larissa Herda, CEO of tw telecom, in an interview with FierceTelecom. "When you don't have organic growth, you see companies making a lot of acquisitions."

Of course, the wireline M&A story is far from over.

A number of other CLECs, including FiberLight and XO will be acquired in 2013. According a Telecom Ramblings reader poll, XO was voted for the third year in a row as the most likely to be acquired, while FiberLight and tw telecom took second and third place.

While these companies have all remained tight-lipped about potential deals, the M&A trend will continue to be a key issue in the wireline industry in 2013 and beyond.--Sean

Click here to read our Top Wireline M&As in 2012 report.