Fairpoint Merging!

Three pieces of news in the industry today. One involves Cisco Partner. [Presidio is filing for an IPO. MSPs rejoice. It could be valued at $3B.] One is a data center player. [Cologix, which I will cover in a separate post]. The third one is just Consolidation.

Consolidated Communications to Acquire FairPoint Communications, Inc.. Fairpoint used to be a small RLEC (rural incumbant telephone company) before it bought Verizon assets in 2007.
“In that year, Verizon Communications announced plans to sell its landline operations in Maine, New Hampshire, and Vermont (Northern New England Spinco) to FairPoint .”[wikipedia = source]

The deal actually got done for $2.4 Billion as everyone – and I mean everyone – had worries about Fairpoint buckling under the acquisition. Not even 2 years later, FairPoint filed for Chapter 11 bankruptcy protection.

Now Consolidated, which bought SureWest and Eventis, is acquiring Fairpoint “in an all-stock merger transaction valued at approximately $1.5 billion, including debt.” The press release says the usual dribble: “Creates a stronger business and broadband communications provider to better serve its customers.” NEVER has that actually happened! And this is also standard wording, “Doubles revenue, adjusted EBITDA and provides significant scale and resources.” The facts are that it increases fiber route miles to 35,100 across 24 states and adds more than 3,000 lit buildings and an extensive fiber-to-the-tower footprint.

On the podcast this week, I talk about the industry consolidation with a trio of agents. One commented after, “As significant as we [agents] think we are in a large providers eyes, we are not. As a whole we are but individually we are not. These are turbulent waters we are in, just got to make sure we are getting in the right life raft.” I agree but many people in the industry don’t even know what raft will be afloat in a year or who will be rowing it! The agent added, “Correct. There will be lots of boats out there, some with pirate in them, some sinking, and some that will remain afloat.” Choose wisely.

Copper needs scale, I guess. This is bigger for the sake of bigger. But RLECs have their own special issues due to a significant change in USF monies and the CAPEX expected from CAF monies. All while cable is kicking their ass. They came to the Change Party a little too late.

Tags: copper, ilec, mergers, rlec, wireline
Related tags: fairpoint, communications, significant, industry