Re: Zayo woes

[Mike Hammett <nanog () ics-il net>]

Some of it is scale-related. Someone's operating just fine at the size they are, but the next order of magnitude larger 
enjoys many benefits from that size, but it takes either A) luck or B) the right skills to be able to move up to get 
those benefits. In terms of network operators, there's a big difference between a company of 1 and a company of 2. 
Again a big difference between a company of 2 and a company of 10. Another big difference between a company of 10 and a 
company of.. I dunno, 100? 


1G waves and 100G waves aren't *THAT* different in price anymore. However, if 1 is doing you just fine, the much better 
cost per bit of 100 won't do you a darn bit of good and will probably hurt. The hurt is not only due to the higher MRC, 
but now the higher NRC for equipment with 100G interfaces. If you can put enough bits on the line to make it worth it, 
you've got yourself tremendous advantage. The acquisition pays for itself in marginally higher costs for much higher 
revenue. 


The company may have been doing just fine before, but couldn't afford the move up to 10 or 100 because their present 
market couldn't justify it and the larger market wasn't obtainable until they had it. Catch 22 that can't really be 
overcome by most. Enter M&A. Someone just can't get to the next level they need to compete with those that can. 




----- 
Mike Hammett 
Intelligent Computing Solutions 

Midwest Internet Exchange 

The Brothers WISP 

----- Original Message -----

From: "Mark Tinka" <mark@tinka.africa> 
To: nanog () nanog org 
Sent: Tuesday, September 19, 2023 10:51:39 AM 
Subject: Re: Zayo woes 




On 9/19/23 17:40, Anne Mitchell wrote: 



And sometimes the acquisition is really just about acquiring the assets, such as the customer list*, and then they are 
left with having to run something that they never really wanted until they can figure out what to do with it. 


Right, buying the revenue to prop up the top and bottom line is also a reason to acquire. Usually, this is based on 
assessed profitability, but what tends to go unseen during the due diligence process is what is actually contributing 
to that profitability. 

I mean, typically, if a company is doing very well, it won't try to get itself sold. Well, not easily anyway... 

Mark.