Happy New Year to all! This year seems to have ended without the pre-New-Year surprise M&A or other incident, but I’m sure the news will pick up on Monday. In the meantime, here are my internet infrastructure predictions for 2016.
- Software as a whole will drive the technology conversation, whether it be SDN, NFV, LSO, or whatever new acronym is next.
- Fiber consolidation in the US will slow further. There are several more regional fiber operators that could be targets in 2016, but overall the pool has shrunk to a handful that seem at all likely to sell. FiberLight might be ready, as might Integra. But as a whole, organic activity in wholesale and enterprise is gaining steam among competitive operators even as the incumbents grudgingly spend on FTTH.
- Fiber consolidation in Europe will claim a consolidator. So far, fiber M&A in Europe has been big well-funded fish gobbling little underfunded fish. In 2016 I think we will see a pan-European operator buy another pan-European operator. And my guess is that it will be an American-based operator buying a European-based one.
- Sponsored data will come under increasing regulatory/political attack. It’s an election year, and once the political parties get their nominations settled we will see net neutrality resurface as a wedge issue. The battle lines on each side of the sponsored data question will be significantly reinforced.
- The courts will let the FCC’s Title II-based net neutrality stand for now. That is not to say that the rhetoric will change much, but this time the industry will need the balance of power to shift at the FCC itself if they want to undo the regulatory regime.
- One of the three US incumbents will sell or spin off its datacenter/cloud business. AT&T, Verizon, and CenturyLink have each been linked to rumors they might do such a thing, and I don’t think it was all idle chatter.
- Two of the following six deals will happen during the year:
- Windstream will buy Integra, selling the actual fiber assets to CS&L in another triple-net lease deal.
- Level 3 will buy Colt from Fidelity
- Zayo will buy XO now that nobody outside the sector is looking
- IBM or NTT will buy the datacenter/cloud assets of a major US incumbent
- Comcast will buy T-Mobile, or at least try.
- Crown Castle will buy FiberLight
That’s all I’ve got. Do you have any? Leave yours in the comments below and I’ll be sure to add my 2 cents.
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Categories: Cloud Computing · Datacenter · Fiber Networks · Mergers and Acquisitions
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wow Zayo and XO no one is looking and no one or at least me saw that prediction coming.
I believe XO is a Comcast play. Expand buisness service into all major markets importantly the ones they are not in like New York , LA, Dallas and possible increase there backbone capability on the LH routes.
Although the need for T-Mobile or Sprint certainly is a must if you want to be in the big three so cant argue with that prediction as 1st for comcast
Comcast/XO? That’s certainly a viable idea.
What about Limelight? Will they EVER get sold?
Comcast attempts to buy Level Three kicking off a bidding war where Alphabet, Microsoft, Verizon, AT&T, Amazon, IBM and Carl Icahn all get involved with Netflix, Akamai and the FCC contributing to the back ground noise resulting in a 300% share price increase vindicating a portion of the long suffering/ever believing LVLT shareholder that is until the president, Trump, Hillary and Congress kill the deal through several different avenues ending in the same cul-de-sac which brings about an abrupt share price crash back to earth that gets rehashed time and again over at IV for years to come…. It could happen.
I’m sure there’s some definition of ‘could happen’ that would be broad enough to help you with that one.
I think that guy started New Years a day early
Those are interesting predictions for 2016 M&A. I have a couple of others:
NTT buys ThinkingPhones
No one is buying XO ever because Carl likes it as it is.
Frontier will choke on VZ and suffer all year.
Comcast won’t buy anything because they can buy market share cheaper.
I think when XO gets sold, it will be done quickly – and then litigated soon thereafter.
yes we take Ichan to trial soon, on the XO robbery! It is not over by any means.
XO is like a hoarders garage, nobody wants to take on the task of going through it
My predictions this year:
– Frontier acquires more Vz assets and then makes a run at some network assets such as Telepacific.
– Comcast invests heavily in Enterprise business services and may even look to augment its operations with a few regional players to test the program before going national.
– Centurylink gets acquired by DT.
– XO will not be sold as Icahn will hold on to it for as long as the R2 lawsuit is happening. When it is finalized and settled the deal will happen but only for addition by subtraction where he ends up with a larger piece of something say Frontier.
– Level 3 may very well by COLT. There’s good synergy there and Carl Grivner who is CEO of COLT now knows many of the actors at Level 3 as well as the former GC UK business since he was the COO of Global Crossing when they acquired Racal in the UK. It could be very interesting but its a pure synergy play since there is much overlap b/w the different operating entities.
– NTT is a hot mess in America and really there is no clear strategy b/w NTT Corp, NTT(A) and their various business units. If they buy anything look for them to purchase a converge cloud provider focusing on network automation as opposed to pure managed IT cloud.
– Earthlink continues to suffer under the lack of strong leadership outside of financial management. That said, they need a deal to survive and so i see them doing something along the lines of managed service acquisition. Also given the deemphasis of the cloud business look for them to shut it down and or sell it.
– IBM or Cisco will buy VMware since Dell is acquiring EMC and will need to float the assets of VMware to pay down the debt.
I see EarthLink getting sold rather than the other way around.
DT buying CenturyLink? To combine with T-Mobile? I’m not feeling it….
I think Frontier will be very busy this year without further M&A.
AKAM finally buys Limelight.
Colt doesn’t sell.
Akamai & Limelight? Seems like it would have happened by now if it was going to. I keep waiting for a network operator to buy Limelight, but it never happens.
Trust me Level 3 will not be buying Colt this year. Primarily because Colt is not for sale this year. It is the only acquisition that will move the needle for Level 3 in Europe though.
Facebook will buy Tata Communications to get the inside track in India.
Bold…
How about XO and Birch?
Not unthinkable, but I’ll take the other side of that bet anyway.
Someone will take a run at TelePacific…Windstream or a CenturyLink is my guess.
TelePacific is a bit of an enigma to me.
Blake Wetzel swears up and down that CTL won’t sell off it’s Tier3/Savvis assets to their partner community, pretty much staked his reputation on it. I’m really interested to see if they actually do though! From a channel perspective CTL hasn’t done too good with these acquisitions, especially Savvis.
Personally, I think they’d be wrong to sell it.
Rob what is your prediction on Berkshires portfolio for Lightower??
Do you mean whether or not they’ll try to cash in by taking Lightower public or selling their stake? I don’t think they’re quite done yet.
curious as to your thoughts on their direction for this year in general. thanks
I think Lightower will be fairly quiet on the inorganic front as they integrate Fibertech and kick off some organic expansion to go with the new territory they cover (e.g. Virginia, Maryland in ’14 and ’15). If they buy something, it will be adjacent and smaller. It’s just a guess though.
thanks Rob