Zayo continues acquisition feast with 360networks deal

Zayo has broken its recent acquisition silence with a move to acquire 360networks, a Seattle-based wholesale provider.

Each company brings something complementary to the table. By making this deal, Zayo will be able to augment its 60-market metro fiber network footprint with 360networks' intercity fiber network spanning the central and western United States.

Although neither company would reveal the financial terms of the deal, this is Zayo's largest of 17 acquisitions it has made since its debut in 2007.

Ed Gubbins, Senior Analyst for NPRG, told FierceTelecom that the 360networks deal is one of the most important Zayo has made in its four year history.

"It's a great 'get' for Zayo," Gubbins said. "While a lot of fiber M&A has taken place on the eastern half of the country, there aren't that many acquirable assets on the western half of the U.S. with the kind of scale and reach that 360's network has."

This is not the first time the two companies have worked together. In March, the two service providers established a long-term agreement for Zayo to provide metro dark-fiber connectivity to 360networks.

Dan Caruso, Zayo

Caruso

Dan Caruso, president and CEO of Zayo Group, said the deal enables gives it greater scale in terms of both network capacity but also services.

"The combination with 360networks marks a new chapter for Zayo, one in which we emerge as a national provider of Bandwidth Infrastructure service," he said. "The near doubling of the network allows us to provide a greater range of solutions, both in terms of markets served and ability to interconnect services across the markets."

By acquiring 360networks, Zayo gets an 18,500 route mile intercity and metro fiber network that reaches across 22 states and British Columbia. To date, 360networks' intercity network interconnects over 70 markets across the central and western United States, including 24 Zayo fiber markets and a number of new markets such as Albuquerque, Bismarck, Des Moines, San Diego, San Francisco and Tucson. 

Complementing its intercity network, 360networks operates over 800 route miles of metropolitan fiber networks across 25 markets, including Seattle, Denver, Colorado Springs, Omaha, Sacramento, and Salt Lake City. Upon completion of the deal, the combined Zayo/360networks network will include a total of 42,000 route miles and nearly two million fiber miles.

What also works in Zayo's favor, argues Gubbins, is that the acquisition fuels its drive to serve a number of smaller U.S. markets that have lacked alternative wholesale service options.  

"It's a great fit with Zayo's strategy in that 360's network serves a good mix of top-tier markets as well as the second- and third-tier markets upon which Zayo has built much of its business," he said. "These are great markets to be in now, particularly with the fiber backhaul land grab going on, as they're less competitive than the tier-one cities. It also positions one well to serve the ever-increasing need for bandwidth to data centers, which are often located outside of major markets."

From a service perspective, the product and customer sets are also complementary with a focus on providing lit and dark fiber to service providers (both wireless and wireline service providers), cable operators and government agencies.

While 360networks also offers wholesale VoIP services, Zayo will spin off those operations into its Onvoy Voice Services, which it spun out previously, so it can maintain its focus on the bandwidth infrastructure service market.

For more:
- see the release

Special report: Telecom's fiber network feeding frenzy: Top mergers and acquisitions

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