& cplSiteName &

Consolidated to Buy SureWest for $340.9M

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
2/6/2012
50%
50%

Consolidated Communications Inc. has struck a deal to acquire SureWest Communications (Nasdaq: SURW) for US$340.9 million in cash and stock, marking a deal that combines two of the nation's Tier 2 service providers. (See Consolidated Snaps Up SureWest.)

Consolidated has agreed to pay $23 per share, a 47 percent premium to SureWest's stock price ($15.59) as of the close on Feb. 3. In conjunction, Morgan Stanley Senior Funding is providing Consolidated with $350 million of committed debt financing, which will be used to refinance SureWest's debt and pay for the cash portion of the purchase price.

Consolidated is looking to acquire SureWest's mix of copper, fiber and hybrid fiber/coax (HFC) systems in the Sacremento, Calif., and Kansas City regions that serve more than 321,700 residential "marketable homes" and 15,700 business customers. SureWest posted third-quarter net income of $643,000, down from $1.4 million year-on-year, on revenues of $63 million, up 3 percent.

Consolidated pipes voice, data and video services primarily to rural pockets of Illinois, Pennsylvania and Texas. It ended the third quarter with 446,426 total "connections," including 109,572 DSL subs and 32,981 IPTV customers.

Consolidated said the combined company would have generated about $620 million in revenues for the fiscal year ended Sep. 30, 2011. It estimates that Consolidated and SureWest, an IPTV pioneer, together will have about 1,775 employees.

Why this matters
The merger won't let Consolidated create larger geographic clusters, but it should help the company achieve greater scale and efficiency for its video and broadband services. Consolidated believes the merger will create $25 million in annual operational savings, and yearly capex savings in the range of $5 million to $10 million by the end of the first year after the deal closes. In the meantime, Consolidated expects to incur merger and integration costs of $20 million to $25 million over the first two years after the deal is sealed.

Monday's merger could signal a new era of consolidation among Tier 2 service providers that are looking to generate more scale amid rising fees for video programming.

For more
Check out some recent headlines about SureWest and Consolidated Communications.



— Jeff Baumgartner, Site Editor, Light Reading Cable



(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:43:29 PM
re: Consolidated to Buy SureWest for $340.9M

Nothing earth-shattering from the follow up call, but here are some tidbits from it:

-          Consolidated Communications CEO Bob Curry said his company intends to expand its national footprint by looking at other M&A opportunities, "hopefully somewhere near where we already operate."

-          The IPTV middleware situation will stay as-is for the time being. SureWest's been using Microsoft Mediaroom and Consolidated's been with Myrio.  Consolidated execs said it's too early to say if they'll unify one or the other, though they said Surewest's been happy with Mediaroom  so far and that Consolidated has been making some progress with its middleware vendor.

-          They hope to close the deal by third or fourth quarter of 2012.

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:43:29 PM
re: Consolidated to Buy SureWest for $340.9M


Just a coincidence, but they are announcing this deal just as Google starts to lay fiber in the KC area, though the Consolidated guys think this could represent an opportunity rather than a new competitor since they might be able to sell services on Google's fiber. JB

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:43:28 PM
re: Consolidated to Buy SureWest for $340.9M


 


I was thinking about who they might go after next.  Maybe TDS?  There are not that many carriers with 100K+ lines.  Lots of the IOCs are tiny and a rollup would take lots of time and transactions.  Maybe they could buy some properties from Fairpoint?


seven


 

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:43:26 PM
re: Consolidated to Buy SureWest for $340.9M


The premium Consolidated agreed to pay pretty much evaporated in SureWest's stock price Monday, closing at $22.67, up $7.08 or 45.41%.  Consolidated shares were down 27 cents (1.40%) to $18.98. JB


 


 

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:43:26 PM
re: Consolidated to Buy SureWest for $340.9M


Perhaps they can be choosy here and only target IOCs that are relatively adjacent since there aren't many bigger targets out there that would also be somewhat adjacent to the Surewest/Consolidated properties. JB


 

From The Founder
NFV's promises of automation and virtualization are intriguing, but what really excites service providers is the massive amount of money they could save.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
AT&T's Tech President Preps Workforce for the Future

7|26|17   |   5:47   |   (6) comments


AT&T is focused on the software-defined network of the future and is reskilling its workforce to get ready too, according to AT&T's President of Technology Development Melissa Arnoldi.
Women in Comms Introduction Videos
Cisco: Mentoring Critical to Attract & Retain Women

