Seems like every few weeks another fiber provider puts itself on the market. In 2010 so far we have seen Zayo buy AGL and Lightower buy Veroxity, while Fibertech, NSTAR, and Intellifiber are known to be soliciting offers. But according to the Wall Street Journal, there is now yet more metro and regional fiber for sale: Alpheus and KDL are apparently on the block as well. Assuming they are right (I will seek more information), here are a few comments about each:
- Alpheus Communications – All Texas all the time, with 3000 route miles and 275 on-net buildings which are mostly of the wholesale variety with a special focus on central office coverage, although they have been addressing the enterprise market more of late. Who would want Alpheus? Texas is prime property, and any of a number of providers could want these assets. Zayo has some fiber in Dallas and would surely be interested. TW Telecom and Level 3 both have substantial footprints in major Texas markets and might see the benefit of scale. Even PAETEC might find the fit with the McLeodUSA fiber to be quite interesting.
- KDL – Kentucky Datalink offers regional fiber throughout the industrial Midwest and Appalachia, with many unique routes and loops reaching places nobody else even has on their radar. There are more than 30,000 route miles in all, along with over 500 PoPs. KDL (or its parent Q-Comm) itself bought midwestern provider Norlight a few years ago for $185M or so, and prices aren’t worse now so you can see this would be a pretty substantial deal. However, the company’s geography and approach is highly specialized and largely off the beaten track, and finding a buyer amongst existing operators that makes sense is a bit more difficult as a result. I think private equity might be more likely here, although either Zayo or TW Telecom could be interested.
Honestly though, of all these fiber networks looking for buyers, the one thing they have in common is that none really need to sell. Rather it is often their backers looking to cash out while prices are good, and that means that a fair number probably will simply not have their price met. But still, it seems clear to me that some will find those buyers, as metro fiber is very hot right now with private equity and there seem to be some big ideas floating around backed by some very interesting money.
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Categories: Mergers and Acquisitions · Metro fiber
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Private equity Big Ideas? Very interesting money? And you leave that out of the blog post? Please share…
I will when anything rises beyond the level of ‘highly improbable’. At the moment the news seems to be simply that such money seems to be sniffing around.
OK, but remember rumors can be just as fun as the real thing and always seem to spur conversation/opinions.
KDL could be on the market, but there are 2 big problems. The biggest problem is that their rates are classically so high that anyone who purchased them would find a host of disgruntled customers looking for better rates that are more in line with reality. I’m not sure anyone else could get away with what KDL has done with rates over the years. It could make a purchase worth MUCH less in a short period of time…so who would sign up for that? Add in stimulus funds, how those might affect these rates with more competition in their cash cow markets…well, I’d be on the market as well if I were them. They could be in for a big dip in the future…but what do I know?
That is exactly why KDL is a good asset. They have won several markets with major wireless carriers for fiber to the cell. By having unique routes those wins will be very sticky and they will benefit from higher prices for the last roll outs of fiber to the cell for the wireless carriers because they are some of the only people that can serve those markets. I wouldn’t be worried about write downs, I see plenty of growth there.
http://finance.yahoo.com/news/Citi-wants-3-billion-for-PE-rb-215733328.html;_ylt=AqsiMX9b0otlwWEOBpCc9qW7YWsA;_ylu=X3oDMTE1bW5xNnQ3BHBvcwM1BHNlYwN0b3BTdG9yaWVzBHNsawNjaXRpd2FudHMzYmY-?x=0&sec=topStories&pos=3&asset=&ccode=
“”their backers looking to cash out while prices are good””
why not sell the entire network now??
any chance Windstream could be a possible buyer of KDL?
That actually sounds like a pretty interesting idea…
Windstream is acquiring KDL…
Let the valuation analysis begin.
http://finance.yahoo.com/news/Duke-takes-on-partner-to-apf-1879497047.html?x=0&.v=1