Zayo Group to acquire Allstream for $348 million

24 November 2015 |

Zayo Group has agreed to acquire Manitoba Telecom Services’ Allstream unit for $348 million (C$465 million).

A wholly-owned subsidiary of MTS, Allstream provides bandwidth and telecoms services to business and public sector customers across Canada.

The acquisition will provide Zayo’s core network communications infrastructure business with additional fibre and colocation assets, including over 9,000 route kilometres of metro fibre network in Canada’s top five metropolitan markets – Toronto, Montreal, Vancouver, Ottawa and Calgary – connecting to approximately 3,300 on-net buildings. 

“Within today’s Allstream is a robust collection of fibre networks, which are enormously valuable to both Allstream and Zayo customers,” said Dan Caruso, chairman and CEO of Zayo.

“We will unleash the full potential of these assets by combining them with Zayo’s network and focus on providing high-quality and low-cost bandwidth to help fuel the growth of Canada’s economy.”

Allstream has an approximate 20,000 route kilometre long-haul fibre network connecting major Canadian markets and 10 US network access points. It also operates colocation space in Toronto, Montreal and Vancouver.

About half of Allstream’s revenue is a direct fit with Zayo’s existing core business, according to the company. As part of a plan to retain a strong Canadian brand and presence, the communication infrastructure portion of Allstream’s business will be integrated into Zayo. 

The other half of Allstream’s business will be organised into two additional segments – voice and universal communications and small business. Each will be separated into standalone business units in parallel with the formation of Zayo Canada.

“We believe these other businesses provide valuable and important services to their customers, and the business unit focus will enable them to grow and innovate,” Caruso added. 

“We’ve successfully done this on prior acquisitions. The key is strong and focused leadership, appropriate management incentives, and stand-alone financial statements that allow transparency into performance.” 

The deal is expected to be completed in the first quarter of 2016.