7|19|17   |   6:40   |   (1) comment


Liz Centoni, senior vice president and general manager of Cisco's Computing System Product Group, shares why mentoring in all its forms is important for women and what Cisco is doing that's made a difference for women in tech.
LRTV Custom TV
Gigabit LTE With Snapdragon 835

7|12|17   |     |   (1) comment


At an event in Wembley stadium, EE used its live network to demonstrate gigabit LTE using a Sony Xperia XZ Premium smartphone with a Qualcomm Snapdragon 835 chip.
LRTV Custom TV
Implementing Machine Intelligence With Guavus

7|12|17   |     |   (0) comments


Guavus unites big data and machine intelligence, enabling many of the the largest service providers in the world to save money and drive measureable revenue. Learn how applying Machine Intelligence substantially reduces operational costs and in many cases can eliminate subscriber impact, meaning a better subscriber experience and higher NPS.
LRTV Custom TV
Unlocking Customer Experience Insights With Machine Intelligence

7|12|17   |     |   (0) comments


When used to analyze operational data and to drive operational decisions, machine intelligence reduces the number of tasks which require human intervention. Guavus invested in Machine Intelligence early. Learn about the difference between Machine Learning and Machine Intelligence.
Women in Comms Introduction Videos
Verizon VP Talks Network, Career Planning

7|12|17   |   4:49   |   (0) comments


Heidi Hemmer, vice president of Technology, Strategy & Planning at Verizon, shares how bold bets and the future of tech define her career.
Telecom Innovators Video Showcase
Masergy's NFV Journey

7|11|17   |     |   (0) comments


Ray Watson, vice president of global technology at Masergy, discusses the advantages and challenges in entering the still-maturing NFV market for the past three years.
Telecom Innovators Video Showcase
Mavenir on RCS Cloud Platform & Multi-ID

7|10|17   |     |   (0) comments


Guillaume Le Mener, head of marketing and corporate development at Mavenir, discussed RCS and the recent launch of Multi-ID, which supports T-Mobile's DIGITS, the revolutionary new technology that breaks down the limitation of one number per phone and one phone per number.
LRTV Custom TV
ADTRAN Executive Outlines Trends in Next-Generation 10-Gigabit Cable Networks

7|10|17   |     |   (0) comments


Hossam Salib, VP of Cable and Wireless Strategy at ADTRAN, outlines key trends as MSOs begin to deploy next-generation Gigabit and 10-Gigabit cable networks. In the interview, Hossam outlines the advantages of a Fiber Deep architecture, FTTH options including EPON and RFoG, and the importance of SDN and NFV in building next-generation high-bandwidth cable networks.
LRTV Interviews
Global Capacity: Bandwidth Demand Driving Ethernet Growth

7|6|17   |   6:37   |   (0) comments


At Light Reading's Big Communications Event in Austin, Texas, Global Capacity's VP of Marketing Mary Stanhope talks about how the demand for bandwidth is changing the way service providers deliver broadband services.
LRTV Interviews
Colt's Services Chief on Digital Delivery

7|5|17   |   16:12   |   (0) comments


Rogier Bronsgeest, the chief customer experience officer (chief CEO!) at Colt, discusses the way in which the service provider interacts with its customers these days and his aggressive net promoter score (NPS) targets.
Women in Comms Introduction Videos
BT VP: Women Should Fill Security Talent Gap

7|5|17   |   6:00   |   (2) comments


By 2020 there will be six security jobs for every qualified worker, and Kate Kuehn, vice president of Security for BT in the Americas, says BT wants to encourage women to fill the shortage in jobs.
Upcoming Live Events
September 28, 2017, Denver, CO
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
NFV, SDN, Big Data – It's All About Automation
Craig Matsumoto, Editor-in-Chief, Light Reading, 7/21/2017
AT&T's Tech President Preps Workforce for the Future
Kelsey Kusterer Ziser, Editor, 7/26/2017
The Hidden (Human) Cost of Automation
Steve Saunders, CEO and founder, Light Reading, 7/26/2017
BBC Head: We Must Reinvent Broadcasting for a New Generation
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 7/21/2017
What's a Little Throttling Between Friends?
Mari Silbey, Senior Editor, Cable/Video, 7/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.