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Entries in Deals: Fiber Network (79)

Monday
Jun012015
DateMonday, June 1, 2015 at 4:59PM

Crown Castle Announces Acquisition of Quanta Fiber

On Thursday, April 30th wireless tower company Crown Castle (NYSE: CCI) announced that it had acquired Quanta Fiber Networks, Inc., also referred to as Sunesys, a subsidiary of Quanta Services Inc. (NYSE: PWR).  The transaction is for approximately $1.0 billion and could bode well for Crown Castle, which is trying to increase its fiber network. 

 

Valuation Analysis and Deal Metrics  

 Transaction Facts

  • The deal will be financed through approximately $1.0 billion in cash.
  • Expected to close by the end of 2015. 

Strategic Considerations

  • Before the transaction, Crown Castle leased approximately 1,000 miles of fiber from Sunesys. 
  • Transaction should strengthen Crown Castle’s small cell networks. 
  • Sunesys has the rights or owns approximately 10,000 miles of fiber in major markets spread throughout the U.S.
  • Transaction gives Crown Castle access to a fiber network that includes cities, such as Philadelphia, Atlanta, Chicago, Silicon Valley, as well as northern New Jersey.
  • After the acquisition closes, Crown Castle will own or have rights to over 16,000 miles of fiber. 

JSICA’s Take

  • Overall, the multiples for the transaction seem to be relatively higher than past transactions in this industry over the last few years.
  • The deal provides significant lease-up potential in major metro markets, such as Southern California and Philadelphia. 
  • The current acquisition and Crown Castle’s previous acquisition of 24/7 Mid-Atlantic in September 2014 should help add to the firm’s total fiber miles and promote further growth for the company in the industry. 
AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Thursday
Apr302015
DateThursday, April 30, 2015 at 4:38PM

Lightower Announces Merger with Fibertech

On Monday, April 27th, Lightower Fiber Networks announced that they have agreed to merge with Fibertech Networks.  The transaction is an all cash deal for $1.9 billion funded with a mixture of debt and equity and is expected to close in Q3 2015.  The merger will allow the two companies to serve more locations, while being able to offer more service options to customers. 


 Transaction Facts

  • Lightower Fiber Networks is a leader in providing custom all-fiber and high-capacity network services.
  • Lightower serves enterprise, government, carrier and data center customers.
  • Fibertech Networks is a leading provider of fiber-optic based network services.
  • Fibertech serves wireline and wireless carriers, data centers, large enterprises, and facilities in several industries.

Strategic Considerations

  • Merged company will have approximately 32,000 fiber route miles connected to 5,000 wireless towers and 13,000 POPs. 
  • Transaction provides a complementary network and geographic footprint. 
  • Both companies offer fiber-based services such as Ethernet, dark fiber, wavelengths, Internet access, private networks and colocation services, which makes for a natural fit.

JSICA’s Take

  • Win for customers, due to the fact that the combined company will be able to offer the same superior level of customer support and reliability as it has in the past, except in more locations.
  • Merger creates a strong presence for the two companies in the Northeast and Mid-Atlantic.
AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Monday
Jun162014
DateMonday, June 16, 2014 at 5:43PM

Level 3 Deepens Metro Presence with tw telecom Acquisition

The Deal

On June 16th, long-haul Internet giant Level 3 Communications Inc. announced its acquisition of leading business Ethernet provider TW Telecom for approximately $7.6 billion.  Under terms of the deal, tw telecom stockholders will receive $10 cash and 0.7 shares of Level 3 common stock for each tw telecom share owned at the deal’s close; a value of approximately $40.86 per share based on the market close as of June 13, 2014.  Level 3 will also assume tw telecom’s outstanding debt which was approximately $1.9b as of March 31, 2014.

Strategic Considerations

The tw telecom acquisition nearly doubles Level 3’s metro fiber footprint in the U.S., adding a fiber network with 23,000 metropolitan route miles and 20,255 POPs across 75 U.S. metropolitan markets.  The combined network will span 50,000 metropolitan route miles in North America and 213,000 total fiber route miles globally. 

The metro focus of tw telecom’s network and its connections to thousands of businesses will enable Level 3 to keep more of its enterprise metro traffic on-network, leading to significant network cost savings.  Management anticipates $200m in annualized cost synergies, 55 percent of which is related to network expense savings.  Level 3 also anticipates approximately $40m in annualized capital expenditure savings generated from the deal.

