The ratings on Louisville, Colo.-based Zayo Group LLC (Zayo) reflect its highly leveraged capital structure, aggressive acquisition and capital investment strategy, and increasing competition among fiber-based bandwidth providers. Standard&Poor's Ratings Services expects significant capital expenditure requirements to grow Zayo's fiber-to-the-tower and dark fiber businesses, which could prevent free operating cash flow (FOCF) generation from turning positive over the next few years. Tempering factors include our expectation for continued strong demand for bandwidth, a recurring revenue stream with over $1 billion in committed revenue under contract, and its niche position within the metro data transport sector serving smaller, less competitive markets. Zayo provides fiber-based telecom services and data center colocation-hosting customers' servers in a centralized data center. Its network
