Zayo Group Holdings, Inc. ZAYO, which owns and operates a Tier 1 IP backbone and 44 carrier-neutral data centers, recently communicated that it has been chosen by Mid-Atlantic Crossroads (MAX) to provide data center colocation in zColo’s Ashburn facility. Financial terms of the deal remained undisclosed. Zayo is likely to benefit from a diversified blue-chip customer base that comprises the largest and most sophisticated users of bandwidth. Its extensive network footprint, product portfolio and ability to penetrate in different markets are laudable.
MAX is a center at the University of Maryland that manages a multi-state advanced cyberinfrastructure platform. Zayo will offer fiber connectivity to support MAX’s network services to its academic, government and business communities. The company’s 133,000-mile network in North America and Europe includes connectivity to thousands of buildings and data centers. Its communications infrastructure solutions comprise dark fiber, private data networks, wavelengths, Ethernet, Internet access and data center colocation services.
Markedly, Zayo’s multi-site data center portfolio, ability to customize its solutions, and capability to connect globally over its network helped it secure this business. The fiber optic bandwidth infrastructure company expanded its Ashburn facility in 2018 and 2019, which currently has more than 75,000 square feet and 15MW of power capacity (expandable up to 40MW).
Zayo’s colocation solution will provide a dedicated, private suite that includes more than 30 cabinets in its Ashburn data center for this customer. Its public sector clients in the Ashburn facility and the National Capital Region are transforming their IT infrastructure and migrating to cloud for scalability and cost savings.
Zayo intends to grow its network business more than 5% and limit operating expenses to improve efficiency. The company emphasizes on less than 12-month payback deals while leaning into strategic investments like e-rate deals, mobile infrastructure and long-haul fiber.
The company continues to make progress on all necessary grounds, including its previously announced pending merger with affiliates of Digital Colony Partners and the EQT Infrastructure IV fund, which is expected to close in the first half of 2020. The transaction is subject to customary conditions including regulatory approvals.
Backed by proper execution of operational strategies, Zayo’s shares have gained 4.8% against the industry’s decline of 10% in the past six months.
Zayo currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader industry are Qualcomm Incorporated QCOM, Ubiquiti Inc. UI and Anterix Inc. ATEX. While Qualcomm and Ubiquiti sport a Zacks Rank #1 (Strong Buy), Anterix carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Qualcomm has long-term earnings growth expectation of 14%.
Ubiquiti has long-term earnings growth expectation of 9.4%.
Anterix topped earnings estimates thrice in the trailing four quarters, the average positive surprise being 10.7%.
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