& 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
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
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.
LRTV Interviews
Masergy: Ability to Adapt Key for NFV

1|16|17   |   6:40   |   (0) comments


Speaking at Light Reading's 2020 Vision in Rome, Masergy's VP, Global Technology, Ray Watson, said agility is key to providing the mix and match NFV-based services that are driving business for the managed service provider today.
LRTV Interviews
Equinix: The Data Explosion

1|13|17   |   4:16   |   (0) comments


At Light Reading's 2020 Vision in Rome, Eric Schwartz, president of EMEA, Equinix, talked about how Equinix is helping its customers manage the influx of data today, and how it's preparing for a future filled with millions of connected IoT devices.
LRTV Interviews
Heavy Reading: The Changing Data Center Landscape

1|12|17   |   6:05   |   (1) comment


At Light Reading's 2020 Vision event in Rome, Heavy Reading's Senior Analyst Roz Roseboro talks about how virtualization is impacting data center evolution and how that evolution is affecting the relationship between service providers, data center operators and public cloud providers.
LRTV Interviews
Boingo: Prepping for Millions of Devices

1|12|17   |   5:07   |   (1) comment


At Light Reading's 2020 Vision in Rome, Boingo's CTO Derek Peterson discusses how wireless operators will address the needs of low-bandwidth and high-bandwidth apps at the same time, the need for more MHz, the impact of IoT and more.
LRTV Interviews
Comcast Shows Off Gig Gateway at CES

1|11|17   |     |   (1) comment


With its largest presence at CES in years, Comcast took the wraps off its long-awaited gigabit gateway and a new platform for managing the home WiFi network. Light Reading Senior Editor Mari Silbey sat down with EVP Chris Satchell to discuss the latest Comcast advance, and met with VP of Product Strategy and Development Andrea Peiro to walk through a demo of the ...
LRTV Interviews
Colt: End-to-End Key for 2017

1|10|17   |   6:21   |   (0) comments


At Light Reading's 2020 Vision Executive Summit in Rome, Nico Fischbach of Colt said having a multi-carrier, end-to-end service proposition is going to be key for 2017 -- and SD-WAN is instrumental in making it happen.
From the Founder
Cisco's Clemson on Mobile Cloud Video

1|9|17   |     |   (1) comment


Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators. "If you think about where we're going… whether it's a mobile application, or a video ...
LRTV Custom TV
VMware Telco NFV Solutions – Preparing for 5G & IOT

1|9|17   |     |   (0) comments


Shekar Ayyar, EVP & Corporate Strategy/General Manager of Telco for VMware, discusses VMware's Telco NFV solutions role and foundation for the Imminent Arrival of 5G & IOT.
LRTV Interviews
Heavy Reading: Big Video Set to Disrupt

1|6|17   |   4:39   |   (0) comments


At Light Reading's 2020 Vision Executive Summit in Rome, Heavy Reading's Adi Kishore talks about the challenges of managing and monetizing bandwidth-intensive video, and how service providers will need to transform their networks to cope with the big video explosion.
LRTV Interviews
Heavy Reading: IoT Set to Disrupt

1|5|17   |   7:07   |   (0) comments


Heavy Reading's Senior Analyst of IoT, Steve Bell, tells Light Reading how the Internet of Things (IoT) will transform service provider markets, business models and mindsets, and how virtualizing the network core and Fog networking is key to meeting the agility and flexibility demands of IoT in the future.
LRTV Custom TV
Ensemble SmartWAN Explained

1|5|17   |     |   (0) comments


Ray Le Maistre and Prayson Pate, CTO of the Ensemble division at ADVA Optical Networking, discuss the details around the recent Ensemble SmartWAN announcement from ADVA and its potential impact on the SD-WAN movement as it goes virtual.
LRTV Interviews
Telstra Shares Digital Dos & Don'ts

1|4|17   |   3:21   |   (0) comments


At Light Reading's 2020 Vision Executive Summit in Rome, Telstra's Managing Director of EMEA Tom Homer shares his insight into what makes a good partner in today's digital world.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Ericsson: 5G Heralds 'New' New Economy
Mari Silbey, Senior Editor, Cable/Video, 1/12/2017
5G: Another Next-Generation Disappointment?
Iain Morris, News Editor, 1/10/2017
CES 2017: WIC's Picks & What Made Us Sick
Sarah Thomas, Director, Women in Comms, 1/10/2017
IBM, FDA Look to Blockchain to Secure Health Records
Scott Ferguson, Editor, Enterprise Cloud, 1/12/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
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.