I was somewhat put off by the FRO CEO's appearance on CNBC.
for one thing, he overstated the extent of FRO's ownership of QWST fiber. While it's true that FRO has IRUs for 24 fibers and that QWST is currently pulling 96 fibers throughout most of its network, QWST has the conduit capacity to pull almost 1000 more fibers. To the best of my knowledge FRO has no rights to those add'l fibers or conduits.
also, QWST is more than just a fiber network. QWST is also the fourth-largest U.S. long distance company, well ahead of FRO, by virtue of having acquired LCI last year. QWST has nailed down huge data contracts and is a prime supplier to the Internet2 project. They have local fiber loops in 10 U.S. cities (19 by year end), transoceanic fiber thanks to capacity swaps with Global Crossing, and an aggressive partnership Europe to build fiber nets throughout the Continent.
third, NXLK last fall acquired the rights to 24 fibers, plus an empty conduit and other considerations, from LVLT for around $700M. for FRO to say that its fiber assets alone demand a higher valuation just isn't so. It's what you do with the fiber that counts.
all this said, FRO may well be a tempting takeover candidate for C&W, DT, one of the RBOCs, or an aggressive CLEC. |
