Zayo isn’t afraid of CenturyLink’s pending acquisition of Level 3, but rather sees it as an opportunity to become one of the last largest independent fiber providers in the United States and pursue more network diversity.
Dan Caruso, CEO of Zayo, told investors during the company’s first quarter 2017 earnings call that if CenturyLink successfully completes the acquisition, the service provider becomes less of a threat to its own customers.
“If you focused on the U.S. alone, it leaves us as the only independent provider who has significant fiber across the broadly defined U.S. with deep dense fiber network and intercity fiber and across many of the city routes,” Caruso said during the earnings call, according to a Seeking Alpha transcript. “I think that's really good for Zayo, I think that puts us in a position where we're kind of neutral, we're kind of an enabler of a broader set of customers, less of a rival to our key customers than say Level 3 would have been, had it not been combined into CenturyLink.”
Caruso added that with CenturyLink taking up a larger share of fiber throughout the U.S., some of their customers could potentially turn to Zayo to provide a secondary redundant route for their traffic.
“CenturyLink through their acquisition of Qwest has a lot of intercity fiber in their historical business,” Caruso said. “They'll also make a diverse alternative from Level 3, but now as those networks get combined, customers are going to have to seek additional diversity, which I think is an opportunity for Zayo.”
Zayo certainly has proven that it can be an effective fiber services competitor, a trend that was certainly evident in its first quarter earnings. During the quarter, Zayo reported $7.2 million in total bookings, $6.5 million in gross installs and $2.3 million in net installs. The service provider noted that all of these were on a monthly recurring revenue and monthly amortized revenue basis, excluding Zayo Canada.
One of the highlights for the quarter was that it won a deal with a large wireless operator to bring fiber to 1,800 of its sites across 26 markets. Zayo said that 50 percent of these sites are expected to be within 500 feet of its existing network.
Out of all its segments, Dark Fiber Solutions and Network Connectivity were the two clear winners. Dark Fiber Solutions reported $148.4 million in revenues, while Network Connectivity raked in $175.6 million.
Zayo reported total revenues of $504.9 million, down slightly sequentially from $507 million in the previous quarter due to lower results from the Allstream assets in Canada that the service provider is currently integrating into its fold.