Morrison & Co scoops up FiberLight in latest PE telecom deal

Deals between telecom companies and private equity (PE) firms continue to roll, with fiber backbone provider FiberLight the latest target. The company on Thursday announced it struck an agreement to be acquired by infrastructure investment firm H.R.L. Morrison & Co for an undisclosed sum.

FiberLight CEO Chris Rabii told Fierce the deal has been in the works for about four months, with talks starting in February after Morrison came to the company unsolicited. Rabii said FiberLight ultimately decided to move forward with the transcation because Morrison shares its vision of what fiber infrastructure will mean “now and into the future.” Morrison was eager to get into the U.S. fiber market and its involvement will allow FiberLight to take on more projects that it otherwise might be able to alone.

“We’re not going to change who we are on a dime. But what it’s going to allow us to do is pursue the things we do with greater scale and speed,” Rabii said. “Almost all the projects we do, because they’re fiber builds, are very capital intensive…Every day we look at deals – and when I saw deals I mean deals with our customers and partners to build out networks – and I think having greater financial flexibility around how we deploy our capital is going to allow us to simply take on more of that.”

In terms of these sorts of projects, Rabii said Morrison is an ideal partner because they understand and accept longer time horizons moreso than other private equity firms might. Others might demand a 3-year or 5-year return on investment. But with Morrison, “if I come back to them and say I’ve got a deal, it’s a good deal but it’s not really cash flow attractive seven years out of a 10-year or 20-year deal, these guys are gonna bite at it where other people might not.”

FiberLight’s network currently spans approximately 18,000 route miles across 30 metropolitan areas, primarily in the major markets of Texas and the Northern Virginia area. While the company has generally grown its network on the back of deals with large customers, Rabii said the financial backing from Morrison will allow it to be more directive with its expansion plans. He noted there are several “logical” places for it to edge out its existing footprint into up and coming markets, for instance pushing north into Oklahoma City or west in Texas, but it will also evaluate some out of territory opportunities.

In addition to helping scale FiberLight’s base business, Rabii said the deal with Morrison will also allow it to flesh out its portfolio of services to better target mid-sized enterprises rather than just large-scale players. This might include the development of product bundles or even new offerings like SD-WAN and managed security, he said.

“We’re excited. It’s kind of really opening a new chapter for us,” he concluded.

Morrison & Co is the latest private equity company to seek its piece of the fiber pie. Others, including Apollo Global Management, Grain Management, GTCR and KKR, have also made moves in the space.