Zayo Continues Its Network Infrastructure Tear, Plans To Acquire Canadian Telecom

In its second acquisition in the same month, bandwidth and colocation provider Zayo Group proves once again it's on a mission to expand its international footprint: The provider said Monday it would acquire Canadian communications provider Allstream for about $348 million, or $465 million Canadian.

The acquisition will include Allstream's fiber and colocation assets.

Boulder, Colo.-based Zayo is on a telecommunications infrastructure binge. The Allstream acquisition comes just about two weeks after the provider revealed that it would acquire fiber infrastructure and data center assets of Dublin-based telecommunications provider Viatel for $102 million.

[Related: Zayo Is Acquiring Irish Telco Assets; Plans To Work On Partner Relationships]

Both acquisitions will provide an extended reach into international markets for existing and new Zayo customers and partners, the company said.

"The Allstream acquisition will further solidify Zayo's position as a global leader in communications infrastructure," said Karl Maier, president of Zayo's international business unit, in an email to CRN. "Our goal is to provide our global customers with infrastructure wherever they do business."

Because the cloud is sensitive to latency, more customers are demanding on-network international services; Zayo’s latest acquisitions are putting the provider in a unique position in the market and with partners, said Vince Bradley, CEO of Malibu, Calif.-based telecom master agent and connectivity services distributor World Telecom Group (WTG), which partners with Zayo.

"With more global assets, they will be able to win even more business in the cloud era in regards to data center services," Bradley said.

Toronto-based Allstream, the fourth-largest telecom provider in Canada, offers bandwidth and telecom services to business and consumer customers across the country. The provider has more than 9,000 route kilometers of metro fiber network within Canada’s top five metropolitan markets, Toronto, Montreal, Vancouver, Ottawa and Calgary. Allstream has about 20,000 route kilometers of long-haul fiber network, which connects to major Canadian markets, as well as 10 U.S. network access points. The provider's infrastructure connects to about 3,300 on-net buildings, according to the company.

The deal also includes Allstream's colocation space in Montreal, Toronto and Vancouver.

Unlike some rival carriers that are selling off data center assets, Zayo is focused on the data center space, WTG's Bradley said.

"Zayo’s M&A will set the stage for them to acquire more of the data center business," he said. "The recent acquisitions also help them increase fiber footprint, [so] Zayo will continue to be more of a player in the connectivity and data center space."

Despite being a U.S.-based company, Zayo plans to keep Allstream's strong Canadian brand and presence. The existing Allstream business will be known as Zayo Canada, Zayo said.

Zayo said it plans to split Allstream into three business units: Allstream's communications infrastructure business will be rolled into Zayo’s core business segments, fiber, colocation, cloud infrastructure and network connectivity. Allstream's remaining business units will be organized into two segments, voice and universal communications, which accounts for about one-third of Allstream’s revenue; and a small business unit. The voice and small business segments will run as standalone business units in parallel with the formation of Zayo Canada, Zayo said in its news release.

PUBLISHED NOV. 23, 2015