Financial Highlights

Level 3 paid approximately 4.8x trailing revenue and 13.8x trailing OIBDA for tw telecom—a premium of 12 percent to where the public market was trading shares of TWTC.  Considering the anticipated $200m in annualized synergies, the deal’s pro forma OIBDA multiple to 10.1x.  Management expects that it will begin to realize $140m in annual cost savings within 18 months of the transactions close, with the balance of the synergies to come in subsequent years.  Level 3 expects to incur roughly $170m in integration costs associated with the transaction.

AuthorAdam Brissette | Comments Off | | | Print ArticlePrint Article
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Sunday
Apr292012
DateSunday, April 29, 2012 at 8:52AM

Zayo Completes 360networks Integration

Source: Zayo Press Release

Zayo Group announces the completion of the 360networks’ long haul network integration. The resulting combined network doubles Zayo’s national network reach, providing coast-to-coast connectivity spanning 45,400 route miles in 42 states and over 70 metro markets. 

The integration of the two networks links deep metro assets like Denver, Phoenix, Spokane, Las Vegas and others to a broad national footprint for end-to-end connectivity.

Completion of this integration allows Zayo to offer IP, Wavelengths and Ethernet across the entire Zayo footprint.  Carriers, content providers, media and wireless customers can work with Zayo to design a custom high-bandwidth long haul and metro solutions.
AuthorDeborah Rand | Comments Off | | | Print ArticlePrint Article
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Sunday
Mar252012
DateSunday, March 25, 2012 at 4:37PM

Zayo Strikes Again, Deals for Michigan Fiber Provider

Adds 900 Fiber Route Miles in $18m Purchase of Arialink

Before the ink was dry on Zayo’s giant-sized $2.2b purchase of AboveNet, announced on March 19, the fiber provider found enough change in its pockets to make another acquisition. Just two days after the largest deal in the company’s history, Zayo announced on March 21 that it had executed a definitive agreement to acquire Lansing, Michigan-based Arialink for $18m.  The deal is expected to close in the second quarter of 2012.

While on a much smaller scale than its AboveNet acquisition, Zayo picks up Mid-Michigan’s largest fiber optic service provider with its Arialink deal. The company’s network includes 400 metro fiber route miles in and around Lansing and Ann Arbor, just a portion of its 900 fiber route miles.  Its fiber footprint also features 437 on-net buildings, a figure that will increase thanks to an ongoing fiber expansion project.

In February, Arialink broke ground on a $2.46m fiber build of a middle mile network that will connect medical hub Memorial Healthcare with a dozen rural healthcare facilities. The company will lay approximately 100 miles of fiber in order to interconnect this healthcare network.

In addition to its business services—high-speed dedicated Internet, virtual Ethernet services, VoIP and hosted PBX—Arialink also offers residential phone, television and Internet services. The assets and customers related to its residential business however are not included in the Zayo deal, and will be spun out to Arialink’s existing owners.

Turning to deal multiples, Zayo paid $20k per route mile in the transaction, just a fraction of the $100k per route mile it put up for AboveNet.  The discrepancy in multiples can be attributed at least in part to the size of AboveNet’s network and its presence in 17 Tier 1 U.S. cities and four European markets.

We do not have Arialink’s financials to calculate definitive revenue multiples on the deal, but deal hungry Zayo’s past transactions allow us to make some estimates.  In its past three priced fiber deals—its acquisitions of AboveNet, 360networks, and AGL Networks—Zayo paid in a range of 4.3x to 4.8x revenue.  This range indicates annual revenue of approximately $3.75m - $4.2m for Arialink.

In looking at fiber prices over the past few years, it its apparent that both cash flow multiples and revenue multiples are pointing higher of late. In transactions we observed in 2010, fiber deals on average were struck at 1.3x revenue and 5.4x trailing OIBDA while deals announced in 2011 and 2012 indicate mean prices of 2.4x revenue and 7.2x OIBDA.

The bullish projections for bandwidth demand and usage is no doubt a contributing factor to this upward trend observed in fiber multiples. According do a recent IDC study fixed broadband traffic is expected to increase at a compound annual growth rate of 50 percent over the next three years with mobile broadband usage growing even faster.  To put some numbers to it, IDC forecasts demand for worldwide broadband traffic will hit 116,539 petabytes per month in 2015, up from just 9,665 per month in 2010.

With a pair of deals under its belt this week, Zayo is building up its network to keep up with this soaring demand.

AuthorAdam Brissette | Comments Off | | | Print ArticlePrint Article
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