ZenFi Networks, a digital infrastructure provider in New York and New Jersey metropolitan areas, said that its cofounder and CEO, Ray LaChance, and its chief administrative officer of ZenFi Networks and president of Wireless Division of CityBridge, Robert Sokota, would be participating in panel sessions at Metro Connect USA 2022, which takes place Jan. 31–Feb. 2 in Miami.
On Jan. 31 at 2:10 p.m. Eastern time, Sokota will join the panel, “How are We Meeting the Demands for Digital Infrastructure?” Panelists will discuss how network operators collaborate with governments and vendors to fast-track network builds and upgrade existing infrastructure. Additional panelists include Maria Browne, a partner at Davis Wright Tremaine; Gil Sataliz, founder and CEO of NJFX; Justin Melnikoff, president and COO of Mox Networks; and Eric Watko, vice president of innovation product line management at American Tower.
On Feb. 1 at 11 a.m. Eastern time, LaChance will participate in the session, “CEO Panel Discussion: Building for Sky-Rocketing Demands.” The panelists will speak about how the past year has affected their businesses, how they see their companies meeting the demands of 2023 and beyond and what some of the most talked-about deals signal for the wireless communications business. Additional panelists include Andrew Lipman, senior partner and chair of the Telecommunications, Media & Technology Practice at Morgan, Lewis & Bockius; Brett Lindsey, CEO of Everstream; Andres Irlando, president of Zayo Group; Kurt Van Wagenen, president and CEO of Firstlight Fiber; and Kenny Gunderman, president and CEO of Uniti Group.
Zayo Group, a company that serves wireless and wireline communications providers with a 133,000-mile fiber-optic cable network in North America and Europe, has hired channel industry specialist Lynn D. Tinney as senior vice president of channels and partnerships.
“Lynn is a well-known leader and respected voice in the channel industry,” said Andres Irlando, president of Zayo Group. “Her track record of success driving growth and building partnerships for leading global security and technology companies speaks for itself. Zayo is making big investments to accelerate our channel sales segment. Lynn will lead that charge, working closely with our existing partnership network as well as identifying new segments and opportunities, including around our regional networks.”
Tinney joins Zayo from Brightcove., where she served as vice president of global channels and oversaw channel bookings growth, according to Zayo Group. The company said that before Brightcove, Tinney served in senior leadership roles with OPAQ, CA Technologies, Riverbed Technology and Cisco Systems.
“While her expertise lies in building strong partnership landscapes, Tinney also has held roles in direct sales, marketing and operations and brings more than three decades of experience working with some of the world’s leading B2B businesses,” a statement from Zayo Group reads. “Tinney has been recognized as a CRN Women of the Channel for 2015, 2016 and Power 100 – Most Powerful Women in the Channel for 2016, 2017 and 2020. She has served on the board of directors for the Massachusetts Conference for Women — the largest women’s conference in North America — since 2012.”
Tinney said that Zayo Group’s diverse communications infrastructure solutions underpin the world’s most innovative companies.
“Zayo is constantly seeking to grow that footprint and has been making recent expansions into areas like Dallas-Fort Worth, Denver and Seattle-Tacoma,” she said. “I look forward to leading our channel sales team with a collaborative strategy based on due diligence, data and a culture that welcomes change.”
With products that include dark and lit fiber, private data networks and data center connectivity, Zayo provides fiber connectivity and is expanding its networks and services to lay the groundwork for the 5G future, the company said.
An Oct. 20 story in the Wall Street Journal said that a group including Zayo Group is trying to buy broadband network owner Uniti Group and its principal customer, Windstream Holdings II. The Journal cites people familiar with the matter as its source.
According to the Journal, the parties involved had discussed a price of about $15 per share, which would value Uniti Group at about $3.5 billion. The talks came to a standstill over the price, according to the Journal. In making a presentation of its earnings report for the second quarter, the company said its implied share price ought to be between $20 and $30.
The price of Uniti Group shares rose 7.43 percent just before the stock market session ended on Wednesday, and the price closed at $13.01. Year-to-date, Uniti Group shares have risen by 11.58 percent, falling as low as $10.37 on June 18.
Zayo Group was a public company until 2020, when Digital Colony and EQT, as lead investors, acquired the company for $35 per share in a cash transaction valued at $14.3 billion, according to Zayo. Digital Colony later took the name DigitalBridge Group, as did Colony Capital, bringing Digital Colony and Colony Capital under the one name.
The Journal said it did not learn the terms of the transaction and said the purchase prices for the two companies would most likely be high, because Uniti Group has about $5 billion of debt, and Windstream has about $2 billion of debt.
Windstream, a telecom services provider, once was a part of Uniti Group. Windstream’s fiber-optic network became the largest Uniti Group asset when Uniti Group separated from Windstream, and Windstream entered a long-term lease for the continuing use of the fiber-optic network. Although Uniti Group has added to its customer base since the separation, Windstream still accounts for about 70 percent of Uniti Group’s revenue.
Marc Ganzi’s vision of diversification took another big step yesterday as his global investment firm Digital Colony purchased fiber optic network provider Zayo Group, with the help of EQT Infrastructure IV fund, in a transaction valued at $14.3 billion. Zayo will transition from a public company to a private company but remain headquartered in Boulder, Colorado. The deal is subject to regulatory and shareholder approval.
Jennifer Fritzsche, senior analyst, Wells Fargo Securities, said. “Ultimately, we believe ZAYO will be a valuable asset within the acquirers’ portfolios and create natural synergies with their other investments. Digital Colony, through its partner Digital Bridge, touches many of the converging parts of the communications infrastructure ecosystem.”
