Next page

Some Thoughts on the Viatel Acquisition by Zayo

Zayo, a provider of bandwidth infrastructure and network-neutral colocation and connectivity services, has announced the acquisition of Viatel’s infrastructure and non-Irish enterprise businesses. Zayo shows an eight-year history in acquisitions: 29 in total to this day. The Viatel acquisition will provide Zayo with Pan-European intercity and metro fiber capability via an 8,400 kilometer-long fiber network across eight countries. The transaction will add 12 new metro networks, seven data centers and connectivity to 81 on-net buildings. Two wholly-owned subsea cable systems will provide connectivity on two of Europe’s busiest routes: London-Amsterdam and London-Paris. The Viatel businesses to be acquired are highly aligned with Zayo’s existing product and customer set, including a higher proportion of dark fiber revenue.

“Viatel’s long-haul fiber network and colo assets combined with Zayo’s existing national UK, France and US networks provides truly international, seamless connectivity for Zayo’s existing and new customers,” says Dan Caruso, Chairman and CEO of Zayo.

By means of this deal it seems that Zayo will become the asset owner of the underlying fiber for the euNetworks’ long-haul network. Nice to know: both companies have the same investor on board: Columbia Capital.

The Zayo-Viatel deal is one in a series of acquisitions that mark the consolidation phase the carrier industry is going through. The First Phase transition was driven by the liberalization of the European Telecoms market in the 1990s; the incumbent carriers had to allow commercial carriers into their markets. The Second Phase was the massive built of long-haul and metro fiber networks by those carriers and the huge investments that were required to do so. The Dotcom Crisis at the beginning of the twentieth century abruptly ended all that. It started the Third Phase: the breaking up and selling of the network assets of the defaulted carriers to new and independent companies that managed to build a sound business upon those assets. And now, in the current Fourth Phase, the consolidation of these smaller entities is in full swing.

As a prominent builder of Pan-European fiber networks during the Second Phase MFN is an interesting party in this context. After its Chapter 11 bankruptcy procedure, its assets were divided between many smaller players such as, Global Voice Networks (that was rebranded into euNetworks) and NEO, to name a few. It seems that Zayo is recreating the original MFN strategy as it is gobbling up one MFN legacy carrier after the other.

Zayo’s motive for the acquisition probably lies not primarily in the long-haul network, but in the connectivity into Viatel’s metro Dark Fibre networks. Zayo now has significant presence in the crowded, highly commoditized Amsterdam, Frankfurt, London and Paris regions. You simply have to be there, but be prepared for fierce competition. The other metros possibly offer better business perspectives. Viatel also operates metros in “emerging” regions, like Geneva, Milan, Marseille and Rotterdam. Zayo now has a Pan-European ring between these cities, and Marseille allows them to easily connect with cable systems that connect Europe with the Middle and Far East.

The acquisition is one in a series of consolidations in the datacenter and carrier domains. A few years ago we expected that Zayo would be one of the carriers that would generate substantial take-overs in Western Europe. The acquisitions of NEO Telecom, GEO and now Viatel prove that we were right.

This consolidation trend undermines the freedom of choice of the end-customer. Fewer providers means less competition and increased pricing. The take-over boom may also lead to other issues end-users may have to deal with, such as poor network integration. Interconnecting all these different networks into one will be a challenge. Also, commercial service levels could deteriorate as the increasing size of organizations results in lower lead times, account management issues and the like.

What do you think? Will euNetworks eventually become integrated into the Zayo infrastructure? If so, when do you expect they will announce this? Let us know in the comments section when you think this will be announced. The person whose guess is closest to the actual date will win a dinner for two.

Would you like to know how you can best can deal with this consolidation situation? Please, contact us!

Next page
Latest articles
Get Your Head Out of The Clouds: 5 Misconceptions About Cloud Computing'
26 April 2017

Today, the cloud is part of everyday life. It is your email, your file sharing, where you listen to music, how your business runs smoothly. So, why is it that we understand so little about it? In an age increasingly

Further reading »
VLOG: Custom Connect & BIT CTO’s Explain Exciting Partnership'
20 April 2017

Custom Connect and BIT are excited to announce their partnership establishing a Point Of Presence at the BIT data center facilities in Ede, Netherlands, giving customers the opportunity to access much sought after hybrid solutions featuring Azure, AWS, Microsoft and

Further reading »
Readtime: 2 minutes
Custom Connect & BIT: Bringing Enterprise-Grade Hybrid Cloud Connectivity to the Edge'
18 April 2017

‘You can stay where you are’ Custom Connect and BIT bring enterprise-grade hybrid cloud connectivity to the edge One connection to multiple clouds for BIT customers   Custom Connect CTO Rutger Bevaart speaks with BIT CTO Alex Bik at the

Further reading »
All Articles