FIBERNET TO ACQUIRE CON EDISON COMMUNICATIONS
[FAC: This one has been on the block for quite a while, I've been told. What surprised me was the inclusion of access to Con Ed's NY City conduit system in the deal (see reference to COCNY below). It wasn't long ago that FiberNet's profile wasn't much more than a campus provider, a step above a BLEC. They've come a ways since then, and I wish them luck going forward. The last time I looked there were eighteen fiber facilities-based franchised operaters in NY City. Now there are seventeen. See both the telecommunications and cable tv franchise lists at the bottom of this page, taken from the New York City Department of Information Technologies and Telecommunications (DoITT) Web site, url shown.]
NEW YORK (December 13, 2004) -- FiberNet Telecom Group, Inc. (NASDAQ: FTGX), a leading provider of
managed network services, announced today that it has signed an agreement to acquire Con Edison Communications
(CEC), a subsidiary of Consolidated Edison, Inc. (NYSE: ED) for approximately $37 million in cash. The acquisition
of CEC, a company that also provides managed network services in the New York metropolitan area, will more than
double FiberNet’s revenues. The Boards of Directors of both FiberNet and Con Edison have approved the
transaction. The acquisition is pending regulatory approval from federal, state and municipal authorities.
The combination of FiberNet and CEC creates one of the most extensive telecommunications networks in the tri-state
area with a deep reach into enterprise buildings, carrier hotels, central offices and data centers. In acquiring CEC,
FiberNet gains access to the Con Edison Company of New York (CECONY) electric conduit system, positioning
FiberNet as the only company to extensively use both the electric utility and conventional telecommunications rightsof-
way. FiberNet will thereby be able to offer customers true physical diversity to support their business continuity and
disaster recovery needs, ensuring the transmission of mission-critical communications traffic.
The combined companies will strategically focus on designing, implementing and managing private networks and high
performance data services that meet today’s demanding requirements for reliability and superior quality of service.
Together, FiberNet and CEC currently serve more than 400 customers, comprising global telecommunications carriers
and Fortune 500 corporations, including major financial institutions, the world’s leading trading exchanges and other
sophisticated data networking users. Combined network assets will include almost 80,000 fiber miles and access to 190
buildings in New York and Los Angeles, including 18 central offices, 22 carrier hotels and 150 commercial buildings.
“With our full-service platform of products and services, we are ideally positioned to offer both enterprise and carrier
customers end-to-end managed network services with unmatched customer service and performance,” said Michael
Liss, FiberNet President and CEO. He added, “This acquisition expands and diversifies our business into the
enterprise arena. The complementary aspects of our capabilities will allow us to benefit from significant synergies and
cost savings, improving our profitability and marketplace strength.”
Stephen B. Bram, Con Edison Group President, Energy and Communications, said, “We are very pleased that FiberNet
has agreed to acquire Con Edison Communications. FiberNet has an excellent reputation as a reliable network
operator and for maintaining a high level of customer service. These attributes were extremely important to Con
Edison as we considered the sale of the business.”
Peter Rust, President and CEO of Con Edison Communications, said, “Joining forces with FiberNet is a major win for
our customers. Combining our strengths in the enterprise market with FiberNet’s successful carrier business is
complementary for both entities and will create a stronger, better-positioned competitor in the marketplace. Our
customers will continue to benefit from our highly reliable network and quality customer care without interruption,
while gaining access to additional products, services and network reach as the business grows.”
To ensure the continuity of superior customer service and technical capabilities, key employees of CEC will become
employees of FiberNet. The new management team will comprise executives from both FiberNet and CEC, leveraging
each company’s respective strengths. Liss, FiberNet’s CEO for the past five years, will remain Chairman after the
acquisition. Jon A. DeLuca, currently FiberNet’s Senior Vice President – Finance and Chief Financial Officer, will
become President and CEO; Edward Granaghan, currently FiberNet’s Vice President of Finance, will succeed DeLuca
as CFO; and Peter Rust, CEC’s President and CEO, will lead the business’s focus on the enterprise market as President
of FiberNet Enterprise Services, a wholly-owned subsidiary. Richard E. Sayers, recently appointed Vice Chairman of
the FiberNet Board of Directors, will continue in that role.
Under the terms of the agreement, FiberNet will pay approximately $37 million in cash to purchase the equity of
Consolidated Edison Communications. FiberNet will finance the transaction through the issuance of convertible
preferred stock. The transaction will financially strengthen the combined company and provide a solid platform to roll
out innovative services, organically grow and make other strategic acquisitions. Based upon current results,
approximately 63% of the combined company’s revenues will be from telecommunications carriers, and 37% will be
from enterprise customers. In the first nine months of 2004, FiberNet posted $23.7 million in revenues, excluding a
non-recurring arbitration award. CEC recorded $23.9 million in revenues during the same period.
