Zayo on Tuesday completed its acquisition of dark fiber provider FiberGate, instantly increasing its fiber and route miles in the Washington, D.C., Northern Virginia, Baltimore, and suburban Maryland area.
By purchasing FiberGate, a deal it announced in June, Zayo immediately adds 399 new route miles and 130,000 fiber miles to its growing network.
The service provider closed the $117 million deal, which was funded from existing cash, on Aug. 31.
This acquisition has benefits to both Zayo and FiberGate's customers. Besides being able to provide its carrier and business customers an expanded fiber footprint, Zayo can now extend its suite of Wavelengths, Ethernet, IP and SONET to FiberGate's dark fiber customers.
Being able to extend its lit services to FiberGate's established customer is a key aspect of this acquisition. Over the course of its 17 years in operation, FiberGate managed to rack up a large customer base that includes government, large enterprise and carrier customers that they serve in over 315 traditional buildings, carrier hotels, data centers, and cell towers.
The 779-route mile network currently extends into key areas including Baltimore, as well as Howard, Montgomery, Prince Georges, and Frederick Counties in Maryland; Washington, D.C.; and the City of Alexandria as well as Loudoun, Fairfax, and Arlington Counties in Northern Virginia.
"FiberGate built this fiber over 15-plus years and originally their entire customer base was with different agencies of the federal government so their fiber is unique in that area because it was self-built and tied into many public buildings," said Dan Caruso, CEO of the Zayo Group, in an interview with FierceTelecom. "When you take what FiberGate had and what we go from AboveNet and we had on our own it makes for an extensive and very robust network in the greater DC area."
Caruso added their depth of on-net buildings will be able to be used to access a number of additional routes to connect more buildings over time.
"FiberGate has been 100 percent dark fiber, but any of their customers or our customers that want lit services it would be very straightforward to provide those because we have the lit services portfolio that we already offer in that geography," Caruso said. "Now this allows us to extend those services bandwidth over the FiberGate fiber to those customers that are already connected to the network."
However, Zayo will continue to sell dark fiber to those customers that only want that service.
Besides the public sector, the FiberGate acquisition will give Zayo greater opportunities in both the Internet services and international wholesale segments.
"Bandwidth growth in that area follows all those sectors, and revenue from both of the businesses was growing in that geography and we expect will continue to grow," Caruso said. "There are a lot of foreign carriers that are just present in the Greater DC area for several reasons: one is the government-related activities; it's also important as an Internet hub; and it's important as a media hub."
Through its various acquisitions and organic fiber build out efforts, Zayo's network now connects over 9,000 on-net buildings spread over 61,400 route miles in seven countries and 45 U.S. states.
FiberGate's fiber network (Image source: Zayo)
- see the release
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