Subsea Cables & Internet Infrastructure

EXA now owns the Aqua Comms assets. These include fibre pairs on AEC-1, AEC-2, and Amitié. EXA also acquired two Irish Sea cables as part of the purchase. EXA managment emphasizes customer choice in their justification of the deal, but I think what makes it a good deal for EXA is the price. It picked up lots of fibre pairs for a total price of around $40 million. Now subsea fibre IRU purchases often range from $30 million to $60 million per pair on life of system term deals. So this is a great distressed purchase. In the same ballpark as Columbia Venture's purchase of the 360 Networks for $25 million, which was rebranded as Hibernia Atlantic. I think the main question I would pose to EXA's operational staff is whether they can generate cost savings. Operational synergies are important to judging the success of an acquisition. This is where companies often fail in their consolidation efforts. GTT went bankrupt in 2021 after rapidly buying lots of network assets i...

A lot of private equity money has been funneled into telecom infrastructure investments. My impression is that returns have been poor largely because the funds don't really understand the challenges in making wholesale operators successful. The key ingredient is not technology. That is available to all. Anyone who has the money can have Ciena's latest version of Wave Logic. It is the ability of management to run a nimble, lean operation that leads to success and very few high profile telecom managers understand that point. Sales cycles must be short and provisioning even shorter. Most managers chosen to run new projects come from staid, often incumbent telecommunication service providers that try to solve problems by throwing bodies at them. They are highly risk averse so they throw sand in the cogs by allowing lawyers to dictate the pace at which everything moves. I have seen customer NDAs with four pages devoted to data processing alone. And NDAs don't prevent customers f...