Fiber Valuations: Secular Tailwinds to Support Current MultiplesFebruary 2019 - Jeff Johnston
- Consolidation in the fiber industry, coupled with the numerous underlying demand drivers for fiber networks, has increased valuations significantly over the last 12 months.
- The U.S. needs an estimated $130B-$150B in fiber infrastructure investment over the next 5-7 years to support broadband competition, rural coverage, and wireless densification, based on a report from Deloitte.
- New network architectures and emerging applications are expected to increase U.S. data traffic by 65 percent over the next three years.
- The pricing power fiber-rich operators enjoy, in addition to the operational expenditure benefits from deep fiber, make fiber networks an attractive investment.
- Given the scarcity of potential takeout candidates and the underlying demand drivers, fiber valuations should remain elevated for the foreseeable future with further consolidation among regional fiber-rich cable operators and RLECs expected.
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