Zayo's Caruso: Tower backhaul tenants provide FTTT, enterprise upsell opportunities

Zayo is finding that as it wins new wireless operator dark and lit fiber tower contracts, these same customers are prime targets for additional services sales.

Speaking to investors during its fiscal third quarter earnings call, Dan Caruso, CEO of Zayo, said while pursuing other wireless operator clients is enticing, the anchor tenant is the easiest to attract because they typically need additional lit capacity or more dark fiber strands.

"When we look at these projects, we're not just looking at our upsell opportunities with additional wireless carriers. We look at many other opportunities as well," Caruso said during the earnings call, according to a Seeking Alpha transcript. "The first one, actually, starts with the anchor tenant itself. The anchor tenant, when you sign these deals, your expectation is that you're going to get more business from them as these networks are being built out."

Caruso added that after winning the trust of a particular wireless operator, Zayo could be called upon to provide fiber-based services to other towers within a particular region as well as small cell opportunities.

"More business because they're not necessarily giving you their full demand set they want, and more business because they're going to have more towers that are inside the reach of that network you're building out," Caruso said. "And then, they're going to have small cell demand as well."

But wireless operators are only one of many opportunities that Zayo is finding in the markets it serves.

As it builds out fiber to more towers, the service provider can pursue a host of other opportunities with local business, content providers, data centers, and local school districts all of which are looking for alternative fiber suppliers. This is because the fiber Zayo has laid in the ground for towers resides along the same path. 

"The next upsell opportunities are with the other wireless carriers who operate in that market, and then the third opportunity is a whole bunch of other companies that exist within that area," Caruso said.

Three markets where it has seen this dynamic taking place is in Dallas Fort Worth, Austin and San Antonio, Texas.

In February, Zayo won a $15.6 million, 12-year contract from the City of Fort Worth, Texas, to supply it with dark fiber service to satisfy the growth of its network. To fulfill this contract, Zayo will use 2,000-mile fiber-to-the-tower (FTTT) network currently being built for a major wireless operator in Dallas.

Besides Fort Worth, the service provider will increase its fiber network by over 3,000 route miles while adding over 900 wireless towers. At the same time, the service provider increased its data center footprint with two additional locations by acquiring Clearview.

"When you build out these fiber networks, you're passing just lots and lots and lots of buildings, commercial buildings, residential buildings, and even neighborhoods themselves," Caruso said. "It might be school districts; it might hospitals; and it might be multi-dwelling units and certainly other commercial buildings."

For more:
- see the Seeking Alpha earnings transcript

Related articles:
Zayo commits nearly $75M to build out 1,000 small cell sites
Small cell services, micro-trenching, and pole attachment rates dominated the news cycle in 2015
Wireless operators will spend $6.5B on small cell backhaul by 2019, says analyst firm
Zayo eyes strong ROI as it inks new Tier 1 FTTT deal in Indiana

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