So Who is Going to Buy XO?

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

So Who is Going to Buy XO?

I got asked this question again today: Who is going to buy XO? I think we can almost all agree that Carl Icahn would like to sell his company.

XO had 2010 revenue of $1.5 billion, only $8 million more than 2009. So that's flat. XO just laid off 400 employees - probably to make the numbers look better.

Who would buy them?

WIND just received approval to acquire PAETEC, so that takes 2 names out of the running.

Level3 didn't win Paetec and just grabbed Global Crossing, but I could see L3 making a pitch to Icahn, because it would be revenue for L3 and a good portion of it is VoIP revenue. However, integration would be a flashback to the 2006-2008 era. Plus while revenue is up for L3 this past quarter, losses also increased. OUCH! [Plus as I have mentioned before L3 needs to take Cogent off the table, since that is their main competitor in the IP space.]

CenturyLink just swallowed Qwest and Savvis. That plate is full, plus I think focus at C-Link is Cloud not TDM/network.

EarthLink has just purchased 3 MSP's, following more in the PAETEC play book than any other. EarthLink acquired IT Solution Center and Hosted Application Business from Synergy Global Solutions. ELNK has completed the acquisition of xDefenders, a managed IT security company based in Rochester, NY, to "Enhances National Managed Services Provider Strategy". And ELNK "completed its acquisition of Business Vitals, a national provider of managed information technology (IT), security and professional services based in Columbia, South Carolina." They also bought LogicalSolutions.net. That's 4 quickies on the heels of STS Telecom, Deltacom and ONE Comm. Just it looks like the play book centers around MSLEC, the strategy that MegaPath re-branded under. Do they have room in the fold for XO? Probably. And ELNK has an easy time getting credit.

[BTW, have you seen the new ELNK website? It looks great! Seems like wordpress with its clean template design. It includes video testimonial!]

Zayo just surprised many folks by buying 360. I thought it would be the other way around, but I'm wrong often. (Well at least 20% of the time according to Dane!) Is there enough VC dough to get XO? (Or will I have that reversed as well?)

Broadview Networks, TelePacific, Broadvox and Integra aren't candidates, but who knows what private equity money is thinking.

Frontier and Fairport have not moved to cloud yet. They both have indigestion from eating up Verizon assets. Maybe one of them will pop some TUMS and give Icahn a bid.

Cox and Comcast - do the cable guys want to buy some VoIP and fiber?

Some outliers:

I remember being surprised when Host.Net bought WV Fiber, so it could happen again. Not likely with its strict focus on data center and cloud services.

A foreign company looking for network - like Tinet, Telefonica, Tata, Reliance (which bought Yipes in 2007), Orange telecom. I would have listed T-Systems, but with DT still wondering what is happening with T-Mobile, that seems unlikely - or if AT&T pays T-Mobile its break-up fee of $3-6 billion, they could buy XO with that!



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