On 9/19/23 18:05, Mike Hammett wrote:
Some of it is scale-related. Someone's operating just fine at the size
they are, but the next order of magnitude larger enjoys many benefits
from that size, but it takes either A) luck or B) the right skills to
be able to move up to get those benefits. In terms of network
operators, there's a big difference between a company of 1 and a
company of 2. Again a big difference between a company of 2 and a
company of 10. Another big difference between a company of 10 and a
company of.. I dunno, 100?
1G waves and 100G waves aren't *THAT* different in price anymore.
However, if 1 is doing you just fine, the much better cost per bit of
100 won't do you a darn bit of good and will probably hurt. The hurt
is not only due to the higher MRC, but now the higher NRC for
equipment with 100G interfaces. If you can put enough bits on the line
to make it worth it, you've got yourself tremendous advantage. The
acquisition pays for itself in marginally higher costs for much higher
revenue.
The company may have been doing just fine before, but couldn't afford
the move up to 10 or 100 because their present market couldn't justify
it and the larger market wasn't obtainable until they had it. Catch 22
that can't really be overcome by most. Enter M&A. Someone just can't
get to the next level they need to compete with those that can.
I'm talking about companies of relatively equal size and influence.
It's all benefit for smaller companies, even if it may be at the cost of
the larger one.
Mark.