Fiber M&A forecasts for the coming year
January 02, 2013
Now that the world hasn’t ended, the next long cycle of the Mayan calendar has begun, and new years' hangovers have been shaken off, it’s time for a few predictions about what’s ahead for telecom and fiber M&A in 2013.
Not ‘things to watch’, ‘emerging trends’, or other wimp-outs, but actual predictions that people can laugh at next December if they can outperform the modern attention span. After all, what’s a blog for if not to stick out one’s neck for no apparent reason:
1. Softbank’s deal for Sprint/Clearwire will go through, but not intact. In the first half of 2013, the deal will be caught in a crossfire of lobbyists worrying about excessive spectrum holdings, foreign ownership of national infrastructure, and just plain sour grapes from AT&T and DISH. US regulators FCC and DOJ want a third competitive alternative, and Softbank/Sprint will offer concessions to give them the cover to approve. They’ll divest some of the Clearwire spectrum, and they’ll commit to selling the wireline business.
2. US-based Zayo will slow down and buy just three companies whose names will probably all begin with the letter F: Making up that list will likely be FiberLight, Fibertech, and FPL Fibernet. With the new depth in the Northeast and Florida, as many on-net buildings as tw telecom, and more intercity and regional fiber, they will then declare victory and prepare for an IPO in 2014.
3. Level 3 Will Buy Colt – Yes, I’ve talked about this one before. However, it was a hypothetical that wasn’t ready to happen yet while the Global Crossing integration was young. In 2013 with much of the GLBC heavy lifting over, making a play for Colt will become the obvious next step. Level 3 will focus on higher organic growth in the Americas while taking advantage of low asset prices in Europe before the economy over there figures out how to find its ass with both hands.
4. CenturyLink will buy a US-wide fiber footprint, but it won’t be tw telecom. Rumors to the contrary aside, I don’t think they’ll find a price they can agree on. CenturyLink will instead turn to XO or Sprint Wireline (see prediction #1) to boost its national enterprise depth at a more affordable multiple. There will be more talk about CenturyLink/Level 3 but that won’t pan out either.
Phil Marshall / Tolaga Research
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