From CenturyLink to FirstLight: Charting the top 13 fiber buyers in 2017

fiber
FierceTeleccom is counting down the top 13 most aggressive service providers that purchased fiber in 2017. (Pixabay)

Whether it was CenturyLink buying Level 3, Crown Castle buying Lightower or regional operator Atlantic Broadband acquiring dark fiber assets from FiberLight, the year 2017 showed that fiber is valuable to a diverse set of service providers.

In this report, we consider two key metrics on publicly available information gathered from fiber service providers: 

Fiber Route Miles: These are measured by the conduit length. Route miles are different from fiber miles, which is the number of route miles in a network multiplied by the number of fiber strands within each cable on the network.

Financial: We also looked at the cash amount of each fiber deal, which most providers disclosed publicly, while others like FirstLight and Logix did not.

We’re ranking each one of these deals with the accompanying summary and chart below by the deal amount and the amount of fiber acquired. We also highlight the fact that some of these service providers, like Verizon and FirstLight, purchased a few providers.

So which U.S.-based providers purchased the most fiber in 2017?

  1. CenturyLink’s Level 3 acquisition bolsters its enterprise service status: CenturyLink dipped into its pocketbook in 2017 to acquire Level 3 Communications for $34 billion, a deal that transforms the once voice-centric telco into an even larger player in the global business services market. By acquiring Level 3, CenturyLink gained an additional 200,000 route miles of fiber, including 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles connecting multiple continents. Now that the acquisition is complete, the key determining factor of success will be in the company’s ability to integrate the assets and how Jeff Storey, who will become CEO of the new company in 2019, will drive the company along a path to profitable growth.
     
  2. Crown Castle bolsters fiber war chest with Lightower: Crown Castle purchased Lightower for approximately $7.1 billion in cash. Lightower owns or has rights to approximately 32,000 route miles of fiber located primarily in metro markets in the Northeast, including Boston, New York and Philadelphia. After completing the deal, Crown Castle now owns about 60,000 route miles of fiber, with a presence in the top 10 and 23 of the top 25 metro markets. Crown Castle has integrated all its fiber operations under the Lightower unit.
     
  3. Verizon tucks in XO, Wide Open West’s Chicago networks: Verizon may favor an organic fiber build approach, but that did not stop the service from buying two fiber assets: XO Communications and a large portion of Wide Open West’s Chicago fiber network. By completing its $1.8 billion acquisition of XO Communications, Verizon deepened its metro fiber density in 45 U.S. markets. The XO acquisition fulfills multiple needs for Verizon. The provider can bring its network services like Ethernet to more of its enterprise and wholesale customers while addressing current 4G and future 5G wireless backhaul needs. Also, Verizon gained metro networks in 40 major U.S. markets with over 4,000 on-net buildings and 1.2 million fiber miles. The service provider's intercity network also spans 20,000 route miles connecting 85 cities.

    To further bolster its small cell backhaul capabilities in Chicago, Verizon also purchased a large portion of Wide Open West’s fiber network. This acquisition allowed Verizon to secure fiber to more than 500 macro-cell wireless sites and more than 500 small-cell wireless sites. The network already connects Verizon Wireless macro towers and small cells, and it will reduce Verizon's fiber leasing costs. Like its acquisition of XO, the Wide Open West purchase falls in line with Verizon’s mentality to get fiber from various sources—building its own fiber, leasing or purchasing other available assets.
     
  4. Consolidated takes ninth U.S. fiber position with FairPoint deal: Consolidated’s purchase of FairPoint may not have been the largest deal in 2017, but clearly this acquisition positions the Mattoon, Illinois-based telco as the ninth largest domestic fiber provider with a presence in 24 states. What this means is Consolidated—which has a growing and sizeable base of wholesale wireless and business customers—has an even larger metro and on-net building fiber footprint that includes FairPoint’s desirable Northern New England fiber network.
     