“We have consistently articulated our strategy of strengthening our position as the leading metro player in New York
City and in having FiberNet consolidate the sector on a national basis,” Liss continued. “The acquisition of Con
Edison Communications is a major building block in executing this strategy, and we are currently pursuing additional
opportunities to advance these goals.”
FiberNet Teleconference:
FiberNet will hold a teleconference today, Monday, December 13, 2004, at 11:00 a.m. EST. To participate in the
teleconference please call: 800-659-2056, and from outside the U.S. call 617-614-2714 and enter pass code 68539583.
A replay of the teleconference will be available beginning Monday, December 13, 2004, 1:00 p.m. EST through
Monday, December 27, 2004. To listen to the replay by phone, call 888-286-8010 and enter pass code 80066171. From
outside the U.S. please call 617-801-6888 and enter the pass code.
About Con Edison Communications:
Con Edison Communications (CEC), a subsidiary of Consolidated Edison, Inc., offers a comprehensive range of
broadband data communications products and services designed to meet today’s demanding needs for business
continuity and disaster recovery. CEC designed and built the New York metro area’s only truly diverse fiber-optic
network. The company serves the enterprise and carrier markets. For additional information about CEC, visit the
Company’s website at www.conedcom.com.
About Consolidated Edison, Inc:
Consolidated Edison, Inc. is one of the nation’s largest investor-owned energy companies, with $10 billion in annual
revenues and $22 billion in assets. The company provides a wide range of energy-related products and services to its
customers through its two regulated utility subsidiaries and its four competitive energy and telecommunications
businesses. For additional financial, operations and customer service information, visit Consolidated Edison, Inc.’s
website at www.conedison.com.
About FiberNet Telecom Group, Inc.:
FiberNet Telecom Group, Inc. deploys, owns and operates fiber-optic networks in the two gateway markets of New
York/New Jersey and Los Angeles, designed to provide comprehensive broadband connectivity to other
telecommunications service providers and enterprise customers for data, voice and video transmissions. FiberNet’s
networks provide an advanced, high bandwidth, fiber-optic solution to support the demand for network capacity and to
facilitate the interconnection of multiple carriers’ and customers’ networks. For additional information about FiberNet,
visit the Company’s website at www.ftgx.com.
------Begin New York City Telecommunications Franchise List
nyc.gov
AboveNet, Inc.2 Dec. 20, 1993 [nee MFNX]
American Telephone and Telegraph (AT&T)3 May 2, 1994
Cablevision Lightpath, Inc. Dec. 20, 1993
Consolidated Edison Communications, Inc. Sept. 22, 2000
Keyspan Communications Corp. July 22, 2002
Level 3 Communications, LLC Jan. 5, 1999
Lexent Metro Connect, LLC Aug. 22, 2002
Lightspeed Fiber Network, LLC April 26, 2000
Looking Glass Networks, Inc. Nov. 29, 2000
Metropolitan Fiber Systems of New York, Inc. (System I)4 April 11, 1990
Metropolitan Fiber Systems of New York, Inc. (System II)5 June 29, 1990
NEON Transcom June 19, 2000
QWEST Communications Corp., Inc. Aug. 6, 2002
RCN Telecom Services of New York, Inc. Jan. 5, 1999
Time Warner Telecom of New York, LP Dec. 20, 1993
Urban Communications Transport Corp. Nov. 12, 2003
XO Communications Dec. 9, 1998
Yipes Enterprise Services (YES), Inc. Sept. 24, 2001
-----Begin New York City Cable TV Franchise List:
Cablevision Systems,
New York City Corporation2 Eastern Brooklyn Oct. 8, 1998
Cablevision Systems,
New York City Corporation3 Bronx Oct. 8, 1998
Queens Inner Unity Cable System4 Southern Queens Sept. 16, 1998
Time Warner Cable of New York City5 Northern Manhattan Sept. 16, 1998
Time Warner Cable of New York City6 Southern Manhattan Sept. 16, 1998
Time Warner Cable of New York City7 Western Brooklyn Sept. 16, 1998
Time Warner Cable of New York City8 Eastern Queens Sept. 16, 1998
Time Warner Cable of New York City9 Western Queens Sept. 16, 1998
TWC Cable Partners10
------
FAC
frank@fttx.org |
