It's Splitsville for Zayo, What About Partners?

Zayo Group plans to separate into two publicly traded companies, with one focused on providing core communications infrastructure and the other using infrastructure to provide offerings for a broad set of enterprise customers.

InfraCo will be a fiber-focused infrastructure provider with networks and broad geographic reach throughout North America and Western Europe. EnterpriseCo’s product portfolio and customer base will be centered on higher bandwidth connectivity to enterprise locations, including to public cloud and SaaS providers, that will be sold both directly to enterprise customers and wholesale through a carrier-focused channel.

The separation is expected to be complete in late 2019.

Phil Mottram, Zayo‘s chief customer officer, tells Channel Partners this split will provide the two companies with an “increased level of focus and autonomy, a move we feel will be beneficial for partners, customers, staff and shareholders alike.”

Zayo’s Phil Mottram

In April, Zayo announced it was launching new incentive programs for its partners and continuing to offer training, lead generation and account programs.

“There will be a long planning process leading up to the spinoff, which will enable us to work out all the details,” Mottram said. “For now, there is no change; it’s business as usual. Zayo recently implemented a new partner plan, which has been well received across the community. The new plan supports teaming with direct account teams where appropriate and provides improved commissions for partners who are growing their revenue base.”

In terms of whether the two companies will have separate partner programs, Mattram said “that decision will be made next year.”

“We are in the process of reaching out to our partners to share the news,” he said. “As you would expect, our partners are curious about what this means for them.”

InfraCo will be comprised of the current fiber solutions and zColo business segments, along with the wavelength and IP transit businesses of Zayo’s current transport segment. This business will own and operate Zayo’s Tier 1 IP backbone as well as the Media Networks platform that serves its strategic video customers.

EnterpriseCo will be comprised of the current enterprise networks and Allstream segments, along with the synchronous optical network (SONET) and Ethernet businesses of Zayo’s current transport segment. It will consist of two business units, an enterprise division and a carrier division.

The enterprise division will focus on the direct-to-enterprise business and will include offerings centered on SD-WAN, IP VPN, and UC. This division will provide high-bandwidth solutions to a customer base of more than 50,000 enterprises. The carrier division will focus on wholesale services to carriers which allow them serve their enterprise customers, including carrier Ethernet tails, wholesale voice and SONET.

“Today’s announcement is the logical next step in the evolution of Zayo,” said Dan Caruso, Zayo’s chairman and CEO. “While Zayo’s business today is organized as five autonomous segments, the complexities of these businesses have made it more difficult to achieve our growth objectives. By completely separating the infrastructure and enterprise businesses, we will enable more focused execution within each business, leading to enhanced growth and unlocking value.”