  5. Zayo shores up West Coast, long-haul networks with Electric Lightwave, Spread deals: Zayo continued on its buying spree throughout 2017, shoring up its West Coast and low latency power by acquiring Electric Lightwave and Spread Networks. Electric Lightwave gives Zayo a larger foothold in the Western part of the U.S.—a key growth target for service providers trying to enhance their presence with businesses—and a growing base of content and social media companies. By acquiring Spread Networks, Zayo gets access to the desirable low-latency fiber route between New York and Chicago. While the financial market has been an advocate of low latency networking, this route and the broader coast-to-coast network will also appeal to other customers in the content, media and cloud services verticals. 
     
  6. GTT establishes fiber foothold with Hibernia: GTT had long been an asset-lite provider, acquiring solutions providers to fuel its growing array of cloud and Ethernet services carried via last mile partners, but the service provider made a different turn at the end of 2015 by acquiring Hibernia. By acquiring Hibernia, GTT enhanced its Tier 1 IP network with a set of owned and leased dark fiber assets including five owned subsea cable and eight landing stations and 25,000 route miles of fiber.
     
  7. EQT takes Lumos private: EQT Infrastructure, a private equity firm with large telecom holdings, purchased Lumos Networks for $950 million, a deal that ends its fiber network spinout plans with an eye toward expanding the providers existing fiber business. The service provider has become a sizable fiber player in the Mid-Atlantic region serving carrier, enterprise and data center customers. With a fiber network of 11,028 fiber route miles and 517,244 total fiber strand miles, Lumos Networks connects 1,310 unique fiber-to-the-cell (FTTC) sites, 1,684 total FTTC connections, 2,230 on-net buildings and over 3,500 total on-net locations. EQT has been active on the fiber consolidation front itself. Besides acquiring Lumos, the equity firm also purchased a large stake in regional provider Spirit Communications
     
  8. Uniti deepens E-Rate, public sector capabilities with Hunt, Southern Light: Uniti Fiber, a unit of real-estate investment trust (REIT) Uniti, made two deals in 2017 to bolster its fiber holdings: Hunt Telecom and Southern Light. By acquiring Hunt Telecom, the company enhances Uniti Fiber's E-Rate capabilities. Hunt is a provider of data transport to K-12 schools and government agencies with a dense network of 140,000 fiber strand miles and 2,600 fiber route miles in Louisiana. With the Southern Light deal, Uniti Fiber has established itself as a growing provider of data transport services along the Gulf Coast region serving 12 attractive Tier II and Tier III markets across Florida, Alabama, Louisiana, Georgia and Mississippi. The carrier’s dense regional fiber network comprises nearly 540,000 fiber strand miles, 5,700 fiber route miles, and over 4,500 on-net locations. 
     
  9. Cincinnati Bell reaches out to Hawaiian Telcom: Cincinnati Bell, while aggressively building out its Cincinnati fiber network, looked on the other side of the country to purchase Hawaiian Telcom in a bid to enhance its fiber reach. The telco will purchase Hawaiian Telcom for about $650 million. Upon completing the acquisition, the combined company will have a total of 14,000 fiber route miles. The service provider will also become a major submarine cable operator with the SEA-US cable that is being built. But the fiber expansion does not stop when this deal closes. To allay Hawaiian regulators, Cincinnati Bell pledged to continue to build out and enhance Hawaiian Telcom fiber network.
     
  10. Fusion takes over beleaguered Birch: Fusion Telecommunications purchased Birch Communications’ cloud and business services divisions for about $280 million in stock, creating a company with a sizeable set of fiber and data center assets to target business customers. This deal has created a combined company with an enterprise value of $950 million. With the deal completed late last year, the new company has become one of the largest North American cloud providers, with over 150,000 business customers, 30 data centers and 31,000 miles of fiber.
     