Digital Colony is a combination of Digital Bridge Holdings, which is headed by Ganzi, and Colony Capital, a real estate investment management firm. Digital Bridge is a holding company that is quite diversified, owning Vertical Bridge, Mexico Tower Partners, ExteNet Systems, Databank, Vantage Data Centers and Andean Tower Partners.
As a global investment firm, Digital Colony focuses on next generation mobile and internet infrastructure – towers, data centers, small cells, and fiber.
Ganzi said, “Zayo has a world-class digital infrastructure portfolio, including a highly-dense fiber network in some of the world’s most important metro markets. We believe the company has a unique opportunity to meet the growing demand for data associated with the connectivity and backhaul requirements of a range of customers.”
Goldman Sachs and J.P. Morgan are serving as financial advisors to Zayo Group in connection with the transaction and Skadden Arps is serving as legal counsel. Morgan Stanley and Deutsche Bank are acting as financial advisors to Digital Colony and EQT Infrastructure, and Simpson Thacher is serving as legal advisor.
Spencer Kern, analyst, New Street Research, said the transaction was bad news for Crown Castle International. First, the pricing of transaction has negative implications because the implied multiple on Zayo’s fiber is 7x lower than the multiple placed on CCI’s fiber by the market.
“We don’t see any reasons why CCI’s fiber should trade at such a high premium to Zayo’s; at the multiple implied by the Zayo transaction, we see 8 percent downside to CCI’s stock price,” Kern wrote. “Second, the new ownership of Zayo could drive greater competition in small cells, putting pressure on CCI’s small cells win-rate, pricing, or both.”
A Busy Year for Digital Colony
Since its inception, Digital Colony has aggressively moved forward on Ganzi’s vision of diversification, with a particular emphasis on the United Kingdom. Last August, Digital Colony entered the U.K. indoor DAS and small cell market with an investment in Stratto, which offers an Infrastructure-as-a-Service business model.
On April 29 of 2019, the global investment firm announced further growth of its U.K. platform through the acquisition of iWireless Solutions, a small cell provider that serves large, high profile venues in the U.K. (London Olympic Stadium, Twickenham Stadium).
Last November, Digital Colony purchased Opencell, which provides multi-operator indoor coverage and currently has more than 2,000 cells across 100 networks that are used by all four U.K. mobile network operators. Opencell was then merged with Stratto.
“Our goal from day one has been to build the leading digital infrastructure platform that delivers exceptional indoor and outdoor network solutions to the mobile network operators in the U.K.; combining Opencell’s capabilities and active networks with the Stratto platform helps us accelerate those goals,” said Ganzi, in a November 2018 press release. “We look forward to continuing to strengthen our relationships with our customers as well as positioning Digital Colony’s U.K. digital infrastructure platform as the recognized leader in the small cell sector.”
Outside the United Kingdom, Digital Colony Buys Fiber, Towers
Elsewhere in the world, Digital Colony has reached out and planted it flag. Last week, Digital Colony closed on the acquisition of Toronto-based, Cogeco Peer 1, a provider of colocation, network connectivity and managed services company. Cogeco Peer 1’s fiber business, which currently encompass more than 2,050 route miles of owned, dense metro fiber in Canada’s two largest urban markets, plans to become the country’s first neutral-host provider of small cell and 5G infrastructure and enterprise and wholesale fiber connectivity.
At the end of just Digital Colony completed its acquisition of Helsinki, Finland-based Digita Oy, which owns and operates the nationwide digital terrestrial television and radio broadcasting tower infrastructure network in Finland and is the largest independent owner of telecom towers in the country.
December 2, 2014 — Zayo Group, whose 81,000 route miles of dense metro and intercity fiber assets provide the backbone for cell tower backhaul, DAS and small cells, raised $400 million in an initial public offering last month. The stock, which debuted at $19 a share, is trading at more than $26 at this writing.
“It’s not just towers that people are excited about. Investor appetite is really strong for other facets of communications infrastructure,” said Marc Ganzi, CEO, Digital Bridge Holdings. “The Zayo IPO, which was extremely successful, was a strong signal that there is depth beyond towers in the comm infrastructure, permeating other asset classes, whether it is fiber or data center developers.”
Wells Fargo initiated coverage of Zayo Group Holdings with an outperform rating and $30 to $32 valuation range.
“Our positive thesis very much centers around the theme of the need for bandwidth infrastructure. We believe we are in the early stages of this demand — on both the wireline and wireless side,” wrote Jennifer Fritzsche, Wells Fargo senior analyst. “The fiber industry is one of dynamic change and growth. For Zayo specifically, we see many catalysts that will continue to drive revenue growth, including increasing demand for dark fiber, the early stage of small cell development and continued growth in wireless and wireline data traffic.”
Zayo’s dark fiber segment generates high-margin, recurring-revenue streams secured by longer-term contracts, and it has enough scale to create high barriers to entry for competition.
“Investors really crave the safety and the yield that comes from long-term contracted cash flows from investment-grade carriers,” Ganzi said. “It is a story that transcends towers and is now permeating other asset classes, whether it is fiber, data centers or small cells.”
Zayo has placed a greater emphasis on selling dark fiber compared with its competitors, which Fritzsche believes differentiates Zayo’s position as fiber-to-the-tower contracts come up for expiration.
“Dark fiber to the tower (FTTT) has a long runway for growth. While the initial FTTT rollout by carriers appears to be in later stages, Zayo sees growth opportunities in dark FTTT, with carriers signing dark fiber contracts for its scale and control benefits,” Fritzsche wrote
Fritzsche also thinks fiber backhaul will play a key role in providing small cell backhaul and that Zayo is more focused on opportunity than its rival, Level 3 Communications.
J. Sharpe Smith is the editor of AGL Link and AGL Small Cell Link newsletters.