Birch Adds a Bit More Fiber to Its Diet

Since its acquisition of Cbeyond last year, one question outstanding — at least for me — has been what they would do with the budding fiber initiatives of the acquired company. Today, Birch in fact revealed a further expansion of its fiber footprint in three major markets.

Prior to its sale process, Cbeyond had been trying to make the transition from copper and T-1 and voice to fiber and Ethernet and cloud services. They leased some metro dark fiber from Zayo, FiberLight, and probably others, and started bringing key buildings on-net with a goal of 1,000 by the end of 2013.  They didn’t quite make it that far before looking for a buyer starting in Q4 of 2013.

According to today’s announcement, they have added fiber into an additional 60 buildings in Houston, Los Angeles, and Washington DC, giving Birch a total of 640 on-net buildings nationwide. So while it doesn’t look like Birch is accelerating things all that much yet, they do seem to be continuing with the process of adding fiber to their diet.

The Cbeyond deal has been Birch’s biggest move to date after a string of minor CLEC roll-ups. It gave Birch a significant revenue boost, albeit at low margins. They’ve always operated at the higher levels of network infrastructure, but adding more fiber is a good way to improve those margins and probably necessary in the long run.

Birch has been relatively quiet since the Cbeyond deal, but I wonder if in 2015 we might see the roll-up continue – perhaps another significant purchase with even more fiber this time.  As with Cbeyond and most of their other targets, it would have to be someone valued at a relatively low multiple.  But there are still a few CLEC assets out there making the transition to the cloud that seem to need a new home.  Buying Broadview, for instance, would complement their core southeastern market with an adjacent northeastern one and a bit of fiber too.

 

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Categories: CLEC · Metro fiber