  11. FirstLight shores up more regional assets with FLTG, 186 deals: FirstLight has become an aggressive regional fiber consolidator in the Northeast—a trend that continued into 2017. Having completed the integration of Sovernet and Oxford, FirstLight Fiber purchased two providers—Finger Lakes Technologies Group (FLTG) and 186 Communications. FirstLight has merged FLTG’s privately owned fiber network, which spans nearly 2,500 route miles in New York state and Pennsylvania, with its 9,500 route mile fiber network and portfolio of data, internet, data center, cloud and voice services.

    The acquisition of Nashua, New Hampshire-based 186 Communications gave FirstLight an additional 1,900 route miles of fiber. Now that it has completed the 186 Networks and Finger Lakes Technologies deals, the company will operate a network that extends a total of 14,000 route miles, connecting nearly 8,000 locations and 12 data centers across the Northeast.
     
  12. Logix deepens DASH market presence with Alpheus deal: Logix Communications acquired Alpheus Communications from its current private equity owners—The Gores Group and Scott Widham—to deepen its reach in Texas’ desirable DASH (Dallas-Austin-San Antonio-Houston) market. By acquiring Alpheus, Logix added 2,800 route miles of long-haul fiber and 1,900 route miles of metro fiber to its existing network. The new company will serve over 12,300 enterprise and carrier customers with a complete portfolio of data, voice, managed and data center services.
     
  13. Cogeco takes up FiberLight’s Florida fiber assets: Cogeco’s U.S. unit Atlantic Broadband acquired several dark fibers throughout South Florida for $16.8 million from FiberLight. Atlantic Broadband also signed an Asset Purchase Agreement to acquire FiberLight’s fiber network and corresponding assets located on the east coast of south Florida for $34 million. This deal will bolster Atlantic Broadband’s business services and potentially wholesale targets like wireless operators. At the same time, the deal will raise speculation on whether FiberLight will sell off other crucial network assets like its Texas network.
Fiber Buyer Provider type Acquisition Target Deal amount Fiber Route Miles Gained
1. CenturyLink  ILEC Level 3 $34B 200K
2. Crown Castle REIT Lightower $7.1B 32K
3. Verizon  ILEC XO $1.9B 1.2M
    WOW (Chicago)  $225M 1.2K
4. Consolidated ILEC FairPoint $1.5B 22K
5. Zayo  Competitor Electric Lightwave $1.42B 8K
    Spread Networks  $127M 825-miles
6. GTT  Competitor Hibernia $950M 25K
7. EQT Private Equity Lumos $950M 11.1K
8. Uniti  REIT Southern Light $700M 5.7K
9. Cincinnati Bell  ILEC Hawaiian Telcom $650M 13.5K 
10. Fusion  Competitor Birch Communications  $280M 31K
11. FirstLight Competitor FLTG (not disclosed) 2.5K
    186 Communications (not disclosed) 1.9K
12. LOGIX Competitor Alpheus (not disclosed) 2.8K 
13. Cogeco Cable MSO FirstLight South Fla.  $16.8M 350 miles
    FirstLight East Coast $34M   

There are four main types of service providers that are acquiring fiber assets:  

Telcos: Being the main operator in town for over a century, AT&T, Verizon, CenturyLink and other independent ILECs have continued to invest in their long-haul, metro and last-mile fiber networks to businesses and consumers.

Cable: A growing number of cable operators including Charter, Comcast, Cablevision and Mediacom have been shaking up the business market by installing fiber in their core network and into business locations.

Competitor: Competitive service providers are a very diverse set that range from large players like Level 3, which has reach across the United States and Europe, down to regional providers like Alpheus and Fatbeam. This segment has been challenging cable and ILECs with a host of lit services like Ethernet and even dark fiber for those customers that desire it. 

REIT: REITs, or real estate investment trusts, are companies that own or finance income-producing real estate in various property sectors. In the fiber network space, REITs have gained increasing prominence with the rise of Uniti and Crown Castle purchasing multiple fiber companies like Sunesys, Wilcon and Lightower.

* total fiber route miles upon completing acquisition