M&A a sign of a sick industry, says Cogent CEO

01 October 2015 |


The purpose of M&A activity divided the panel at Capacity North America 2015 in Toronto yesterday, with Cogent Communications CEO Dave Schaeffer saying that it was the sign of a “sick industry”.

Moderator Andrew Lipman, partner at Morgan Lewis and Bockus, asked panellists how important M&A activity was to their company, and Schaeffer said that 85% of M&A activity is a failure “on some level”. He added that it is often done for the wrong reasons.

Contrarily, Paul Scott, president at Cable & Wireless Networks, said that M&A activity was “absolutely part of the company’s DNA”, but revealed that not all of its efforts were as successful as intended.

He highlighted C&W’s acquisition of Columbus earlier this year as a great success, noting that “scale matters” and that in this case the acquisition provided enormous opportunity.

Scott said that C&W was still in the “expansion” phase and is actively seeking fibre assets, while Schaeffer said that Cogent focussed on expanding its footprint in the 90s and is no longer looking for such acquisitions.

When it comes to mergers, the panellists agreed that it was something of a messy business.

Michael Wheeler, EVP of global IP network at NTT Communications, likened the post-acquisition integration process to “sausage making”, while Cogent’s Schaeffer described it as “an egg with two yolks”.