What Next for MFN?

Metromedia Fiber Network is back in the news. Analysts have been speculating that the company is likely to be sold off in pieces rather than emerging from Chapter 11 as a single entity. That seems to be a familiar refrain in recent bankruptcies, largely because lenders are loathe to touch telecom unless the opportunity is very clear and tightly focused. Now there are additional worries for MFN.

Thursday MFN announced that the company is under investigation by the SEC for its accounting practices. That shouldn't be a complete surprise, as earlier this year MFN said it would restate revenue for last year after its new auditors raised questions about its accounting.

Starting to sound a little like Global Crossing, isn't it? There are significant differences between the two companies. Nonetheless, the double-whammy of an SEC inquiry and uncertainties about the restructuring could be making customers and business partners nervous.

FiberNet, for one, seems to be taking prudent steps to hedge its bets. FiberNet, which uses MFN fiber to connect much of its Manhattan inter-building network, today announced it was purchasing dark fiber from KeySpan that will provide connectivity to key carrier hotels in New York.