According to multiple sources, metro fiber builder and operator FiberLight is reining in spending. A round of layoffs hit late last week (ugh), focused on sales and marketing. FiberLight had been one of the most aggressive builders around for some time, and has recently announced a major buildout in West Texas. That effort continues, but for about a year now the company has been quieter than normal and has obviously been undergoing an internal transition of some kind.
There were rumors all last summer that the company was for sale. Nothing came of it at the time, but perhaps that story is not yet over. When a metro fiber business pulls back, it is generally because of insufficient access to capital for the current rate of expansion. Thermo Capital has been their primary owner for many years, and they may simply be ready to move on and uninterested in funding the company to the levels it has become accustomed.
Raising EBITDA by cutting expenses would of course be the classic way of sprucing things up for a sale. Often, a metro fiber business with insufficiently deep pockets is worth more in the hands of deeper pockets, and FiberLight’s assets would definitely be of interest to a variety of potential buyers. We might be seeing the early stages of a renewed sales process.
abvt has not yet pulled the trigger on any M&A since re-emerging as a force in the industry, although they have been looking. FiberLight’s collection of Tier 1 metro markets and surrounding regional fiber would be very complementary. AboveNet just moved into Miami last year and announced an expansion in Atlanta just a few weeks ago, while in DC and Dallas they have great assets but could benefit from greater regional connectivity. They also have generate more cash than they need even while spending capex at 30%+ of revenue.
Zayo Group (news, filings) is just as good a fit, and their bottomless appetite speaks for itself. Zayo’s presence in Texas and DC presence is less extensive than elsewhere in the country, and would benefit greatly from FiberLight’s footprint. Meanwhile, Florida is the biggest remaining piece missing from their nearly national footprint. FiberLight’s Fiber-to-the-Tower business would fit well too, and you can just imagine Zayo and its backers eagerness to get it hands on the assets in general.
Amongst the larger competitive players, both TW Telecom (NASDAQ:TWTC, news, filings) and Windstream (NYSE:WIN, news, filings) would probably be less of a fit due to the customer mismatch. But Level 3 Communications (NYSE:LVLT, news, filings) could make plenty of sense if the company has the appetite.
And of course there are other private equity firms. ABRY has been buying all sorts of infrastructure assets, and they could easily pair FiberLight with Sidera, for instance. And the assets would also fit nicely into Gores portfolio alongside First Communications and Alpheus.
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Categories: Jobs · Mergers and Acquisitions · Metro fiber
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Please they flew in their entire sales staff for sales kickoff in the middle of February and then 3 weeks later riffed 65% of their sales force including all sales engineers. Somebody want to read the tea leaves… spin, hype, spin, lol
Sounds like you got riffed…90% of the sales staff that got riffed were SMB market commission only employees and supporting SEs. I agree the timing stunk and there were a small handful of valuable people that were part of the RIF, but quite a few non-performers as well. Not unusual in Telecom..
The SEs that were cut were not part of the SMB, they were part of the Enterprise and Federal Groups.
Sounds like XO!
I have to imagine Dan has had his eye on Fiberlight. The TX, FL, Atlanta and VA builds would complement the Zayo footprint.
Obviously, Dan had his eye on Abovenet.
No kidding, eh?
Ok, I have to admit I did not see that coming.
You know, it could be that FiberLight’s layoffs decision followed the end of merger talks with either Zayo or AboveNet when those two were coming to terms.
It sounds like Fiberlight had a large portion of its sales people working with no base salary or as they referred to it above “SMB market commission only employees”. This tatic is usually done to create superficial headcount when trying to sell a company.
Do I need to put this on my resume?