BROADBAND BREAKFAST INSIGHT: Many fiber-focused companies in the U.S., and overseas, have turned to private equity investors instead of the public markets. What the public company Zayo's acquisition mean for the industry? Steven Blum takes a stab at his prognostication. One can only hope that it bodes well: Zayo is a key middle-mile ingredient for innovative fiber companies seeking to deploy gigabit connectivity more broadly.
Zayo, a major fiber optic network owner, sold to private investors, from Steven Blum's Blog at Tellus Venture Associates:
Zayo announced yesterday that it had “a definitive merger agreement to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund”. The $8.2 billion deal takes Zayo off the New York Stock Exchange and puts it in the hands of owners who might have the patience to play the long game against the monopoly-model telcos – AT&T, Verizon and CenturyLink, particularly – who control the lion’s share of long haul and metro fiber in the U.S.
In the statement announcing the deal, the head of Digital Colony, Mark Ganzi, at least spoke encouraging words. He said Zayo “has a unique opportunity to meet the growing demand for data associated with the connectivity and backhaul requirements of a range of customers”. That’s true enough, and if – if – Ganzi is sincere it would indicate that his Plan A is to make Zayo a stronger competitor, rather than flipping it as quickly as possible to one of the big players.