Zayo Picks Up Clearview International to Bolster Fiber, Colocation Operations

Data center operations are taking on an increased value these days thanks to a rapidly-growing use for data center tools, as well as the accompanying goods and services that are part of the picture. This was demonstrated in Zayo Group Holdings' recent purchase of Clearview International, a move that proved just how much value there is in this market.

The deal was valued at $18.9 million at last report—paid for with cash on hand—and represented two data centers with around 30,000 square feet of space total. This gives Zayo's total operations a substantial boost, since just at the end of 2015, Zayo also acquired another data center in the area with 66,000 square feet. All these acquisitions come at about the same time that Zayo is finding huge demand for data center and fiber needs, particularly in its area, the Dallas-Fort Worth metropolitan area. A recent fiber-to-the-tower (FTT) deployment brought in fresh demand, and with a major provider of software-as-a-service (SaaS) operations finding colocation opportunities with Zayo, the demand is clearly spiking.

This brings Zayo's total Texas data center count to seven, and even that's just part of a North American and European network that totals 57 such centers in the regions. The operation is expected to start earning fairly quickly, as Zayo expects a contribution of over $2 million to the incremental annualized adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). That doesn't even factor in basic cost synergies that may crop up.

Zayo's executive vice president of colocation and cloud infrastructure, Greg Friedman, commented “Enterprise, content, and technology customers increasingly require solutions that involve network connectivity, colocation and cloud infrastructure. Zayo’s acquisition of Clearview ensures we continue to be well-positioned to capitalize on these opportunities and we expect to exceed a 30 percent internal rate of return on this investment.”

All told, this looks like a good investment. We know that data center demand is on the rise as more companies look to bring in virtualization, cloud-based operations, and similar matters. We also know that fiber and colocation demands are likewise on the rise as data center operations will require more bandwidth to function properly; a data center can't be running into bandwidth caps. So Zayo's moves look like the kind of moves needed to give data center operations that little extra push, making an already potent portfolio that much better. Zayo should be able to bolster its position as the provider of choice, drawing in more users and ultimately more revenue.

Data center operations are a big part of the picture these days, and Zayo likely wants to be as big a part of this big picture as it can be. Its purchases, therefore, should make such a stance all the more likely.

Edited by Maurice Nagle