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This article was created in collaboration with BSP.
When telecommunications and fiber companies merge, they typically focus on combining SG&A functions like back offices and HR departments. While doing so streamlines operations, it also leaves major money on the table.
Network integrations—in which the two companies fuse their existing service networks—can drive the greatest value, yet according to AlixPartners analysis, 85% of fiber company mergers fail to derive anticipated savings from integration. This is often due to perceived challenges around integrating network operations and technology, even though investors recognize the value.
But we believe while there are risks and difficulties, network integration is within reach as long as organizations can provide the right capacity and inject the right capabilities, including strong project and program management.
As we covered in our Americas Fiber M&A Playbook, the industry is entering a phase of accelerated consolidation. It’s a buyer’s market, and sellers will need to build their market appeal and highlight operational efficiencies to position themselves as attractively as possible. Therefore, network integration abilities and costs will become crucial factors.
Buying and integrating existing infrastructure is far more cost-effective than building fiber networks from scratch. To integrate efficiently, companies must fine-tune the following aspects.
How to streamline network integration
When advising clients during due diligence or preparing for a sale, we believe it is critical that operators improve their network documentation as needed, show consistency in network construction and deployment, maintain high data integrity, and demonstrate solid network operations and support.
With these qualities in place, network integration proves simpler and easier to enact than expected. Operators need to prioritize each element, combined with strong project and program management as well as network expansion and monetization.
Network documentation
Network documentation involves maintaining comprehensive records of network architectures, equipment inventories, vendor relationships, and service configurations. This includes up-to-date, as-built drawings, logical and physical network diagrams, and capacity and traffic flow details. It is also essential to clearly define how systems, applications, and customer-facing services work together.
Proper documentation greatly reduces risk during mergers, enabling a smoother process. For example, during due diligence, Company A may want to see the exact routes of fiber connections owned by Company B. If Company B’s route records are incomplete or outdated, there is a risk of unexpected downtime or construction costs.
Network construction
Network construction focuses on ongoing or planned expansions of network infrastructure such as fiber rollouts, tower builds, and new site acquisitions. It requires project management oversight to assure timelines and budgets are met, as well as coordination with local authorities, regulatory bodies, and contractors for permitting and construction approvals.
Effective network construction manages company reputation and ensures financial predictability. For instance, differing processes for site inspections and quality checks between merging companies can lead to confusion and inconsistent service quality.
Network deployment
Network deployment is about managing current network equipment including routers, switches, base stations, and servers. It also includes monitoring the lifecycle status of hardware and software, spare parts availability, vendor contract risks, and warranty coverage.
Ensuring maintenance and reliability while managing costs impacts is crucial to success. It can be tricky to keep critical services functional while phasing out legacy equipment. Without careful planning, this can lead to service interruptions.
Network operations and support
Network operations and support involve processes and tools for monitoring, maintaining, and troubleshooting network and service issues. It factors in organizational structures such as network operation centers, DevOps teams, field support teams, and service-level targets.
The adoption of AI, self-service portals, and automation optimizes routine tasks and predicts failures. Enhancing the customer experience, optimizing costs, and driving innovation are the main goals. For example, integrating AI-based anomaly detection can predict potential issues before they impact customers. Successful integration unlocks company value. When two companies consider merging, networks are often viewed as “black boxes” with uncertain risks, leading to overly cautious valuations. By methodically addressing each of the above to-dos—starting with robust documentation, consistent construction practices, clear deployment roadmaps, thoughtful integration planning, high data integrity, and advanced network operations—these risks can be mitigated or even turned into strategic advantages.
Data integrity
Data integrity emphasizes master data management, data quality checks, and tools to unify data across systems. Sources include customer data, network inventory data, service configuration data, and financial data.
Accurate reporting, a reduction in churn and billing errors, and regulatory compliance management are key. For instance, customer account duplication can cause billing cycle overlaps and unhappy customers—something strong integrity efforts will avoid.
Sellers that set themselves up correctly today will enable buyers to more quickly integrate networks and capture value. Those who choose to pass these problems on to the buyer will see a reduction in their sell price as a result. While network integration can be complicated, understanding the nuances and value drivers can help set the right price tag.
