Roundup: TDS, Zayo, Birch and the Business Markets

Zayo scooped up some more fiber – dark fiber this time. Zayo adds 1,200 route miles of dark fiber that hits Chicago,Des Moines, Omaha and Denver in its acquisition of Fiberlink LLC. No financial details were available from privately held Zayo.

Birch closed on its Lightyear Networks deal, since Lightyear settled its USF contribution dispute with the FCC – even during a shutdown.

FiberLight secured $97M in financing to help it build out its 8000 miles in Texas. More debt. They had a huge shale up in the last year with everyone I know gone. I guess when neither AboveNet nor Zayo bought them, it was pivot time – or strategy session time with the money managers.

TDS bought MSN Communications for $40 million. MSN is a VAR (managed IT services shop) in the Rocky Mountains Region that will be added to the TDS Hosted and Managed Services division of the company. “MSN Communications generated annual revenues of $99 million in 2012,” according to DCK. That’s a good buy for TDS.

TDS has been following the Windstream playbook of migrating new revenue streams to data centers, out of region business customers and managed services. TDS has acquired OneNeck IT corp and VISI in the past couple of years and is building another data center.

The companies that stand to lose the most from the encroachment of TDS, Windstream, and to some extent C-Link/Savvis/Qwest are the two RBOCs. Ma and Pa Bell (VZ + ATT) used to be alone in the enterprise space for managed services. Then C-Link combined Savvis and Qwest to chase after these deals. Then VZ bought Terremark to nail down even bigger deals. Now with cable – especially Comcast and TWC, which owns Navisite – chasing after small to medium business for network services, the business revenues pies of the RBOCs has to be taking a hit.

The RBOCs will have to launch new bundles of services to take back some of this revenue. For TDS and WIND, it’s all gravy. Even to the cable guys, it is gravy – extra business that they wouldn’t normally get. However, most of this business is being won on price and not technical know how or good customer service, so I wonder how that will play out. Think Geek Squad. Once word gets out that they suck at service, deployment, or in the case of cable being easy to order from, it won’t be hard for C-Link, the RBOCs, Cbeyond, TelePacific, Zayo, Netwolves or maybe MegaPath (if they can solve their issues) to take deals away – and carve out some nice niches.

Tags: mergers, rboc, smb, zayo
Related tags: managed services, savvis qwest, business, services, managed, rbocs