Zayo Is Acquiring Irish Telco Assets; Plans To Work On Partner Relationships

Bandwidth and colocation provider Zayo Group will acquire network and data center assets from Dublin-based telecommunications provider Viatel, Zayo revealed earlier this week, when it also unveiled internal restructuring plans as well as efforts to build up its channel relationships.

Zayo said it will buy Viatel's infrastructure -- including fiber and data center assets and non-Irish enterprise businesses -- for $102 million. Viatel is a wholly owned subsidiary of the Digiweb Group, an Irish telecommunications and managed services provider.

Alongside the acquisition, Zayo's new organizational changes will break the provider into two main business units, Strategic Business Segments, and Global Sales and Customer Success.

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Zayo revealed the acquisition and the internal changes ahead of the provider's call about its Q1 2016 earnings, which fell short of Wall Street expectations. Zayo posted revenues of $366.8 million, missing expectations by $2.25 million, or 10 cents per share.

Matt Erickson, Zayo's president and chief operating officer, will be heading up the sales and alliances unit and the indirect sales team will report to him, he said.

No executive changes are being made to Zayo's indirect sales team, led by Channel Chief Brian Sheehan. However, one goal of the company's organizational change is for Zayo to focus on its go-to-market strategies and build more relationships through the indirect channel over the coming year, Erickson said.

"One of my key goals is to broaden and strengthen Zayo's relationship within the partner community," he said.

Per the latest reordering, Zayo's Strategic Business Segments will include Zayo's network connectivity, colocation and cloud infrastructure, and dark fiber solutions businesses. Global Sales and Customer Success will include sales, marketing, engineering and security functions, the company said.

Once the Viatel acquisition closes, Viatel's existing channel program will be integrated into Zayo's larger channel program and run as one organization, Erickson said. The acquisition will help Zayo and its channel partners reach new customers in new geographies, he added.

Via the deal, Zayo will acquire Viatel's fiber network that runs across eight countries, including two subsea cable systems that provide connectivity on two of Europe’s busiest routes between London and Amsterdam, and London and Paris. Zayo will also acquire 12 new metro networks, seven data centers and connectivity to 81 on-net buildings, according to the Boulder, Colo.-based company.

Zayo is aggressively building out its network, and recently added 1,629 route miles and 555 buildings to the network. Zayo has also been building up its network inorganically, through acquisitions, Erickson said.

Unlike recent moves from fellow telecom providers in the industry, like Windstream and CenturyLink, which are moving away from data center and colocation operations, Zayo has its eye on infrastructure assets, such as fiber and data centers, Erickson said.

While Zayo was primarily interested in Viatel for its fiber, the provider had underutilized colocation space that also piqued Zayo's interest, he said. According to Erickson, colocation accounts for about 10 percent of Zayo's business.

Viatel's infrastructure fits in with Zayo's existing geographical footprint, Erickson said.

"Viatel's fiber is very complementary to what Zayo already has in Europe, and will allow us to expand into a lot of new geographies," he said.

PUBLISHED NOV. 13, 2015