The past year was a big one for telecom M&A. There were more than two dozen mergers and acquisitions in 2016 and they involved numerous facets of the industry. Several companies decided to double dip in the M&A pool.
Here’s a summary of telecom acquisitions from 2016:
CenturyLink made a huge splash in October with its planned acquisition of/merger with Level 3 Communications. This was perhaps the biggest deal of the year. CenturyLink made other deals last year as well, mostly acquiring talent and technology for its managed and cloud services. In March, they bought netAura, boosting the company's managed security services. In June, they bought ElasticBox for multi-cloud application management. They also turned around and sold off their data centers to private equity.
Zayo made fewer fiber deals in 2016 than they did in previous years, partly because they were still digesting the Viatel and Allstream deals when the year began. But Zayo finished big by taking out one of the remaining large regional fiber assets in North America, Electric Lightwave. The ELI name had just re-emerged from Integra's past, but will likely fade away again. Yet Zayo also quietly bought some colo down in Texas with the acquisition of ClearView as well as some out in Silicon Valley with the acquisition of 4101 Lafayette.
AT&T made just the one big move last year and it wasn't for network assets, but it was a big one anyway - the acquisition of Time Warner. AT&T stated that it didn’t expect the FCC to review the transaction, because there would be no transfer of wireless licenses (or Time Warner could sell off the few it currently has). While President Trump said on the campaign trail that his administration “will not approve” the AT&T–Time Warner merger, he hasn’t touched on the issue in the months since the election and even had what appeared to be a cheery meeting with AT&T CEO Randall Stephenson in mid-January this year. There’s no indication so far that his Justice Department will move to block the merger; and with the FCC declining review, the toughest regulator of the deal is now out of the picture.
One of the year's biggest deals wasn't even for a network operator, as Verizon took another swing at content with the planned acquisition of Yahoo. Shortly after the year end, Verizon and Yahoo are finally close to reaching an acquisition deal, with a price tag that’s $250M less than the $4.8B agreed upon last year. Following the disclosure of two separate hacks (one affecting more than 500 million accounts, another affecting more than a billion), Yahoo announced last month that the deal’s closing date had been pushed back to the second quarter of 2017.
Verizon also gained FCC approval for a $1.8B acquisition of XO Communications, clearing a major regulatory hurdle for a deal that expanded the telco's metro and on-net fiber as well as millimeter wave wireless spectrum holdings in several major markets. Last but not least, Verizon also showed up with IoT deals for Sensity and Fleetmatics.
GTT made some big waves out in the Atlantic with its acquisition of Hibernia Networks. Under the terms of the acquisition, GTT will pay $515M in cash and about 3.3M shares of GTT common stock valued at $75M that will be issued at closing. They also made a smaller move earlier in the year, acquiring Telnes Broadband and appear to have bought Yipes from Reliance and Global Cloud Xchange as well.
CS&L and Windstream
One of the bigger fiber buyers of the year was CS&L, the communications REIT spun off by Windstream the year before. After remaining quiet in 2015, CS&L kicked off 2016 with the acquisition of PEG Bandwidth and followed it up a quarter later with a deal for Tower Cloud and relaunched it all as Uniti Fiber. But they also did a follow up deal with Windstream, acquiring a selection of tower assets and rights. For its part, Windstream played on the buyer's side of the table as well with the purchase of EarthLink.
In the Pacific Northwest, Wave made deals for both CoastCom and SawNet in 2016. Shortly after year end, they also purchased Cascade Networks, adding more than 350 route miles of fiber to Wave’s fast-growing West Coast network.
Another of 2016's repeat consolidators was Consolidated Communications. Consolidated made a big move in December with an agreement to buy Fairpoint, taking it into the upper Northeast for the first time. But that wasn't the only move Consolidated made last year. Back in February they acquired Champaign Telephone Company, boosting their footprint in Illinois.
Crown Castle continued to make its presence felt with two deals last year. First, they made a small deal for some fiber up in Boston with the acquisition of Last Mile Networks. Then later in the year, they took out the biggest pile of independent fiber in Florida, FPL Fibernet, which also had a fair amount of fiber in Texas.
Private equity buyers made their mark in the telecom market as well, and none made a bigger one than Oak Hill. Oak Hill decided to run the table up in the far northeast with the acquisition of FirstLight Fiber, then Oxford Networks, and finally Sovernet. When they finish combining all that under the FirstLight banner, they'll have deep metro and regional network from Lake Erie to the Maine coastline.
Also with private equity backing, Everstream emerged as a new consolidator out in the Midwest, with the acquisitions of Great Lakes Comnet and Lynx Network Group. We should be hearing more from them soon. TPG Capital also bought two fiber networks, acquiring both RCN and Grande from ABRY Partners.
A few of the single purchases made in 2016:
- Lumos Networks found an entry into the North Carolina market with the acquisition of Clarity
- Birch had a relatively quiet year in the US, but managed to invade Canada with the acquisition of Primus
- Cox took a majority stake in UPN in the Midwest
- Canadian cable outfit Videotron also bought some metro fiber with the acquisition of Fibrenoire
- Cleareon gave its NYC metro dreams a boost with the acquisition of Pangaea Networks out of bankruptcy court, instantly becoming a lit operator as well as dark fiber provider
- TelePacific made a new move with the acquisition of DSCI
- TDS acquired InterLinx Communications in southern Utah
According to experts, the acquisition trend will continue. Companies that traditionally ran their businesses in siloed environments are now expanding their reach into tangential markets to seek out new growth and bundled service options to reduce churn.
Next up in our 2016 M&A recap series, Unified Communications and Managed Services.
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