Zayo Europe carve out: ‘nothing is going to change,’ says CEO
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Zayo Europe carve out: ‘nothing is going to change,’ says CEO

Colman headshot.png

Zayo Europe made headlines last week as it announced the carve out of its European business, a month after hiring telco veteran Colman Deegan as European CEO. Capacity caught up with Deegan to find out more.

While excited to lead the European division at a time when it was about to become its own business with its own strategy, “for the most part, nothing is going to change,” he told Capacity.

Zayo’s European operation enjoys a high level of autonomy already, and cross selling into different regions with parent company Zayo Group will continue much the same as prior to the carve out.

For customers, Deegan said he hoped that initially there would be no noticeable difference working with a separated Zayo Europe compared to the combined entity, praising the service delivery the group offers.

The carve out will however allow Zayo Europe more financial independence with a standalone balance sheet that Deegan thinks will enable the company to use its capital in a more focused way in Europe.

“Maybe we can be a bit more agile on how we deploy things … it gives us the opportunity to move more quickly,” he said.

Currently the capital available to Zayo’s European business is decided by the US group once a year, Deegan said, but a standalone balance sheet will enable the business to move capital between projects in a more streamlined fashion.

“Currently our cash flow needs are funded by the US group, but now we will be developing that on our own. We'll have our own external financing, that will give us capacity to invest in projects, and fund our growth or expansion.”

What that expansion will look like is still uncertain, or at least being kept close to the chest of Zayo Europe for now.

When asked to expand on its strategic and business objectives, Deegan acknowledged that the company is operating in a competitive industry, that is “fuelling some of the vast evolution and advancements that are happening in technology. If you think about AI and cloud capacity growth, the demand for bandwidth on an industrial scale is just off the charts, whether it's hyperscalers or large corporate enterprises”.

But despite these opportunities, Deegan seems keen to show restraint.

Speaking on his appointment he said he joined Zayo Europe to grow the company, but grow it in a sustainable and profitable way.

“It's not growth at all costs,” he said. “The critical part of what I want to do is bring capital discipline. We want to make sure that when we expand, we're going to get good returns on the capital deployed.”

How Zayo will turn this mission into reality is also undecided.

“I don't have all the answers today,” Deegan said. “The work I’m doing at the moment is to make sure we have the right resources and the right product services to go and fulfill the plan over the medium term.”

Deegan is a 25-year veteran of Vodafone, serving in M&A roles, before C-suite positions in India, Italy, Turkey and Spain.

That telco experience is going to be crucial to success at Zayo, especially when it comes to forming the partnerships Deegan plans on using to achieve his growth ambitions.

“I come from a background of deepening commercial partnerships, I have a good understanding of what you can do yourself, and when you need to leverage different partners,” he explains.

Deegan is also confident his telco experience will help with Zayo’s customer-facing activities.

“I had B2B franchises in four or five places that I worked in,” he said.

“We really worked hard on customer engagement, customer care and focus around product service delivery. It’s very pleasing to see that when I came here that’s part of the DNA of the company.”

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